10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                

Commission File Number: 0-25980

First Citizens Banc Corp

(Exact name of registrant as specified in its charter)

Ohio	34-1558688
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

100 East Water Street, Sandusky, Ohio	44870
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (419) 625-4121

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Shares, no par value, outstanding at November 7, 2012—7,707,917 shares

FIRST CITIZENS BANC CORP

Index

PART I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets (Unaudited) September 30, 2012 and December 31, 2011	3
Consolidated Statements of Income (Unaudited) Three and nine months ended September 30, 2012 and 2011	4
Consolidated Comprehensive Income Statements (Unaudited) Three and nine months ended September  30, 2012 and 2011	5
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) Nine months ended September  30, 2012	6
Condensed Consolidated Statement of Cash Flows (Unaudited) Nine months ended September  30, 2012 and 2011	7
Notes to Interim Consolidated Financial Statements (Unaudited)	8-35
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36-48
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49-51
Item 4. Controls and Procedures	51-52
PART II. Other Information
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53
Signatures	54

Part I – Financial Information

ITEM 1. Financial Statements

FIRST CITIZENS BANC CORP

Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

	September 30, 2012			December 31, 2011
ASSETS
Cash and due from financial institutions	$	38,861		$	52,127
Securities available for sale		210,344			204,633
Loans held for sale		749			598
Loans, net of allowance of $21,489 and $21,257		781,183			764,011
Other securities		15,573			15,388
Premises and equipment, net		17,380			17,774
Accrued interest receivable		4,709			3,787
Goodwill		21,720			21,720
Other intangibles		3,370			4,113
Bank owned life insurance		18,439			17,963
Other assets		9,547			10,863
Total assets	$	1,121,875		$	1,112,977
LIABILITIES
Deposits
Noninterest-bearing	$	195,788		$	189,382
Interest-bearing		719,449			711,864
Total deposits		915,237			901,246
Federal Home Loan Bank advances		40,270			50,295
Securities sold under agreements to repurchase		20,525			19,029
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		11,521			10,452
Total liabilities		1,016,980			1,010,449
SHAREHOLDERS’ EQUITY
Preferred stock, no par value, 200,000 shares authorized, 23,184 shares issued		23,184			23,151
Common stock, no par value, 20,000,000 shares authorized, 8,455,881 shares issued		114,365			114,447
Accumulated deficit		(16,132	)		(17,667	)
Treasury stock, 747,964 shares at cost		(17,235	)		(17,235	)
Accumulated other comprehensive income (loss)		713			(168	)
Total shareholders’ equity		104,895			102,528
Total liabilities and shareholders’ equity	$	1,121,875		$	1,112,977

See notes to interim unaudited consolidated financial statements

Page 3

FIRST CITIZENS BANC CORP

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Interest and dividend income
Loans, including fees	$	9,901	$	10,455	$	30,338	$	31,208
Taxable securities		1,120		1,367		3,608		4,213
Tax-exempt securities		490		419		1,376		1,250
Federal funds sold and other		18		26		83		54
Total interest and dividend income		11,529		12,267		35,405		36,725
Interest expense
Deposits		894		1,233		2,955		3,948
Federal Home Loan Bank advances		394		401		1,181		1,208
Subordinated debentures		208		189		635		578
Other		5		5		15		27
Total interest expense		1,501		1,828		4,786		5,761
Net interest income		10,028		10,439		30,619		30,964
Provision for loan losses		1,700		2,000		5,565		7,700
Net interest income after provision for loan losses		8,328		8,439		25,054		23,264
Noninterest income
Service charges		1,108		1,233		3,243		3,350
Net gain on sale of securities		—		—		40		3
Net gain on sale of loans		183		53		456		73
ATM fees		440		473		1,323		1,371
Trust fees		527		505		1,596		1,577
Bank owned life insurance		151		173		476		477
Computer center data processing fees		60		60		202		193
Other		158		167		997		814
Total noninterest income		2,627		2,664		8,333		7,858
Noninterest expense
Salaries, wages and benefits		5,207		5,144		15,603		14,588
Net occupancy expense		543		549		1,614		1,728
Equipment expense		293		343		897		1,059
Contracted data processing		246		200		705		612
FDIC assessment		212		240		714		971
State franchise tax		252		330		756		871
Professional services		676		509		2,080		1,505
Amortization of intangible assets		232		291		742		872
ATM expense		121		154		405		452
Marketing		193		157		581		540
Other operating expenses		1,166		1,682		4,648		5,071
Total noninterest expense		9,141		9,599		28,745		28,269
Income before taxes		1,814		1,504		4,642		2,853
Income tax expense		430		311		1,029		384
Net Income		1,384		1,193		3,613		2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Earnings per common share, basic and diluted	$	0.14	$	0.12	$	0.35	$	0.21

See notes to interim unaudited consolidated financial statements

Page 4

FIRST CITIZENS BANC CORP

Consolidated Comprehensive Income Statements (Unaudited)

(In thousands)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Net income	$	1,384		$	1,193		$	3,613		$	2,469
Other comprehensive income:
Unrealized holding gains on available for sale securities		758			2,719			1,375			6,042
Tax effect of unrealized holdings gains on available for sale securities		(259	)		(924	)		(468	)		(2,054	)
Reclassification adjustment for gain recognized in income		—			—			(40	)		(3	)
Tax effect of reclassification adjustment for gain recognized in income		—			—			14			1
Total other comprehensive income		499			1,795			881			3,986
Comprehensive income	$	1,883		$	2,988		$	4,494		$	6,455

See notes to interim unaudited consolidated financial statements

Page 5

FIRST CITIZENS BANC CORP

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(In thousands, except share data)

																Accumulated
	Preferred Stock				Common Stock											Other			Total
	Outstanding				Outstanding					Accumulated			Treasury			Comprehensive			Shareholders’
	Shares		Amount		Shares		Amount			Deficit			Stock			Income (Loss)			Equity
Balance, January 1, 2012		23,184	$	23,151		7,707,917	$	114,447		$	(17,667	)	$	(17,235	)	$	(168	)	$	102,528
Net Income		—		—		—		—			3,613			—			—			3,613
Other Comprehensive income, net of reclassification and tax effect		—		—		—		—			—			—			881			881
Accretion of discount on preferred stock		—		33		—		—			(33	)		—			—			—
Common stock warrant redemption		—		—		—		(82	)		(482	)		—			—			(564	)
Cash dividends ($.09 per share)		—		—		—		—			(694	)		—			—			(694	)
Preferred stock dividend		—		—		—		—			(869	)		—			—			(869	)
Balance, September 30, 2012		23,184	$	23,184		7,707,917	$	114,365		$	(16,132	)	$	(17,235	)	$	713		$	104,895

See notes to interim unaudited consolidated financial statements

Page 6

FIRST CITIZENS BANC CORP

Condensed Consolidated Statement of Cash Flows (Unaudited)

(In thousands)

	Nine months ended September 30,
	2012			2011
Net cash from operating activities	$	12,473		$	12,977
Cash flows used for investing activities
Maturities and calls of securities, available-for-sale		51,115			46,044
Purchases of securities, available-for-sale		(69,991	)		(64,624	)
Security sales		12,982			300
Redemption of FRB stock		—			83
Purchases of FRB stock		(185	)		(127	)
Purchase of bank owned life insurance		—			(5,000	)
Net loan originations		(23,346	)		(18,843	)
Proceeds from sale of OREO properties		1,048			785
Proceeds from sale of property		5			48
Purchases of office premises and equipment		(702	)		(1,102	)
Net cash used for by investing activities		(29,074	)		(42,436	)
Cash flows provided by financing activities
Repayment of FHLB borrowings		(25	)		(24	)
Proceeds from short-term FHLB advances		—			20,000
Repayment of long-term FHLB advances		(10,000	)		(22,500	)
Proceeds from long-term FHLB advances		—			22,500
Net change in deposits		13,991			19,299
Net change in securities sold under agreements to repurchase		1,496			(2,559	)
Repayment of U. S. Treasury interest-bearing demand note payable		—			331
Repurchase common stock warrant from U.S.Treasury		(564	)		—
Cash dividends paid on common stock and preferred stock		(1,563	)		(869	)
Net cash provided by financing activities		3,335			36,178
Net change in cash and due from financial institutions		(13,266	)		6,719
Cash and cash equivalents at beginning of period		52,127			79,030
Cash and cash equivalents at end of period	$	38,861		$	85,749
Cash paid during the period for:
Interest	$	4,812		$	5,779
Income taxes	$	—		$	—
Supplemental cash flow information:
Transfer of loans from portfolio to OREO	$	289		$	677

See notes to interim unaudited consolidated financial statements

Page 7

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(1) Consolidated Financial Statements

Nature of Operations and Principles of Consolidation: The Consolidated Financial Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries: The Citizens Banking Company (Citizens), First Citizens Insurance Agency, Inc., Water Street Properties, Inc. (Water St.) and FC Refund Solutions, Inc (FCRS). FCRS was formed to facilitate payment of individual state and federal income tax refunds. First Citizens Capital LLC (FCC) is wholly-owned by Citizens and holds inter-company debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens and holds and manages Citizens’ securities portfolio. The operations of FCI are located in Wilmington, Delaware. The above companies together are referred to as the “Corporation”. Intercompany balances and transactions are eliminated in consolidation.

The consolidated financial statements have been prepared by the Corporation without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Corporation’s financial position as of September 30, 2012 and its results of operations and changes in cash flows for the periods ended September 30, 2012 and 2011 have been made. The accompanying Consolidated Financial Statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended September 30, 2012 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Corporation described in the notes to the financial statements contained in the Corporation’s 2011 annual report. The Corporation has consistently followed these policies in preparing this Form 10-Q.

The Corporation provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Union, Ottawa, and Richland. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and Federal Funds sold. First Citizens Insurance Agency, Inc. was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue was less than 1.0% of total revenue through September 30, 2012. Water St. revenue was less than 1.0% of total revenue through September 30, 2012. Management considers the Corporation to operate primarily in one reportable segment, banking.

Page 8

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(2) Significant Accounting Policies

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, impairment of goodwill, fair values of financial instruments, deferred taxes and pension obligations are particularly subject to change.

Income Taxes: Income tax expense is based on the effective tax rate expected to be applicable for the entire year. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

Effect of Newly Issued but Not Yet Effective Accounting Standards:

In December 2011, the FASB issued ASU 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early adoption is permitted. This update is not expected to have a significant impact on the Corporation’s financial statements.

Page 9

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Corporation is currently evaluating the impact the adoption of this update will have on the Corporation’s financial position or results of operations.

(3) Securities

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

September 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	52,482	$	381	$	—		$	52,863
Obligations of states and political subdivisions		72,576		7,112		(2	)		79,686
Mortgage-backed securities in government sponsored entities		75,194		2,367		(222	)		77,339
Total debt securities		200,252		9,860		(224	)		209,888
Equity securities in financial institutions		481		—		(25	)		456
Total	$	200,733	$	9,860	$	(249	)	$	210,344
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	49,305	$	399	$	—		$	49,704
Obligations of states and political subdivisions		61,508		5,240		(12	)		66,736
Mortgage-backed securities in government sponsored entities		85,063		2,582		(128	)		87,518
Total debt securities		195,876		8,221		(140	)		203,957
Equity securities in financial institutions		481		195		—			676
Total	$	196,357	$	8,416	$	(140	)	$	204,633

Page 10

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The fair value of securities at September 30, 2012, by contractual maturity, is shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities, are shown separately.

Available for sale	Amortized Cost		Fair Value
Due in one year or less	$	5,157	$	5,190
Due after one year through five years		17,036		17,184
Due after five years through ten years		18,109		19,018
Due after ten years		84,756		91,157
Mortgage-backed securities		75,194		77,339
Equity securities		481		456
Total securities available for sale	$	200,733	$	210,344

Proceeds from the sale of securities were $12,982 for the nine-month period ended September 30, 2012. Included in those sales were gross gains of $99 and gross losses of $59. Proceeds from the sale of securities for the nine-month period ended September 30, 2011 were $300. There were no gains or losses on the sales during the period ended September 30, 2011. There were no gains or losses on securities settled by the issuer during the nine-month period ended September 30, 2012. Gains from securities settled by the issuer were $3 during the nine-month period ended September 30, 2011. No securities were sold during the quarters ended September 30, 2012 and 2011.

Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $148,811 and $156,114 as of September 30, 2012 and December 31, 2011, respectively.

Page 11

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Securities with unrealized losses at September 30, 2012 and December 31, 2011 not recognized in income are as follows:

September 30, 2012	12 Months or less					More than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
Obligations of states and political subdivisions	$	—	$	—		$	474	$	(2	)	$	474	$	(2	)
Mortgage-backed securities in gov’t sponsored entities		10,669		(210	)		1,426		(12	)		12,095		(222	)
Equity securities		481		(25	)		—		—			481		(25	)
Total temporarily impaired	$	11,150	$	(235	)	$	1,900	$	(14	)	$	13,050	$	(249	)
December 31, 2011	12 Months or less					More than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
Obligations of states and political subdivisions	$	1,309	$	(10	)	$	160	$	(2	)	$	1,469	$	(12	)
Mortgage-backed securities in gov’t sponsored entities		20,915		(128	)		—		—			20,915		(128	)
Total temporarily impaired	$	22,224	$	(138	)	$	160	$	(2	)	$	22,384	$	(140	)

At September 30, 2012, there were sixteen securities in the portfolio with unrealized losses. Unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to market yields increasing across the municipal sector partly due to higher risk premiums associated with municipal insurers. The fair value is expected to recover as the securities approach their maturity date or reset date. The Corporation does not intend to sell until recovery and does not believe selling will be required before recovery.

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First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(4) Loans

Loan balances were as follows:

	September 30,			December 31,
	2012			2011
Commercial and agriculture	$	84,848		$	86,395
Commercial real estate		405,535			371,852
Real estate—mortgage		256,840			274,995
Real estate—construction		45,405			39,790
Consumer		10,044			12,236
Total loans		802,672			785,268
Allowance for loan losses		(21,489	)		(21,257	)
Net loans	$	781,183		$	764,011

(5) Allowance for Loan Losses

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Corporation has segmented certain loans in the portfolio by product type. Historical loss percentages for each risk category are calculated and used as the basis for calculating loan loss allowance allocations. These historical loss percentages are calculated over a three-year period for all portfolio segments. Certain economic factors are also considered for trends which management uses to establish the directionality of changes to the unallocated portion of the reserve. The following economic factors are analyzed:

• Changes in lending policies and procedures

• Changes in experience and depth of lending and management staff

• Changes in quality of Bank’s credit review system

• Changes in nature and volume of the loan portfolio

• Changes in past due, classified and nonaccrual loans and TDRs

• Changes in economic and business conditions

• Changes in competition or legal and regulatory requirements

• Changes in concentrations within the loan portfolio

• Changes in the underlying collateral for collateral dependent loans

Page 13

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Corporation considers the allowance for loan losses of $21,489 adequate to cover loan losses inherent in the loan portfolio, at September 30, 2012. The following tables present by portfolio segment, the changes in the allowance for loan losses and the loan balances outstanding for periods ended September 30, 2012, September 30, 2011 and December 31, 2011. The allowance for Consumer loans was reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type.

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated		Total
For the nine months ending September 30, 2012
Allowance for loan losses:
Beginning balance	$	2,876		$	10,571		$	5,796		$	974		$	719		$	321	$	21,257
Charge-offs		(610	)		(2,463	)		(2,803	)		(297	)		(174	)		—		(6,347	)
Recoveries		280			371			208			104			51			—		1,014
Provision		23			2,748			2,758			284			(343	)		95		5,565
Ending Balance	$	2,569		$	11,227		$	5,959		$	1,065		$	253		$	416	$	21,489

The allowances for both Real Estate Construction and Consumer loans were reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type. The net result of these changes was a reduction in the allowance for these loan types and is represented as a decrease in the provision. The allowance related to the unallocated segment was also reduced.

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated			Total
For the nine months ending September 30, 2011
Allowance for loan losses:
Beginning balance	$	3,639		$	9,827		$	4,569		$	2,139		$	726		$	868		$	21,768
Charge-offs		(1,053	)		(2,926	)		(3,126	)		(778	)		(151	)		—			(8,034	)
Recoveries		284			299			245			348			77			—			1,253
Provision		1,079			3,253			4,265			(498	)		(18	)		(381	)		7,700
Ending Balance	$	3,949		$	10,453		$	5,953		$	1,211		$	634		$	487		$	22,687

Page 14

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated			Total
For the three months ending September 30, 2012
Allowance for loan losses:
Beginning balance	$	2,537		$	11,701		$	6,379		$	1,095		$	262		$	(43	)	$	21,931
Charge-offs		(192	)		(824	)		(1,334	)		(192	)		(49	)					(2,591	)
Recoveries		180			196			47			(9	)		35						449
Provision		44			154			867			171			5			459			1,700
Ending Balance	$	2,569		$	11,227		$	5,959		$	1,065		$	253		$	416		$	21,489

The allowance for both Real Estate Construction and Consumer loans were reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type. The net result of these changes was a reduction in the allowance for these loan types and is represented as a decrease in the provision.

G

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated		Total
For the three months ending September 30, 2011
Allowance for loan losses:
Beginning balance	$	2,821		$	10,713		$	6,184		$	1,196		$	670		$	165	$	21,749
Charge-offs		(145	)		(710	)		(703	)		—			(42	)		—		(1,600	)
Recoveries		111			166			136			98			27			—		538
Provision		1,162			284			336			(83	)		(21	)		322		2,000
Ending Balance	$	3,949		$	10,453		$	5,953		$	1,211		$	634		$	487	$	22,687

Page 15

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Unallocated		Total
September 30, 2012
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	251	$	3,760	$	808	$	194	$	62	$	—	$	5,075
Ending balance:
Collectively evaluated for impairment	$	2,318	$	7,467	$	5,151	$	871	$	191	$	416	$	16,414
Ending Balance	$	2,569	$	11,227	$	5,959	$	1,065	$	253	$	416	$	21,489
Loan balances outstanding:
Ending balance:
Individually evaluated for impairment	$	5,264	$	18,150	$	6,219	$	885	$	63			$	30,581
Ending balance:
Collectively evaluated for impairment	$	79,584	$	387,385	$	250,621	$	44,520	$	9,981			$	772,091
Ending Balance	$	84,848	$	405,535	$	256,840	$	45,405	$	10,044			$	802,672

Page 16

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Unallocated		Total
December 31, 2011
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	618	$	3,094	$	860	$	239	$	—	$	—	$	4,811
Ending balance:
Collectively evaluated for impairment	$	2,258	$	7,477	$	4,936	$	735	$	719	$	321	$	16,446
Ending Balance	$	2,876	$	10,571	$	5,796	$	974	$	719	$	321	$	21,257
Loan balances outstanding:
Ending balance:
Individually evaluated for impairment	$	5,258	$	17,700	$	3,846	$	576	$	—			$	27,380
Ending balance:
Collectively evaluated for impairment	$	81,137	$	354,152	$	271,149	$	39,214	$	12,236			$	757,888
Ending Balance	$	86,395	$	371,852	$	274,995	$	39,790	$	12,236			$	785,268

Page 17

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table represents credit exposures by internally assigned grades for the period ended September 30, 2012 and December 31, 2011. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. Residential real estate loans with an internal credit risk grade include commercial loans that are secured by conventional 1-4 family residential properties. Real estate construction loans with an internal credit risk grade include commercial construction, land development and other land loans. The Corporation’s internal credit risk grading system is based on experiences with similarly graded loans.

The Corporation’s internally assigned grades are as follows:

• Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

• Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

• Substandard – loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that Citizens will sustain some loss if the deficiencies are not corrected.

• Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

• Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

• Unrated – Generally, consumer loans are not risk-graded, except when collateral is used for a business purpose.

September 30, 2012	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Total
Pass	$	74,610	$	364,004	$	94,859	$	39,229	$	900	$	573,602
Special Mention		1,901		7,625		2,447		682		—		12,655
Substandard		8,337		33,906		14,156		2,339		67		58,805
Doubtful		—		—		—		—		—		—
Ending Balance	$	84,848	$	405,535	$	111,462	$	42,250	$	967	$	645,062
December 31, 2011	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Total
Pass	$	73,011	$	319,084	$	92,577	$	31,697	$	2,208	$	518,577
Special Mention		4,358		15,321		5,071		702		—		25,452
Substandard		9,026		37,447		17,764		5,067		—		69,304
Doubtful		—		—		—		—		—		—
Ending Balance	$	86,395	$	371,852	$	115,412	$	37,466	$	2,208	$	613,333

Page 18

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following tables present performing and nonperforming loans based solely on payment activity for the period ended September 30, 2012 and December 31, 2011 that have not been assigned an internal risk grade. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans are considered to be nonperforming when they become 90 days past due. Nonperforming loans also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Corporation’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

	Residential Real Estate		Real Estate Construction		Consumer		Total
September 30, 2012
Performing	$	145,378	$	3,155	$	9,077	$	157,610
Nonperforming		—		—		—		—
Total	$	145,378	$	3,155	$	9,077	$	157,610
	Residential Real Estate		Real Estate Construction		Consumer		Total
December 31, 2011
Performing	$	159,291	$	2,324	$	10,027	$	171,642
Nonperforming		292		—		1		293
Total	$	159,583	$	2,324	$	10,028	$	171,935

Page 19

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table includes an aging analysis of the recorded investment of past due loans outstanding as of September 30, 2012 and December 31, 2011.

