FLINT and ANN ARBOR, Mich., June 27 /PRNewswire-FirstCall/ --
Citizens Banking Corporation ("Citizens") and Republic Bancorp Inc.
("Republic") announced today that they have agreed to merge
Republic into Citizens to create the new Citizens Republic Bancorp
in a transaction currently valued at approximately $1.048 billion
in stock and cash. Citizens Republic Bancorp will be the 45th
largest bank holding company headquartered in the United States,
based on March 31, 2006 assets of $13.9 billion. "This exciting
partnership with Republic is the culmination of the outstanding
results our leadership team has achieved in completing the
turnaround initiatives we established in 2002. It enhances our core
markets, sales culture, product capabilities, and credit
competencies as well as improves our presence in attractive,
high-growth markets. Most importantly, it positions us to enhance
long-term shareholder value," stated William R. Hartman, chairman,
president and CEO of Citizens. "Led by a strong leadership team,
Republic has a long track record of consistent financial
performance based on high-touch and high-quality service, which are
also core values of our Vision," added Hartman. "Republic's
top-notch management team has built a solid, focused organization
through consistent growth since we started as a de novo bank 21
years ago. We're excited to join Republic with Citizens to create a
leading Midwestern franchise," stated Jerry D. Campbell, chairman
and founder of Republic. "We believe this is an excellent
transaction for our shareholders and demonstrates our commitment
since inception to continually increase shareholder value,"
continued Campbell. "We are very enthusiastic about working with
the outstanding Citizens leadership team. Our companies complement
each other in many ways and by implementing the best practices from
each organization, we will have an even greater ability to deliver
superior products and services to our customers. This translates
into an opportunity for stronger financial performance and enhanced
shareholder value. The appeal of this combination by every
strategic, financial, and operational measure is a win for our
customers, shareholders, and employees," stated Dana M. Cluckey,
president and CEO of Republic. Key Highlights of the Transaction: *
Based on Citizens' average closing price for the ten trading day
period ended June 26, 2006, the transaction is valued at $13.86 per
Republic share and represents total consideration of $1.048
billion. The aggregate consideration is fixed at approximately $155
million in cash and 33.2 million Citizens shares (approximately 15%
cash and 85% stock). * Republic shareholders will have the right to
elect to receive either cash or Citizens common stock, subject to
pro-ration if either cash or stock is oversubscribed. At closing,
each Republic shareholder will receive, in exchange for each share
of Republic common stock they hold, cash or Citizens common stock,
in either case having a value equal to $2.08 in cash plus 0.4378
shares of Citizens common stock based on the average closing price
for the ten trading day period immediately preceding the completion
of the merger. Common stock received by Republic shareholders is
expected to qualify as a tax-free exchange. * The transaction is
projected to close in the fourth quarter of 2006, subject to
regulatory and shareholder approvals. * Assuming no revenue
synergies, the transaction is expected to be immediately GAAP and
cash accretive to earnings per share for all shareholders in 2007.
* The new entity will be named Citizens Republic Bancorp ("Citizens
Republic") and will retain the familiar Citizens' colors and
weatherball as part of its logo. * Key facts about Citizens
Republic Bancorp: -- $2.0 billion in combined market capitalization
-- 275 branches and loan production offices in Michigan, Wisconsin,
Ohio, Iowa, and Indiana -- $13.9 billion in assets -- $8.6 billion
in deposits -- $2.6 billion in trust assets under administration
Management Structure The executive management of Citizens Republic
Bancorp will be comprised of Jerry D. Campbell as chairman, William
R. Hartman as CEO, Dana M. Cluckey as president and chief operating
officer, Charles D. Christy as chief financial officer, John D.
