10-Q 1 k71319e10vq.txt QUARTERLY REPORT FOR PERIOD ENDED JUNE 30, 2002 ================================================================================ 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 period ended June 30, 2002 ----------------------- 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 0-10535 --------------------- CITIZENS BANKING CORPORATION ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) MICHIGAN 38-2378932 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 328 S. Saginaw St., Flint, Michigan 48502 ---------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (810) 766-7500 ------------------------------------------------------------------- (Registrant's telephone number, including area code) None ------------------------------------------------------------------- (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 X Yes No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at August 09, 2002 -------------------------- ------------------------------ Common Stock, No Par Value 44,625,979 Shares ================================================================================ CITIZENS BANKING CORPORATION Index to Form 10-Q

Page ---- PART I - FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. - Quantitative and Qualitative Disclosures about Market Risk 25 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders 25 Item 6 - Exhibits and Reports on Form 8-K 25 SIGNATURE 26

2 PART I - FINANCIAL INFORMATION ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS CITIZENS BANKING CORPORATION AND SUBSIDIARIES

---------------------------------------------------------------------------------------------- JUNE 30, December 31, (in thousands) 2002 2001 ---------------------------------------------------------------------------------------------- (UNAUDITED) (Note 1) ASSETS Cash and due from banks $ 180,139 $ 224,416 Money market investments: Federal funds sold -- 891 Interest-bearing deposits with banks 3,952 3,455 Term federal funds sold 15,000 -- ---------- ---------- Total money market investments 18,952 4,346 Securities available-for-sale: U.S. Treasury and federal agency securities 931,944 739,792 State and municipal securities 451,879 443,956 Other securities 110,682 113,948 ---------- ---------- Total investment securities 1,494,505 1,297,696 Mortgage loans held for sale 79,662 150,443 Loans: Commercial 3,254,365 3,246,380 Real estate construction 202,185 216,041 Real estate mortgage 605,249 821,090 Consumer 1,505,104 1,488,452 ---------- ---------- Total loans 5,566,903 5,771,963 Less: Allowance for loan losses (80,447) (80,299) ---------- Net loans 5,486,456 5,691,664 Premises and equipment 125,160 128,805 Goodwill 54,785 54,785 Other intangible assets 24,583 26,191 Other assets 82,786 100,529 ----------- ---------- TOTAL ASSETS $7,547,028 $7,678,875 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $ 872,734 $ 903,900 Interest-bearing 4,993,204 5,061,226 ---------- ---------- Total deposits 5,865,938 5,965,126 Federal funds purchased and securities sold under agreements to repurchase 176,705 233,077 Other short-term borrowings 81,538 81,353 Other liabilities 78,615 72,756 Long-term debt 629,548 629,099 ---------- ---------- Total liabilities 6,832,344 6,981,411 Shareholders' Equity: Preferred stock - No par value -- -- Common stock - No par value 135,729 155,720 Retained earnings 545,410 521,191 Accumulated other comprehensive income 33,545 20,553 ---------- ---------- Total shareholders' equity 714,684 697,464 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,547,028 $7,678,875 ========== ========== ----------------------------------------------------------------------------------------------

See notes to consolidated financial statements. 3 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) CITIZENS BANKING CORPORATION AND SUBSIDIARIES

------------------------------------------------------------------------------------------------------------------------------ Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- (in thousands, except per share amounts) 2002 2001 2002 2001 ------------------------------------------------------------------------------------------------------------------------------ INTEREST INCOME Interest and fees on loans $ 96,825 $126,657 $196,988 $260,477 Interest and dividends on investment securities: Taxable 14,602 14,534 26,971 31,604 Nontaxable 5,335 5,408 10,719 10,739 Money market investments 231 661 590 998 -------- -------- -------- -------- Total interest income 116,993 147,260 235,268 303,818 -------- -------- -------- -------- INTEREST EXPENSE Deposits 32,865 54,782 67,435 115,661 Short-term borrowings 904 8,014 1,869 20,060 Long-term debt 7,815 8,039 15,596 16,052 -------- -------- -------- -------- Total interest expense 41,584 70,835 84,900 151,773 -------- -------- -------- -------- NET INTEREST INCOME 75,409 76,425 150,368 152,045 Provision for loan losses 9,400 6,362 14,650 10,411 -------- -------- -------- -------- Net interest income after provision for loan losses 66,009 70,063 135,718 141,634 -------- -------- -------- -------- NONINTEREST INCOME Service charges on deposit accounts 6,515 7,181 13,147 13,884 Trust fees 5,030 5,269 9,888 10,764 Mortgage and other loan income 2,872 4,461 6,897 6,555 Bankcard fees 1,929 3,204 4,687 6,110 Brokerage and investment fees 2,633 2,035 4,683 3,903 Investment securities gains (59) 245 (57) 351 Gain on sale of merchant business 5,400 -- 5,400 -- Gain on securitized mortgages 2,436 3,259 2,436 5,372 Gain on sale of credit card assets --- 2,623 -- 2,623 Other 3,859 3,814 8,260 7,190 -------- -------- -------- -------- Total noninterest income 30,615 32,091 55,341 56,752 -------- -------- -------- -------- NONINTEREST EXPENSE Salaries and employee benefits 31,844 31,526 64,044 63,044 Equipment 4,956 5,077 9,814 10,031 Occupancy 4,584 4,453 9,199 9,380 Data processing services 3,250 3,288 6,375 6,463 Professional services 3,354 3,030 6,189 5,412 Bankcard expenses 1,571 2,556 3,653 4,844 Advertising and public relations 1,856 1,632 3,687 3,193 Postage and delivery 1,757 1,924 3,515 3,887 Intangible asset amortization 724 2,531 1,449 5,060 Other 7,625 7,599 14,787 15,013 -------- -------- -------- -------- Total noninterest expense 61,521 63,616 122,712 126,327 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 35,103 38,538 68,347 72,059 Income taxes 9,764 11,390 18,905 21,106 -------- -------- -------- -------- NET INCOME $ 25,339 $ 27,148 $ 49,442 $ 50,953 ======== ======== ======== ======== NET INCOME PER SHARE: Basic $ 0.57 $ 0.59 $ 1.10 $ 1.10 Diluted 0.56 0.58 1.09 1.09 CASH DIVIDENDS DECLARED PER SHARE 0.29 0.28 0.56 0.54 AVERAGE SHARES OUTSTANDING: Basic 44,789 46,388 44,925 46,431 Diluted 45,282 46,789 45,462 46,866 ------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements 4 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) CITIZENS BANKING CORPORATION AND SUBSIDIARIES

---------------------------------------------------------------------------------------------------------------------------- Accumulated Other Common Retained Comprehensive (in thousands except per share amounts) Stock Earnings Income Total ---------------------------------------------------------------------------------------------------------------------------- BALANCE - JUNE 30, 2001 $194,293 $492,776 $ 19,607 $706,676 Net income 27,962 27,962 Net unrealized gain on securities available-for-sale, net of tax effect 18,282 18,282 -------- Total comprehensive income 46,244 Exercise of stock options, net of shares purchased 4,401 4,401 Shares acquired for retirement (23,406) (23,406) Cash dividends - $0.275 per share (12,725) (12,725) -------- -------- -------- -------- BALANCE - SEPTEMBER 30, 2001 $175,288 $508,013 $ 37,889 $721,190 Net income 25,742 25,742 Net unrealized loss on securities available-for-sale, net of tax effect (15,609) Minimum pension liability (1,727) (17,336) -------- -------- Total comprehensive income 8,406 Exercise of stock options, net of shares purchased 4,675 4,675 Shares acquired for retirement (24,243) (24,243) Cash dividends - $0.275 per share (12,564) (12,564) -------- -------- -------- -------- BALANCE - DECEMBER 31, 2001 $155,720 $521,191 $ 20,553 $697,464 Net income 24,103 24,103 Net unrealized loss on securities available-for-sale, net of tax effect (4,491) (4,491) -------- Total comprehensive income 19,612 Exercise of stock options, net of shares purchased 2,625 2,625 Shares acquired for retirement (7,322) (7,322) Cash dividends - $0.275 per share (12,405) (12,405) -------- -------- -------- -------- BALANCE - MARCH 31, 2002 $151,023 $532,889 $ 16,062 $699,974 Net income 25,339 25,339 Net unrealized gain on securities available-for-sale, net of tax effect 17,483 17,483 -------- Total comprehensive income 42,822 Exercise of stock options, net of shares purchased 3,756 3,756 Shares acquired for retirement (19,198) (19,198) Net change in deferred compensation, net of tax effect 148 148 Cash dividends - $0.285 per share (12,818) (12,818) -------- -------- -------- -------- BALANCE - JUNE 30, 2002 $135,729 $545,410 $ 33,545 $714,684 ======== ======== ======== ======== -----------------------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements. 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CITIZENS BANKING CORPORATION AND SUBSIDIARIES