September 30, 2012	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		Past Due 90 Days and Accruing
Commericial & Agriculture	$	364	$	48	$	710	$	1,122	$	83,726	$	84,848	$	245
Commercial Real Estate		931		2,264		8,958		12,153		393,382		405,535		2,189
Residential Real Estate		736		1,047		7,857		9,640		247,200		256,840		262
Real Estate Construction		323		—		801		1,124		44,281		45,405		—
Consumer		48		26		—		74		9,970		10,044		—
Total	$	2,402	$	3,385	$	18,326	$	24,113	$	778,559	$	802,672	$	2,696
December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		Past Due 90 Days and Accruing
Commericial & Agriculture	$	229	$	174	$	509	$	912	$	85,483	$	86,395	$	19
Commercial Real Estate		4,156		1,369		9,466		14,991		356,861		371,852		737
Residential Real Estate		3,614		1,182		6,504		11,300		263,695		274,995		511
Real Estate Construction		—		—		45		45		39,745		39,790		45
Consumer		89		16		2		107		12,129		12,236		2
Total	$	8,088	$	2,741	$	16,526	$	27,355	$	757,913	$	785,268	$	1,314

Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Corporation may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income.

The following table presents loans on nonaccrual status as of September 30, 2012 and December 31, 2011.

	September 30, 2012		December 31, 2011
Commericial & Agriculture	$	2,793	$	940
Commercial Real Estate		19,137		15,346
Residential Real Estate		10,408		8,915
Real Estate Construction		1,355		567
Consumer		55		—
Total	$	33,748	$	25,768

Page 20

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Loan modifications that are considered troubled debt restructurings (TDRs) completed during the quarter ended September 30, 2012 and September 30, 2011 were as follows:

	For the Quarter Ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		2	$	197	$	497
Commercial Real Estate		—		—		—
Residential Real Estate		1		385		385
Real Estate Construction		—		—		—
Consumer		1		19		19
Total TDRs		4	$	601	$	901
	For the Quarter Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		—	$	—	$	—
Commercial Real Estate		—		—		—
Residential Real Estate		1		143		144
Real Estate Construction		—		—		—
Consumer		—		—		—
Total TDRs		1	$	143	$	144

Page 21

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Loan modifications that are considered troubled debt restructurings (TDRs) completed during the nine month periods ended September 30, 2012 and September 30, 2012 were as follows:

	For the Nine-Month Period Ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		6	$	983	$	976
Commercial Real Estate		3		1,206		1,206
Residential Real Estate		21		1,250		1,171
Real Estate Construction		—		—		—
Consumer		5		66		66
Total TDRs		35	$	3,505	$	3,419
	For the Nine-Month Period Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		—	$	—	$	—
Commercial Real Estate		—		—		—
Residential Real Estate		1		143		144
Real Estate Construction		—		—		—
Consumer		—		—		—
TDRs		1	$	143	$	144

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans.

During the three and nine-month period ended September 30, 2012 and 2011, there were no defaults on any loans which were modified and considered TDRs during the twelve months previous to the respective periods ending September 30, 2012 or September 30, 2011.

Page 22

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Impaired Loans: Larger (greater than $350) commercial loans and commercial real estate loans, many of which are 60 days or more past due, are tested for impairment. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

The following tables include the recorded investment and unpaid principal balances for impaired financing receivables with the associated allowance amount, if applicable, as of September 30, 2012 and December 31, 2011.

	September 30, 2012						December 31, 2011
September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commericial & Agriculture	$	5,003	$	5,339	$	—	$	2,914	$	3,010	$	—
Commercial Real Estate		8,030		9,192		—		3,804		4,739		—
Residential Real Estate		3,086		4,598		—		862		953		—
Real Estate Construction		—		—		—		—		—		—
Consumer and Other		1		1		—		—		—		—
Total	$	16,120	$	19,130	$	—	$	7,580	$	8,702	$	—
With an allowance recorded:
Commericial & Agriculture	$	261	$	271	$	251	$	2,344	$	3,645	$	618
Commercial Real Estate		10,120		12,194		3,760		13,896		16,534		3,094
Residential Real Estate		3,133		3,274		808		2,984		4,127		860
Real Estate Construction		885		1,413		194		576		1,103		239
Consumer and Other		62		62		62		—		—		—
Total	$	14,461	$	17,214	$	5,075	$	19,800	$	25,409	$	4,811
Total:
Commericial & Agriculture	$	5,264	$	5,610	$	251	$	5,258	$	6,655	$	618
Commercial Real Estate		18,150		21,386		3,760		17,700		21,273		3,094
Residential Real Estate		6,219		7,872		808		3,846		5,080		860
Real Estate Construction		885		1,413		194		576		1,103		239
Consumer and Other		63		63		62		—		—		—
Total	$	30,581	$	36,344	$	5,075	$	27,380	$	34,111	$	4,811

Page 23

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

	September 30, 2012				September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the quarter ended:
Commericial & Agriculture	$	5,366	$	26	$	5,112	$	168
Commercial Real Estate		16,448		329		13,953		666
Residential Real Estate		5,227		145		3,317		172
Real Estate Construction		608		11		849		9
Consumer and Other		54		1		—		—
Total	$	27,703	$	512	$	23,231	$	1,015
	September 30, 2012				September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the nine months ended:
Commericial & Agriculture	$	4,631	$	205	$	4,618	$	330
Commercial Real Estate		17,060		995		12,975		934
Residential Real Estate		4,628		391		3,574		194
Real Estate Construction		531		11		1,560		41
Consumer and Other		28		1		—		—
Total	$	26,878	$	1,603	$	22,727	$	1,499

Page 24

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(6) Earnings per Common Share

Basic earnings per share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under stock options, computed using the treasury stock method.

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Basic
Net income	$	1,384	$	1,193	$	3,613	$	2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Weighted average common shares outstanding		7,707,917		7,707,917		7,707,917		7,707,917
Basic earnings per common share	$	0.14	$	0.12	$	0.35	$	0.21
Diluted
Net income	$	1,384	$	1,193	$	3,613	$	2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Weighted average common shares outstanding for basic earnings per common share		7,707,917		7,707,917		7,707,917		7,707,917
Add: Dilutive effects of assumed exercises of stock options and warrants		—		—		—		—
Average shares and dilutive potential common shares outstanding		7,707,917		7,707,917		7,707,917		7,707,917
Diluted earnings per common share	$	0.14	$	0.12	$	0.35	$	0.21

Stock options for 10,000 common shares that have an exercise price of $35.00 were not considered in computing diluted earnings per common share for the three and nine-month periods ended September 30, 2012 because they were anti-dilutive.

Stock options for 19,500 common shares that have an exercise price of $20.50 were not considered in computing diluted earnings per common share for the nine-month period ended September 30, 2012 because they were anti-dilutive. These options expired during the three month period ended September 30, 2012.

Stock options for 29,500 common shares that have an exercise price ranging from $20.50 to $35.00 were not considered in computing diluted earnings per common share for the three and nine-month periods ended September 30, 2011 because they were anti-dilutive.

Page 25

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(7) Commitments, Contingencies and Off-Balance Sheet Risk

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection are issued to meet customers’ financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amount of financial instruments with off-balance-sheet risk was as follows for September 30, 2012 and December 31, 2011:

	Contract Amount
	September 30, 2012				December 31, 2011
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Commitment to extend credit:
Lines of credit and construction loans	$	13,274	$	118,110	$	6,913	$	111,710
Overdraft protection		1,294		18,381		1,320		17,828
Letters of credit		294		406		200		424
	$	14,862	$	136,897	$	8,433	$	129,962

Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 2.25% to 15.0% at September 30, 2012 and December 31, 2011, respectively. Maturities extend up to 30 years.

Citizens is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The average reserve balance maintained in accordance with such requirements was $1,240 on September 30, 2012 and $998 on December 31, 2011.

Page 26

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(8) Pension Information

Net periodic pension expense was as follows:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Service cost	$	235		$	212		$	704		$	635
Interest cost		229			203			686			611
Expected return on plan assets		(215	)		(206	)		(644	)		(620	)
Other components		90			85			270			257
Net periodic pension cost	$	339		$	294		$	1,016		$	883

The total amount of contributions expected to be paid by the Corporation in 2012 total $1,355, compared to $1,152 in 2011.

(9) Stock Options

Options to buy stock could be granted to directors, officers and employees under the Corporation’s Stock Option and Stock Appreciation Rights Plan, which provided for issue of up to 225,000 options. The exercise price of stock options is determined based on the market price of the Corporation’s common shares at the date of grant. The maximum option term is ten years, and options normally vest after three years.

The Corporation did not grant any stock options during the first nine months of 2012 or 2011, nor did any stock options become vested during the first nine months of 2012 or 2011. The Corporation’s Stock Option and Stock Appreciation Rights Plan expired in 2010, and no further stock options or other awards may be granted by the Corporation under such plan.

Page 27

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

A summary of the activity in the plan is as follows:

	Nine months ended					Nine months ended
	September 30, 2012					September 30, 2011
				Weighted				Weighted
				Average				Average
				Price				Price
	Shares			Per Share		Shares		Per Share
Outstanding at beginning of year		29,500		$	25.42		29,500	$	25.42
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(19,500	)		20.50		—		—
Options outstanding, end of period		10,000		$	35.00		29,500	$	25.42
Options exercisable, end of period		10,000		$	35.00		29,500	$	25.42

The following table details stock options outstanding:

	Outstanding Options
			Weighted
			Average		Weighted
			Remaining		Average
			Contractual		Exercise
Exercise price	Number		Life		Price
$35.00		10,000		6.4 mos.		35.00
Outstanding at quarter-end		10,000		6.4 mos.	$	35.00

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common shares as of the reporting date. As of September 30, 2012 and December 31, 2011, the aggregate intrinsic value of outstanding stock options was $0. A total of 19,500 stock options with an exercise price of $20.50 expired on July 2, 2012.

Page 28

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

(10) Fair Value Measurement

The Corporation uses a fair value hierarchy to measure fair value. The topic describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Corporation’s own view about the assumptions that market participants would use in pricing an asset.

Securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Management uses significant unobservable inputs to determine the fair value of one security (Level 3 inputs). These inputs include appraised values of the underlying collateral and estimated costs to sell the collateral. The value of the collateral has been discounted to represent the value in a distressed sale situation.

Equity securities: The Corporation’s equity securities are not actively traded in an open market. The fair values of these equity securities available for sale are determined by using market data inputs for similar securities that are observable. (Level 2 inputs).

The fair value measurement for equity securities in financial institutions at December 31, 2011 was determined using Level 1 quoted market prices. No transactions have occurred since December 31, 2011 therefore the fair value of the equity securities in financial institutions at September 30, 2012 is measured using Level 2 observable market data inputs.

Impaired loans: The fair values of impaired loans are determined using the fair values of collateral for collateral dependent loans, or discounted cash flows. The Corporation uses independent appraisals, discounted cash flow models and other available data to estimate the fair value of collateral (Level 3 inputs).

Other real estate owned: The fair value of other real estate owned is determined using the fair value of collateral. The Corporation uses appraisals and other available data to estimate the fair value of collateral (Level 3 inputs). The appraised values are discounted to represent an estimated value in a distressed sale. Additionally, estimated costs to sell the property are used to further adjust the value.

Page 29

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Assets measured at fair value are summarized below.

	Fair Value Measurements at September 30, 2012 Using:
	(Level 1)		(Level 2)		(Level 3)
Assets:
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	52,863	$	—
Obligations of states and political subdivisions		—		79,210		476
Mortgage-backed securities in government sponsored entities		—		77,339		—
Equity securities in financial institutions		—		456		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	25,506
Other real estate owned		—		—		464
	Fair Value Measurements at December 31, 2011 Using:
	(Level 1)		(Level 2)		(Level 3)
Assets:
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	49,704	$	—
Obligations of states and political subdivisions		—		66,219		517
Mortgage-backed securities in government sponsored entities		—		87,518		—
Equity securities in financial institutions		676		—		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	22,569
Other real estate owned		—		—		1,097

Page 30

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at September 30, 2012.

	Quantitative Information about Level 3 Fair Value Measurements
September 30, 2012	Fair Value Estimate		Valuation Technique	Unobservable Input	Range
Investments	$	476	Appraisal of collateral	Appraisal adjustments	20% - 30%
				Liquidation expense	8% - 12%
Impaired loans	$	25,506	Appraisal of collateral	Appraisal adjustments	10% - 30%
				Liquidation expense	0% - 10%
				Holding period	0 - 30 months
			Discounted cash flows	Discount rates	3% - 8.4%
Other real estate owned	$	464	Appraisal of collateral	Appraisal adjustments	10% - 30%
				Liquidation expense	0% - 10%

The following table presents the changes in the Level 3 fair-value category for the period ended September 31, 2012. The Corporation classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to the unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable, either directly or indirectly.

Securities available for sale
Beginning balance January 1, 2012	$	517
Principal payments		(41	)
Ending balance September 31, 2012	$	476

Page 31

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The carrying amount and fair values of financial instruments are as follows.

					Quoted
					Prices in
					Active		Significant		Significant
					Markets for		Other		Other
					Identical		Observable		Unobservable
September 30, 2012	Carrying		Total		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	38,861	$	38,861	$	38,861	$	—	$	—
Securities available for sale		200,733		210,344		—		209,868		476
Other securities		15,573		15,573		15,573		—		—
Loans, available for sale		749		749		749		—		—
Loans, net of allowance for loan losses		781,183		796,918		—		—		796,918
Bank owned life insurance		18,439		18,439		18,439		—		—
Accrued interest receivable		4,709		4,709		4,709		—		—
Financial Liabilities:
Nonmaturing deposits		644,430		644,430		644,430		—		—
Time deposits		270,807		273,037		—		—		273,037
Federal Home Loan Bank advances		40,270		41,816		—		—		41,816
Securities sold under agreement to repurchase		20,525		20,525		20,525		—		—
Subordinated debentures		29,427		27,360		—		—		27,360
Accrued interest payable		232		232		232		—		—

Page 32

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

	December 31, 2011
	Carrying Amount		Fair Value
Financial Assets:
Cash and due from financial institutions	$	52,127	$	52,127
Securities, AFS		196,357		204,633
Other securities		15,388		15,388
Loans, available for sale		598		598
Loans, net of allowance for loan losses		764,011		785,900
Bank owned life insurance		17,963		17,963
Accrued interest receivable		3,787		3,787
Financial Liabilities:
Deposits		901,246		911,945
Federal Home Loan Bank advances		50,295		52,263
Securities sold under agreement to repurchase		19,029		19,029
Subordinated debentures		29,427		26,461
Accrued interest payable		258		258

Cash and due from financial institutions:

The carrying amounts for cash and due from financial institutions approximate fair value because they have original maturities of less than 90 days and do not present unanticipated credit concerns.

Available-for-sale securities:

The fair value of securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for specific securities. Instead, this method relies on the securities relationship to other benchmark quoted securities (Level 2 inputs). For equity securities, management uses market information related to the value of similar institutions to determine the fair value (Level 2 inputs). Management uses significant unobservable inputs to determine the fair value of one security (Level 3 inputs). These inputs include appraised values of the underlying collateral and estimated costs to sell the collateral. The value of the collateral has been discounted to represent the value in a distressed sale situation.

Other securities:

The carrying value of regulatory stock approximates fair value based on applicable redemption provisions.

Page 33

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Loans, available-for-sale:

Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment to an investor. Because the holding period of such loans is typically short, the carrying value generally approximates the fair value at the time the commitment is received. All loans in the held-for-sale account conform to Fannie Mae underwriting guidelines, with specific intent of the loan being purchased by an investor at the predetermined rate structure.

Loans, net of allowance for loan losses:

Fair values for loans, other than impaired, are estimated for portfolios of loans with similar financial characteristics. The fair value of performing loans has been estimated by discounting expected future cash flows of the underlying portfolios. The discount rates used in these calculations are generally derived from the treasury yield curve and are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate inherent in the loan. The estimated maturity is based on the Corporation’s historical experience with repayments for each loan classification. The off-balance-sheet items are based on the current fees or cost that would be charged to enter into or terminate such arrangements and are considered nominal. Changes in these significant unobservable inputs used in discounted cash flow analysis, such as the discount rate or prepayment speeds, could lead to changes in the underlying fair value.

Bank owned life insurance:

The carrying value of bank owned life insurance approximates the fair value based on applicable redemption provisions.

Accrued interest receivable and payable and securities sold under agreements to repurchase:

The carrying amounts for accrued interest receivable, accrued interest payable and securities sold under agreements to repurchase approximate fair value because they are generally received or paid in 90 days or less and do not present unanticipated credit concerns.

Deposits:

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and NOW accounts, and money market accounts, is equal to the amount payable on demand.

The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

The deposits’ fair value estimates do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

Federal Home Loan Bank advances:

Rates available to the Corporation for borrowed funds with similar terms and remaining maturities are used to estimate the fair value of borrowed funds.

Page 34

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

Subordinated debentures:

The fair value of subordinated debentures is based on the discounted value of contractual cash flows of the underlying debt agreements. The discount rate is estimated using the current rate for a 30 year mortgage-matched secured borrowing from the FHLB.

(11) Participation in the Treasury Capital Purchase Program

On January 23, 2009, the Corporation completed the sale to the U.S. Treasury of $23,184 of newly-issued non-voting preferred shares as part of the Capital Purchase Program (CPP) enacted by the U.S. Treasury as part of the Troubled Assets Relief Program (TARP) under the Emergency Economic Stabilization Act of 2008 (EESA). To finalize the Corporation’s participation in the CPP, the Corporation and the Treasury entered into a Letter Agreement, dated January 23, 2009, including the Securities Purchase Agreement – Standard Terms attached thereto. Pursuant to the terms of the Securities Purchase Agreement, the Corporation issued and sold to Treasury (1) 23,184 Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (Preferred Shares), and (2) a Warrant to purchase 469,312 common shares of the Corporation, each without par value, at an exercise price of $7.41 per share. The Warrant has a ten-year term. All of the proceeds from the sale of the Preferred Shares and the Warrant by the Corporation to the U.S. Treasury under the CPP qualify as Tier 1 capital for regulatory purposes. Under the standardized CPP terms, cumulative dividends on the Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter, but will be paid only if, as and when declared by the Corporation’s Board of Directors. The Preferred Shares have no maturity date and rank senior to the common shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Corporation.

On July 3, 2012, the U.S. Treasury completed the sale of all 23,184 of the Preferred Shares to various investors pursuant to a modified “Dutch auction” process. As a result of the U.S. Treasury’s sale of all of the Preferred Shares, the executive compensation and corporate governance standards which applied to the Corporation as a participant in the CPP, which standards were most recently set forth in the Interim Final Rule on TARP Standards for Compensation and Corporate Governance, published June 15, 2009, are no longer applicable to the Corporation.

On September 5, 2012, the Corporation completed the repurchase of the Warrant from the U.S. Treasury in accordance with the terms of the Securities Purchase Agreement for an aggregate purchase price of $563,174. The purchase price was determined by the Board of Directors of the Corporation based on the Fair Market Value of the Warrant, as established by an appraisal conducted by a nationally recognized independent investment banking firm.

Page 35

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion focuses on the consolidated financial condition of the Corporation at September 30, 2012 compared to December 31, 2011 and the consolidated results of operations for the three and nine-month periods ended September 30, 2012, compared to the same periods in 2011. This discussion should be read in conjunction with the consolidated financial statements and footnotes included in this Form 10-Q.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements by the Corporation relating to various matters, including, without limitation, anticipated operating results, credit quality expectations, economic trends (including interest rates) and similar matters. Such statements are based upon the current beliefs and expectations of the Corporation’s management and are subject to risks and uncertainties. While the Corporation believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could prove to be inaccurate, and accordingly, actual results and experiences could differ materially from the anticipated results or other expectations expressed by the Corporation in its forward-looking statements. Factors that could cause actual results or experiences to differ from results discussed in the forward-looking statements include, but are not limited to, regional and national economic conditions; volatility and direction of market interest rates; credit risks of lending activities; governmental legislation and regulation, including changes in accounting regulation or standards; material unforeseen changes in the financial condition or results of operations of the Corporation’s clients; increases in FDIC insurance premiums and assessments; and other risks identified from time-to-time in the Corporation’s other public documents on file with the SEC, including those risks identified in Item 1A of Part 1 of the Corporation’s Annual Report on Form 10-K.

The Corporation does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements, and the purpose of this section is to secure the use of the safe harbor provisions.

Financial Condition

Total assets of the Corporation at September 30, 2012 were $1,121,875 compared to $1,112,977 at December 31, 2011, an increase of $8,898, or 0.8 percent. The increase in total assets was mainly attributed to an increase in loans, net of allowance and investment securities offset by a decrease in cash and due from banks. Total liabilities at September 30, 2012 were $1,016,980 compared to $1,010,449 at December 31, 2011, an increase of $6,531, or 0.6 percent. The increase in total liabilities was mainly attributed to increases in non interest-bearing deposits and interest–bearing deposits offset by a decrease in FHLB advances.

Page 36

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Net loans have increased $17,172 or 2.2 percent since December 31, 2011. The commercial real estate and real estate construction portfolios increased $33,683 and $5,615, respectively since December 31, 2011, while the commercial and agricultural, real estate and consumer loan portfolios decreased $1,547, $18,155 and $2,192, respectively. The current increase in commercial real estate loans is mainly due to increased opportunities from our larger markets and calling efforts by the commercial lending officers. The current increase in real estate construction is mainly due to an increase in the demand for construction loans. The current decrease in commercial and agricultural loans is the result of the pay down of loan balances on agricultural loans. The current decrease in real estate and consumer loans is mainly the result of the economic downturn and high unemployment rates in our market area, coupled with the Corporation’s decision to originate and sell the majority of mortgage loans in the secondary market.

Loans held for sale have increased $151 or 25.3 percent since December 31, 2011. At September 30, 2012, the net loan to deposit ratio was 85.4 percent compared to 84.8 percent at December 31, 2011. This ratio has increased in 2012 due to an increase in loans.