Schwab as chief credit officer, and Thomas F. Menacher as merger
integration officer. The Board of Directors for Citizens Republic
will be comprised of nine current Citizens directors and seven
current Republic directors. In addition to being familiar with the
communities served, the existing corporate cultures and strategies
for both companies are very compatible and the new leadership team
is committed to improving upon the strong sales and
service-oriented philosophy of both Citizens and Republic. Citizens
Republic Bancorp Upon completion of the transaction, Citizens
Republic Bancorp will represent a strong regional brand and will be
better positioned to compete with super-regional as well as
community banks. The combined entity will be the 45th largest bank
holding company headquartered in the United States with market
capitalization of $2.0 billion, assets of $13.9 billion, deposits
of $8.6 billion, and trust assets under administration of $2.6
billion. Citizens Republic will provide a full complement of
commercial, cash management, wealth management, and specialty
lending products and services to Republic customers as well as
enhanced SBA, commercial real estate and mortgage banking products
and services for Citizens' customers through 275 branch and loan
production offices with modest location overlap and 279 ATMs in
Michigan, Wisconsin, Ohio, Iowa, and Indiana. This partnership will
significantly increase the Southeast Michigan presence to 39
locations, giving Citizens Republic almost 5% of total deposit
market share in Michigan, and placing over 35% of its deposits in
high-growth markets. The merger will improve net charge-offs to
total average loans as a result of a more diversified loan
portfolio, diversify the revenue mix through complementary lines of
business and reduce the efficiency ratio as a result of the
enhanced scale of operations. Shareholders of the new entity are
expected to receive dividends of $1.16 per share annually. This
represents a 4.3% yield, based on Citizens' average closing price
for ten trading days ended June 26, 2006 of $26.92. This is
consistent with Citizens' current policy and represents an increase
of 36% for Republic shareholders who receive Citizens stock. The
complementary strengths of the two companies are expected to
generate significant revenue opportunities. These enhancements are
not included in the financial assumptions for the transaction but
are expected to further improve operating results and other key
financial ratios. Restructuring and Integration The transaction
will improve financial returns by utilizing existing operating
capacity to improve efficiency. Annual cost savings of $28 million,
or 9% of the combined expense base, are expected, of which 70% are
projected for 2007 and 100% for 2008 and thereafter. Citizens
Republic anticipates $87 million in pre-tax restructuring costs,
comprised of personnel, facilities/branch, systems and other
expenses. While the entire management team at both banks has
successful acquisition integration experience, Thomas F. Menacher
will lead the merger integration to ensure a successful transition
for customers. Branch divestitures, if required after regulatory
review, and system conversions are expected to occur in the first
quarter of 2007. As part of the transaction, management plans to
improve the interest rate risk and credit risk positions at
Citizens Republic by selling approximately $1 billion in mortgage
loans and securities, liquidating $1 billion in wholesale funding,
and recording $20 million of credit-related adjustments. These
estimated improvements are based on the current economic and
interest rate environment and may change prior to completion of the
merger and the restructuring. Additional actions are planned to
improve the revenue and deposit mix of the new entity by adding
enhanced loan and deposit product capabilities and leveraging the
expanded branch network to increase lower-cost core deposits.
Advisors to Citizens included UBS Investment Bank and Wachtell,
Lipton, Rosen & Katz. Advisors to Republic were Goldman, Sachs
& Co. and Cadwalader, Wickersham & Taft LLP. Investor
Conference Call Jerry D. Campbell, chairman of Republic, William R.
Hartman, chairman, president, and CEO of Citizens, Dana M. Cluckey,
president and CEO of Republic, Charles D. Christy, CFO of Citizens,
Thomas F. Menacher, EVP, treasurer, and CFO of Republic, John D.
Schwab, chief credit officer of Citizens, and Martin E. Grunst,
treasurer of Citizens, will review an investor presentation filed
with the SEC and posted to our website today at 10:30am EDT on
Tuesday, June 27, 2006. To participate in the conference call,
please call the number below approximately 10 minutes prior to the
scheduled conference time. US/Canada Dial-in Number: (877) 407-8031
International Dial-In Number: (201) 689-8031 Conference Name:
"Citizens Banking Corporation Conference Call." RSVP is not
required. Media Conference Call The executive management team will
conduct a conference call with media representatives to review an
investor presentation filed with the SEC and posted to our website
today and to answer questions at 1:00pm EDT on Tuesday, June 27,
2006. To participate in the conference call, please call the number
below approximately 10 minutes prior to the scheduled conference
time. US/Canada Dial-in Number: (888) 664-9958 Participant
Passcode: 7410344 Conference Name: "Media Conference." RSVP is not
required. Corporate Profiles Citizens Banking Corporation is a
diversified financial services company providing a full range of
commercial, consumer, mortgage banking, trust and financial
planning services to a broad client base. Citizens operates 183
branch, private banking, and financial center locations and 188
ATMs throughout Michigan, Wisconsin, and Iowa. Republic Bancorp
Inc., has consistently been the number one Small Business
Administration bank lender based in Michigan and one of the
Midwest's top retail mortgage lenders. Republic was named the 17th
Best Company to Work For by FORTUNE magazine (marking the sixth
year on FORTUNE's "100 Best Companies to Work For" list) and named
to Working Mother magazine's list of "100 Best Companies for
Working Mothers" for the fifth year in a row. Republic operates 92
retail, commercial, and mortgage banking offices and 91 ATMs
throughout Michigan, Ohio and Indiana. Safe Harbor Statement
Discussions in this release that are not statements of historical
fact (including statements that include terms such as "will,"
"may," "should," "believe," "expect," "anticipate," "estimate,"
"intend," and "plan") are forward-looking statements that involve
risks and uncertainties. Any forward- looking statement is not a
guarantee of future performance and actual results could differ
materially from those contained in the forward-looking information.