-------------------------------------------------------------------------------------------------------- Six Months Ended June 30, ------------------------ (in thousands) 2002 2001 -------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net income $ 49,442 $ 50,953 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 14,650 10,411 Depreciation 8,167 8,203 Amortization of intangibles 1,449 5,060 Net amortization on investment securities 315 (591) Investment securities gains (2,379) (5,723) Loans originated for sale (393,253) (325,628) Proceeds from loan sales 467,398 227,402 Net gain from loan sales (3,364) (4,047) Accrued merger related and other charges -- (2,088) Other 16,766 23,085 --------- --------- Net cash provided (used) by operating activities 159,191 (12,963) INVESTING ACTIVITIES: Net increase in money market investments (14,606) (51,261) Securities available-for-sale: Proceeds from sales 65,989 283,106 Proceeds from maturities 117,749 220,711 Purchases (358,496) (362,271) Net decrease in loans 190,558 406,140 Net increase in premises and equipment (4,522) (2,643) --------- --------- Net cash provided by investing activities (3,328) 493,782 FINANCING ACTIVITIES: Net increase (decrease) in demand and savings deposits 20,963 (107,652) Net decrease in time deposits (120,151) (214,459) Net decrease in short-term borrowings (56,187) (344,920) Proceeds from issuance of long-term debt 26,000 150,000 Principal reductions in long-term debt (25,551) (114) Cash dividends paid (25,223) (24,869) Net change in deferred compensation, net of tax effect 148 -- Proceeds from stock options exercised 6,381 3,586 Shares acquired for retirement (26,520) (10,842) --------- --------- Net cash used by financing activities (200,140) (549,270) --------- --------- Net decrease in cash and due from banks (44,277) (68,451) Cash and due from banks at beginning of period 224,416 318,115 --------- --------- Cash and due from banks at end of period $ 180,139 $ 249,664 ========= ========= --------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements. 6 CITIZENS BANKING CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) NOTE 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Citizens' 2001 Annual Report on Form 10-K. NOTE 2. LINES OF BUSINESS INFORMATION Citizens is managed along the following business lines: Business Banking, Consumer Banking, Wealth Management, and Other. Selected lines of business segment information for the three and six month periods ended June 30, 2002 are provided below. Prior to January 1, 2002 Citizens managed five lines of business; Commercial Banking, Retail Banking, Financial Services, F&M and Other. Beginning in 2002 the F&M line of business was combined into the remaining four lines of business. In the second quarter of 2002 three of the business lines: Commercial Banking, Retail Banking and Financial services were renamed to Business Banking, Consumer Banking and Wealth Management, respectively. The components of the renamed business lines remained the same. Prior year amounts have been restated to reflect the current business unit structure and cost allocation methodology. There are no significant intersegment revenues.

----------------------------------------------------------------------------------------------------------------- Business Consumer Wealth (in thousands) Banking Banking Management Other Total ----------------------------------------------------------------------------------------------------------------- EARNINGS SUMMARY - THREE MONTHS ENDED JUNE 30, 2002 Net interest income (taxable equivalent) $35,174 $38,687 $ 22 $5,139 $79,022 Provision for loan losses 7,345 2,732 -- (677) 9,400 ------- ------- ------ ------ ------- Net interest income after provision 27,829 35,955 22 5,816 69,622 Noninterest income 4,374 17,957 6,359 1,925 30,615 Noninterest expense 17,935 37,004 4,511 2,071 61,521 ------- ------- ------ ------ ------- Income (loss) before income taxes 14,268 16,908 1,870 5,670 38,716 Income tax expense (taxable equivalent) 4,995 5,909 654 1,819 13,377 ------- ------- ------ ------ ------- Net income (loss) $ 9,273 $10,999 $1,216 $3,851 $25,339 ======= ======= ====== ====== ======= Average Assets (in millions) $ 3,398 $ 2,682 $ 4 $1,449 $ 7,533 ================================================================================================================= EARNINGS SUMMARY - THREE MONTHS ENDED JUNE 30, 2001 Net interest income (taxable equivalent) $35,132 $43,147 $ 393 $1,463 $80,135 Provision for loan losses 4,286 1,942 -- 134 6,362 ------- ------- ------ ------ ------- Net interest income after provision 30,846 41,205 393 1,329 73,773 Noninterest income 4,014 16,992 6,684 4,401 32,091 Noninterest expense 16,957 36,812 4,792 5,055 63,616 ------- ------- ------ ------ ------- Income (loss) before income taxes 17,903 21,385 2,285 675 42,248 Income tax expense (taxable equivalent) 6,267 7,484 800 549 15,100 ------- ------- ------ ------ ------- Net income (loss) $11,636 $13,901 $1,485 $ 126 $27,148 ======= ======= ====== ====== ======= Average Assets (in millions) $ 3,535 $ 3,442 $ 5 $ 996 $ 7,977 =================================================================================================================

7

------------------------------------------------------------------------------------------------------------------ Business Consumer Wealth (in thousands) Banking Banking Management Other Total ------------------------------------------------------------------------------------------------------------------ EARNINGS SUMMARY - SIX MONTHS ENDED JUNE 30, 2002 Net interest income (taxable equivalent) $69,679 $77,617 $ 239 $10,086 $157,621 Provision for loan losses 10,436 5,475 -- (1,261) 14,650 ------- ------- ------- ------- -------- Net interest income after provision 59,243 72,142 239 11,347 142,971 Noninterest income 8,727 31,617 12,259 2,738 55,341 Noninterest expense 34,507 71,605 8,655 7,945 122,712 ------- ------- ------- ------- -------- Income (loss) before income taxes 33,463 32,154 3,843 6,140 75,600 Income tax expense (taxable equivalent) 11,714 11,245 1,345 1,854 26,158 ------- ------- ------- ------- -------- Net income (loss) $21,749 $20,909 $ 2,498 $ 4,286 $ 49,442 ======= ======= ======= ======= ======== Average Assets (in millions) $ 3,398 $ 2,755 $ 5 $ 1,391 $7,549 ================================================================================================================== EARNINGS SUMMARY - SIX MONTHS ENDED JUNE 30, 2001 Net interest income (taxable equivalent) $70,180 $87,679 $ 728 $ 882 $159,469 Provision for loan losses 6,079 4,663 -- (331) 10,411 ------- ------- ------- ------- -------- Net interest income after provision 64,101 83,016 728 1,213 149,058 Noninterest income 7,975 29,352 13,006 6,419 56,752 Noninterest expense 33,610 72,613 8,929 11,175 126,327 ------- ------- ------- ------- -------- Income (loss) before income taxes 38,466 39,755 4,805 (3,543) 79,483 Income tax expense (taxable equivalent) 13,466 13,914 1,682 (532) 28,530 ------- ------- ------- ------- -------- Net income (loss) $25,000 $25,841 $ 3,123 $(3,011) $ 50,953 ======= ======= ======= ======= ======== Average Assets (in millions) $ 3,539 $ 3,406 $ 4 $ 1,170 $ 8,120 ==================================================================================================================

NOTE 3. EARNINGS PER SHARE Net income per share is computed based on the weighted-average number of shares outstanding, including the dilutive effect of stock options, as follows:

-------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share amounts) 2002 2001 2002 2001 -------------------------------------------------------------------------------------------------------- NUMERATOR: Basic and dilutive earnings per share -- net income available to common shareholders $25,339 $27,148 $49,442 $50,953 ======= ======= ======= ======= DENOMINATOR: Basic earnings per share -- weighted average shares 44,789 46,388 44,925 46,431 Effect of dilutive securities -- potential conversion of employee stock options 493 401 537 435 ------- ------- ------- ------- Diluted earnings per share -- adjusted weighted-average shares and assumed conversions 45,282 46,789 45,462 46,866 ======= ======= ======= ======= BASIC EARNINGS PER SHARE $ 0.57 $ 0.59 $ 1.10 $ 1.10 ======= ======= ======= ======= DILUTED EARNINGS PER SHARE $ 0.56 $ 0.58 $ 1.09 $ 1.09 ======= ======= ======= ======= --------------------------------------------------------------------------------------------------------

During the second quarter of 2002, employees exercised stock options to acquire 180,943 shares at an average exercise price of $20.76 per share. 8 NOTE 4. GOODWILL AND OTHER INTANGIBLE ASSETS On January 1, 2002 Citizens Banking Corporation adopted SFAS No. 142 which changed the accounting for intangible assets. The effect of this statement was to eliminate amortization of indefinite life intangibles (i.e. goodwill) beginning January 1, 2002. The following table reflects the reconciliation of reported net earnings and earnings per share to the amounts adjusted for the exclusion of goodwill amortization.