For the nine months of operations in 2012, $5,565 was placed into the allowance for loan losses from earnings, compared to $7,700 in the same period of 2011. The economic downturn and high unemployment rates in our market area continue to stress the ability of some customers to make payments on their loans. Although general reserves required decreased compared to December 31, 2011, specific reserves increased during the same period. Detailed analyses of potential losses in the loan portfolio indicated that a reduced provision was appropriate. Net charge-offs have decreased to $5,333, compared to $6,781 in 2011. For the first nine months of 2012, the Corporation has charged off one hundred and ninety-three loans. One hundred and two real estate mortgage loans totaling $2,451 net of recoveries, thirty-four commercial real estate loans totaling $2,235 net of recoveries, twenty-three commercial and agriculture loans totaling $330 net of recoveries, and five real estate construction loan totaling $192 net of recoveries were charged off in the first nine months of the year. In addition, twenty-nine consumer loans totaling $124, net of recoveries, were charged off. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Nonperforming loans have increased by $7,966, of which $15 was due to a decrease in loans past due 90 days but still accruing and $7,981 was due to an increase in loans on nonaccrual status. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance. Management specifically evaluates loans that are impaired, or graded as doubtful by the internal grading function for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for loan losses.

Page 37

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Management analyzes commercial and commercial real estate loans, with balances of $350 or larger, on an individual basis and classifies a loan as impaired when an analysis of the borrower’s operating results and financial condition indicates that underlying cash flows are not adequate to meet its debt service requirements. Often this is associated with a delay or shortfall in payments of 90 days or more. In addition, loans held for sale and leases are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. The allowance for loan losses as a percent of total loans was 2.68 percent at September 30, 2012 and 2.71 percent at December 31, 2011.

The available for sale security portfolio increased by $5,711, from $204,633 at December 31, 2011, to $210,344 at September 30, 2012. The increase is the result of additional securities purchases made in the first nine months of 2012 above scheduled maturities and reinvestment of profits. The Corporation continued utilizing letters of credit from the Federal Home Loan Bank (FHLB) to replace maturing securities that were pledged for public entities. As of September 30, 2012, the Corporation was in compliance with all pledging requirements.

Bank owned life insurance (BOLI) increased $476 from December 31, 2011 to September 30, 2012 due to increases in the cash surrender value of the underlying insurance policies.

Office premises and equipment, net, have decreased $394 from December 31, 2011 to September 30, 2012, as a result of depreciation of $1,091 and disposals of $5, offset by new purchases of $702.

Total deposits at September 30, 2012 increased $13,991 from year-end 2011. Noninterest-bearing deposits increased $6,406 from year-end 2011, while interest-bearing deposits, including savings and time deposits, increased $7,585 from December 31, 2011. The primary reason for the increase in noninterest-bearing deposits was due to an increase in commercial accounts, which tend to fluctuate. The interest-bearing deposit increase was due to an increase in savings accounts, interest-bearing demand accounts and brokered deposits offset by decreases in time certificates and individual retirement accounts (IRA). Savings accounts increased $6,979 from year-end 2011, which included increases of $8,244 in statement savings, offset by decreases of $725 in corporate savings, $988 in money market savings and $236 in public fund money market savings. Interest-bearing demand accounts increased $17,792 from year end 2011, which included increases of $9,930 in interest-bearing checking accounts, $7,831 in interest-bearing public funds, offset by a decrease of $1,532 in NOW public funds. Time certificates, individual retirement accounts (IRA) and Certificate of Deposit Account Registry Service (CDARS) accounts decreased $23,947, $2,162 and $1,169, respectively, while brokered deposits increased $10,096 from year end 2011. The year-to-date average balance of total deposits decreased $805 compared to the average balance for the same period in 2011. The decrease in average balance is due to decreases of $17,991 in time certificates and $13,290 in CDARS accounts, offset by increases of $16,201 in demand deposit accounts, $9,695 in statement savings accounts and $2,601 in money market savings.

Page 38

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Total borrowed funds have decreased $8,529 from December 31, 2011 to September 30, 2012. At September 30, 2012, the Corporation had $40,270 in outstanding Federal Home Loan Bank advances compared to $50,295 at December 31, 2011. The Corporation had a FHLB advance mature during the nine months ended September 30, 2012. The advance matured on September 26, 2012, in the amount of $10,000. This advance had terms of thirty-seven months with a fixed rate of 1.91%. The advance was not replaced. Securities sold under agreements to repurchase, which tend to fluctuate due to timing of deposits, have increased $1,496 from December 31, 2011 to September 30, 2012.

Shareholders’ equity at September 30, 2012 was $104,895, or 9.4 percent of total assets, compared to $102,528, or 9.2 percent of total assets at December 31, 2011. The increase in shareholders’ equity resulted from net income of $3,613 plus the increase in the fair value of securities available for sale, net of tax, of $881 less preferred dividends and common dividends paid of $869 and $694, respectively. In addition, on July 3, 2012, the U.S. Treasury completed the sale of Preferred Shares and the Corporation paid $564 to redeem common stock warrants. Total outstanding common shares at September 30, 2012 and 2011 were 7,707,917.

Results of Operations

Nine Months Ended September 30, 2012 and 2011

The Corporation had net income of $3,613 for the nine months ended September 30, 2012, an increase of $1,144 from net income of $2,469 for the same nine months of 2011. Basic and diluted earnings per common share were $.36 for the nine months of 2012, compared to $0.21 for the same period in 2011. The primary reasons for the changes in net income are explained below.

Net interest income for the nine months ended September 30, 2012 was $30,619, a decrease of $345 from $30,964 in the same nine months of 2011. Net interest income, the difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities, is the most significant component of the Corporation’s earnings. Net interest income is affected by changes in volume, rates and composition of interest-earning assets and interest-bearing liabilities. Total interest income for the nine months ended September 30, 2012 was $35,405, a decrease of $1,320 from $36,725 in the same nine months of 2011. Average earning assets decreased 1.2 percent from the nine month period last year. Average loans, securities and interest-bearing deposits in other banks for the nine months of 2012 increased 2.0 percent, 4.7 percent and 14.3 percent respectively compared to the nine months of last year. These increases were offset by a decrease in average federal funds sold compared to the same period of 2011. The yield on earning assets decreased 9 basis points for the first nine months of 2012 compared to the same period last year. The yield on loans, taxable securities and non-taxable securities decreased 26, 47 and 11 basis points respectively during the first nine months of 2012 compared to the first nine months of last year. These factors combined resulted in the decrease in total interest income for the first nine months of 2012. Total interest expense for the nine months ended September 30, 2012 was $4,786, a decrease of $975 from $5,761 in the same nine months of 2011. Interest expense on certificates of deposit decreased $697 or 21.4 percent in the first nine months of 2012 compared to the same period in 2011. Average time deposits for the first nine months of 2012 decreased 10.9 percent compared to 2011. The interest rate paid on time deposits during the first nine months of 2012 also decreased as compared to the same period in 2011 by 16 basis points. The Corporation’s net yield on interest-earning assets for the nine months ended September 30, 2012 and 2011 was 3.94% and 3.91%, respectively.

Page 39

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

The following table presents the condensed average balance sheets for the nine months ended September 30, 2012 and 2011. Rates are computed on a tax equivalent basis. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities.

	Nine Months Ended September 30,
	2012								2011
	(Dollars in thousands)
	Average balance			Interest		Yield/ rate *			Average balance			Interest		Yield/ rate *
Assets:
Interest-earning assets:
Loans	$	774,704		$	30,338		5.22	%	$	759,755		$	31,208		5.48	%
Taxable securities		174,499			3,608		2.83	%		173,413			4,213		3.30	%
Non-taxable securities		49,978			1,376		3.99	%		41,562			1,250		4.10	%
Federal funds sold		—			—		0.00	%		42,568			19		0.06	%
Interest-bearing deposits in other banks		47,436			83		0.23	%		41,512			35		0.11	%
Total interest-earning assets	$	1,046,617			35,405		4.55	%	$	1,058,810			36,725		4.64	%
Noninterest-earning assets:
Cash and due from financial institutions		22,570								9,422
Premises and equipment, net		17,673								18,078
Accrued interest receivable		4,358								4,907
Intangible assets		25,483								26,599
Other assets		9,907								10,810
Bank owned life insurance		18,182								17,527
Less allowance for loan losses		(21,816	)							(22,755	)
Total Assets	$	1,122,974							$	1,123,398
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	442,247		$	387		0.11	%	$	425,542		$	683		0.21	%
Time		274,866			2,568		1.25	%		308,597			3,265		1.41	%
US treasury demand		—			—		0.00	%		1,404			—		0.00	%
FHLB		50,108			1,181		3.14	%		55,176			1,208		2.92	%
Other		18,039			15		0.11	%		20,262			27		0.18	%
Subordinated debentures		30,349			635		2.79	%		30,349			578		2.54	%
Total interest-bearing liabilities	$	815,609			4,786		0.78	%	$	841,330			5,761		0.91	%
Noninterest-bearing deposits		191,134								174,352
Other liabilities		12,442								8,710
Shareholders’ Equity		103,789								99,006
Total Liabilities and Shareholders’ Equity	$	1,122,974							$	1,123,398
Net interest income and interest rate spread				$	30,619		3.77	%				$	30,964		3.73	%
Net yield on interest earning assets							3.94	%							3.91	%

* - All yields and costs are presented on an annualized basis

Page 40

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table is an analysis of the changes in interest income and expense between the nine-month periods ended September 30, 2012 and September 30, 2011. The table is presented on a fully tax-equivalent basis.

	Increase (decrease) due to:
	Volume(1)			Rate(1)			Net
	(Dollars in thousands)
Interest income:
Loans	$	606		$	(1,476	)	$	(870	)
Taxable securities		27			(632	)		(605	)
Nontaxable securities		253			(127	)		126
Federal funds sold		(19	)		—			(19	)
Interest-bearing deposits in other banks		6			42			48
Total interest income	$	873		$	(2,193	)	$	(1,320	)
Interest expense:
Savings and interest-bearing demand accounts		26			(322	)		(296	)
Certificates of deposit		(337	)		(360	)		(697	)
Federal Home Loan Bank advances		(116	)		89			(27	)
Securities sold under repurchase agreements		(3	)		(9	)		(12	)
Subordinated debentures		—			57			57
Total interest expense	$	(430	)	$	(545	)	$	(975	)
Net interest income	$	1,303		$	(1,648	)	$	(345	)

(1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

The Corporation provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required on the allowance for loan losses. Provisions for loan losses totaled $5,565 for the nine months ended September 30, 2012, compared to $7,700 for the same period in 2011. Although general reserves decreased compared to December 31, 2011, specific reserves increased during the same period. Management believes the overall adequacy of the reserve for loan losses supported a reduced provision, compared to September 30, 2011.

Non-interest income for the nine months ended September 30, 2012 was $8,333, an increase of $475 or 6.0 percent from $7,858 for the same period of 2011. Service charge fee income for the first nine months of 2012 was $3,243, down $107 or 3.2 percent over the same period of 2011. Trust fee income was $1,596, up $19 or 1.2 percent over the same period in 2011. ATM fee income for the first nine months of 2012 was $1,323, down $48 or 3.5 percent over the same period of 2011. BOLI contributed $476 to non-interest income during the nine months ended September 30, 2012. Net gain on sale of loans for the nine months ended September 30, 2012 was $456, up $383 over the same period in 2011. Other non-interest income was $1,239, up $229 over the same period in 2011 mainly as a result of the sale of loan collateral.

Page 41

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Non-interest expense for the nine months ended September 30, 2012 was $28,745, an increase of $476, from $28,269 reported for the same period of 2011. Salary and other employee costs were $15,603, up $1,015 or 7.0 percent as compared to the same period of 2011. This increase is mainly due to an increase in staffing in the credit and special assets departments and higher insurance costs for the first nine months of 2012. The number of full-time equivalent employees increased during the first nine months of 2012 to 311.9, up 8.6, compared to the same period of 2011. Occupancy and equipment costs were $2,511, down $276 or 9.9 percent compared to the same period in 2011. This decrease is mainly due to decreases in utility, grounds maintenance and equipment depreciation expenses. The decrease in utility and grounds maintenance was the result of the mild winter weather. The decrease in equipment maintenance was the result of decreased depreciation costs as assets have aged. Contracted data processing costs were $705, up $93 or 15.2 percent compared to the same period in 2011. State franchise taxes decreased by $115 compared to the same period of 2011. Amortization expense decreased $130, or 14.9 percent from the same nine months of 2011, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were down by $257 during the first nine months of 2012 compared to the same period of 2011 as a result of a change in methodology used to calculate the assessment charged to banks. The change included both a new assessment base and a change in the assessment rate. Professional service costs were $2,080, up $575 or 38.2 percent compared to the same period in 2011. The increase is mainly due to consulting services for reducing communication expenses and streamlining the Corporation’s communication services and employment search firms. In addition, professional fees have increased due to expenses related to the U. S. Treasury’s auction of its preferred stock in the Corporation and professional services related to repossession expenses related to loans. Other operating expenses were $5,634, down $429 or 7.1 percent compared to the same period of 2011. The decrease in other operating expenses is due to losses on sale of OREO properties. During the nine month period ended September 30, 2012, the Corporation posted gains on the sale of OREO. For the same period in 2011, losses were posted for the sale of OREO properties. In addition, a majority of the Corporation’s other operating expenses declined compared to the same period in 2011.

Income tax expense for the nine months ended September 30, 2012 totaled $1,029, up $645 or 168.0 percent compared to the same period in 2011. The increase in the federal income tax expense is mainly a result of an increase in taxable income, primarily due to reduced provision for loan losses, this year compared to last. The effective tax rates for the nine-month periods ended September 30, 2012 and September 30, 2011 were 22.2% and 13.5%, respectively. The increase in the effective tax rate is the result of an increase in taxable income compared to last year.

Page 42

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Three Months Ended September 30, 2012 and 2011

The Corporation had net income of $1,384 for the three months ended September 30, 2012, an increase of $191 from net income of $1,193 for the same three months of 2011. Basic and diluted earnings per common share were $0.14 for the quarter ended September 30, 2012, compared to $0.12 for the same period in 2011. The primary reasons for the changes in net income are explained below.

Net interest income for the three months ended September 30, 2012 was $10,028, a decrease of $411 from $10,439 in the same three months of 2011. Total interest income for the three months ended September 30, 2012 was $11,529, a decrease of $738 from $12,267 in the same three months of 2011. Average earning assets decreased 1.9 percent during the quarter ended September 30, 2012 as compared to the same period in 2011. Average loans and non-taxable securities for the third quarter of 2012 increased 1.9 percent and 29.9 percent respectively compared to the third quarter of last year. These increases were offset by a decrease in average taxable securities and interest-bearing deposits in other banks of 6.1 percent and 52.7 percent respectively compared to the same period of 2011. In addition, average federal funds sold decreased compared to the same period of 2011. The yield on earning assets decreased 18 basis points for the third quarter of 2012 compared to the third quarter of last year. The yield on loans and taxable securities decreased 38 and 39 basis points respectively during the third quarter of 2012 compared to the third quarter of last year. The yield on non-taxable securities increased 176 basis points during the third quarter of 2012 compared to the third quarter of last year. These factors combined resulted in the decrease in total interest income for the third quarter of 2012. Total interest expense for the three months ended September 30, 2012 was $1,501, a decrease of $327 from $1,828 in the same three months of 2011. Interest expense on time deposits decreased $297 or 28.0 percent in the third quarter of 2012 compared to the same period in 2011. Average time deposits for the third quarter of 2012 decreased 14.3 percent compared to the third quarter of 2011. The interest rate paid on time deposits during the third quarter of 2012 also decreased as compared to the same period in 2011 by 22 basis points. The Corporation’s net yield for the three months ended September 30, 2012 and 2011 was 3.87% and 3.94%, respectively.

The following table presents the condensed average balance sheets for the three months ended September 30, 2012 and 2011. Rates are computed on a tax equivalent basis. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.

Page 43

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

	Three Months Ended September 30,
	2012								2011
	(Dollars in thousands)
	Average balance			Interest		Yield/ rate *			Average balance			Interest		Yield/ rate *
Assets:
Interest-earning assets:
Loans	$	786,471		$	9,901		5.04	%	$	771,505		$	10,455		5.42	%
Taxable securities		171,632			1,120		2.69	%		181,654			1,367		3.08	%
Non-taxable securities		54,671			490		5.92	%		42,075			419		4.16	%
Federal funds sold		—			—		0.00	%		978			—		0.00	%
Interest-bearing deposits in other banks		32,748			18		0.22	%		69,276			26		0.15	%
Total interest-earning assets	$	1,045,522		$	11,529		4.45	%	$	1,065,488		$	12,267		4.63	%
Noninterest-earning assets:
Cash and due from financial institutions		20,684								9,545
Premises and equipment, net		17,567								18,134
Accrued interest receivable		4,118								4,653
Intangible assets		25,241								26,311
Other assets		18,340								17,687
Bank owned life insurance		9,650								11,013
Less allowance for loan losses		(21,992	)							(22,376	)
Total Assets	$	1,119,130							$	1,130,455
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings		447,637			129		0.11	%		428,783			172		0.16	%
Time		265,058			765		1.15	%		309,106			1,062		1.37	%
US treasury demand		—			—		0.00	%		1,280			—		0.00	%
FHLB		49,754			394		3.17	%		64,664			400		2.47	%
Other		18,708			5		0.11	%		19,342			6		0.12	%
Subordinated debentures		30,349			208		2.74	%		30,349			188		2.48	%
Total interest-bearing liabilities	$	811,506			1,501		0.74	%	$	853,524			1,828		0.86	%
Noninterest-bearing deposits		192,015								169,818
Other liabilities		11,213								6,570
Shareholders’ Equity		104,396								100,543
Total Liabilities and Shareholders’ Equity	$	1,119,130							$	1,130,455
Net Interest Income and interest rate spread				$	10,028		3.71	%				$	10,439		3.77	%
Net yield on interest earning assets							3.87	%							3.94	%

* - All yields and costs are presented on an annualized basis

Page 44

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table is an analysis of the changes in interest income and expense between the three months ended September 30, 2012 and September 30, 2011. The table is presented on a fully tax-equivalent basis.

	Increase (decrease) due to:
	Volume(1)			Rate(1)			Net
	(Dollars in thousands)
Interest income:
Loans	$	200		$	(754	)	$	(554	)
Taxable securities		(74	)		(173	)		(247	)
Nontaxable securities		124			(53	)		71
Interest-bearing deposits in other banks		(17	)		9			(8	)
Total interest income	$	233		$	(971	)	$	(738	)
Interest expense:
Savings and interest-bearing demand accounts		7			(50	)		(43	)
Certificates of deposit		(140	)		(157	)		(297	)
Federal Home Loan Bank advances		(104	)		98			(6	)
Securities sold under repurchase agreements		—			(1	)		(1	)
Subordinated debentures		—			20			20
Total interest expense	$	(237	)	$	(90	)	$	(327	)
Net interest income	$	470		$	(881	)	$	(411	)

(1) The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate.

The Corporation provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required on the allowance for loan losses. Provisions for loan losses totaled $1,700 for the three months ended September 30, 2012, compared to $2,000 for the same period in 2011. Although general reserves decreased compared to December 31, 2011, specific reserves increased during the same period. Management believes the overall adequacy of the reserve for loan losses supported a reduced provision, compared to September 30, 2011.

Non-interest income for the three months ended September 30, 2012 was $2,627, a decrease of $37 or 1.4 percent from $2,664 for the same period of 2011. Service charge fee income for the period ended September 30, 2012 was $1,108, down $125 or 10.1 percent over the same period of 2011. Trust fee income was $527, up $22 or 4.4 percent over the same period in 2011. The increase is related to a general increase in assets under management. ATM fee income was $440, down $33 or 7.0 percent over the same period of 2011. BOLI contributed $151 to non-interest income during the three months ended September 30, 2012. Other non-interest income was $401, up $121 over the same period in 2011 as a result of gain on sale of loans.

Page 45

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Non-interest expense for the three months ended September 30, 2012 was $9,141, a decrease of $458, from $9,599 reported for the same period of 2011. Salary and other employee costs were $5,207, up $63 or 1.2 percent as compared to the same period of 2011. This increase is mainly due to an increase in staffing in the credit and special assets departments and higher insurance costs for the quarter ended September 30, 2012. The number of full-time equivalent employees increased during the quarter ended September 30, 2012 to 311.9, up 8.6, compared to the same period of 2011. Occupancy and equipment costs were $836, down $56 or 6.3 percent compared to the same period in 2011. This decrease is mainly due to a decrease in equipment depreciation compared to the same period in 2011. Contracted data processing costs were $246, up $46 or 23.0 percent compared to the same period in 2011. State franchise taxes decreased by $78 compared to the same period of 2011. Amortization expense decreased $59, or 20.3 percent from the same three months of 2011, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were down by $28 during the three months ended September 30, 2012 compared to the same period of 2011 as a result of a change in methodology used to calculate the assessment charged to banks. The change included both a new assessment base and a change in the assessment rate. Professional service costs were $676, up $167 or 32.8 percent compared to the same period in 2011. The increase is mainly due to consulting services for reducing communication expenses and streamlining the Corporation’s communication services and employment search firms. In addition, professional fees have increased due to expenses related to the U. S. Treasury’s auction of its preferred stock in the Corporation. Other operating expenses were $1,480, down $513 or 25.8 percent compared to the same period of 2011. The decrease in other operating expenses is due to an allowance for loss on unused commitments reversal posted in the third quarter of 2012 and losses on the sales of OREO.

Income tax expense for the three months ended September 30, 2012 totaled $430, up $119 compared to the same period in 2011. The increase in the federal income tax expense is mainly a result of an increase in taxable income, primarily due to reduced provision for loan losses. The effective tax rates for the three-month periods ended September 30, 2012 and September 30, 2011 were 23.7% and 20.7%, respectively. The increase in the effective tax rate is the result of an increase in taxable income compared to last year.