Such forward-looking statements include, but are not limited to,
statements about the benefits of the business combination
transaction involving Citizens and Republic, including future
financial and operating results, the new company's plans,
objectives, expectations and intentions and other statements that
are not historical facts. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: the ability to obtain regulatory
approvals of the transaction on the proposed terms and schedule;
the failure of Citizens or Republic shareholders to approve the
transaction; the risk that the businesses will not be integrated
successfully; deposit attrition and disruption from the transaction
making it more difficult to maintain relationships with customers,
employees or suppliers; the risk that the cost savings and any
other synergies from the transaction may not be fully realized or
may take longer to realize than expected; competition and its
effect on pricing, spending, third-party relationships and
revenues; movements in market interest rates and secondary market
volatility; divestitures assumed and/or required; potential
conditions that may affect the tax-free status of the Republic
stock exchange for Citizens' common shares; and unfavorable changes
in economic and business conditions or the regulatory environment.
Additional factors that may affect future results are contained in
Citizens' and Republic's filings with the SEC, which are available
at the SEC's web site http://www.sec.gov/. Citizens and Republic
disclaim any obligation to update and revise statements contained
in these materials based on new information or otherwise.
Additional Information In connection with the proposed merger,
Citizens and Republic will file a joint proxy statement/prospectus
with the Securities and Exchange Commission ("SEC"). Investors and
security holders are advised to read the joint proxy
statement/prospectus when it becomes available because it will
contain important information. Investors and security holders may
obtain a free copy of the joint proxy statement/prospectus (when
available) and other documents filed by Citizens and Republic with
the SEC at the SEC's website at http://www.sec.gov/. Free copies of
the joint proxy statement/prospectus (when available) and each
company's other filings with the SEC may also be obtained by
accessing Citizens' website at http://www.citizensonline.com/ under
the Investor Relations section or by accessing Republic's website
at http://www.republicbancorp.com/ under the Investor Relations
section. Citizens and Republic and their respective directors,
executive officers and other members of their management may be
soliciting proxies from their respective shareholders in favor of
the merger. Information concerning persons who may be considered
participants in the solicitation of Citizens' shareholders under
the rules of the SEC is set forth in the Proxy Statement filed by
Citizens with the SEC on March 22, 2006, and information concerning
persons who may be considered participants in the solicitation of
Republic's shareholders under the rules of the SEC is set forth in
the Proxy Statement filed by Republic with the SEC on March 14,
2006. Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the joint proxy
statement/prospectus regarding the proposed merger when it becomes
available. You may obtain free copies of these documents as
described above. This communication shall not constitute an offer
to sell or the solicitation of an offer to buy securities, nor
shall there be any sale of securities in any jurisdiction in which
such solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of such
jurisdiction. Visit our websites at http://www.citizensonline.com/
and http://www.republicbancorp.com/ for more information. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050421/CBCFLOGO ) (Logo:
http://www.newscom.com/cgi-bin/prnh/20060627/RBCLOGO )
http://www.newscom.com/cgi-bin/prnh/20050421/CBCFLOGO
http://photoarchive.ap.org/ DATASOURCE: Citizens Banking
Corporation CONTACT: Charles D. Christy, EVP & Chief Financial
Officer, +1-810-237-4200, , or Kathleen Miller, Investor Relations,
+1-810-257-2506, , both of Citizens Banking Corporation; or Thomas
F. Menacher, EVP, Treasurer, & Chief Financial, Officer,
+1-989-725-7337, , or Kristine D. Brenner, Director of Investor
Relations, +1-989-725-7337, Web site:
http://www.citizensonline.com/ http://www.republicbancorp.com/
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