------------------------------------------------------------------------------------------------------------------ For the Year Ended Three Months Ended Six Months Ended December 31, 2001 June 30, 2001 June 30, 2001 --------------------- ------------------- ----------------- Net Earnings Net Earnings Net Earnings (in thousands, except per share amounts) Income Per Share Income Per Share Income Per Share ------------------------------------------------------------------------------------------------------------------ Diluted earnings per common share computation: Net income/diluted EPS as $104,657 $2.25 $27,148 $0.58 $50,953 $1.09 reported Add back: Goodwill amortization, net of tax effect 5,545 0.12 1,399 0.03 2,775 0.06 -------- ----- ------- ----- ------- ----- Adjusted net income/diluted EPS $110,202 $2.37 $28,547 $0.61 $53,728 $1.15 ======== ===== ======= ===== ======= ===== ------------------------------------------------------------------------------------------------------------------

SFAS No. 142 also requires that goodwill be tested for impairment at least annually. As of June 30, 2002 Citizens has completed it's transitional impairment testing and no impairment under SFAS No. 142 was identified. Goodwill at June 30, 2002 was allocated to Citizens' lines of business as follows:

JUNE 30, (in thousands) 2002 ------------------------------------------------ Business Banking $23,982 Consumer Banking 29,002 Wealth Management 1,801 Other -- ------- Total Goodwill $54,785 ======= ================================================

No changes in the carrying amount of goodwill have been recorded during the six months ended June 30, 2002. Citizens' other intangible assets as of June 30, 2002 and 2001 are shown in the table below.

----------------------------------------------------------------------- JUNE 30, June 30, (in thousands) 2002 2001 ----------------------------------------------------------------------- Core deposit intangibles $28,989 $28,989 Accumulated amortization 7,710 4,811 ------- ------- Net core deposit intangibles 21,279 24,178 Minimum pension liability 3,304 -- ------- ------- Total other intangibles $24,583 $24,178 ======= ======= ======================================================================

The estimated annual amortization expense for core deposit intangibles for each of the next five years is $2.9 million. As part of adopting SFAS No. 142 Citizens has had no material reclassifications or adjustments to the useful lives of finite-lived (core deposit) intangible assets. 9 NOTE 5. ACCUMULATED OTHER COMPREHENSIVE INCOME The components of comprehensive income, net of tax, for the three and six month periods are presented below.

---------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2002 2001 2002 2001 ---------------------------------------------------------------------------------------------------- Net unrealized gains (losses) on investment securities available for sale: Balance at beginning of period $16,062 $25,313 $20,553 $11,738 Net change in unrealized gains (losses), net of tax 17,483 (5,706) 12,992 7,869 ------- ------- ------- ------- Accumulated other comprehensive income, net of tax $33,545 $19,607 $33,545 $19,607 ======= ======= ======= ======= ====================================================================================================

NOTE 6. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. 10 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

------------------------------------------------------------------------------------------------------------------------------------ FIVE-QUARTER SUMMARY OF SELECTED FINANCIAL INFORMATION FOR QUARTER ENDED CITIZENS BANKING CORPORATION AND SUBSIDIARIES ------------------------------------------------------------------------ JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, 2002 2002 2001 2001 2001 ------------------------------------------------------------------------------------------------------------------------------------ SUMMARY OF OPERATIONS (THOUSANDS) Interest Income $116,993 $118,275 $129,335 $140,406 $147,260 Net interest income 75,409 74,959 77,676 78,260 76,425 Provision for loan losses 9,400 5,250 7,496 8,500 6,362 Investment securities gains 2,377 2 423 49 3,504 Other noninterest income 28,238 24,724 25,599 34,658 28,587 Noninterest expense 61,521 61,191 60,586 64,270 63,616 Income taxes 9,764 9,141 9,874 12,235 11,390 Net income 25,339 24,103 25,742 27,962 27,148 Cash dividends 12,818 12,405 12,564 12,725 12,771 ------------------------------------------------------------------------------------------------------------------------------------ PER COMMON SHARE DATA Basic net income $ 0.57 $ 0.53 $ 0.57 $ 0.60 $ 0.59 Diluted net income 0.56 0.53 0.56 0.60 0.58 Cash dividends 0.285 0.275 0.275 0.275 0.275 Market value (end of period) 28.98 32.47 32.88 32.08 29.25 Book value (end of period) 16.02 15.55 15.46 15.77 15.27 ------------------------------------------------------------------------------------------------------------------------------------ AT PERIOD END (MILLIONS) Assets $ 7,547 $ 7,482 $ 7,679 $ 7,715 $ 7,924 Loans 5,567 5,613 5,772 5,866 6,008 Deposits 5,866 5,861 5,965 5,890 5,922 Shareholders' equity 715 700 697 721 707 ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE FOR THE QUARTER (MILLIONS) Assets $ 7,533 $ 7,565 $ 7,701 $ 7,809 $ 7,977 Loans 5,536 5,623 5,786 5,918 6,068 Deposits 5,900 5,924 5,930 5,944 6,007 Shareholders' equity 702 701 708 713 700 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS (ANNUALIZED) Return on average assets 1.35% 1.29% 1.33% 1.42% 1.37% Return on average shareholders' equity 14.48 13.94 14.42 15.56 15.56 Net interest margin (FTE) 4.45 4.45 4.48 4.44 4.26 Efficiency ratio 60.40 59.22 55.37 59.15 58.26 Net loans charged off to average loans 0.68 0.37 0.57 0.57 0.36 Average equity to average assets 9.32 9.27 9.19 9.13 8.78 Allowance for loan losses as a percent of loans 1.45 1.43 1.39 1.39 1.35 Nonperforming assets to loans plus ORAA (end of period) 1.57 1.43 1.37 1.35 1.42 Nonperforming assets to total assets (end of period) 1.16 1.07 1.03 1.02 1.08 Leverage ratio 8.09 8.08 7.79 7.84 7.71 Tier 1 capital ratio 10.18 10.17 9.87 10.06 9.91 Total capital ratio 11.43 11.42 11.12 11.31 11.16 ====================================================================================================================================

11 INTRODUCTION The following is a review of Citizens Banking Corporation's ("Citizens") performance during the three and six months ended June 30, 2002. This discussion should be read in conjunction with the accompanying unaudited financial statements and notes thereto appearing on pages 3 through 10 of this report and Citizens' 2001 Annual Report on Form 10-K. A quarterly summary of selected financial data for the five-quarter period ended June 30, 2002 is presented in the table on page 11 of this report. EARNINGS SUMMARY Citizens earned net income of $25,339,000 for the three months ended June 30, 2002, or $0.56 per share, compared with net income of $27,148,000, or $0.58 per share, for the same quarter of 2001. Returns on average assets and average equity for the quarter were 1.35% and 14.48%, respectively, compared with 1.37% and 15.56%, respectively, in 2001. For the first six months of 2002, net income was $49,442,000 or $1.09 per share, compared to $50,953,000 or $1.09 per share for the same period in 2001. Return on average assets and average equity during the first six months of 2002 were 1.32% and 14.22%, respectively, compared with 1.27% and 14.81%, respectively, in 2001. Net income for the three and six months ended June 30, 2002 declined from the comparable periods in 2001 due to higher provisions for loan losses and decreased net interest income and noninterest income, which were partially offset by lower noninterest expenses and income taxes. The decline in net interest income resulted from a lower level of earning assets partially offset by an improvement in the net interest margin due to lower funding costs. Noninterest income decreased in the three and six month periods ended June 30, 2002 over the comparable periods in 2001 primarily due to lower bankcard fees as a result of the second quarter 2002 sale of the merchant services business and the second quarter 2001 sale of the credit card portfolio. Noninterest expenses decreased for both the three and six month periods as a result of lower intangible asset amortization due to adoption of SFAS No. 142 and lower bankcard expenses as a result of the previously mentioned sales of the merchant services business and the credit card portfolio. LINES OF BUSINESS REPORTING Citizens has four major business segments: Business Banking, Consumer Banking, Wealth Management and Other. For more information about each line of business, see Note 18 to Citizens' 2001 Annual Report on Form 10-K and Note 2 of this Quarterly Report on Form 10-Q. A summary of net income by each business line is presented below.