Page 46

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Capital Resources

Shareholders’ equity totaled $104,895 at September 30, 2012 compared to $102,528 at December 31, 2011. The increase in shareholders’ equity resulted from $3,613 of net income and $881 net increase in the unrealized gain on securities. This was offset by preferred dividends and common dividends paid of $869 and $694, respectively. In addition, on July 3, 2012, the U.S. Treasury completed the sale of all of the TARP preferred shares and the Corporation paid $564 to redeem common stock warrants. All of the Corporation’s capital ratios exceeded the regulatory minimum guidelines as of September 30, 2012 and December 31, 2011 as identified in the following table:

	Total Risk Based Capital			Tier I Risk Based Capital			Leverage Ratio
Corporation Ratios - September 30, 2012		15.0	%		13.3	%		9.4	%
Corporation Ratios - December 31, 2011		15.1	%		13.8	%		9.3	%
For Capital Adequacy Purposes		8.0	%		4.0	%		4.0	%
To Be Well Capitalized Under Prompt Corrective Action Provisions		10.0	%		6.0	%		5.0	%

The Corporation paid a cash dividend of $.03 per common share each on February 1, May 1, and August 1, 2012. The Corporation did not pay a cash dividend on its common shares during the first nine months of 2011. The Corporation paid a 5% cash dividend on its preferred shares issued to the U.S. Treasury pursuant to TARP in the amount of approximately $290 each on February 15, May 15, and August 15, 2012 and February 15, May 15, and August 15, 2011.

Liquidity

Citizens maintains a conservative liquidity position. All securities are classified as available for sale. Securities, with maturities of one year or less, totaled $5,190, or 2.5 percent of the total security portfolio at September 30, 2012. The available for sale portfolio helps to provide the Corporation with the ability to meet its funding needs. The Consolidated Statements of Cash Flows (Unaudited) contained in the consolidated financial statements detail the Corporation’s cash flows from operating activities resulting from net earnings.

Page 47

First Citizens Banc Corp

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Form 10-Q

(Amounts in thousands, except share data)

Cash from operations for the period ended September 30, 2012 was $12,473. This includes net income of $3,613 plus net adjustments of $8,860 to reconcile net earnings to net cash provided by operations. Cash used by investing activities was $29,074 for the period ended September 30, 2012. The use of cash from investing activities is primarily due to securities purchases and loans made to customers, net of principal collected. Cash received from maturing, called and sold securities totaled $64,097. This increase in cash was offset by the purchase of securities of $69,991 and loans made to customers, net of principal collected, of $23,346. Cash provided from financing activities for the first nine months of 2012 totaled $3,335. The increase of cash from financing activities is due to the net change in deposits and change in securities sold under agreements to repurchase. The increase was offset by the repayment of a FHLB advance and dividends paid. The net change in deposits was $13,991 for the first nine months of 2012. The increase in deposits was primarily due to increases of $6,406 in non interest-bearing deposits, $6,979 in savings deposits, $17,792 in interest-bearing demand deposits and $10,096 in brokered deposits offset by decreases of $23,947 in time certificates and $2,162 in individual retirement accounts (IRA) during the first nine months of 2012. Securities sold under agreements to repurchase increased $1,496. The payment of dividends used $1,563. Cash and cash equivalents decreased from $52,127 at December 31, 2011 to $38,861 at September 30, 2012.

Future loan demand of Citizens may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Citizens maintains federal funds borrowing lines totaling $20,000. As of September 30, 2012, Citizens had total credit availability with the FHLB of $98,908, of which $40,270 was outstanding.

Page 48

First Citizens Banc Corp

Form 10-Q

(Amounts in thousands, except share data)

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Corporation’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Corporation’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Corporation’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Corporation’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Corporation seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Corporation to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, adopted a Joint Agency Policy Statement on interest-rate risk, effective June 26, 1996. The policy statement provides guidance to examiners and bankers on sound practices for managing interest-rate risk, which will form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The policy statement also outlines fundamental elements of sound management that have been identified in prior Federal Reserve guidance and discusses the importance of these elements in the context of managing interest-rate risk. Specifically, the guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk.

Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

Page 49

First Citizens Banc Corp

Form 10-Q

(Amounts in thousands, except share data)

Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Corporation is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Corporation’s primary asset/liability management technique is the measurement of the Corporation’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.

Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. The Corporation has not purchased derivative financial instruments in the past and does not currently intend to purchase such instruments in the near future. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Corporation’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Corporation seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Corporation.

The following table provides information about the Corporation’s financial instruments that were sensitive to changes in interest rates as of December 31, 2011 and September 30, 2012, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Corporation’s net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of 200 basis points and 100 basis points and an interest rate decrease of 100 basis points at September 30, 2012 and December 31, 2011.

Page 50

First Citizens Banc Corp

Form 10-Q

(Amounts in thousands, except share data)

The Corporation had no derivative financial instruments or trading portfolio as of December 31, 2011 or September 30, 2012. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Corporation’s borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.

Net Portfolio Value

	June 30, 2012								December 31, 2011
Change in Rates	Dollar Amount		Dollar Change			Percent Change			Dollar Amount		Dollar Change		Percent Change
+200bp		126,167		(3,320	)		-3	%		135,092		669		0	%
+100bp		125,316		(4,171	)		-3	%		135,299		876		1	%
Base		129,487		—			—			134,423		—		—
-100bp		154,626		25,139			19	%		153,916		19,493		15	%

The change in net portfolio value from December 31, 2011 to September 30, 2012, is primarily a result of two factors. The yield curve has shifted downward slightly and become slightly steeper, on the short end, since the end of the year. Additionally, the mix and/or volume of assets and funding sources have changed. While the volume of earning assets has increased, the mix has shifted toward loans and securities and away from cash, which leads to greater volatility. Funding sources have increased while the funding mix shifted from CDs and borrowed money to deposits. The shifts in mixes led to the decrease in the base. Beyond the change in the base level of net portfolio value, overall projected movements, given specific changes in rates, would lead to generally larger changes in the value of assets. The change in the rates up scenarios for both the 100 and 200 basis point movements would lead to a faster decrease in the fair value of assets, compared to liabilities. Accordingly we would see a decrease in the net portfolio value. A downward change in rates would lead to an increase in the net portfolio value as the fair value of liabilities would increase much more slowly than the fair value of the asset portfolio.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2012, were effective.

Page 51

First Citizens Banc Corp

Form 10-Q

(Amounts in thousands, except share data)

Changes in Internal Control over Financial Reporting

There have not been any changes in the Corporation’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Corporation’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Page 52

First Citizens Banc Corp

Other Information

Form 10-Q

Part II – Other Information

Item 1. Legal Proceedings

There were no new material legal proceedings or material changes to existing legal proceedings during the current period.

Item 1A. Risk Factors

There were no material changes to the risk factors as presented in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None

Item 6. Exhibits

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section

906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 The following materials from First Citizens Banc Corp’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets (Unaudited) as of September 30, 2012 and December 31, 2011; (ii) Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2012 and 2011; (iii) Consolidated Comprehensive Income Statements (Unaudited) for the three and nine months ended September 30, 2012 and 2011; (iv) Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the nine months ended September 30, 2012; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the nine months ended September 30, 2012 and 2011; and (vi) Notes to Interim Consolidated Financial Statements (Unaudited).*

* Pursuant to Rule 406T of SEC Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those Sections.

Page 53

First Citizens Banc Corp

Signatures

Form 10-Q

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

First Citizens Banc Corp

/s/ James O. Miller	November 8, 2012
James O. Miller	Date
President, Chief Executive Officer
/s/ Todd A. Michel	November 8, 2012
Todd A. Michel	Date
Senior Vice President, Controller

Page 54

First Citizens Banc Corp

Index to Exhibits

Form 10-Q

Exhibits

Exhibit	Description	Location
3.1(a)	Articles of Incorporation, as amended, of First Citizens Banc Corp.	Filed as Exhibit 3.1 to First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2005, filed on March 16, 2006 and incorporated herein by reference. (File No. 0-25980)
3.1(b)	Certificate of Amendment by Shareholders or Members as filed with the Ohio Secretary of State on January 12, 2009, evidencing the adoption by the shareholders of First Citizens Banc Corp on January 5, 2009 of an amendment to Article FOURTH to authorize the issuance of up to 200,000 preferred shares, without par value.	Filed as Exhibit 3.1(b) to First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference. (File No. 0-25980)
3.1(c)	Certificate of Amendment by Directors or Incorporators to Articles, filed with the Ohio Secretary of State on January 21, 2009, evidencing adoption of an amendment by the Board of Directors of First Citizens Banc Corp to Article FOURTH to establish the express terms of the Fixed Rate Cumulative Perpetual Preferred Shares, Series A, of First Citizens.	Filed as Exhibit 3.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference. (File No. 0-25980)
3.2	Amended and Restated Code of Regulations of First Citizens Banc Corp (adopted April 17, 2007).	Filed as Exhibit 3.2 to First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference. (File No. 0-25980)
31.1	Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer.	Included herewith
31.2	Rule 13a-14(a)/15-d-14(a) Certification of Chief Financial Officer.	Included herewith
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith

Page 55

First Citizens Banc Corp

Index to Exhibits

Form 10-Q

101 The following materials from First Citizens Banc Corp’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets (Unaudited) as of September 30, 2012 and December 31, 2011; (ii) Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2012 and 2011; (iii) Consolidated Comprehensive Income Statements (Unaudited) for the three and nine months ended September 30, 2012 and 2011; (iv) Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three and nine months ended September 30, 2012; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the three and nine months ended September 30, 2012 and 2011; and (vi) Notes to Interim Consolidated Financial Statements (Unaudited).* Included herewith

* Pursuant to Rule 406T of SEC Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those Sections.

Page 56

EX-31.1

Section 302 Certification

For Principal Executive Officer

Exhibit 31.1

I, James O. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Citizens Banc Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature and Title: /s/ James O. Miller, President, Chief Executive Officer                     Date: November 8, 2012

EX-31.2

Section 302 Certification

For Principal Accounting Officer

Exhibit 31.2

I, Todd A. Michel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Citizens Banc Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature and Title: /s/ Todd A. Michel, Senior Vice President, Controller                     Date: November 8, 2012

Page 1

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Citizens Banc Corp (the “Corporation”) on Form 10-Q for the period ending November 30, 2012 as filed with the Securities and Exchange Commission on the date of this certification (the “Report”), I, James O. Miller, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ James O. Miller

James O. Miller

Chief Executive Officer

November 8, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Citizens Banc Corp (the “Corporation”) on Form 10-Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date of this certification (the “Report”), I, Todd A. Michel, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Todd A. Michel

Todd A. Michel

Senior Vice President and Controller

November 8, 2012

XML

Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of Non-accrual Loans
Total, Non- Accrual Status	$ 33,748	$ 25,768
Commercial and Agriculture [Member]
Summary of Non-accrual Loans
Total, Non- Accrual Status	2,793	940
Commercial Real Estate [Member]
Summary of Non-accrual Loans
Total, Non- Accrual Status	19,137	15,346
Residential Real Estate [Member]
Summary of Non-accrual Loans
Total, Non- Accrual Status	10,408	8,915
Real estate - construction [Member]
Summary of Non-accrual Loans
Total, Non- Accrual Status	1,355	567
Consumer [Member]
Summary of Non-accrual Loans
Total, Non- Accrual Status	$ 55

XML

Fair Value Measurement (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial Assets:
Securities available for sale	$ 210,344	$ 204,633
Significant Other Unobservable Inputs Level 3 [Member]
Financial Assets:
Securities available for sale	476	517
Carrying Amount [Member]
Financial Assets:
Cash and due from financial institutions	38,861	52,127
Securities available for sale	200,733	196,357
Other securities	15,573	15,388
Loans, available for sale	749	598
Loans, net of allowance for loan losses	781,183	764,011
Bank owned life insurance	18,439	17,963
Accrued interest receivable	4,709	3,787
Financial Liabilities:
Deposits		901,246
Nonmaturing deposits	644,430
Time deposits	270,807
Federal Home Loan Bank advances	40,270	50,295
Securities sold under agreement to repurchase	20,525	19,029
Subordinated debentures	29,427	29,427
Accrued interest payable	232	258
Total Fair Value [Member]
Financial Assets:
Cash and due from financial institutions	38,861	52,127
Securities available for sale	210,344	204,633
Other securities	15,573	15,388
Loans, available for sale	749	598
Loans, net of allowance for loan losses	796,918	785,900
Bank owned life insurance	18,439	17,963
Accrued interest receivable	4,709	3,787
Financial Liabilities:
Deposits		911,945
Nonmaturing deposits	644,430
Time deposits	273,037
Federal Home Loan Bank advances	41,816	52,263
Securities sold under agreement to repurchase	20,525	19,029
Subordinated debentures	27,360	26,461
Accrued interest payable	232	258
Total Fair Value [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
Financial Assets:
Cash and due from financial institutions	38,861
Other securities	15,573
Loans, available for sale	749
Bank owned life insurance	18,439
Accrued interest receivable	4,709
Financial Liabilities:
Nonmaturing deposits	644,430
Securities sold under agreement to repurchase	20,525
Accrued interest payable	232
Total Fair Value [Member] | Significant Other Observable Inputs Level 2 [Member]
Financial Assets:
Securities available for sale	209,868
Total Fair Value [Member] | Significant Other Unobservable Inputs Level 3 [Member]
Financial Assets:
Securities available for sale	476
Loans, net of allowance for loan losses	796,918
Financial Liabilities:
Time deposits	273,037
Federal Home Loan Bank advances	41,816
Subordinated debentures	$ 27,360

XML

Stock Options (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Summary of the activity in the plan
Shares, Outstanding at beginning of year	29,500	29,500
Shares, Granted	0
Shares, Exercised
Shares, Forfeited	(19,500)
Shares, Outstanding at end of period	10,000	29,500
Shares, Options exercisable, end of period	10,000	29,500
Weighted Average Price Per Share, Outstanding at beginning of year	$ 25.42	$ 25.42
Weighted Average Price Per Share, Granted
Weighted Average Price Per Share, Exercised
Weighted Average Price Per Share, Forfeited	$ 20.50
Weighted Average Price Per Share, Outstanding at end of period	$ 35.00	$ 25.42
Weighted Average Price Per Share, Options exercisable at end of period	$ 35.00	$ 25.42

XML

Fair Value Measurement (Details Textual)	9 Months Ended
	Sep. 30, 2012
Fair Value Measurement (Textual) [Abstract]
Maturity days of carrying amounts for cash and due from financial institutions	less than 90
Receiving/paying days of carrying amounts for accrued interest receivable, accrued interest payable and securities sold under agreements to repurchase	90 days or less
Discount rate is estimated using current rate for mortgage-matched secured borrowing period from FHLB	30 years

XML

Commitments, Contingencies and Off-Balance Sheet Risk (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Commitments Contingencies and Off Balance Sheet Risk (Additional Textual) [Abstract]
Maximum Period to Commit Loan	1 year
Extend of maturities	30 years
Average Reserve Balance Under Federal Reserve Board Requirements	$ 1,240	$ 998
Maximum [Member]
Commitments, Contingencies and Off-Balance Sheet Risk (Textual) [Abstract]
Range of fixed interest rate loan commitments	15.00%	15.00%
Minimum [Member]
Commitments, Contingencies and Off-Balance Sheet Risk (Textual) [Abstract]
Range of fixed interest rate loan commitments	2.25%	2.25%

XML

Securities (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012 Security	Sep. 30, 2011	Sep. 30, 2012 Security	Sep. 30, 2011	Dec. 31, 2011
Securities (Textual) [Abstract]
Proceeds from the sale of securities	$ 0	$ 0	$ 12,982	$ 300
Gross gains from the sale of securities			99	0
Gross losses from the sale of securities			59	0
Carrying value of pledged securities	148,811		148,811		156,114
Gains from securities called or settled by the issuer			$ 40	$ 3
Number of securities in the portfolio with unrealized losses	16		16

XML

Commitments, Contingencies and Off-Balance Sheet Risk (Tables)

9 Months Ended

Sep. 30, 2012

Commitments Contingencies and Off Balance Sheet Risk [Abstract]

Contractual amount of financial instruments with off-balance-sheet risk

commitment. The contractual amount of financial instruments with off-balance-sheet risk was as follows for September 30, 2012 and December 31, 2011:

	Contract Amount
	September 30, 2012				December 31, 2011
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Commitment to extend credit:
Lines of credit and construction loans	$	13,274	$	118,110	$	6,913	$	111,710
Overdraft protection		1,294		18,381		1,320		17,828
Letters of credit		294		406		200		424
	$	14,862	$	136,897	$	8,433	$	129,962

XML

Stock Options (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Stock Options (Textual) [Abstract]
Number	10,000
Stock Options (Additional Textual) [Abstract]
Option term Maximum period	10 years
Option term Minimum period	3 years
Stock options granted	0
Stock options vested	0	0
Aggregate intrinsic value of outstanding stock options	$ 0		$ 0
Exercise price, Lower limit	$ 20.50
Expiry date of stock options	Jul. 02, 2012
Range 1 [Member]
Stock Options (Textual) [Abstract]
Number	19,500
Corporations Stock Option and Stock Appreciation Rights Plan [Member]
Stock Options (Textual) [Abstract]
Options provided for issue	225,000

XML

Allowance for Loan Losses (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2010
Allowance for loan losses (Textual) [Abstract]
Historical loss percentage period for portfolio segments	3 years
Adequate allowance for loan losses	$ 21,489	$ 22,687	$ 21,931	$ 21,257	$ 21,749	$ 21,768
Number of days past due for loans to be considered as nonperforming	90 days
Reasonable period for nonperforming TDRs to be returned to performing status	6 months
Number of days reaching which loans are considered for nonaccrual status	90 days
Defaulted loans	0	0
Impaired loans	$ 350
Due days for testing impairment	60 days

XML

Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Performing and nonperforming loans
Performing	$ 157,610	$ 171,642
Nonperforming		293
Total	157,610	171,935
Residential Real Estate [Member]
Performing and nonperforming loans
Performing	145,378	159,291
Nonperforming		292
Total	145,378	159,583
Real estate - construction [Member]
Performing and nonperforming loans
Performing	3,155	2,324
Nonperforming
Total	3,155	2,324
Consumer [Member]
Performing and nonperforming loans
Performing	9,077	10,027
Nonperforming		1
Total	$ 9,077	$ 10,028

XML

Fair Value Measurement (Details 1) (Significant Unobservable Inputs (Level 3) [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Investments [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Estimate	476
Investments [Member] | Appraisal of collateral [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements, Valuation Techniques	Appraisal of collateral
Investments [Member] | Appraisal of collateral [Member] | Maximum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Appraisal adjustments	30.00%
Fair Value Assumptions, Liquidation expense	12.00%
Investments [Member] | Appraisal of collateral [Member] | Minimum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Appraisal adjustments	20.00%
Fair Value Assumptions, Liquidation expense	8.00%
Other real estate owned [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Estimate	464
Other real estate owned [Member] | Appraisal of collateral [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements, Valuation Techniques	Appraisal of collateral
Other real estate owned [Member] | Appraisal of collateral [Member] | Maximum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Appraisal adjustments	30.00%
Fair Value Assumptions, Liquidation expense	10.00%
Other real estate owned [Member] | Appraisal of collateral [Member] | Minimum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Appraisal adjustments	10.00%
Fair Value Assumptions, Liquidation expense	0.00%
Impaired Loans [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Estimate	25,506
Impaired Loans [Member] | Appraisal of collateral [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements, Valuation Techniques	Appraisal of collateral
Impaired Loans [Member] | Appraisal of collateral [Member] | Maximum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Appraisal adjustments	30.00%
Fair Value Assumptions, Liquidation expense	10.00%
Fair Value Assumptions, Holding period	30 months
Impaired Loans [Member] | Appraisal of collateral [Member] | Minimum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Appraisal adjustments	10.00%
Fair Value Assumptions, Liquidation expense	0.00%
Fair Value Assumptions, Holding period	0 months
Impaired Loans [Member] | Discounted cash flows [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements, Valuation Techniques	Discounted cash flows
Impaired Loans [Member] | Discounted cash flows [Member] | Maximum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Discount rates	8.40%
Impaired Loans [Member] | Discounted cash flows [Member] | Minimum [Member]
Quantitative Information about Level 3 Fair Value Measurements
Fair Value Assumptions, Discount rates	3.00%

XML

Pension Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Net periodic pension expense
Service cost	$ 235	$ 212	$ 704	$ 635
Interest cost	229	203	686	611
Expected return on plan assets	(215)	(206)	(644)	(620)
Other components	90	85	270	257
Net periodic pension cost	339	294	1,016	883
Pension Information (Textual) [Abstract]
Total amount of contributions expected to be paid	1,355		1,355
Total amount of contributions compared					$ 1,152

XML

Consolidated Financial Statements

9 Months Ended

Sep. 30, 2012

Consolidated Financial Statements [Abstract]

Consolidated Financial Statements

(1) Consolidated Financial Statements

Nature of Operations and Principles of Consolidation: The Consolidated Financial Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries: The Citizens Banking Company (Citizens), First Citizens Insurance Agency, Inc., Water Street Properties, Inc. (Water St.) and FC Refund Solutions, Inc (FCRS). FCRS was formed to facilitate payment of individual state and federal income tax refunds. First Citizens Capital LLC (FCC) is wholly-owned by Citizens and holds inter-company debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens and holds and manages Citizens’ securities portfolio. The operations of FCI are located in Wilmington, Delaware. The above companies together are referred to as the “Corporation”. Intercompany balances and transactions are eliminated in consolidation.

The consolidated financial statements have been prepared by the Corporation without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Corporation’s financial position as of September 30, 2012 and its results of operations and changes in cash flows for the periods ended September 30, 2012 and 2011 have been made. The accompanying Consolidated Financial Statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended September 30, 2012 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Corporation described in the notes to the financial statements contained in the Corporation’s 2011 annual report. The Corporation has consistently followed these policies in preparing this Form 10-Q.

The Corporation provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Union, Ottawa, and Richland. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and Federal Funds sold. First Citizens Insurance Agency, Inc. was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue was less than 1.0% of total revenue through September 30, 2012. Water St. revenue was less than 1.0% of total revenue through September 30, 2012. Management considers the Corporation to operate primarily in one reportable segment, banking.

XML

Earnings per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic
Net income	$ 1,384	$ 1,193	$ 3,613	$ 2,469
Preferred stock dividends and discount accretion	316	293	903	881
Net income available to common shareholders	1,068	900	2,710	1,588
Weighted average common shares outstanding	7,707,917	7,707,917	7,707,917	7,707,917
Basic earnings per common share	$ 0.14	$ 0.12	$ 0.35	$ 0.21
Diluted
Net income	1,384	1,193	3,613	2,469
Preferred stock dividends and discount accretion	316	293	903	881
Net income available to common shareholders	$ 1,068	$ 900	$ 2,710	$ 1,588
Weighted average common shares outstanding for basic earnings per common share	7,707,917	7,707,917	7,707,917	7,707,917
Add: Dilutive effects of assumed exercises of stock options
Average shares and dilutive potential common shares outstanding	7,707,917	7,707,917	7,707,917	7,707,917
Diluted earnings per common share	$ 0.14	$ 0.12	$ 0.35	$ 0.21

XML

Consolidated Financial Statements (Details Textual)	9 Months Ended
	Sep. 30, 2012
Consolidated Financial Statements (Additional Textual) [Abstract]
Percentage of Insurance commission revenue of total revenue	less than 1.0%
Water St. [Member]
Consolidated Financial Statements (Textual) [Abstract]
Percentage of Water St. revenue of total revenue	less than 1.0%

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurement [Abstract]

Assets measured at fair value

Assets measured at fair value are summarized below.

	Fair Value Measurements at September 30, 2012 Using:
	(Level 1)		(Level 2)		(Level 3)
Assets:
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	52,863	$	—
Obligations of states and political subdivisions		—		79,210		476
Mortgage-backed securities in government sponsored entities		—		77,339		—
Equity securities in financial institutions		—		456		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	25,506
Other real estate owned		—		—		464
	Fair Value Measurements at December 31, 2011 Using:
	(Level 1)		(Level 2)		(Level 3)
Assets:
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	49,704	$	—
Obligations of states and political subdivisions		—		66,219		517
Mortgage-backed securities in government sponsored entities		—		87,518		—
Equity securities in financial institutions		676		—		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	22,569
Other real estate owned		—		—		1,097

Quantitative Information about Level 3 Fair Value Measurements

The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at September 30, 2012.

	Quantitative Information about Level 3 Fair Value Measurements
September 30, 2012	Fair Value Estimate		Valuation Technique	Unobservable Input	Range
Investments	$	476	Appraisal of collateral	Appraisal adjustments	20% - 30%
				Liquidation expense	8% - 12%
Impaired loans	$	25,506	Appraisal of collateral	Appraisal adjustments	10% - 30%
				Liquidation expense	0% - 10%
				Holding period	0 - 30 months
			Discounted cash flows	Discount rates	3% - 8.4%
Other real estate owned	$	464	Appraisal of collateral	Appraisal adjustments	10% - 30%
				Liquidation expense	0% - 10%

Summary of changes in the Level 3 fair-value category in securities available for sale

The following table presents the changes in the Level 3 fair-value category for the period ended September 31, 2012. The Corporation classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to the unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable, either directly or indirectly.

Securities available for sale
Beginning balance January 1, 2012	$	517
Principal payments		(41	)
Ending balance September 31, 2012	$	476

Carrying amount and fair values of financial instruments

					Quoted
					Prices in
					Active		Significant		Significant
					Markets for		Other		Other
					Identical		Observable		Unobservable
September 30, 2012	Carrying		Total		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	38,861	$	38,861	$	38,861	$	—	$	—
Securities available for sale		200,733		210,344		—		209,868		476
Other securities		15,573		15,573		15,573		—		—
Loans, available for sale		749		749		749		—		—
Loans, net of allowance for loan losses		781,183		796,918		—		—		796,918
Bank owned life insurance		18,439		18,439		18,439		—		—
Accrued interest receivable		4,709		4,709		4,709		—		—
Financial Liabilities:
Nonmaturing deposits		644,430		644,430		644,430		—		—
Time deposits		270,807		273,037		—		—		273,037
Federal Home Loan Bank advances		40,270		41,816		—		—		41,816
Securities sold under agreement to repurchase		20,525		20,525		20,525		—		—
Subordinated debentures		29,427		27,360		—		—		27,360
Accrued interest payable		232		232		232		—		—

	December 31, 2011
	Carrying Amount		Fair Value
Financial Assets:
Cash and due from financial institutions	$	52,127	$	52,127
Securities, AFS		196,357		204,633
Other securities		15,388		15,388
Loans, available for sale		598		598
Loans, net of allowance for loan losses		764,011		785,900
Bank owned life insurance		17,963		17,963
Accrued interest receivable		3,787		3,787
Financial Liabilities:
Deposits		901,246		911,945
Federal Home Loan Bank advances		50,295		52,263
Securities sold under agreement to repurchase		19,029		19,029
Subordinated debentures		29,427		26,461
Accrued interest payable		258		258

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Participation in the Treasury Capital Purchase Program (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	9 Months Ended
	Jan. 31, 2009	Sep. 30, 2012	Sep. 05, 2012	Jan. 23, 2009
Participation in the Treasury Capital Purchase Program (Textual) [Abstract]
Sale to U.S. Treasury of newly-issued non-voting preferred shares	$ 23,184
Number of shares issued and sold to treasury				23,184
Warrant sold to purchase common shares as per securities purchase agreement				469,312
Liquidation preference as per securities purchase agreement				$ 1,000
Amount of common shares not considered in computing diluted earnings per common share				$ 7.41
Term of warrant		10 years
Liquidation preference rate for first five years		5.00%
Liquidation preference rate after five years		9.00%
Aggregate purchase price of warrant			$ 563,174

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Earnings per Common Share (Details Textual) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2011 Stock options [Member]	Sep. 30, 2011 Stock options [Member]	Sep. 30, 2011 Stock options [Member] Maximum [Member]	Sep. 30, 2011 Stock options [Member] Maximum [Member]	Sep. 30, 2011 Stock options [Member] Minimum [Member]	Sep. 30, 2011 Stock options [Member] Minimum [Member]	Sep. 30, 2012 Stock options one [Member]	Sep. 30, 2012 Stock options one [Member]	Sep. 30, 2012 Stock options two [Member]
Earnings per Common Share (Textual) [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	29,500	29,500					10,000	10,000	19,500
Exercise price of stock options not considered in computing diluted earnings per common share			$ 35.00	$ 35.00	$ 20.50	$ 20.50	$ 35.00	$ 35.00	$ 20.50

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available for sale securities
Amortized Cost	$ 200,733	$ 196,357
Gross Unrealized Gains	9,860	8,416
Gross Unrealized Losses	(249)	(140)
Total securities available for sale, Fair Value	210,344	204,633
U.S. Treasury securities and obligations of U.S. government agencies [Member]
Available for sale securities
Amortized Cost	52,482	49,305
Gross Unrealized Gains	381	399
Total securities available for sale, Fair Value	52,863	49,704
Obligations of states and political subdivisions [Member]
Available for sale securities
Amortized Cost	72,576	61,508
Gross Unrealized Gains	7,112	5,240
Gross Unrealized Losses	(2)	(12)
Total securities available for sale, Fair Value	79,686	66,736
Mortgage-backed securities in government sponsored entities [Member]
Available for sale securities
Amortized Cost	75,194	85,063
Gross Unrealized Gains	2,367	2,582
Gross Unrealized Losses	(222)	(128)
Total securities available for sale, Fair Value	77,339	87,518
Total debt securities [Member]
Available for sale securities
Amortized Cost	200,252	195,876
Gross Unrealized Gains	9,860	8,221
Gross Unrealized Losses	(224)	(140)
Total securities available for sale, Fair Value	209,888	203,957
Equity securities in financial institutions [Member]
Available for sale securities
Amortized Cost	481	481
Gross Unrealized Gains		195
Gross Unrealized Losses	(25)
Total securities available for sale, Fair Value	$ 456	$ 676

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair value of securities by contractual maturity
Due in one year or less, Amortized Cost	$ 5,157
Due in one year or less, Fair Value	5,190
Due after one year through five years, Amortized Cost	17,036
Due after one year through five years, Fair Value	17,184
Due after five years through ten years, Amortized Cost	18,109
Due after five years through ten years, Fair Value	19,018
Due after ten years, Amortized Cost	84,756
Due after ten years, Fair Value	91,157
Mortgage-backed securities, Amortized Cost	75,194
Mortgage-backed securities, Fair Value	77,339
Equity securities, Amortized Cost	481
Equity securities, Fair Value	456
Total securities available for sale, Amortized Cost	200,733	196,357
Total securities available for sale, Fair Value	$ 210,344	$ 204,633

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Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Condensed Consolidated Statement of Cash Flows [Abstract]
Net cash from operating activities	$ 12,473	$ 12,977
Cash flows used for investing activities
Maturities and calls of securities, available-for-sale	51,115	46,044
Purchases of securities, available-for-sale	(69,991)	(64,624)
Security sales	12,982	300
Redemption of FRB stock		83
Purchases of FRB stock	(185)	(127)
Purchase of bank owned life insurance		(5,000)
Net loan originations	(23,346)	(18,843)
Proceeds from sale of OREO properties	1,048	785
Proceeds from sale of property	5	48
Purchases of office premises and equipment	(702)	(1,102)
Net cash used for by investing activities	(29,074)	(42,436)
Cash flows provided by financing activities
Repayment of FHLB borrowings	(25)	(24)
Proceeds from short term FHLB Advances		20,000
Repayment of long-term FHLB advances	(10,000)	(22,500)
Proceeds from long-term FHLB advances		22,500
Net change in deposits	13,991	19,299
Net change in securities sold under agreements to repurchase	1,496	(2,559)
Repayment of U. S. Treasury interest-bearing demand note payable		331
Repurchase of common stock warrant from U.S. Treasury	(564)
Cash dividends paid on common stock and preferred stock	(1,563)	(869)
Net cash provided by financing activities	3,335	36,178
Net change in cash and due from financial institutions	(13,266)	6,719
Cash and cash equivalents at beginning of period	52,127	79,030
Cash and cash equivalents at end of period	38,861	85,749
Cash paid during the period for:
Interest	4,812	5,779
Income taxes
Supplemental cash flow information:
Transfer of loans from portfolio to OREO	$ 289	$ 677

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Securities with unrealized losses not recognized in income
12 Months or less, Fair Value	$ 11,150	$ 22,224
12 Months or less, Unrealized Loss	(235)	(138)
More than 12 months, Fair Value	1,900	160
More than 12 months, Unrealized Loss	(14)	(2)
Total Fair Value	13,050	22,384
Total Unrealized Loss	(249)	(140)
Obligations of states and political subdivisions [Member]
Securities with unrealized losses not recognized in income
12 Months or less, Fair Value		1,309
12 Months or less, Unrealized Loss		(10)
More than 12 months, Fair Value	474	160
More than 12 months, Unrealized Loss	(2)	(2)
Total Fair Value	474	1,469
Total Unrealized Loss	(2)	(12)
Mortgage-backed securities in government sponsored entities [Member]
Securities with unrealized losses not recognized in income
12 Months or less, Fair Value	10,669	20,915
12 Months or less, Unrealized Loss	(210)	(128)
More than 12 months, Fair Value	1,426
More than 12 months, Unrealized Loss	(12)
Total Fair Value	12,095	20,915
Total Unrealized Loss	(222)	(128)
Equity securities in financial institutions [Member]
Securities with unrealized losses not recognized in income
12 Months or less, Fair Value	481
12 Months or less, Unrealized Loss	(25)
Total Fair Value	481
Total Unrealized Loss	$ (25)

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Allowance for Loan Losses (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012 Contract	Sep. 30, 2011 Contract	Sep. 30, 2012 Contract	Sep. 30, 2011 Contract
Schedule of Troubled Debt Restructurings
Number of Contracts	4	1	35	1
Pre-Modification Outstanding Investment	$ 601	$ 143	$ 3,505	$ 143
Post-Modification Outstanding Recorded Investment	901	144	3,419	144
Commercial and Agriculture [Member]
Schedule of Troubled Debt Restructurings
Number of Contracts	2		6
Pre-Modification Outstanding Investment	197		983
Post-Modification Outstanding Recorded Investment	497		976
Commercial Real Estate [Member]
Schedule of Troubled Debt Restructurings
Number of Contracts			3
Pre-Modification Outstanding Investment			1,206
Post-Modification Outstanding Recorded Investment			1,206
Residential Real Estate [Member]
Schedule of Troubled Debt Restructurings
Number of Contracts	1	1	21	1
Pre-Modification Outstanding Investment	385	143	1,250	143
Post-Modification Outstanding Recorded Investment	385	144	1,171	144
Real estate - construction [Member]
Schedule of Troubled Debt Restructurings
Number of Contracts
Pre-Modification Outstanding Investment
Post-Modification Outstanding Recorded Investment
Consumer [Member]
Schedule of Troubled Debt Restructurings
Number of Contracts	1		5
Pre-Modification Outstanding Investment	19		66
Post-Modification Outstanding Recorded Investment	$ 19		$ 66

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Fair Value Measurement (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Securities available for sale
Beginning balance January 1, 2012	$ 204,633
Purchases of securities, available-for-sale	(69,991)	(64,624)
Ending balance September 31, 2012	210,344
Significant Other Unobservable Inputs Level 3 [Member]
Securities available for sale
Beginning balance January 1, 2012	517
Purchases of securities, available-for-sale	(41)
Ending balance September 31, 2012	$ 476

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from financial institutions	$ 38,861	$ 52,127
Securities available for sale	210,344	204,633
Loans held for sale	749	598
Loans, net of allowance of $21,489 and $21,257	781,183	764,011
Other securities	15,573	15,388
Premises and equipment, net	17,380	17,774
Accrued interest receivable	4,709	3,787
Goodwill	21,720	21,720
Other intangibles	3,370	4,113
Bank owned life insurance	18,439	17,963
Other assets	9,547	10,863
Total assets	1,121,875	1,112,977
Deposits
Noninterest-bearing	195,788	189,382
Interest-bearing	719,449	711,864
Total deposits	915,237	901,246
Federal Home Loan Bank advances	40,270	50,295
Securities sold under agreements to repurchase	20,525	19,029
Subordinated debentures	29,427	29,427
Accrued expenses and other liabilities	11,521	10,452
Total liabilities	1,016,980	1,010,449
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 200,000 shares authorized, 23,184 shares issued	23,184	23,151
Common stock, no par value, 20,000,000 shares authorized, 8,455,881 shares issued	114,365	114,447
Accumulated deficit	(16,132)	(17,667)
Treasury stock, 747,964 shares at cost	(17,235)	(17,235)
Accumulated other comprehensive income (loss)	713	(168)
Total shareholders' equity	104,895	102,528
Total liabilities and shareholders' equity	$ 1,121,875	$ 1,112,977

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Commitments, Contingencies and Off-Balance Sheet Risk (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Commitment to extend credit:
Fixed Rate	$ 14,862	$ 8,433
Variable Rate	136,897	129,962
Lines of credit and construction loans [Member]
Commitment to extend credit:
Fixed Rate	13,274	6,913
Variable Rate	118,110	111,710
Overdraft protection [Member]
Commitment to extend credit:
Fixed Rate	1,294	1,320
Variable Rate	18,381	17,828
Letters of credit [Member]
Commitment to extend credit:
Fixed Rate	294	200
Variable Rate	$ 406	$ 424

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Total	Preferred Stock	Common Stock	Accumulated Deficit	Treasury Stock	Accumulated Other Comprehensive Income (Loss)
Balance at Dec. 31, 2011	$ 102,528	$ 23,151	$ 114,447	$ (17,667)	$ (17,235)	$ (168)
Balance, shares at Dec. 31, 2011		23,184	7,707,917
Net Income	3,613			3,613
Other Comprehensive income, net of reclassification and tax effect	881					881
Accretion of discount on preferred stock		33		(33)
Common stock warrant redemption	(564)		(82)	(482)
Cash dividends ($.09 per share)	(694)			(694)
Preferred stock dividend	(869)			(869)
Balance at Sep. 30, 2012	$ 104,895	$ 23,184	$ 114,365	$ (16,132)	$ (17,235)	$ 713
Balance, shares at Sep. 30, 2012		23,184	7,707,917

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Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	$ 21,931	$ 21,749	$ 21,257	$ 21,768
Charge-offs	(2,591)	(1,600)	(6,347)	(8,034)
Recoveries	449	538	1,014	1,253
Provision	1,700	2,000	5,565	7,700
Ending Balance	21,489	22,687	21,489	22,687
Individually evaluated for impairment	5,075		5,075		4,811
Collectively evaluated for impairment	16,414		16,414		16,446
Ending Balance	21,489		21,489		21,257
Loan balances outstanding
Financing Receivable, individually evaluated for impairment	30,581		30,581		27,380
Financing Receivable, collectively evaluated for impairment	772,091		772,091		757,888
Ending Balance	802,672		802,672		785,268
Commercial & Agriculture [Member]
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	2,537	2,821	2,876	3,639
Charge-offs	(192)	(145)	(610)	(1,053)
Recoveries	180	111	280	284
Provision	44	1,162	23	1,079
Ending Balance	2,569	3,949	2,569	3,949
Individually evaluated for impairment	251		251		618
Collectively evaluated for impairment	2,318		2,318		2,258
Ending Balance	2,569		2,569		2,876
Loan balances outstanding
Financing Receivable, individually evaluated for impairment	5,264		5,264		5,258
Financing Receivable, collectively evaluated for impairment	79,584		79,584		81,137
Ending Balance	84,848		84,848		86,395
Commercial Real Estate [Member]
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	11,701	10,713	10,571	9,827
Charge-offs	(824)	(710)	(2,463)	(2,926)
Recoveries	196	166	371	299
Provision	154	284	2,748	3,253
Ending Balance	11,227	10,453	11,227	10,453
Individually evaluated for impairment	3,760		3,760		3,094
Collectively evaluated for impairment	7,467		7,467		7,477
Ending Balance	11,227		11,227		10,571
Loan balances outstanding
Financing Receivable, individually evaluated for impairment	18,150		18,150		17,700
Financing Receivable, collectively evaluated for impairment	387,385		387,385		354,152
Ending Balance	405,535		405,535		371,852
Residential Real Estate [Member]
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	6,379	6,184	5,796	4,569
Charge-offs	(1,334)	(703)	(2,803)	(3,126)
Recoveries	47	136	208	245
Provision	867	336	2,758	4,265
Ending Balance	5,959	5,953	5,959	5,953
Individually evaluated for impairment	808		808		860
Collectively evaluated for impairment	5,151		5,151		4,936
Ending Balance	5,959		5,959		5,796
Loan balances outstanding
Financing Receivable, individually evaluated for impairment	6,219		6,219		3,846
Financing Receivable, collectively evaluated for impairment	250,621		250,621		271,149
Ending Balance	256,840		256,840		274,995
Real estate - construction [Member]
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	1,095	1,196	974	2,139
Charge-offs	(192)		(297)	(778)
Recoveries	(9)	98	104	348
Provision	171	(83)	284	(498)
Ending Balance	1,065	1,211	1,065	1,211
Individually evaluated for impairment	194		194		239
Collectively evaluated for impairment	871		871		735
Ending Balance	1,065		1,065		974
Loan balances outstanding
Financing Receivable, individually evaluated for impairment	885		885		576
Financing Receivable, collectively evaluated for impairment	44,520		44,520		39,214
Ending Balance	45,405		45,405		39,790
Consumer [Member]
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	262	670	719	726
Charge-offs	(49)	(42)	(174)	(151)
Recoveries	35	27	51	77
Provision	5	(21)	(343)	(18)
Ending Balance	253	634	253	634
Individually evaluated for impairment	62		62
Collectively evaluated for impairment	191		191		719
Ending Balance	253		253		719
Loan balances outstanding
Financing Receivable, individually evaluated for impairment	63		63
Financing Receivable, collectively evaluated for impairment	9,981		9,981		12,236
Ending Balance	10,044		10,044		12,236
Unallocated [Member]
Changes in Allowance for Loan Losses and Loan Balances Outstanding
Beginning Balance	(43)	165	321	868
Provision	459	322	95	(381)
Ending Balance	416	487	416	487
Collectively evaluated for impairment	416		416		321
Ending Balance	416		416		321
Loan balances outstanding
Financing Receivable, individually evaluated for impairment
Financing Receivable, collectively evaluated for impairment
Ending Balance

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Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Loans balances

Loan balances were as follows:

	September 30,			December 31,
	2012			2011
Commercial and agriculture	$	84,848		$	86,395
Commercial real estate		405,535			371,852
Real estate—mortgage		256,840			274,995
Real estate—construction		45,405			39,790
Consumer		10,044			12,236
Total loans		802,672			785,268
Allowance for loan losses		(21,489	)		(21,257	)
Net loans	$	781,183		$	764,011

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Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	$ 645,062	$ 613,333
Pass [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	573,602	518,577
Special Mention [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	12,655	25,452
Substandard [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	58,805	69,304
Doubtful [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades
Commercial & Agriculture [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	84,848	86,395
Commercial & Agriculture [Member] | Pass [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	74,610	73,011
Commercial & Agriculture [Member] | Special Mention [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	1,901	4,358
Commercial & Agriculture [Member] | Substandard [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	8,337	9,026
Commercial & Agriculture [Member] | Doubtful [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades
Commercial Real Estate [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	405,535	371,852
Commercial Real Estate [Member] | Pass [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	364,004	319,084
Commercial Real Estate [Member] | Special Mention [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	7,625	15,321
Commercial Real Estate [Member] | Substandard [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	33,906	37,447
Commercial Real Estate [Member] | Doubtful [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades
Residential Real Estate [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	111,462	115,412
Residential Real Estate [Member] | Pass [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	94,859	92,577
Residential Real Estate [Member] | Special Mention [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	2,447	5,071
Residential Real Estate [Member] | Substandard [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	14,156	17,764
Residential Real Estate [Member] | Doubtful [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades
Real estate - construction [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	42,250	37,466
Real estate - construction [Member] | Pass [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	39,229	31,697
Real estate - construction [Member] | Special Mention [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	682	702
Real estate - construction [Member] | Substandard [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	2,339	5,067
Real estate - construction [Member] | Doubtful [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades
Consumer [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	967	2,208
Consumer [Member] | Pass [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	900	2,208
Consumer [Member] | Substandard [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades	67
Consumer [Member] | Doubtful [Member]
Credit exposures by internally assigned grades
Credit exposures by internally assigned grades

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Earnings per Common Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings per Common Share [Abstract]

Computation of basic and diluted earnings per common share

Basic earnings per share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under stock options, computed using the treasury stock method.