---------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2002 2001 2002 2001 ---------------------------------------------------------------------------------------------------- Business Banking $ 9,273 $11,636 $21,749 $25,000 Consumer Banking 10,999 13,901 20,909 25,841 Wealth Management 1,216 1,485 2,498 3,123 Other 3,851 126 4,286 (3,011) ------- ------- ------- ------- Net income $25,339 $27,148 $49,442 $50,953 ======= ======= ======= ======= ====================================================================================================

Business Banking net income declined in the three and six months ended June 30, 2002 compared to the same periods in the prior year due primarily to higher loan loss provisions and, to a lessor extent, increased operating expenses. Higher loan loss provisions were attributable to increased charge-offs and nonperforming loans in the commercial portfolio. Net interest income remained relatively flat in both periods as average loan balances declined slightly while the net interest spread improved. Noninterest income increased in both the three and six month periods due in large part to higher deposit service charges. The decrease in Consumer Banking net income for the three and six month periods ended June 30, 2002 versus the comparable periods of the prior year was primarily due to lower net interest income and higher provisions for loan losses. The decrease in net interest income was due to a decline in average loan balances and narrower margin on deposits. Loan balances declined due to the sale of new mortgage loan production, the current and prior year securitization of portfolio mortgage loans, the June 2001 sale of the Michigan credit card portfolio and a decline in indirect loans. Higher loan loss provisions were attributable to increased charge-offs in the direct and indirect loan portfolios. Wealth Management net income declined in both the three and six month periods due in part to lower trust fees. Trust fees decreased due to a lower level of assets under administration resulting primarily from weak equity markets. The increase in net income in the Other category is the result of higher net interest income and reduced operating expenses. Higher net interest income is the result of the lower interest rate environment and the balance sheet restructuring initiatives begun in 2001. Reduced operating expenses are primarily due to the elimination of goodwill amortization which totaled $1.8 12 million and $3.6 million for the three and six month periods ended June 30, 2001, respectively. See Note 4 for additional information. NET INTEREST INCOME Tax equivalent net interest income decreased to $79.0 million in the second quarter of 2002 from $80.1 million in the comparable period in 2001. For the six months ended June 30, 2002 tax equivalent net interest income decreased 1.2% to $157.6 million from $159.5 million for the same period in 2001. A lower level of earning assets partially offset by an improved net interest margin, led to the decline. An analysis of how changes in average balances ("volume") and market rates of interest ("rates") have effected net interest income appears in the table below. Detailed analyses of net interest income, with average balances and related interest rates for the three and six months ended June 30, 2002 and 2001 are presented on pages 14 and 15.

---------------------------------------------------------------------------------------------------- ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE 2002 Compared with 2001 -------------------------------------------------------------------- Three Months Ended June 30, Six Months Ended June 30, --------------------------------- -------------------------------- Increase(Decrease) (Increase(Decrease) Due to Change in Due to Change in Net --------------------- Net --------------------- (in thousands) Change(1) Rate(2) Volume(2) Change(1) Rate(2) Volume(2) ---------------------------------------------------------------------------------------------------- INTEREST INCOME: Money market investments $ (430) $ (383) $ (47) $ (408) $ (868) $ 460 Investment securities: Taxable 68 (1,740) 1,808 (4,633) (3,597) (1,036) Tax-exempt (73) (123) 50 (20) (222) 202 Mortgage loans held for sale (367) (321) (46) 1,288 (335) 1,623 Loans: Commercial (17,424) (14,881) (2,543) (37,676) (32,306) (5,370) Real estate (6,836) (841) (5,995) (15,706) (2,349) (13,357) Consumer (5,205) (3,629) (1,576) (11,395) (7,716) (3,679) -------- ------- ------- -------- -------- -------- Total (30,267) (21,918) (8,349) (68,550) (47,393) (21,157) -------- ------- ------- -------- -------- -------- INTEREST EXPENSE Deposits: Demand 1,226 (666) 1,892 3,133 (666) 3,799 Savings (5,533) (4,452) (1,081) (13,925) (11,092) (2,833) Time (17,610) (12,746) (4,864) (37,434) (26,304) (11,130) Short-term borrowings (7,110) (3,618) (3,492) (18,191) (9,223) (8,968) Long-term debt (224) (1,073) 849 (456) (2,525) 2,069 -------- ------- ------- -------- -------- -------- Total (29,251) (22,555) (6,696) (66,873) (49,810) (17,063) -------- ------- ------- -------- -------- -------- NET INTEREST INCOME $ (1,016) $ 637 $(1,653) $ (1,677) $ 2,417 $ (4,094) ======== ======= ======= ======== ======== ======== ====================================================================================================

(1) Changes are based on actual interest income and do not reflect taxable equivalent adjustments. (2) The change in interest due to both rate and volume are allocated between the factors in proportion to the relationship of the absolute amount of the change in each. For the three and six month periods ended June 30, 2002, net unfavorable volume and net favorable rate related variances in net interest income resulted in decreases in net interest income of $1,016,000 and $1,677,000, respectively, as compared to the same periods in 2001. Yields on earning assets for the three and six month periods ended June 30, 2002 declined to 6.80% and 6.86%, respectively, from 8.04% and 8.18%, for the same periods in the prior year. The cost of interest-bearing liabilities for the three and six month periods ended June 30, 2002 decreased to 2.83% and 2.90%, respectively, from 4.50% and 4.74%, for the same periods in 2001. Lower yields on earning assets were more than offset by decreased rates on interest-bearing liabilities. Lower loan volumes were partially offset by decreased levels of deposits and short-term borrowings. Decreased funding costs resulted from a decline in borrowed funds, a shift in deposit accounts from higher cost savings and time deposits to lower cost demand deposits, and the lower interest rate environment. Net interest margin, the difference between yields earned on earning assets compared to the rates paid on supporting funds, was 4.45% for both the second quarter and first six months of 2002, an increase of 19 and 27 basis points, respectively, over the same periods in 2001. The improvement in net interest margin is a result of lower funding costs due to the current interest rate environment and the balance sheet restructuring efforts initiated in 2001. Management continually monitors Citizens' balance sheet to insulate net interest income from significant swings caused by interest rate volatility. Citizens' policies in this regard are further discussed in "Interest Rate Risk". 13

----------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES/NET INTEREST INCOME/AVERAGE RATES 2002 2001 ------------------------------------ ----------------------------------------- Three Months Ended June 30 AVERAGE AVERAGE Average Average (in thousands) BALANCE INTEREST(1) RATE(2) Balance Interest(1) Rate(2) ----------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Money market investments: Federal funds sold $ 24,255 $ 103 1.68% $ 28,699 $ 346 4.78% Other 30,365 128 1.69 30,384 315 4.15 Investment securities(3): Taxable 1,001,223 14,602 5.83 884,114 14,534 6.58 Tax-exempt 418,178 5,335 7.85 414,254 5,408 8.03 Mortgage loans held for sale 99,097 1,864 7.52 101,237 2,231 8.81 Loans: Commercial 3,348,395 52,572 6.39 3,491,726 69,996 8.13 Real estate 702,178 12,701 7.23 1,031,758 19,537 7.56 Direct consumer 830,479 16,243 7.84 851,823 19,833 9.34 Indirect consumer 654,580 13,445 8.24 691,980 15,060 8.73 ---------- -------- ---------- -------- Total earning assets(3) 7,108,750 116,993 6.80 7,525,975 147,260 8.04 NONEARNING ASSETS Cash and due from banks 172,645 191,927 Bank premises and equipment 126,531 133,003 Investment security fair value adjustment 41,128 30,615 Other nonearning assets 163,771 176,190 Allowance for loan losses (80,246) (81,070) ---------- ---------- Total assets $7,532,579 $7,976,640 ========== ========== INTEREST-BEARING LIABILITIES Deposits: Demand deposits 1,115,440 4,520 1.63 668,939 3,294 1.98 Savings deposits 1,350,890 3,953 1.17 1,497,909 9,486 2.54 Time deposits 2,581,794 24,392 3.79 2,968,206 42,002 5.68 Short-term borrowings 213,653 904 1.69 614,617 8,014 5.21 Long-term debt 629,671 7,815 4.98 566,075 8,039 5.70 ---------- -------- ---------- -------- Total interest-bearing liabilities 5,891,448 41,584 2.83 6,315,746 70,835 4.50 -------- -------- NONINTEREST-BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits 851,867 871,553 Other liabilities 87,341 89,463 Shareholders' equity 701,923 699,878 ---------- ---------- Total liabilities and shareholders' equity $7,532,579 $7,976,640 ========== ========== NET INTEREST INCOME $ 75,409 $ 76,425 ======== ======== NET INTEREST INCOME AS A PERCENT OF EARNING ASSETS 4.45% 4.26% -----------------------------------------------------------------------------------------------------------------------------------

(1) Interest income shown on actual basis and does not include taxable equivalent adjustments. (2) Average rates are presented on an annual basis and include taxable equivalent adjustments to interest income of $3,613,000 and $3,710,000 for the three months ended June 30, 2002 and 2001, respectively, based on a tax rate of 35%. (3) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. 14