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Basic
Net income	$	1,384	$	1,193	$	3,613	$	2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Weighted average common shares outstanding		7,707,917		7,707,917		7,707,917		7,707,917
Basic earnings per common share	$	0.14	$	0.12	$	0.35	$	0.21
Diluted
Net income	$	1,384	$	1,193	$	3,613	$	2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Weighted average common shares outstanding for basic earnings per common share		7,707,917		7,707,917		7,707,917		7,707,917
Add: Dilutive effects of assumed exercises of stock options and warrants		—		—		—		—
Average shares and dilutive potential common shares outstanding		7,707,917		7,707,917		7,707,917		7,707,917
Diluted earnings per common share	$	0.14	$	0.12	$	0.35	$	0.21

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012
Cash dividends per share	$ 0.09
Accumulated Deficit
Cash dividends per share	$ 0.09

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Allowance, loans	$ 21,489	$ 21,257
Preferred stock, no par value
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	23,184	23,184
Common stock, no par value
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	8,455,881	8,455,881
Treasury stock, shares	747,964	747,964

XML

Stock Options

9 Months Ended

Sep. 30, 2012

Stock Options [Abstract]

Stock Options

(9) Stock Options

Options to buy stock could be granted to directors, officers and employees under the Corporation’s Stock Option and Stock Appreciation Rights Plan, which provided for issue of up to 225,000 options. The exercise price of stock options is determined based on the market price of the Corporation’s common shares at the date of grant. The maximum option term is ten years, and options normally vest after three years.

The Corporation did not grant any stock options during the first nine months of 2012 or 2011, nor did any stock options become vested during the first nine months of 2012 or 2011. The Corporation’s Stock Option and Stock Appreciation Rights Plan expired in 2010, and no further stock options or other awards may be granted by the Corporation under such plan.

A summary of the activity in the plan is as follows:

	Nine months ended					Nine months ended
	September 30, 2012					September 30, 2011
				Weighted				Weighted
				Average				Average
				Price				Price
	Shares			Per Share		Shares		Per Share
Outstanding at beginning of year		29,500		$	25.42		29,500	$	25.42
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(19,500	)		20.50		—		—
Options outstanding, end of period		10,000		$	35.00		29,500	$	25.42
Options exercisable, end of period		10,000		$	35.00		29,500	$	25.42

The following table details stock options outstanding:

	Outstanding Options
			Weighted
			Average		Weighted
			Remaining		Average
			Contractual		Exercise
Exercise price	Number		Life		Price
$35.00		10,000		6.4 mos.		35.00
Outstanding at quarter-end		10,000		6.4 mos.	$	35.00

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common shares as of the reporting date. As of September 30, 2012 and December 31, 2011, the aggregate intrinsic value of outstanding stock options was $0. A total of 19,500 stock options with an exercise price of $20.50 expired on July 2, 2012.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 07, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	FIRST CITIZENS BANC CORP /OH
Entity Central Index Key	0000944745
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,707,917

XML

Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement

(10) Fair Value Measurement

The Corporation uses a fair value hierarchy to measure fair value. The topic describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Corporation’s own view about the assumptions that market participants would use in pricing an asset.

Securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Management uses significant unobservable inputs to determine the fair value of one security (Level 3 inputs). These inputs include appraised values of the underlying collateral and estimated costs to sell the collateral. The value of the collateral has been discounted to represent the value in a distressed sale situation.

Equity securities: The Corporation’s equity securities are not actively traded in an open market. The fair values of these equity securities available for sale are determined by using market data inputs for similar securities that are observable. (Level 2 inputs).

The fair value measurement for equity securities in financial institutions at December 31, 2011 was determined using Level 1 quoted market prices. No transactions have occurred since December 31, 2011 therefore the fair value of the equity securities in financial institutions at September 30, 2012 is measured using Level 2 observable market data inputs.

Impaired loans: The fair values of impaired loans are determined using the fair values of collateral for collateral dependent loans, or discounted cash flows. The Corporation uses independent appraisals, discounted cash flow models and other available data to estimate the fair value of collateral (Level 3 inputs).

Other real estate owned: The fair value of other real estate owned is determined using the fair value of collateral. The Corporation uses appraisals and other available data to estimate the fair value of collateral (Level 3 inputs). The appraised values are discounted to represent an estimated value in a distressed sale. Additionally, estimated costs to sell the property are used to further adjust the value.

Assets measured at fair value are summarized below.

	Fair Value Measurements at September 30, 2012 Using:
	(Level 1)		(Level 2)		(Level 3)
Assets:
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	52,863	$	—
Obligations of states and political subdivisions		—		79,210		476
Mortgage-backed securities in government sponsored entities		—		77,339		—
Equity securities in financial institutions		—		456		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	25,506
Other real estate owned		—		—		464
	Fair Value Measurements at December 31, 2011 Using:
	(Level 1)		(Level 2)		(Level 3)
Assets:
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	49,704	$	—
Obligations of states and political subdivisions		—		66,219		517
Mortgage-backed securities in government sponsored entities		—		87,518		—
Equity securities in financial institutions		676		—		—
Assets measured at fair value on a nonrecurring basis:
Impaired loans	$	—	$	—	$	22,569
Other real estate owned		—		—		1,097

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)

Form 10-Q

(Amounts in thousands, except share data)

The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at September 30, 2012.

	Quantitative Information about Level 3 Fair Value Measurements
September 30, 2012	Fair Value Estimate		Valuation Technique	Unobservable Input	Range
Investments	$	476	Appraisal of collateral	Appraisal adjustments	20% - 30%
				Liquidation expense	8% - 12%
Impaired loans	$	25,506	Appraisal of collateral	Appraisal adjustments	10% - 30%
				Liquidation expense	0% - 10%
				Holding period	0 - 30 months
			Discounted cash flows	Discount rates	3% - 8.4%
Other real estate owned	$	464	Appraisal of collateral	Appraisal adjustments	10% - 30%
				Liquidation expense	0% - 10%

The following table presents the changes in the Level 3 fair-value category for the period ended September 31, 2012. The Corporation classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to the unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable, either directly or indirectly.

Securities available for sale
Beginning balance January 1, 2012	$	517
Principal payments		(41	)
Ending balance September 31, 2012	$	476

The carrying amount and fair values of financial instruments are as follows.

					Quoted
					Prices in
					Active		Significant		Significant
					Markets for		Other		Other
					Identical		Observable		Unobservable
September 30, 2012	Carrying		Total		Assets		Inputs		Inputs
	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from financial institutions	$	38,861	$	38,861	$	38,861	$	—	$	—
Securities available for sale		200,733		210,344		—		209,868		476
Other securities		15,573		15,573		15,573		—		—
Loans, available for sale		749		749		749		—		—
Loans, net of allowance for loan losses		781,183		796,918		—		—		796,918
Bank owned life insurance		18,439		18,439		18,439		—		—
Accrued interest receivable		4,709		4,709		4,709		—		—
Financial Liabilities:
Nonmaturing deposits		644,430		644,430		644,430		—		—
Time deposits		270,807		273,037		—		—		273,037
Federal Home Loan Bank advances		40,270		41,816		—		—		41,816
Securities sold under agreement to repurchase		20,525		20,525		20,525		—		—
Subordinated debentures		29,427		27,360		—		—		27,360
Accrued interest payable		232		232		232		—		—

	December 31, 2011
	Carrying Amount		Fair Value
Financial Assets:
Cash and due from financial institutions	$	52,127	$	52,127
Securities, AFS		196,357		204,633
Other securities		15,388		15,388
Loans, available for sale		598		598
Loans, net of allowance for loan losses		764,011		785,900
Bank owned life insurance		17,963		17,963
Accrued interest receivable		3,787		3,787
Financial Liabilities:
Deposits		901,246		911,945
Federal Home Loan Bank advances		50,295		52,263
Securities sold under agreement to repurchase		19,029		19,029
Subordinated debentures		29,427		26,461
Accrued interest payable		258		258

Cash and due from financial institutions:

The carrying amounts for cash and due from financial institutions approximate fair value because they have original maturities of less than 90 days and do not present unanticipated credit concerns.

Available-for-sale securities:

The fair value of securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for specific securities. Instead, this method relies on the securities relationship to other benchmark quoted securities (Level 2 inputs). For equity securities, management uses market information related to the value of similar institutions to determine the fair value (Level 2 inputs). Management uses significant unobservable inputs to determine the fair value of one security (Level 3 inputs). These inputs include appraised values of the underlying collateral and estimated costs to sell the collateral. The value of the collateral has been discounted to represent the value in a distressed sale situation.

Other securities:

The carrying value of regulatory stock approximates fair value based on applicable redemption provisions.

Loans, available-for-sale:

Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment to an investor. Because the holding period of such loans is typically short, the carrying value generally approximates the fair value at the time the commitment is received. All loans in the held-for-sale account conform to Fannie Mae underwriting guidelines, with specific intent of the loan being purchased by an investor at the predetermined rate structure.

Loans, net of allowance for loan losses:

Fair values for loans, other than impaired, are estimated for portfolios of loans with similar financial characteristics. The fair value of performing loans has been estimated by discounting expected future cash flows of the underlying portfolios. The discount rates used in these calculations are generally derived from the treasury yield curve and are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate inherent in the loan. The estimated maturity is based on the Corporation’s historical experience with repayments for each loan classification. The off-balance-sheet items are based on the current fees or cost that would be charged to enter into or terminate such arrangements and are considered nominal. Changes in these significant unobservable inputs used in discounted cash flow analysis, such as the discount rate or prepayment speeds, could lead to changes in the underlying fair value.

Bank owned life insurance:

The carrying value of bank owned life insurance approximates the fair value based on applicable redemption provisions.

Accrued interest receivable and payable and securities sold under agreements to repurchase:

The carrying amounts for accrued interest receivable, accrued interest payable and securities sold under agreements to repurchase approximate fair value because they are generally received or paid in 90 days or less and do not present unanticipated credit concerns.

Deposits:

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and NOW accounts, and money market accounts, is equal to the amount payable on demand.

The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

The deposits’ fair value estimates do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

Federal Home Loan Bank advances:

Rates available to the Corporation for borrowed funds with similar terms and remaining maturities are used to estimate the fair value of borrowed funds.

Subordinated debentures:

The fair value of subordinated debentures is based on the discounted value of contractual cash flows of the underlying debt agreements. The discount rate is estimated using the current rate for a 30 year mortgage-matched secured borrowing from the FHLB.

XML

Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest and dividend income
Loans, including fees	$ 9,901	$ 10,455	$ 30,338	$ 31,208
Taxable securities	1,120	1,367	3,608	4,213
Tax-exempt securities	490	419	1,376	1,250
Federal funds sold and other	18	26	83	54
Total interest and dividend income	11,529	12,267	35,405	36,725
Interest expense
Deposits	894	1,233	2,955	3,948
Federal Home Loan Bank advances	394	401	1,181	1,208
Subordinated debentures	208	189	635	578
Other	5	5	15	27
Total interest expense	1,501	1,828	4,786	5,761
Net interest income	10,028	10,439	30,619	30,964
Provision for loan losses	1,700	2,000	5,565	7,700
Net interest income after provision for loan losses	8,328	8,439	25,054	23,264
Noninterest income
Service charges	1,108	1,233	3,243	3,350
Net gain on sale of securities			40	3
Net gain on sale of loans	183	53	456	73
ATM fees	440	473	1,323	1,371
Trust fees	527	505	1,596	1,577
Bank owned life insurance	151	173	476	477
Computer center data processing fees	60	60	202	193
Other	158	167	997	814
Total noninterest income	2,627	2,664	8,333	7,858
Noninterest expense
Salaries, wages and benefits	5,207	5,144	15,603	14,588
Net occupancy expense	543	549	1,614	1,728
Equipment expense	293	343	897	1,059
Contracted data processing	246	200	705	612
FDIC assessment	212	240	714	971
State franchise tax	252	330	756	871
Professional services	676	509	2,080	1,505
Amortization of intangible assets	232	291	742	872
ATM expense	121	154	405	452
Marketing	193	157	581	540
Other operating expenses	1,166	1,682	4,648	5,071
Total noninterest expense	9,141	9,599	28,745	28,269
Income before taxes	1,814	1,504	4,642	2,853
Income tax expense	430	311	1,029	384
Net Income	1,384	1,193	3,613	2,469
Preferred stock dividends and discount accretion	316	293	903	881
Net income available to common shareholders	$ 1,068	$ 900	$ 2,710	$ 1,588
Earnings per common share, basic and diluted	$ 0.14	$ 0.12	$ 0.35	$ 0.21

XML

Loans

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Loans

(4) Loans

Loan balances were as follows:

	September 30,			December 31,
	2012			2011
Commercial and agriculture	$	84,848		$	86,395
Commercial real estate		405,535			371,852
Real estate—mortgage		256,840			274,995
Real estate—construction		45,405			39,790
Consumer		10,044			12,236
Total loans		802,672			785,268
Allowance for loan losses		(21,489	)		(21,257	)
Net loans	$	781,183		$	764,011

XML

Securities

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Securities

(3) Securities

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

September 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	52,482	$	381	$	—		$	52,863
Obligations of states and political subdivisions		72,576		7,112		(2	)		79,686
Mortgage-backed securities in government sponsored entities		75,194		2,367		(222	)		77,339
Total debt securities		200,252		9,860		(224	)		209,888
Equity securities in financial institutions		481		—		(25	)		456
Total	$	200,733	$	9,860	$	(249	)	$	210,344
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	49,305	$	399	$	—		$	49,704
Obligations of states and political subdivisions		61,508		5,240		(12	)		66,736
Mortgage-backed securities in government sponsored entities		85,063		2,582		(128	)		87,518
Total debt securities		195,876		8,221		(140	)		203,957
Equity securities in financial institutions		481		195		—			676
Total	$	196,357	$	8,416	$	(140	)	$	204,633

The fair value of securities at September 30, 2012, by contractual maturity, is shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities, are shown separately.

Available for sale	Amortized Cost		Fair Value
Due in one year or less	$	5,157	$	5,190
Due after one year through five years		17,036		17,184
Due after five years through ten years		18,109		19,018
Due after ten years		84,756		91,157
Mortgage-backed securities		75,194		77,339
Equity securities		481		456
Total securities available for sale	$	200,733	$	210,344

Proceeds from the sale of securities were $12,982 for the nine-month period ended September 30, 2012. Included in those sales were gross gains of $99 and gross losses of $59. Proceeds from the sale of securities for the nine-month period ended September 30, 2011 were $300. There were no gains or losses on the sales during the period ended September 30, 2011. There were no gains or losses on securities settled by the issuer during the nine-month period ended September 30, 2012. Gains from securities settled by the issuer were $3 during the nine-month period ended September 30, 2011. No securities were sold during the quarters ended September 30, 2012 and 2011.

Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $148,811 and $156,114 as of September 30, 2012 and December 31, 2011, respectively.

Securities with unrealized losses at September 30, 2012 and December 31, 2011 not recognized in income are as follows:

September 30, 2012	12 Months or less					More than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
Obligations of states and political subdivisions	$	—	$	—		$	474	$	(2	)	$	474	$	(2	)
Mortgage-backed securities in gov’t sponsored entities		10,669		(210	)		1,426		(12	)		12,095		(222	)
Equity securities		481		(25	)		—		—			481		(25	)
Total temporarily impaired	$	11,150	$	(235	)	$	1,900	$	(14	)	$	13,050	$	(249	)
December 31, 2011	12 Months or less					More than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
Obligations of states and political subdivisions	$	1,309	$	(10	)	$	160	$	(2	)	$	1,469	$	(12	)
Mortgage-backed securities in gov’t sponsored entities		20,915		(128	)		—		—			20,915		(128	)
Total temporarily impaired	$	22,224	$	(138	)	$	160	$	(2	)	$	22,384	$	(140	)

At September 30, 2012, there were sixteen securities in the portfolio with unrealized losses. Unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to market yields increasing across the municipal sector partly due to higher risk premiums associated with municipal insurers. The fair value is expected to recover as the securities approach their maturity date or reset date. The Corporation does not intend to sell until recovery and does not believe selling will be required before recovery.

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Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses [Abstract]

Allowance related to unallocated segment

September 30, 2012. The following tables present by portfolio segment, the changes in the allowance for loan losses and the loan balances outstanding for periods ended September 30, 2012, September 30, 2011 and December 31, 2011. The allowance for Consumer loans was reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type.

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated		Total
For the nine months ending September 30, 2012
Allowance for loan losses:
Beginning balance	$	2,876		$	10,571		$	5,796		$	974		$	719		$	321	$	21,257
Charge-offs		(610	)		(2,463	)		(2,803	)		(297	)		(174	)		—		(6,347	)
Recoveries		280			371			208			104			51			—		1,014
Provision		23			2,748			2,758			284			(343	)		95		5,565
Ending Balance	$	2,569		$	11,227		$	5,959		$	1,065		$	253		$	416	$	21,489

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated			Total
For the nine months ending September 30, 2011
Allowance for loan losses:
Beginning balance	$	3,639		$	9,827		$	4,569		$	2,139		$	726		$	868		$	21,768
Charge-offs		(1,053	)		(2,926	)		(3,126	)		(778	)		(151	)		—			(8,034	)
Recoveries		284			299			245			348			77			—			1,253
Provision		1,079			3,253			4,265			(498	)		(18	)		(381	)		7,700
Ending Balance	$	3,949		$	10,453		$	5,953		$	1,211		$	634		$	487		$	22,687

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated			Total
For the three months ending September 30, 2012
Allowance for loan losses:
Beginning balance	$	2,537		$	11,701		$	6,379		$	1,095		$	262		$	(43	)	$	21,931
Charge-offs		(192	)		(824	)		(1,334	)		(192	)		(49	)					(2,591	)
Recoveries		180			196			47			(9	)		35						449
Provision		44			154			867			171			5			459			1,700
Ending Balance	$	2,569		$	11,227		$	5,959		$	1,065		$	253		$	416		$	21,489

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated		Total
For the three months ending September 30, 2011
Allowance for loan losses:
Beginning balance	$	2,821		$	10,713		$	6,184		$	1,196		$	670		$	165	$	21,749
Charge-offs		(145	)		(710	)		(703	)		—			(42	)		—		(1,600	)
Recoveries		111			166			136			98			27			—		538
Provision		1,162			284			336			(83	)		(21	)		322		2,000
Ending Balance	$	3,949		$	10,453		$	5,953		$	1,211		$	634		$	487	$	22,687

	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Unallocated		Total
September 30, 2012
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	251	$	3,760	$	808	$	194	$	62	$	—	$	5,075
Ending balance:
Collectively evaluated for impairment	$	2,318	$	7,467	$	5,151	$	871	$	191	$	416	$	16,414
Ending Balance	$	2,569	$	11,227	$	5,959	$	1,065	$	253	$	416	$	21,489
Loan balances outstanding:
Ending balance:
Individually evaluated for impairment	$	5,264	$	18,150	$	6,219	$	885	$	63			$	30,581
Ending balance:
Collectively evaluated for impairment	$	79,584	$	387,385	$	250,621	$	44,520	$	9,981			$	772,091
Ending Balance	$	84,848	$	405,535	$	256,840	$	45,405	$	10,044			$	802,672

	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Unallocated		Total
December 31, 2011
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	618	$	3,094	$	860	$	239	$	—	$	—	$	4,811
Ending balance:
Collectively evaluated for impairment	$	2,258	$	7,477	$	4,936	$	735	$	719	$	321	$	16,446
Ending Balance	$	2,876	$	10,571	$	5,796	$	974	$	719	$	321	$	21,257
Loan balances outstanding:
Ending balance:
Individually evaluated for impairment	$	5,258	$	17,700	$	3,846	$	576	$	—			$	27,380
Ending balance:
Collectively evaluated for impairment	$	81,137	$	354,152	$	271,149	$	39,214	$	12,236			$	757,888
Ending Balance	$	86,395	$	371,852	$	274,995	$	39,790	$	12,236			$	785,268

Credit exposures by internally assigned grades

September 30, 2012	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Total
Pass	$	74,610	$	364,004	$	94,859	$	39,229	$	900	$	573,602
Special Mention		1,901		7,625		2,447		682		—		12,655
Substandard		8,337		33,906		14,156		2,339		67		58,805
Doubtful		—		—		—		—		—		—
Ending Balance	$	84,848	$	405,535	$	111,462	$	42,250	$	967	$	645,062
December 31, 2011	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Total
Pass	$	73,011	$	319,084	$	92,577	$	31,697	$	2,208	$	518,577
Special Mention		4,358		15,321		5,071		702		—		25,452
Substandard		9,026		37,447		17,764		5,067		—		69,304
Doubtful		—		—		—		—		—		—
Ending Balance	$	86,395	$	371,852	$	115,412	$	37,466	$	2,208	$	613,333

Performing and nonperforming loans

include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

	Residential Real Estate		Real Estate Construction		Consumer		Total
September 30, 2012
Performing	$	145,378	$	3,155	$	9,077	$	157,610
Nonperforming		—		—		—		—
Total	$	145,378	$	3,155	$	9,077	$	157,610
	Residential Real Estate		Real Estate Construction		Consumer		Total
December 31, 2011
Performing	$	159,291	$	2,324	$	10,027	$	171,642
Nonperforming		292		—		1		293
Total	$	159,583	$	2,324	$	10,028	$	171,935

Aging Analysis of Past Due Loans

The following table includes an aging analysis of the recorded investment of past due loans outstanding as of September 30, 2012 and December 31, 2011.

September 30, 2012	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		Past Due 90 Days and Accruing
Commericial & Agriculture	$	364	$	48	$	710	$	1,122	$	83,726	$	84,848	$	245
Commercial Real Estate		931		2,264		8,958		12,153		393,382		405,535		2,189
Residential Real Estate		736		1,047		7,857		9,640		247,200		256,840		262
Real Estate Construction		323		—		801		1,124		44,281		45,405		—
Consumer		48		26		—		74		9,970		10,044		—
Total	$	2,402	$	3,385	$	18,326	$	24,113	$	778,559	$	802,672	$	2,696
December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		Past Due 90 Days and Accruing
Commericial & Agriculture	$	229	$	174	$	509	$	912	$	85,483	$	86,395	$	19
Commercial Real Estate		4,156		1,369		9,466		14,991		356,861		371,852		737
Residential Real Estate		3,614		1,182		6,504		11,300		263,695		274,995		511
Real Estate Construction		—		—		45		45		39,745		39,790		45
Consumer		89		16		2		107		12,129		12,236		2
Total	$	8,088	$	2,741	$	16,526	$	27,355	$	757,913	$	785,268	$	1,314

Summary of Non-accrual Loans

The following table presents loans on nonaccrual status as of September 30, 2012 and December 31, 2011.

	September 30, 2012		December 31, 2011
Commericial & Agriculture	$	2,793	$	940
Commercial Real Estate		19,137		15,346
Residential Real Estate		10,408		8,915
Real Estate Construction		1,355		567
Consumer		55		—
Total	$	33,748	$	25,768

Schedule of Troubled Debt Restructurings

Loan modifications that are considered troubled debt restructurings (TDRs) completed during the quarter ended September 30, 2012 and September 30, 2011 were as follows:

	For the Quarter Ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		2	$	197	$	497
Commercial Real Estate		—		—		—
Residential Real Estate		1		385		385
Real Estate Construction		—		—		—
Consumer		1		19		19
Total TDRs		4	$	601	$	901
	For the Quarter Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		—	$	—	$	—
Commercial Real Estate		—		—		—
Residential Real Estate		1		143		144
Real Estate Construction		—		—		—
Consumer		—		—		—
Total TDRs		1	$	143	$	144

Loan modifications that are considered troubled debt restructurings (TDRs) completed during the nine month periods ended September 30, 2012 and September 30, 2012 were as follows:

	For the Nine-Month Period Ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		6	$	983	$	976
Commercial Real Estate		3		1,206		1,206
Residential Real Estate		21		1,250		1,171
Real Estate Construction		—		—		—
Consumer		5		66		66
Total TDRs		35	$	3,505	$	3,419
	For the Nine-Month Period Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		—	$	—	$	—
Commercial Real Estate		—		—		—
Residential Real Estate		1		143		144
Real Estate Construction		—		—		—
Consumer		—		—		—
TDRs		1	$	143	$	144

Impaired financing receivables

The following tables include the recorded investment and unpaid principal balances for impaired financing receivables with the associated allowance amount, if applicable, as of September 30, 2012 and December 31, 2011.

	September 30, 2012						December 31, 2011
September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commericial & Agriculture	$	5,003	$	5,339	$	—	$	2,914	$	3,010	$	—
Commercial Real Estate		8,030		9,192		—		3,804		4,739		—
Residential Real Estate		3,086		4,598		—		862		953		—
Real Estate Construction		—		—		—		—		—		—
Consumer and Other		1		1		—		—		—		—
Total	$	16,120	$	19,130	$	—	$	7,580	$	8,702	$	—
With an allowance recorded:
Commericial & Agriculture	$	261	$	271	$	251	$	2,344	$	3,645	$	618
Commercial Real Estate		10,120		12,194		3,760		13,896		16,534		3,094
Residential Real Estate		3,133		3,274		808		2,984		4,127		860
Real Estate Construction		885		1,413		194		576		1,103		239
Consumer and Other		62		62		62		—		—		—
Total	$	14,461	$	17,214	$	5,075	$	19,800	$	25,409	$	4,811
Total:
Commericial & Agriculture	$	5,264	$	5,610	$	251	$	5,258	$	6,655	$	618
Commercial Real Estate		18,150		21,386		3,760		17,700		21,273		3,094
Residential Real Estate		6,219		7,872		808		3,846		5,080		860
Real Estate Construction		885		1,413		194		576		1,103		239
Consumer and Other		63		63		62		—		—		—
Total	$	30,581	$	36,344	$	5,075	$	27,380	$	34,111	$	4,811

	September 30, 2012				September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the quarter ended:
Commericial & Agriculture	$	5,366	$	26	$	5,112	$	168
Commercial Real Estate		16,448		329		13,953		666
Residential Real Estate		5,227		145		3,317		172
Real Estate Construction		608		11		849		9
Consumer and Other		54		1		—		—
Total	$	27,703	$	512	$	23,231	$	1,015
	September 30, 2012				September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the nine months ended:
Commericial & Agriculture	$	4,631	$	205	$	4,618	$	330
Commercial Real Estate		17,060		995		12,975		934
Residential Real Estate		4,628		391		3,574		194
Real Estate Construction		531		11		1,560		41
Consumer and Other		28		1		—		—
Total	$	26,878	$	1,603	$	22,727	$	1,499

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Participation in the Treasury Capital Purchase Program

9 Months Ended

Sep. 30, 2012

Participation in the Treasury Capital Purchase Program [Abstract]

Participation in the Treasury Capital Purchase Program

(11) Participation in the Treasury Capital Purchase Program

On January 23, 2009, the Corporation completed the sale to the U.S. Treasury of $23,184 of newly-issued non-voting preferred shares as part of the Capital Purchase Program (CPP) enacted by the U.S. Treasury as part of the Troubled Assets Relief Program (TARP) under the Emergency Economic Stabilization Act of 2008 (EESA). To finalize the Corporation’s participation in the CPP, the Corporation and the Treasury entered into a Letter Agreement, dated January 23, 2009, including the Securities Purchase Agreement – Standard Terms attached thereto. Pursuant to the terms of the Securities Purchase Agreement, the Corporation issued and sold to Treasury (1) 23,184 Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (Preferred Shares), and (2) a Warrant to purchase 469,312 common shares of the Corporation, each without par value, at an exercise price of $7.41 per share. The Warrant has a ten-year term. All of the proceeds from the sale of the Preferred Shares and the Warrant by the Corporation to the U.S. Treasury under the CPP qualify as Tier 1 capital for regulatory purposes. Under the standardized CPP terms, cumulative dividends on the Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter, but will be paid only if, as and when declared by the Corporation’s Board of Directors. The Preferred Shares have no maturity date and rank senior to the common shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Corporation.

On July 3, 2012, the U.S. Treasury completed the sale of all 23,184 of the Preferred Shares to various investors pursuant to a modified “Dutch auction” process. As a result of the U.S. Treasury’s sale of all of the Preferred Shares, the executive compensation and corporate governance standards which applied to the Corporation as a participant in the CPP, which standards were most recently set forth in the Interim Final Rule on TARP Standards for Compensation and Corporate Governance, published June 15, 2009, are no longer applicable to the Corporation.

On September 5, 2012, the Corporation completed the repurchase of the Warrant from the U.S. Treasury in accordance with the terms of the Securities Purchase Agreement for an aggregate purchase price of $563,174. The purchase price was determined by the Board of Directors of the Corporation based on the Fair Market Value of the Warrant, as established by an appraisal conducted by a nationally recognized independent investment banking firm.

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Commitments, Contingencies and Off-Balance Sheet Risk

9 Months Ended

Sep. 30, 2012

Commitments Contingencies and Off Balance Sheet Risk [Abstract]

Commitments, Contingencies and Off-Balance Sheet Risk

(7) Commitments, Contingencies and Off-Balance Sheet Risk

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection are issued to meet customers’ financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amount of financial instruments with off-balance-sheet risk was as follows for September 30, 2012 and December 31, 2011:

	Contract Amount
	September 30, 2012				December 31, 2011
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Commitment to extend credit:
Lines of credit and construction loans	$	13,274	$	118,110	$	6,913	$	111,710
Overdraft protection		1,294		18,381		1,320		17,828
Letters of credit		294		406		200		424
	$	14,862	$	136,897	$	8,433	$	129,962

Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 2.25% to 15.0% at September 30, 2012 and December 31, 2011, respectively. Maturities extend up to 30 years.

Citizens is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The average reserve balance maintained in accordance with such requirements was $1,240 on September 30, 2012 and $998 on December 31, 2011.

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Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses [Abstract]

Allowance for Loan Losses

(5) Allowance for Loan Losses

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Corporation has segmented certain loans in the portfolio by product type. Historical loss percentages for each risk category are calculated and used as the basis for calculating loan loss allowance allocations. These historical loss percentages are calculated over a three-year period for all portfolio segments. Certain economic factors are also considered for trends which management uses to establish the directionality of changes to the unallocated portion of the reserve. The following economic factors are analyzed:

• Changes in lending policies and procedures

• Changes in experience and depth of lending and management staff

• Changes in quality of Bank’s credit review system

• Changes in nature and volume of the loan portfolio

• Changes in past due, classified and nonaccrual loans and TDRs

• Changes in economic and business conditions

• Changes in competition or legal and regulatory requirements

• Changes in concentrations within the loan portfolio

• Changes in the underlying collateral for collateral dependent loans

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Corporation considers the allowance for loan losses of $21,489 adequate to cover loan losses inherent in the loan portfolio, at September 30, 2012. The following tables present by portfolio segment, the changes in the allowance for loan losses and the loan balances outstanding for periods ended September 30, 2012, September 30, 2011 and December 31, 2011. The allowance for Consumer loans was reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type.

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated		Total
For the nine months ending September 30, 2012
Allowance for loan losses:
Beginning balance	$	2,876		$	10,571		$	5,796		$	974		$	719		$	321	$	21,257
Charge-offs		(610	)		(2,463	)		(2,803	)		(297	)		(174	)		—		(6,347	)
Recoveries		280			371			208			104			51			—		1,014
Provision		23			2,748			2,758			284			(343	)		95		5,565
Ending Balance	$	2,569		$	11,227		$	5,959		$	1,065		$	253		$	416	$	21,489

The allowances for both Real Estate Construction and Consumer loans were reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type. The net result of these changes was a reduction in the allowance for these loan types and is represented as a decrease in the provision. The allowance related to the unallocated segment was also reduced.

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated			Total
For the nine months ending September 30, 2011
Allowance for loan losses:
Beginning balance	$	3,639		$	9,827		$	4,569		$	2,139		$	726		$	868		$	21,768
Charge-offs		(1,053	)		(2,926	)		(3,126	)		(778	)		(151	)		—			(8,034	)
Recoveries		284			299			245			348			77			—			1,253
Provision		1,079			3,253			4,265			(498	)		(18	)		(381	)		7,700
Ending Balance	$	3,949		$	10,453		$	5,953		$	1,211		$	634		$	487		$	22,687

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated			Total
For the three months ending September 30, 2012
Allowance for loan losses:
Beginning balance	$	2,537		$	11,701		$	6,379		$	1,095		$	262		$	(43	)	$	21,931
Charge-offs		(192	)		(824	)		(1,334	)		(192	)		(49	)					(2,591	)
Recoveries		180			196			47			(9	)		35						449
Provision		44			154			867			171			5			459			1,700
Ending Balance	$	2,569		$	11,227		$	5,959		$	1,065		$	253		$	416		$	21,489

The allowance for both Real Estate Construction and Consumer loans were reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the historical charge-offs for this type. The net result of these changes was a reduction in the allowance for these loan types and is represented as a decrease in the provision.

G

	Commercial & Agriculture			Commercial Real Estate			Residential Real Estate			Real Estate Construction			Consumer			Unallocated		Total
For the three months ending September 30, 2011
Allowance for loan losses:
Beginning balance	$	2,821		$	10,713		$	6,184		$	1,196		$	670		$	165	$	21,749
Charge-offs		(145	)		(710	)		(703	)		—			(42	)		—		(1,600	)
Recoveries		111			166			136			98			27			—		538
Provision		1,162			284			336			(83	)		(21	)		322		2,000
Ending Balance	$	3,949		$	10,453		$	5,953		$	1,211		$	634		$	487	$	22,687

	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Unallocated		Total
September 30, 2012
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	251	$	3,760	$	808	$	194	$	62	$	—	$	5,075
Ending balance:
Collectively evaluated for impairment	$	2,318	$	7,467	$	5,151	$	871	$	191	$	416	$	16,414
Ending Balance	$	2,569	$	11,227	$	5,959	$	1,065	$	253	$	416	$	21,489
Loan balances outstanding:
Ending balance:
Individually evaluated for impairment	$	5,264	$	18,150	$	6,219	$	885	$	63			$	30,581
Ending balance:
Collectively evaluated for impairment	$	79,584	$	387,385	$	250,621	$	44,520	$	9,981			$	772,091
Ending Balance	$	84,848	$	405,535	$	256,840	$	45,405	$	10,044			$	802,672

	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Unallocated		Total
December 31, 2011
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	618	$	3,094	$	860	$	239	$	—	$	—	$	4,811
Ending balance:
Collectively evaluated for impairment	$	2,258	$	7,477	$	4,936	$	735	$	719	$	321	$	16,446
Ending Balance	$	2,876	$	10,571	$	5,796	$	974	$	719	$	321	$	21,257
Loan balances outstanding:
Ending balance:
Individually evaluated for impairment	$	5,258	$	17,700	$	3,846	$	576	$	—			$	27,380
Ending balance:
Collectively evaluated for impairment	$	81,137	$	354,152	$	271,149	$	39,214	$	12,236			$	757,888
Ending Balance	$	86,395	$	371,852	$	274,995	$	39,790	$	12,236			$	785,268

The following table represents credit exposures by internally assigned grades for the period ended September 30, 2012 and December 31, 2011. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. Residential real estate loans with an internal credit risk grade include commercial loans that are secured by conventional 1-4 family residential properties. Real estate construction loans with an internal credit risk grade include commercial construction, land development and other land loans. The Corporation’s internal credit risk grading system is based on experiences with similarly graded loans.

The Corporation’s internally assigned grades are as follows:

• Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

• Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

• Substandard – loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that Citizens will sustain some loss if the deficiencies are not corrected.

• Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

• Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

• Unrated – Generally, consumer loans are not risk-graded, except when collateral is used for a business purpose.

September 30, 2012	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Total
Pass	$	74,610	$	364,004	$	94,859	$	39,229	$	900	$	573,602
Special Mention		1,901		7,625		2,447		682		—		12,655
Substandard		8,337		33,906		14,156		2,339		67		58,805
Doubtful		—		—		—		—		—		—
Ending Balance	$	84,848	$	405,535	$	111,462	$	42,250	$	967	$	645,062
December 31, 2011	Commercial & Agriculture		Commercial Real Estate		Residential Real Estate		Real Estate Construction		Consumer		Total
Pass	$	73,011	$	319,084	$	92,577	$	31,697	$	2,208	$	518,577
Special Mention		4,358		15,321		5,071		702		—		25,452
Substandard		9,026		37,447		17,764		5,067		—		69,304
Doubtful		—		—		—		—		—		—
Ending Balance	$	86,395	$	371,852	$	115,412	$	37,466	$	2,208	$	613,333

The following tables present performing and nonperforming loans based solely on payment activity for the period ended September 30, 2012 and December 31, 2011 that have not been assigned an internal risk grade. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans are considered to be nonperforming when they become 90 days past due. Nonperforming loans also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Corporation’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

	Residential Real Estate		Real Estate Construction		Consumer		Total
September 30, 2012
Performing	$	145,378	$	3,155	$	9,077	$	157,610
Nonperforming		—		—		—		—
Total	$	145,378	$	3,155	$	9,077	$	157,610
	Residential Real Estate		Real Estate Construction		Consumer		Total
December 31, 2011
Performing	$	159,291	$	2,324	$	10,027	$	171,642
Nonperforming		292		—		1		293
Total	$	159,583	$	2,324	$	10,028	$	171,935

The following table includes an aging analysis of the recorded investment of past due loans outstanding as of September 30, 2012 and December 31, 2011.

September 30, 2012	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		Past Due 90 Days and Accruing
Commericial & Agriculture	$	364	$	48	$	710	$	1,122	$	83,726	$	84,848	$	245
Commercial Real Estate		931		2,264		8,958		12,153		393,382		405,535		2,189
Residential Real Estate		736		1,047		7,857		9,640		247,200		256,840		262
Real Estate Construction		323		—		801		1,124		44,281		45,405		—
Consumer		48		26		—		74		9,970		10,044		—
Total	$	2,402	$	3,385	$	18,326	$	24,113	$	778,559	$	802,672	$	2,696
December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		Past Due 90 Days and Accruing
Commericial & Agriculture	$	229	$	174	$	509	$	912	$	85,483	$	86,395	$	19
Commercial Real Estate		4,156		1,369		9,466		14,991		356,861		371,852		737
Residential Real Estate		3,614		1,182		6,504		11,300		263,695		274,995		511
Real Estate Construction		—		—		45		45		39,745		39,790		45
Consumer		89		16		2		107		12,129		12,236		2
Total	$	8,088	$	2,741	$	16,526	$	27,355	$	757,913	$	785,268	$	1,314

Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Corporation may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income.

The following table presents loans on nonaccrual status as of September 30, 2012 and December 31, 2011.

	September 30, 2012		December 31, 2011
Commericial & Agriculture	$	2,793	$	940
Commercial Real Estate		19,137		15,346
Residential Real Estate		10,408		8,915
Real Estate Construction		1,355		567
Consumer		55		—
Total	$	33,748	$	25,768

Loan modifications that are considered troubled debt restructurings (TDRs) completed during the quarter ended September 30, 2012 and September 30, 2011 were as follows:

	For the Quarter Ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		2	$	197	$	497
Commercial Real Estate		—		—		—
Residential Real Estate		1		385		385
Real Estate Construction		—		—		—
Consumer		1		19		19
Total TDRs		4	$	601	$	901
	For the Quarter Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		—	$	—	$	—
Commercial Real Estate		—		—		—
Residential Real Estate		1		143		144
Real Estate Construction		—		—		—
Consumer		—		—		—
Total TDRs		1	$	143	$	144

Loan modifications that are considered troubled debt restructurings (TDRs) completed during the nine month periods ended September 30, 2012 and September 30, 2012 were as follows:

	For the Nine-Month Period Ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		6	$	983	$	976
Commercial Real Estate		3		1,206		1,206
Residential Real Estate		21		1,250		1,171
Real Estate Construction		—		—		—
Consumer		5		66		66
Total TDRs		35	$	3,505	$	3,419
	For the Nine-Month Period Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commericial & Agriculture		—	$	—	$	—
Commercial Real Estate		—		—		—
Residential Real Estate		1		143		144
Real Estate Construction		—		—		—
Consumer		—		—		—
TDRs		1	$	143	$	144

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans.

During the three and nine-month period ended September 30, 2012 and 2011, there were no defaults on any loans which were modified and considered TDRs during the twelve months previous to the respective periods ending September 30, 2012 or September 30, 2011.

Impaired Loans: Larger (greater than $350) commercial loans and commercial real estate loans, many of which are 60 days or more past due, are tested for impairment. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

The following tables include the recorded investment and unpaid principal balances for impaired financing receivables with the associated allowance amount, if applicable, as of September 30, 2012 and December 31, 2011.