----------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES/NET INTEREST INCOME/AVERAGE RATES 2002 2001 ------------------------------------- ------------------------------------- Six Months Ended June 30 AVERAGE AVERAGE Average Average (in thousands) BALANCE INTEREST(1) RATE(2) Balance Interest(1) Rate(2) ----------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Money market investments: Federal funds sold $ 46,080 $ 387 1.67% $ 25,568 $ 632 4.91% Other 24,183 203 1.70 15,827 366 4.67 Investment securities(3): Taxable 922,378 26,971 5.85 954,525 31,604 6.62 Tax-exempt 418,899 10,719 7.87 411,083 10,739 8.04 Mortgage loans held for sale 123,007 4,576 7.44 80,060 3,288 8.21 Loans: Commercial 3,344,717 105,861 6.47 3,491,399 143,537 8.39 Real estate 754,483 26,972 7.15 1,124,711 42,678 7.58 Direct consumer 823,849 32,628 7.99 853,292 40,524 9.57 Indirect consumer 655,852 26,951 8.29 699,073 30,450 8.78 ---------- -------- ---------- -------- Total earning assets(3) 7,113,448 235,268 6.86 7,655,538 303,818 8.18 NONEARNING ASSETS Cash and due from banks 179,963 199,782 Bank premises and equipment 127,651 134,266 Investment security fair value adjustment 40,072 30,245 Other nonearning assets 168,008 180,613 Allowance for loan losses (80,588) (80,960) ---------- ---------- Total assets $7,548,554 $8,119,484 ========== ========== INTEREST-BEARING LIABILITIES Deposits: Demand deposits 1,092,268 8,659 1.60 620,400 5,526 1.80 Savings deposits 1,359,772 7,963 1.18 1,542,476 21,888 2.86 Time deposits 2,606,745 50,813 3.93 3,037,908 88,247 5.86 Short-term borrowings 222,798 1,869 1.69 707,000 20,060 5.73 Long-term debt 629,039 15,596 5.00 552,397 16,052 5.86 ------- -------- ---------- -------- Total interest-bearing liabilities 5,910,622 84,900 2.90 6,460,181 151,773 4.74 -------- -------- NONINTEREST-BEARING LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits 852,980 879,553 Other liabilities 83,687 85,580 Shareholders' equity 701,265 694,170 ---------- ---------- Total liabilities and shareholders' equity $7,548,554 $8,119,484 ========== ========== NET INTEREST INCOME $150,368 $152,045 ======== ======== NET INTEREST INCOME AS A PERCENT OF EARNING ASSETS 4.45% 4.18% -----------------------------------------------------------------------------------------------------------------------------------

(1) Interest income shown on actual basis and does not include taxable equivalent adjustments. (2) Average rates are presented on an annual basis and include taxable equivalent adjustments to interest income of $7,253,000 and $7,424,000 for the six months ended June 30, 2002 and 2001, respectively, based on a tax rate of 35%. (3) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. 15 PROVISION AND ALLOWANCE FOR LOAN LOSSES The provision for loan losses represents a charge against income and a corresponding increase in the allowance for loan losses. The provision for loan losses was $9,400,000 in the second quarter of 2002, an increase of $3,038,000 over the same period in 2001. Net charge-offs were 0.68% of average loans in the second quarter of 2002, up from 0.36% in the same period a year ago. The increase in charge-offs occurred primarily in the commercial loan portfolio. A summary of loan loss experience during the three and six months ended June 30, 2002 and 2001 is provided below.

----------------------------------------------------------------------------------------------------------------------------------- ANALYSIS OF ALLOWANCE FOR LOAN LOSSES Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2002 2001 2002 2001 ----------------------------------------------------------------------------------------------------------------------------------- Allowance for loan losses - beginning of period $ 80,425 $ 80,470 $ 80,299 $ 80,070 Charge-offs (10,963) (7,407) (17,695) (12,722) Recoveries 1,585 1,926 3,193 3,592 ---------- ---------- ---------- ---------- Net charge-offs (9,378) (5,481) (14,502) (9,130) Provision for loan losses 9,400 6,362 14,650 10,411 ---------- ---------- ---------- ---------- Allowance for loan losses - end of period $ 80,447 $ 81,351 $ 80,447 $ 81,351 ========== ========== ========== ========== Loans outstanding at period end(1) $5,566,903 $6,008,009 $5,566,903 $6,008,009 Average loans outstanding during period(1) 5,535,632 6,067,286 5,578,901 6,168,475 Allowance for loan losses as a percentage of loans outstanding at period end 1.45% 1.35 1.45% 1.35% Ratio of net charge-offs during period to average loans outstanding (annualized) 0.68 0.36 0.52 0.29 Loan loss coverage (allowance as a multiple of net charge-offs, annualized) 2.1x 3.7 2.8x 4.5x -----------------------------------------------------------------------------------------------------------------------------------

(1) Loans outstanding and average loans outstanding excludes loans held for sale. Citizens maintains an allowance for credit losses to absorb losses inherent in the loan portfolios. The allowance is based on a regular, quarterly assessment of the probable losses inherent in the loan portfolios. The allowance is increased by the provision charged to income and reduced by the amount charged-off, net of recoveries. Citizens' methodology for measuring the adequacy of the allowance relies on several key elements, which include specific allowances for identified problem loans, allowance by formula and an unallocated allowance. Specific allowances are established in cases where management has identified significant conditions or circumstances related to a credit that management believes indicate it is probable that a loss has been or will be incurred. The specific credit allocations are based on a regular analysis of all commercial and commercial mortgage loans over a fixed dollar amount where the internal credit rating is at or below a predetermined classification. The allowance amount is determined by analyzing the financial condition, collateral value and other qualitative factors as well as by a method prescribed by SFAS No. 114, "Accounting by Creditors for Impairment of a Loan". The formula allowance is calculated by applying loss factors to outstanding loans (excluding specifically identified credits) based on loan type, accrual status and internal risk grade of such loans and pools of loans. Minimum loss factors for criticized loan categories are consistent with regulatory agency factors. Loss factors for non-criticized loan categories are determined based on historical (generally three-year) averages adjusted quarterly for recent loss experience in the specific portfolios. In addition, adjustments are made to any loss factor used in the computation of the formula allowance in the event that, in management's judgment, significant factors which affect the collectibility of the portfolio as of the valuation date, are not reflected in the loss factors. The unallocated portion of the allowance is determined based upon management's evaluation of various conditions, the effects of which are not directly measured in the determination of the specific and formula allowances. The evaluation of the inherent loss with respect to these conditions is subject to a higher degree of uncertainty because they are not identified with specific credits. The conditions evaluated in connection with the unallocated allowance include general economic and business conditions in Citizens' key lending markets, the level and composition of nonperforming loans, underwriting standards within specific portfolio segments, specific industry conditions within portfolio segments, collateral values, loan 16 volumes and concentrations, regulatory examination results, internal credit examination results and other factors. This determination inherently involves a higher degree of uncertainty and considers current risk factors that may not have yet manifested themselves in Citizens' specific allowances or in the historical loss factors used to determine the formula allowances. The unallocated allowance was $6.1 million and $18.1 million as of June 30, 2002 and December 31, 2001, respectively. Citizens maintains formal policies and procedures to monitor and control credit risk. Citizens' loan portfolio has no significant concentrations in any one industry nor any exposure to foreign loans. Citizens has generally not extended credit to finance highly leveraged transactions nor does it intend to do so in the future. Based on present information, management believes the allowance for loan losses is adequate to meet known risks in the loan portfolio. Employment levels and other economic conditions in Citizens' local markets may have a significant impact on the level of credit losses. Management has identified and devotes appropriate attention to credits that may not be performing as well as expected. Nonperforming loans are further discussed in the section entitled "Nonperforming Assets." NONINTEREST INCOME A summary of significant sources of noninterest income during the first three and six months of 2002 and 2001 follows:

---------------------------------------------------------------------------------------------------------------------------- NONINTEREST INCOME Percent Change in 2002 Three Months Ended Six Months Ended ---------------------- June 30, June 30, Three Six (in thousands) 2002 2001 2002 2001 Months Months ---------------------------------------------------------------------------------------------------------------------------- Service charges on deposit accounts $ 6,515 $ 7,181 $13,147 $13,884 (9.3)% (5.3)% Trust fees 5,030 5,269 9,888 10,764 (4.5) (8.1) Mortgage and other loan income 2,872 4,461 6,897 6,555 (35.6) 5.2 Brokerage and investment fees 2,633 2,035 4,683 3,903 29.4 20.0 Bankcard fees 1,929 3,204 4,687 6,110 (39.8) (23.3) ATM network user fees 932 880 1,684 1,681 5.9 0.2 Cash management services 660 697 1,376 1,341 (5.3) 2.6 Other, net 2,267 2,237 5,200 4,168 1.3 24.8 ------- ------- ------- ------- Noninterest income before gains on sales 22,838 25,964 47,562 48,406 (12.0) (1.7) Investment securities gains (59) 245 (57) 351 (1) (1) Gain on sale of merchant business 5,400 --- 5,400 --- (1) (1) Gain on sale of securitized mortgages 2,436 3,259 2,436 5,372 (1) (1) Gain on sale of credit card assets --- 2,623 --- 2,623 (1) (1) ------- ------- ------- ------- Total noninterest income $30,615 $32,091 $55,341 $56,752 (4.6) (2.5) ======= ======= ======= ======= ----------------------------------------------------------------------------------------------------------------------------