	September 30, 2012						December 31, 2011
September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commericial & Agriculture	$	5,003	$	5,339	$	—	$	2,914	$	3,010	$	—
Commercial Real Estate		8,030		9,192		—		3,804		4,739		—
Residential Real Estate		3,086		4,598		—		862		953		—
Real Estate Construction		—		—		—		—		—		—
Consumer and Other		1		1		—		—		—		—
Total	$	16,120	$	19,130	$	—	$	7,580	$	8,702	$	—
With an allowance recorded:
Commericial & Agriculture	$	261	$	271	$	251	$	2,344	$	3,645	$	618
Commercial Real Estate		10,120		12,194		3,760		13,896		16,534		3,094
Residential Real Estate		3,133		3,274		808		2,984		4,127		860
Real Estate Construction		885		1,413		194		576		1,103		239
Consumer and Other		62		62		62		—		—		—
Total	$	14,461	$	17,214	$	5,075	$	19,800	$	25,409	$	4,811
Total:
Commericial & Agriculture	$	5,264	$	5,610	$	251	$	5,258	$	6,655	$	618
Commercial Real Estate		18,150		21,386		3,760		17,700		21,273		3,094
Residential Real Estate		6,219		7,872		808		3,846		5,080		860
Real Estate Construction		885		1,413		194		576		1,103		239
Consumer and Other		63		63		62		—		—		—
Total	$	30,581	$	36,344	$	5,075	$	27,380	$	34,111	$	4,811

	September 30, 2012				September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the quarter ended:
Commericial & Agriculture	$	5,366	$	26	$	5,112	$	168
Commercial Real Estate		16,448		329		13,953		666
Residential Real Estate		5,227		145		3,317		172
Real Estate Construction		608		11		849		9
Consumer and Other		54		1		—		—
Total	$	27,703	$	512	$	23,231	$	1,015
	September 30, 2012				September 30, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
For the nine months ended:
Commericial & Agriculture	$	4,631	$	205	$	4,618	$	330
Commercial Real Estate		17,060		995		12,975		934
Residential Real Estate		4,628		391		3,574		194
Real Estate Construction		531		11		1,560		41
Consumer and Other		28		1		—		—
Total	$	26,878	$	1,603	$	22,727	$	1,499

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Earnings per Common Share

9 Months Ended

Sep. 30, 2012

Earnings per Common Share [Abstract]

Earnings per Common Share

(6) Earnings per Common Share

Basic earnings per share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under stock options, computed using the treasury stock method.

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Basic
Net income	$	1,384	$	1,193	$	3,613	$	2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Weighted average common shares outstanding		7,707,917		7,707,917		7,707,917		7,707,917
Basic earnings per common share	$	0.14	$	0.12	$	0.35	$	0.21
Diluted
Net income	$	1,384	$	1,193	$	3,613	$	2,469
Preferred stock dividends and discount accretion		316		293		903		881
Net income available to common shareholders	$	1,068	$	900	$	2,710	$	1,588
Weighted average common shares outstanding for basic earnings per common share		7,707,917		7,707,917		7,707,917		7,707,917
Add: Dilutive effects of assumed exercises of stock options and warrants		—		—		—		—
Average shares and dilutive potential common shares outstanding		7,707,917		7,707,917		7,707,917		7,707,917
Diluted earnings per common share	$	0.14	$	0.12	$	0.35	$	0.21

Stock options for 10,000 common shares that have an exercise price of $35.00 were not considered in computing diluted earnings per common share for the three and nine-month periods ended September 30, 2012 because they were anti-dilutive.

Stock options for 19,500 common shares that have an exercise price of $20.50 were not considered in computing diluted earnings per common share for the nine-month period ended September 30, 2012 because they were anti-dilutive. These options expired during the three month period ended September 30, 2012.

Stock options for 29,500 common shares that have an exercise price ranging from $20.50 to $35.00 were not considered in computing diluted earnings per common share for the three and nine-month periods ended September 30, 2011 because they were anti-dilutive.

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Pension Information

9 Months Ended

Sep. 30, 2012

Pension Information [Abstract]

Pension Information

(8) Pension Information

Net periodic pension expense was as follows:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Service cost	$	235		$	212		$	704		$	635
Interest cost		229			203			686			611
Expected return on plan assets		(215	)		(206	)		(644	)		(620	)
Other components		90			85			270			257
Net periodic pension cost	$	339		$	294		$	1,016		$	883

The total amount of contributions expected to be paid by the Corporation in 2012 total $1,355, compared to $1,152 in 2011.

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Loans (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Loan balances
Total loans	$ 802,672		$ 785,268
Allowance for loan losses	(21,489)	(21,931)	(21,257)	(22,687)	(21,749)	(21,768)
Net loans	781,183		764,011
Commercial and Agriculture [Member]
Loan balances
Total loans	84,848		86,395
Allowance for loan losses	(2,569)	(2,537)	(2,876)	(3,949)	(2,821)	(3,639)
Commercial real estate [Member]
Loan balances
Total loans	405,535		371,852
Allowance for loan losses	(11,227)	(11,701)	(10,571)	(10,453)	(10,713)	(9,827)
Real estate - mortgage [Member]
Loan balances
Total loans	256,840		274,995
Allowance for loan losses	(5,959)	(6,379)	(5,796)	(5,953)	(6,184)	(4,569)
Real estate - construction [Member]
Loan balances
Total loans	45,405		39,790
Allowance for loan losses	(1,065)	(1,095)	(974)	(1,211)	(1,196)	(2,139)
Consumer [Member]
Loan balances
Total loans	10,044		12,236
Allowance for loan losses	$ (253)	$ (262)	$ (719)	$ (634)	$ (670)	$ (726)

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Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Significant Unobservable Inputs (Level 3) [Member] | Impaired Loans [Member]
Assets measured at fair value
Assets	$ 25,506
Significant Unobservable Inputs (Level 3) [Member] | Other real estate owned [Member]
Assets measured at fair value
Assets	464
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury securities and obligations of U.S. government agencies [Member]
Assets measured at fair value
Assets
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Obligations of states and political subdivisions [Member]
Assets measured at fair value
Assets
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mortgage-backed securities in government sponsored entities [Member]
Assets measured at fair value
Assets
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity securities in financial institutions [Member]
Assets measured at fair value
Assets		676
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury securities and obligations of U.S. government agencies [Member]
Assets measured at fair value
Assets	52,863	49,704
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Obligations of states and political subdivisions [Member]
Assets measured at fair value
Assets	79,210	66,219
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-backed securities in government sponsored entities [Member]
Assets measured at fair value
Assets	77,339	87,518
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Equity securities in financial institutions [Member]
Assets measured at fair value
Assets	456
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Obligations of states and political subdivisions [Member]
Assets measured at fair value
Assets	476	517
Fair Value, Measurements, Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member]
Assets measured at fair value
Assets
Fair Value, Measurements, Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other real estate owned [Member]
Assets measured at fair value
Assets
Fair Value, Measurements, Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Impaired Loans [Member]
Assets measured at fair value
Assets	25,506	22,569
Fair Value, Measurements, Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other real estate owned [Member]
Assets measured at fair value
Assets	$ 464	$ 1,097

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Securities (Tables)

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Available for sale securities

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

September 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	52,482	$	381	$	—		$	52,863
Obligations of states and political subdivisions		72,576		7,112		(2	)		79,686
Mortgage-backed securities in government sponsored entities		75,194		2,367		(222	)		77,339
Total debt securities		200,252		9,860		(224	)		209,888
Equity securities in financial institutions		481		—		(25	)		456
Total	$	200,733	$	9,860	$	(249	)	$	210,344
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. government agencies	$	49,305	$	399	$	—		$	49,704
Obligations of states and political subdivisions		61,508		5,240		(12	)		66,736
Mortgage-backed securities in government sponsored entities		85,063		2,582		(128	)		87,518
Total debt securities		195,876		8,221		(140	)		203,957
Equity securities in financial institutions		481		195		—			676
Total	$	196,357	$	8,416	$	(140	)	$	204,633

Fair value of securities by contractual maturity

contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities, are shown separately.

Available for sale	Amortized Cost		Fair Value
Due in one year or less	$	5,157	$	5,190
Due after one year through five years		17,036		17,184
Due after five years through ten years		18,109		19,018
Due after ten years		84,756		91,157
Mortgage-backed securities		75,194		77,339
Equity securities		481		456
Total securities available for sale	$	200,733	$	210,344

Securities with unrealized losses not recognized in income

Securities with unrealized losses at September 30, 2012 and December 31, 2011 not recognized in income are as follows:

September 30, 2012	12 Months or less					More than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
Obligations of states and political subdivisions	$	—	$	—		$	474	$	(2	)	$	474	$	(2	)
Mortgage-backed securities in gov’t sponsored entities		10,669		(210	)		1,426		(12	)		12,095		(222	)
Equity securities		481		(25	)		—		—			481		(25	)
Total temporarily impaired	$	11,150	$	(235	)	$	1,900	$	(14	)	$	13,050	$	(249	)
December 31, 2011	12 Months or less					More than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
Obligations of states and political subdivisions	$	1,309	$	(10	)	$	160	$	(2	)	$	1,469	$	(12	)
Mortgage-backed securities in gov’t sponsored entities		20,915		(128	)		—		—			20,915		(128	)
Total temporarily impaired	$	22,224	$	(138	)	$	160	$	(2	)	$	22,384	$	(140	)

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Pension Information (Tables)

9 Months Ended

Sep. 30, 2012

Pension Information [Abstract]

Net periodic pension expense

Net periodic pension expense was as follows:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Service cost	$	235		$	212		$	704		$	635
Interest cost		229			203			686			611
Expected return on plan assets		(215	)		(206	)		(644	)		(620	)
Other components		90			85			270			257
Net periodic pension cost	$	339		$	294		$	1,016		$	883

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Stock Options (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2012
Stock options outstanding
Exercise price	$ 35.00
Number	10,000
Weighted Average Remaining Contractual Life	6 months 12 days
Weighted Average Exercise Price	$ 35.00

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Allowance for Loan Losses (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Impaired financing receivables
Impaired financing receivable, with no related allowance, Recorded Investment	$ 16,120		$ 16,120		$ 7,580
Impaired financing receivable, with an allowance recorded, Recorded Investment	14,461		14,461		19,800
Impaired financing receivable, Recorded Investment, Total	30,581		30,581		27,380
Impaired financing receivable, with no related allowance, Unpaid Principal Balance	19,130		19,130		8,702
Impaired financing receivable, with an allowance recorded, Unpaid Principal Balance	17,214		17,214		25,409
Impaired financing receivable, Unpaid Principal Balance, Total	36,344		36,344		34,111
Impaired financing receivable with no related allowance
Impaired financing receivable, Related Allowance	5,075		5,075		4,811
Impaired financing receivable, Related Allowance, Total	5,075		5,075		4,811
Impaired financing receivable, Average Recorded Investment, Total	27,703	23,231	26,878	22,727
Impaired financing receivable, Interest Income Recognized, Total	512	1,015	1,603	1,499
Commercial & Agriculture [Member]
Impaired financing receivables
Impaired financing receivable, with no related allowance, Recorded Investment	5,003		5,003		2,914
Impaired financing receivable, with an allowance recorded, Recorded Investment	261		261		2,344
Impaired financing receivable, Recorded Investment, Total	5,264		5,264		5,258
Impaired financing receivable, with no related allowance, Unpaid Principal Balance	5,339		5,339		3,010
Impaired financing receivable, with an allowance recorded, Unpaid Principal Balance	271		271		3,645
Impaired financing receivable, Unpaid Principal Balance, Total	5,610		5,610		6,655
Impaired financing receivable with no related allowance
Impaired financing receivable, Related Allowance	251		251		618
Impaired financing receivable, Related Allowance, Total	251		251		618
Impaired financing receivable, Average Recorded Investment, Total	5,366	5,112	4,631	4,618
Impaired financing receivable, Interest Income Recognized, Total	26	168	205	330
Commercial Real Estate [Member]
Impaired financing receivables
Impaired financing receivable, with no related allowance, Recorded Investment	8,030		8,030		3,804
Impaired financing receivable, with an allowance recorded, Recorded Investment	10,120		10,120		13,896
Impaired financing receivable, Recorded Investment, Total	18,150		18,150		17,700
Impaired financing receivable, with no related allowance, Unpaid Principal Balance	9,192		9,192		4,739
Impaired financing receivable, with an allowance recorded, Unpaid Principal Balance	12,194		12,194		16,534
Impaired financing receivable, Unpaid Principal Balance, Total	21,386		21,386		21,273
Impaired financing receivable with no related allowance
Impaired financing receivable, Related Allowance	3,760		3,760		3,094
Impaired financing receivable, Related Allowance, Total	3,760		3,760		3,094
Impaired financing receivable, Average Recorded Investment, Total	16,448	13,953	17,060	12,975
Impaired financing receivable, Interest Income Recognized, Total	329	666	995	934
Residential Real Estate [Member]
Impaired financing receivables
Impaired financing receivable, with no related allowance, Recorded Investment	3,086		3,086		862
Impaired financing receivable, with an allowance recorded, Recorded Investment	3,133		3,133		2,984
Impaired financing receivable, Recorded Investment, Total	6,219		6,219		3,846
Impaired financing receivable, with no related allowance, Unpaid Principal Balance	4,598		4,598		953
Impaired financing receivable, with an allowance recorded, Unpaid Principal Balance	3,274		3,274		4,127
Impaired financing receivable, Unpaid Principal Balance, Total	7,872		7,872		5,080
Impaired financing receivable with no related allowance
Impaired financing receivable, Related Allowance	808		808		860
Impaired financing receivable, Related Allowance, Total	808		808		860
Impaired financing receivable, Average Recorded Investment, Total	5,227	3,317	4,628	3,574
Impaired financing receivable, Interest Income Recognized, Total	145	172	391	194
Real estate - construction [Member]
Impaired financing receivables
Impaired financing receivable, with no related allowance, Recorded Investment
Impaired financing receivable, with an allowance recorded, Recorded Investment	885		885		576
Impaired financing receivable, Recorded Investment, Total	885		885		576
Impaired financing receivable, with no related allowance, Unpaid Principal Balance
Impaired financing receivable, with an allowance recorded, Unpaid Principal Balance	1,413		1,413		1,103
Impaired financing receivable, Unpaid Principal Balance, Total	1,413		1,413		1,103
Impaired financing receivable with no related allowance
Impaired financing receivable, Related Allowance	194		194		239
Impaired financing receivable, Related Allowance, Total	194		194		239
Impaired financing receivable, Average Recorded Investment, Total	608	849	531	1,560
Impaired financing receivable, Interest Income Recognized, Total	11	9	11	41
Consumer and Other [Member]
Impaired financing receivables
Impaired financing receivable, with no related allowance, Recorded Investment	1		1
Impaired financing receivable, with an allowance recorded, Recorded Investment	62		62
Impaired financing receivable, Recorded Investment, Total	63		63
Impaired financing receivable, with no related allowance, Unpaid Principal Balance	1		1
Impaired financing receivable, with an allowance recorded, Unpaid Principal Balance	62		62
Impaired financing receivable, Unpaid Principal Balance, Total	63		63
Impaired financing receivable with no related allowance
Impaired financing receivable, Related Allowance	62		62
Impaired financing receivable, Related Allowance, Total	62		62
Impaired financing receivable, Average Recorded Investment, Total	54		28
Impaired financing receivable, Interest Income Recognized, Total	$ 1		$ 1

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Consolidated Comprehensive Income Statements (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Comprehensive Income Statements [Abstract]
Net income	$ 1,384	$ 1,193	$ 3,613	$ 2,469
Other comprehensive income:
Unrealized holding gains on available for sale securities	758	2,719	1,375	6,042
Tax effect of unrealized holdings gains on available for sale securities	(259)	(924)	(468)	(2,054)
Reclassification adjustment for gain recognized in income			(40)	(3)
Tax effect of reclassification adjustment for gain recognized in income			14	1
Total other comprehensive income	499	1,795	881	3,986
Comprehensive income	$ 1,883	$ 2,988	$ 4,494	$ 6,455

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Significant Accounting Policies [Abstract]

Significant Accounting Policies

(2) Significant Accounting Policies

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, impairment of goodwill, fair values of financial instruments, deferred taxes and pension obligations are particularly subject to change.

Income Taxes: Income tax expense is based on the effective tax rate expected to be applicable for the entire year. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

Effect of Newly Issued but Not Yet Effective Accounting Standards:

In December 2011, the FASB issued ASU 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early adoption is permitted. This update is not expected to have a significant impact on the Corporation’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Corporation is currently evaluating the impact the adoption of this update will have on the Corporation’s financial position or results of operations.

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Stock Options (Tables)

9 Months Ended

Sep. 30, 2012

Stock Options [Abstract]

Summary of the activity in the plan

A summary of the activity in the plan is as follows:

	Nine months ended					Nine months ended
	September 30, 2012					September 30, 2011
				Weighted				Weighted
				Average				Average
				Price				Price
	Shares			Per Share		Shares		Per Share
Outstanding at beginning of year		29,500		$	25.42		29,500	$	25.42
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited		(19,500	)		20.50		—		—
Options outstanding, end of period		10,000		$	35.00		29,500	$	25.42
Options exercisable, end of period		10,000		$	35.00		29,500	$	25.42

Stock options outstanding

The following table details stock options outstanding:

	Outstanding Options
			Weighted
			Average		Weighted
			Remaining		Average
			Contractual		Exercise
Exercise price	Number		Life		Price
$35.00		10,000		6.4 mos.		35.00
Outstanding at quarter-end		10,000		6.4 mos.	$	35.00

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Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Aging Analysis of Past Due Loans
30-59 Days Past Due	$ 2,402	$ 8,088
60-89 Days Past Due	3,385	2,741
90 Days or Greater	18,326	16,526
Total Past Due	24,113	27,355
Current	778,559	757,913
Total Loans	802,672	785,268
Past Due 90 Days and Accruing	2,696	1,314
Commercial & Agriculture [Member]
Aging Analysis of Past Due Loans
30-59 Days Past Due	364	229
60-89 Days Past Due	48	174
90 Days or Greater	710	509
Total Past Due	1,122	912
Current	83,726	85,483
Total Loans	84,848	86,395
Past Due 90 Days and Accruing	245	19
Commercial Real Estate [Member]
Aging Analysis of Past Due Loans
30-59 Days Past Due	931	4,156
60-89 Days Past Due	2,264	1,369
90 Days or Greater	8,958	9,466
Total Past Due	12,153	14,991
Current	393,382	356,861
Total Loans	405,535	371,852
Past Due 90 Days and Accruing	2,189	737
Residential Real Estate [Member]
Aging Analysis of Past Due Loans
30-59 Days Past Due	736	3,614
60-89 Days Past Due	1,047	1,182
90 Days or Greater	7,857	6,504
Total Past Due	9,640	11,300
Current	247,200	263,695
Total Loans	256,840	274,995
Past Due 90 Days and Accruing	262	511
Real estate - construction [Member]
Aging Analysis of Past Due Loans
30-59 Days Past Due	323
90 Days or Greater	801	45
Total Past Due	1,124	45
Current	44,281	39,745
Total Loans	45,405	39,790
Past Due 90 Days and Accruing		45
Consumer [Member]
Aging Analysis of Past Due Loans
30-59 Days Past Due	48	89
60-89 Days Past Due	26	16
90 Days or Greater		2
Total Past Due	74	107
Current	9,970	12,129
Total Loans	10,044	12,236
Past Due 90 Days and Accruing		$ 2

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Consolidated Financial Statements (Policies)

9 Months Ended

Sep. 30, 2012

Consolidated Financial Statements [Abstract]

Nature of Operations and Principles of Consolidation

Nature of Operations and Principles of Consolidation: The Consolidated Financial Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries: The Citizens Banking Company (Citizens), First Citizens Insurance Agency, Inc., Water Street Properties, Inc. (Water St.) and FC Refund Solutions, Inc (FCRS). FCRS was formed to facilitate payment of individual state and federal income tax refunds. First Citizens Capital LLC (FCC) is wholly-owned by Citizens and holds inter-company debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens and holds and manages Citizens’ securities portfolio. The operations of FCI are located in Wilmington, Delaware. The above companies together are referred to as the “Corporation”. Intercompany balances and transactions are eliminated in consolidation.

The consolidated financial statements have been prepared by the Corporation without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Corporation’s financial position as of September 30, 2012 and its results of operations and changes in cash flows for the periods ended September 30, 2012 and 2011 have been made. The accompanying Consolidated Financial Statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended September 30, 2012 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Corporation described in the notes to the financial statements contained in the Corporation’s 2011 annual report. The Corporation has consistently followed these policies in preparing this Form 10-Q.

The Corporation provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Union, Ottawa, and Richland. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and Federal Funds sold. First Citizens Insurance Agency, Inc. was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue was less than 1.0% of total revenue through September 30, 2012. Water St. revenue was less than 1.0% of total revenue through September 30, 2012. Management considers the Corporation to operate primarily in one reportable segment, banking.

Use of Estimates

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, impairment of goodwill, fair values of financial instruments, deferred taxes and pension obligations are particularly subject to change.

Income Taxes

Income Taxes: Income tax expense is based on the effective tax rate expected to be applicable for the entire year. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

Reclassifications

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

Property, Plant, and Equipment

In December 2011, the FASB issued ASU 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early adoption is permitted. This update is not expected to have a significant impact on the Corporation’s financial statements.

Balance Sheet

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Corporation is currently evaluating the impact the adoption of this update will have on the Corporation’s financial position or results of operations.

Fair Value Measurement

The Corporation uses a fair value hierarchy to measure fair value. The topic describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Corporation’s own view about the assumptions that market participants would use in pricing an asset.

Securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Management uses significant unobservable inputs to determine the fair value of one security (Level 3 inputs). These inputs include appraised values of the underlying collateral and estimated costs to sell the collateral. The value of the collateral has been discounted to represent the value in a distressed sale situation.

Equity securities: The Corporation’s equity securities are not actively traded in an open market. The fair values of these equity securities available for sale are determined by using market data inputs for similar securities that are observable. (Level 2 inputs).

The fair value measurement for equity securities in financial institutions at December 31, 2011 was determined using Level 1 quoted market prices. No transactions have occurred since December 31, 2011 therefore the fair value of the equity securities in financial institutions at September 30, 2012 is measured using Level 2 observable market data inputs.

Impaired loans: The fair values of impaired loans are determined using the fair values of collateral for collateral dependent loans, or discounted cash flows. The Corporation uses independent appraisals, discounted cash flow models and other available data to estimate the fair value of collateral (Level 3 inputs).

Other real estate owned: The fair value of other real estate owned is determined using the fair value of collateral. The Corporation uses appraisals and other available data to estimate the fair value of collateral (Level 3 inputs). The appraised values are discounted to represent an estimated value in a distressed sale. Additionally, estimated costs to sell the property are used to further adjust the value.