(1) Not Meaningful Noninterest income for the second quarter of 2002, before gains on sales, decreased $3,126,000, or 12.0% over the same period of 2001. Bankcard fees were down $1,275,000 or 39.8% due to the sale of the merchant services business in the second quarter of 2002 and sale of the credit card portfolio during 2001. Mortgage and other loan income declined $1,589,000 or 35.6% from the second quarter a year ago due to narrower gains on sales of new loan production and related servicing rights. Service charges on deposit accounts decreased $606,000 or 9.3% in the second quarter from the same period in 2001 due to a decline in overdraft fees. Trust fees were down $239,000 or 4.5% reflecting the lower value of managed assets primarily due to weak equity markets. Brokerage and investment fees increased $598,000 or 29.4% over the same period of 2001 due to higher retail sales of fixed annuities. Also during the second quarter of 2002, Citizens realized gains of $2.4 million on the sale of securitized mortgages and $5.4 million on the sale of the merchant services business. During the second quarter of the prior year Citizens recognized gains of $3.3 million on the sale of securitized mortgages and $2.6 million on the sale of the credit card portfolio. For the six months ended June 30, 2002, noninterest income, before gains on sales, decreased $844,000 or 1.7% from the same period a year ago. The decline was largely due to a decrease in bankcard fees of $1,423,000 or 23.3% resulting from the aforementioned sales of the merchant services business in the second quarter of 2002 and the credit card portfolio in the second quarter of the prior year. In addition, trust fees declined $876,000 or 8.1% due primarily to weak equity markets, and 17 deposit service charges decreased $737,000 or 5.3% due to lower overdraft fees. Brokerage and investment fees increased $780,000 or 20% primarily from annuity sales and other income increased $1,032,000 or 24.8% due to higher revenue from check orders, title insurance fees and other sources. NONINTEREST EXPENSE Significant changes in noninterest expense during the three and six months ended June 30, 2002 and 2001 are summarized in the table below.

----------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Change in 2002 Three Months Ended Six Months Ended ---------------------- June 30, June 30, Three Six (in thousands) 2002 2001 2002 2001 Months Months ----------------------------------------------------------------------------------------------------------------------------------- Salaries and employee benefits $31,844 $31,526 $ 64,044 $ 63,044 1.0% 1.6% Equipment 4,956 5,077 9,814 10,031 (2.4) (2.2) Occupancy 4,584 4,453 9,199 9,380 2.9 (1.9) Data processing services 3,250 3,288 6,375 6,463 (1.2) (1.4) Professional services 3,354 3,030 6,189 5,412 10.7 14.4 Bankcard expenses 1,571 2,556 3,653 4,844 (38.5) (24.6) Advertising and public relations 1,856 1,632 3,687 3,193 13.7 15.5 Postage and delivery 1,757 1,924 3,515 3,887 (8.7) (9.6) Telephone 1,459 1,440 2,835 3,015 1.3 (6.0) Stationery and supplies 1,036 1,060 2,114 2,251 (2.3) (6.1) Intangible asset amortization 724 2,531 1,449 5,060 (71.4) (71.4) Other, net 5,130 5,099 9,838 9,747 0.6 0.9 ------- ------- -------- -------- Total noninterest expense $61,521 $63,616 $122,712 $126,327 (3.3) (2.9) ======= ======= ======== ======== -----------------------------------------------------------------------------------------------------------------------------------

For the quarter noninterest expense decreased $2,095,000, or 3.3% from the second quarter 2001. Intangible asset amortization declined $1,807,000, or 71.4% from the same quarter of the prior year primarily due to the adoption of SFAS No. 142 that eliminated goodwill amortization as an operating expense. Bankcard expenses declined by $985,000 or 38.5% as a result of the sale of the credit card portfolio during the second quarter of 2001 and the second quarter 2002 sale of the merchant services business. In addition, operating expenses for data processing, postage and delivery, and stationery and supplies declined due to improved pricing from new or renegotiated contracts. Professional service expenses increased 10.7% in the second quarter 2002 over the comparable period last year due to higher loan collection and consulting costs. Citizens has engaged banking industry consultants to help analyze the profitability and mix of its consumer, business banking and wealth management businesses. As a result of this review which will continue throughout 2002, Citizens anticipates future improvement in customer service levels, lower operating expenses, increased revenue generation capacity, improved credit quality and enhanced risk management techniques. However, in the near term this review will result in higher operating expenses as actions are taken to implement these improvements. Advertising and public relations expense increased 13.7% over the same period a year ago due to the introduction of a new marketing campaign in February 2002 to promote Citizens deposit services and loan products. For the six months ended June 30, 2002, noninterest expenses decreased 2.9% from the same period of the prior year due primarily to the same factors. INCOME TAXES Income tax expense was $9.8 million in the second quarter of 2002, a decrease of 14.3% over the same period last year. For the six months ended June 30, 2002, income tax expense was $18.9 million, a decrease of 10.4% over the same period in 2001. Lower pre-tax earnings and the change in goodwill amortization accounted for the decrease for the three month period ended June 30, 2002, as compared to the same period in the prior year. The same factors and a recent tax law change resulting in a $342,000 nonrecurring tax benefit accounted for the decrease for the six month period ended June 30, 2002 as compared to the prior year. FINANCIAL CONDITION Citizens had total assets of $7.547 billion as of June 30, 2002, a decrease of $132 million, or 1.7% from $7.679 billion as of December 31, 2001. Total assets declined due to balance sheet restructuring efforts begun in 2001 and reduced loan demand from a soft economy. Citizens continues to sell current mortgage loan production into the secondary market during this low 18 interest rate environment to reduce interest rate risk. Average earning assets comprised 94.2% of average total assets during the first six months of 2002 compared with 94.3% in the first six months of 2001. INVESTMENT SECURITIES AND MONEY MARKET INVESTMENTS Total average investments, including money market investments, comprised 19.8% of average earning assets during the first half of 2002, compared with 18.4% for the same period of 2001. YTD average investment security balances in the first six months of 2002 were down $24.3 million over the same period in 2001. YTD average money market investments were up $28.9 million from 2001 levels. Citizens held higher levels of money market investments during the first half of 2002 in anticipation of purchasing bank owned life insurance. Citizens completed a $78 million purchase of bank owned life insurance in the third quarter of 2002. MORTGAGE LOANS HELD FOR SALE Average mortgage loans held for sale during the first six months of 2002 comprised 1.7% of average earning assets compared with 1.1% at June 30, 2001. This increase primarily reflects a higher percentage of loans available for sale during the first six months of 2002. As part of Citizens' balance sheet restructuring initiatives begun in the first quarter of 2001, Citizens is selling most of its new residential mortgage loan production into the secondary market. Mortgages held for sale are accounted for on the lower of cost or market basis. LOANS Citizens extends credit primarily within the local markets of its banking subsidiaries located in Michigan, Wisconsin, Iowa and Illinois. The loan portfolio is widely diversified by borrower and industry groups with no foreign loans or significant concentrations in any industry. Total loans at June 30, 2002 were down $205 million, or 3.6%, from year-end 2001. The decline in total loans is attributable to a $230 million decrease in the mortgage loan portfolio. Mortgage loans declined due to the ongoing sale of new mortgage loan production, continued pay-down of the existing portfolio loans and the securitization of $63 million of portfolio loans in the second quarter. Commercial loan balances at June 30, 2002 remained flat with year end 2001 due to weak demand, while consumer loans increased modestly. Average loans declined by $532 million, or 8.8%, for the second quarter of 2002 as compared with the same period in 2001. Average real estate mortgage loans declined $330 million from the second quarter of 2001 due to the on going sale of new mortgage loan production and the securitization of a portion of the portfolio loans. Commercial and consumer loans decreased from second quarter 2001 due to weakened loan demand and the sale of $30 million of credit card assets in the second quarter of 2001. At June 30, 2002 and 2001, $215.4 million and $320.9 million, respectively, of residential real estate loans originated and subsequently sold in the secondary market were being serviced by Citizens. Capitalized servicing rights relating to the serviced loans totaled $1.1 million at June 30, 2002 and $2.3 million at June 30, 2001. NONPERFORMING ASSETS Nonperforming assets are comprised of nonaccrual loans, restructured loans, loans 90 days past due and still accruing interest, and other real estate owned. Certain of these loans, as defined below, are considered to be impaired. Under Citizens' credit policies and practices, a loan is placed on nonaccrual status when there is doubt regarding collection of principal or interest, or when principal or interest is past due 90 days or more and the loan is not well secured and in the process of collection. Interest accrued but not collected is reversed and charged against income when the loan is placed on nonaccrual status. A loan is considered impaired when management determines it is probable that all the principal and interest due under the contractual terms of the loans will not be collected. In most instances, impairment is measured based on the fair value of the underlying collateral. Impairment may also be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate. Citizens maintains a valuation allowance for impaired loans. Interest income on impaired nonaccrual loans is recognized on a cash basis. Interest income on all other impaired loans is recorded on an accrual basis. Certain of Citizens' nonperforming loans included in the following table are considered to be impaired. Citizens measures impairment on all large balance nonaccrual commercial and commercial real estate loans. Certain large balance accruing loans rated substandard or worse are also measured for impairment. In most instances, impairment is measured based on the fair value of the underlying collateral. Impairment losses are included in the provision for loan losses. The policy does not apply to large groups of smaller balance homogeneous loans that are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring. Loans collectively evaluated for impairment include certain smaller balance commercial loans, consumer loans, residential real estate loans, and credit card loans, and are not included in the impaired loan analysis. 19 The following table provides a summary analysis of impaired loans as of June 30, 2002 and 2001.

------------------------------------------------------------------------------------------------------------------------------ IMPAIRED LOAN ANALYSIS Balance Outstanding Valuation Reserve ------------------------ ---------------------------- June 30, June 30, (in thousands) 2002 2001 2002 2001 ------------------------------------------------------------------------------------------------------------------------------ Impaired loans with valuation reserve $71,098 $ 83,381 $(17,531) $(26,393) Impaired loans with no valuation reserve 27,709 27,043 -- -- ------- -------- -------- -------- Total impaired loans $98,807 $110,424 $(17,531) $(26,393) ======= ======== ======== ======== Impaired loans on nonaccrual basis $56,655 $ 54,177 $(10,331) $(11,725) Impaired loans on accrual basis 42,152 56,247 (7,200) (14,668) ------- -------- -------- -------- Total impaired loans $98,807 $110,424 $(17,531) $(26,393) ======= ======== ======== ======== ------------------------------------------------------------------------------------------------------------------------------

The average recorded investment in impaired loans was $81.4 million for the quarter ended June 30, 2002 and $81.3 million for the same quarter last year. For the quarter ended June 30, 2002, Citizens recognized interest income of $0.5 million on impaired loans with cash collected on nonaccrual impaired loans totaling $0.9 million, all of which was applied to principal. For the same quarter last year, Citizens recognized interest income of approximately $0.8 million on impaired loans with cash collected on nonaccrual impaired loans of $1.1 million, all of which was applied to principal. The table below provides a summary of nonperforming assets as of June 30, 2002, December 31, 2001 and June 30, 2001. Total nonperforming assets amounted to $87.8 million as of June 30, 2002 compared with $79.2 million as of December 31, 2001 and $85.5 million as of June 30, 2001. Employment levels and other economic conditions in the Citizens' local markets, however, can impact the level and composition of nonperforming assets. Due to the current economic outlook and higher levels of nonperforming loans and charge-offs, management recently began a process to reevaluate all watch listed commercial credits over $100,000 and other selected commercial credits over $250,000 for proper credit rating and identification of loss exposure. This review is anticipated to be completed by September 30, 2002. As a result of this review and the weak economy, net charge-offs are expected to continue at higher than historical levels throughout the remainder of 2002, which may also result in a higher loan loss provision in the same period.

-------------------------------------------------------------------------------------------------------------------------- NONPERFORMING ASSETS JUNE 30, December 31, June 30, (in thousands) 2002 2001 2001 -------------------------------------------------------------------------------------------------------------------------- Nonperforming Loans Nonaccrual Less than 30 days past due $ 4,975 $ 6,528 $10,661 From 30 to 89 days past due 6,430 5,218 7,292 90 or more days past due 66,219 57,047 57,114 ------- ------- ------- Total 77,624 68,793 75,067 90 days past due and still accruing 1,207 4,168 4,460 Restructured 336 337 625 ------- ------- ------- Total nonperforming loans 79,167 73,298 80,152 Other Repossessed Assets Acquired (ORAA) 8,621 5,947 5,315 ------- ------- ------- Total nonperforming assets $87,788 $79,245 $85,467 ======= ======= ======= Nonperforming assets as a percent of loans plus ORAA 1.57% 1.37% 1.42% Nonperforming assets as a percent of total assets 1.16 1.03 1.08 Allowance for loan loss as a percent of nonperforming loans 101.62 109.55 101.50 Allowance for loan loss as a percent of nonperforming assets 91.64 101.33 95.18 --------------------------------------------------------------------------------------------------------------------------

20 In addition to nonperforming loans, management identifies and closely monitors other credits that are current in terms of principal and interest payments but, in management's opinion, may deteriorate in quality if economic conditions change. As of June 30, 2002, such credits amounted to $81.2 million or 1.5% of total loans, compared with $78.9 million or 1.3% at December 31, 2001 and $79.0 million or 1.3% of total loans as of June 30, 2001. These loans are primarily commercial and commercial real estate loans made in the normal course of business and do not represent a concentration in any one industry. Also subsequent to June 30, 2002, Citizens identified additional exposure on a $16.0 million commercial credit, which was performing as of the end of the quarter and a $20.5 million unfunded letter of credit, which if funded may result in a loss. The current estimated charge-off on these credits is between $7 million and $17 million. As of June 30, 2002, $3.4 million of loan loss reserve was specifically allocated to these credits. DEPOSITS Total deposits decreased $99 million to $5.866 billion at June 30, 2002 from $5.965 billion at year-end 2001. Average deposits declined $168.6 million, or 2.8% in the first six months of 2002 over the same period in 2001. The decline in deposits from year-end and the first six months of 2001 occurred primarily in large denomination time deposits as Citizens was less aggressive in pricing such deposits due to decreased funding requirements. Citizens gathers deposits primarily in its local markets and historically has not relied on brokered funds to sustain liquidity. At June 30, 2002 Citizens had approximately $165 million in brokered deposits as an alternative source of funding, down from $171 million at year-end 2001. Citizens will continue to evaluate the use of alternative funding sources such as brokered deposits as funding needs change. SHORT-TERM BORROWINGS AND LONG-TERM DEBT On average, total short-term borrowings decreased $484.2 million to $222.8 million during the first six months of 2002 from $707.0 million during the same period of 2001. The decrease primarily reflects reduced reliance on short-term borrowings as a funding source due to lower earning asset levels. Long-term debt accounted for $629.0 million or 10.6% of average interest-bearing funds for the first six months of 2002, compared with $552.4 million or 8.6% of average interest-bearing funds for the same period in 2001. At June 30, 2002, $629.3 million of the long-term debt consists of borrowings from the Federal Home Loan Bank with $321.0 million maturing at different intervals over the next five years and the remaining maturing over the next 15 years. These borrowings are utilized to fund Citizens' loan portfolio. Borrowed funds are expected to remain an important, reliable and cost-effective funding vehicle for Citizens and its subsidiary banks. CAPITAL RESOURCES Citizens continues to maintain a strong capital position which supports its current needs and provides a sound foundation to support further expansion. At June 30, 2002, shareholders' equity was $714.7 million compared with $697.5 million at December 31, 2001 and $706.7 million as of June 30, 2001. Book value per common share at June 30, 2002, December 31, 2001 and June 30, 2001 was $16.02, $15.46 and $15.27, respectively. Citizens has consistently maintained regulatory capital ratios at or above the "well-capitalized" standards and all bank subsidiaries of Citizens have sufficient capital to maintain a well-capitalized designation. Citizens' capital ratios as of June 30, 2002, December 31, 2001 and June 30, 2001 are presented below.

------------------------------------------------------------------------------------------------------------------------------- CAPITAL RATIOS Regulatory Minimum For "Well JUNE 30, December 31, June 30, Capitalized" 2002 2001 2001 ------------------------------------------------------------------------------------------------------------------------------- Risk based capital: Tier I 6.0% 10.2% 9.9% 9.9% Total capital 10.0 11.4 11.1 11.2 Tier I leverage 5.0 8.1 7.8 7.7 -------------------------------------------------------------------------------------------------------------------------------

In October 2001, Citizens' board of directors approved a plan to repurchase up to 3,000,000 shares of Citizens common stock for general purposes. At June 30, 2002, 998,400 shares of common stock had been repurchased under this plan at an average price of $32.61. Citizens declared cash dividends of $0.285 per share in the second quarter of 2002, an increase of 3.6% over the $0.275 declared during the same period of 2001. 21 LIQUIDITY AND DEBT CAPACITY The liquidity position of Citizens is monitored to ensure that funds are available at a reasonable cost to meet financial commitments, to finance business expansion and to take advantage of unforeseen opportunities. Citizens' subsidiary banks derive liquidity primarily through core deposit growth, maturity of money market investments, and maturity and sale of investment securities and loans. Additionally, Citizens' subsidiary banks have access to market borrowing sources on an unsecured, as well as a collateralized basis, for both short-term and long-term purposes including, but not limited to, the Federal Reserve and Federal Home Loan Banks where the subsidiary banks are members. Another source of liquidity is the ability of the parent company to borrow funds on both a short-term and long-term basis. The parent company has established borrowing facilities with a group of unaffiliated banks and has used portions of this revolving credit agreement for various corporate purposes. As of June 30, 2002, the parent company had $75 million available in the credit agreement of which $30 million was outstanding. The interest rate on the $30 million outstanding at June 30, 2002 reprices daily and is based on the Federal funds rate. Management believes that the key to successful balance sheet liquidity is the establishment and subsequent utilization of sufficient sources of liquidity. Proactive management of Citizens' liquidity capacity and generation has increased sources of funds and borrowing capacities enabling Citizens and its subsidiary banks to operate effectively, safely and with improved profitability. At June 30, 2002, Citizens had sufficient liquidity to meet presently known short and long term cash flow requirements arising from ongoing business transactions. INTEREST RATE RISK Interest rate risk generally arises when the maturity or repricing structure of Citizens' assets and liabilities differs significantly. Asset/liability management, which among other things addresses such risk, is the process of developing, testing and implementing strategies that seek to maximize net interest income, maintain sufficient liquidity and minimize exposure to significant changes in interest rates. This process includes monitoring contractual and expected repricing of assets and liabilities as well as forecasting earnings under different interest rate scenarios and balance sheet structures. Generally, management seeks a structure that insulates net interest income from large swings attributable to changes in market interest rates. Citizens' static interest rate sensitivity ("GAP") as of June 30, 2002 and 2001 is illustrated in the following table. 22

----------------------------------------------------------------------------------------------------------------------------------- INTEREST RATE SENSITIVITY TOTAL 1-90 91-180 181-365 WITHIN 1-5 Over (dollars in millions) Days Days Days 1 YEAR Years 5 Years Total ----------------------------------------------------------------------------------------------------------------------------------- JUNE 30, 2002 RATE SENSITIVE ASSETS(1) Loans(2) $2,666.5 $ 259.8 $ 466.7 $3,393.0 $1,924.7 $ 328.9 $5,646.6 Investment securities 129.5 28.5 52.6 210.6 657.7 626.2 1,494.5 Short-term investments 19.0 -- -- 19.0 -- -- 19.0 -------- -------- -------- -------- -------- -------- -------- Total $2,815.0 $ 288.3 $ 519.3 $3,622.6 $2,582.4 $ 955.1 $7,160.1 ======== ======== ======== ======== ======== ======== ======== RATE SENSITIVE LIABILITIES Deposits(3) $ 807.5 $ 673.7 $1,080.4 $2,561.6 $2,113.6 $ 318.0 $4,993.2 Other interest bearing liabilities 408.3 0.1 25.1 433.5 146.0 308.3 887.8 -------- -------- -------- -------- -------- -------- -------- Total $1,215.8 $ 673.8 $1,105.5 $2,995.1 $2,259.6 $ 626.3 $5,881.0 ======== ======== ======== ======== ======== ======== ======== Period GAP(4) $1,599.2 $ (385.5) $ (586.2) $ 627.5 $ 322.8 $ 328.8 $1,279.1 Cumulative GAP 1,599.2 1,213.7 627.5 950.3 1,279.1 Cumulative GAP to Total Assets 21.19% 16.08% 8.31% 8.31% 12.59% 16.95% 16.95% Multiple of Rate Sensitive Assets to Liabilities 2.32 0.43 0.47 1.21 1.14 1.52 1.22 ----------------------------------------------------------------------------------------------------------------------------------- JUNE 30, 2001 RATE SENSITIVE ASSETS(1) Loans(2) $2,339.0 $ 353.6 $ 561.7 $3,254.3 $2,350.5 $ 505.5 $6,110.3 Investment securities 59.5 25.5 52.0 137.0 507.7 616.3 1,261.0 Short-term investments 78.8 -- -- 78.8 -- -- 78.8 -------- -------- -------- -------- -------- -------- -------- Total $2,477.3 $ 379.1 $ 613.7 $3,470.1 $2,858.2 $1,121.8 $7,450.1 ======== ======== ======== ======== ======== ======== ======== RATE SENSITIVE LIABILITIES Deposits(3) $1,188.8 $ 757.2 $1,114.3 $3,060.3 $1,562.2 $ 411.5 $5,034.0 Other interest bearing liabilities 959.1 85.2 120.4 1,164.7 36.0 8.6 1,209.3 -------- -------- -------- -------- -------- -------- -------- Total $2,147.9 $ 842.4 $1,234.7 $4,225.0 $1,598.2 $ 420.1 $6,243.3 ======== ======== ======== ======== ======== ======== ======== Period GAP(4) $ 329.4 $ (463.3) $ (621.0) $ (754.9) $1,260.0 $ 701.7 $1,206.8 Cumulative GAP 329.4 (133.9) (754.9) 505.1 1,206.8 Cumulative GAP to Total Assets 4.16% (1.69)% (9.53)% (9.53)% 6.37% 15.23% 15.23% Multiple of Rate Sensitive Assets to Liabilities 1.15 0.45 0.50 0.82 1.79 2.67 1.19 -----------------------------------------------------------------------------------------------------------------------------------

(1) Incorporates prepayment projections for certain assets which may shorten the time frame for repricing or maturity compared to contractual runoff. (2) Includes loans held for sale. (3) Includes interest bearing savings and demand deposits of $764 million and $691 million in 2002 and 2001, respectively, in the less than one year category, and $1.694 billion and $1.480 billion, respectively in the over one year category, based on historical trends for these noncontractual maturity deposit types, which reflects industry standards. (4) GAP is the excess of rate sensitive assets (liabilities). As shown, Citizens' interest rate risk position at June 30, 2002 is asset sensitive in the less than one year time frame with rate sensitive assets exceeding rate sensitive liabilities by $627.5 million. Citizens' interest rate risk position at June 30, 2001 was liability sensitive in the less than one year time frame with rate sensitive liabilities exceeding rate sensitive assets by $754.9 million. Application of GAP theory would suggest that in an asset sensitive position Citizens' net interest income could rise if interest rates rise; i.e., liabilities are likely to reprice slower than assets, resulting in an increase in net income in a rising rate environment. Conversely, net income should decrease in a falling rate environment in an asset sensitive position. Net interest income is not only affected by the level and direction of interest rates, but also by the shape of the yield curve, relationships between interest sensitive instruments and key driver rates, as well as balance sheet growth and the timing of changes in these variables. 23 Management is continually reviewing its interest rate risk position and modifying its strategies based on projections to minimize the impact of future interest rate changes. While traditional GAP analysis does not always incorporate adjustments for the magnitude or timing of non-contractual repricing, the table above does incorporate appropriate adjustments as indicated in footnotes 1 and 3 to the table. Because of these and other inherent limitations of any GAP analysis, management utilizes net interest income simulation modeling as its primary tool to evaluate the impact of changes in interest rates and balance sheet strategies. Management uses these simulations to develop strategies that can limit interest rate risk and provide liquidity to meet client loan demand and deposit preferences. FORWARD-LOOKING STATEMENTS The foregoing disclosure contains "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended, with respect to expectations for future periods. These forward-looking statements represent Citizens' outlook only as of the date of this report. While Citizens believes that its forward-looking statements are reasonable, actual results could differ materially since the statements are based on Citizens' current expectations, which are subject to risks and uncertainties. These risks and uncertainties are detailed from time to time in reports filed by Citizens with the Securities and Exchange Commission, including 8-K, 10-Q and 10-K, and include, among others, unanticipated changes in the competitive environment, relationships with third party vendors, clients, the effect of terrorist attacks and potential attacks and certain other factors discussed in this report. Other factors not currently anticipated by management may also be materially and adversely affect Citizens results of operations. Citizens does not undertake, and expressly disclaim any obligation, to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. 24 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has been no material change in the information concerning quantitative and qualitative disclosures about market risk contained and incorporated by reference in Item 7A of Citizens' 2001 Annual Report on Form 10-K. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Citizens held its Annual Meeting of Shareholders on April 16, 2002 at which the shareholders considered the following: The results were as follows with respect to each of the four director nominees:

Director For Withheld -------- ---------- --------- Edward P Abbott 37,284,605 548,684 Jonathan E. Burroughs II 37,253,477 579,812 Lawrence O. Erickson 37,283,274 550,015 Robert J. Vitito 34,729,450 3,103,839

The results were as follows with respect to the approval of Citizens Banking Corporation Stock Compensation Plan: For: 21,529,567 Against: 5,159,455 Abstentions: 553,661 Broker non-votes: 10,590,606 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 3(i) Restated Articles of Incorporation, as amended. 99.1 Certification of Quarterly Report by Chief Executive Officer 99.2 Certification of Quarterly Report by Chief Financial Officer (b) Reports on Form 8-K No report on Form 8-K was filed during the three-month period ended June 30, 2002. 25 SIGNATURE 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. CITIZENS BANKING CORPORATION Date August 14, 2002 By /s/ John W. Ennest ----------------- ----------------------------------- John W. Ennest Vice Chairman of the Board, Treasurer and Chief Financial Officer (Principal Financial Officer) (Duly Authorized Signatory) 26 Exhibit Index

Exhibit No. Description of Exhibit ----------- ---------------------- 3(i) Restated Articles of Incorporation, as amended 99.1 Certification of quarterly Report by Chief Executive Officer 99.2 Certification of quarterly Report by Chief Financial Officer