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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Filed by a Party other than the Registrant o

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o Preliminary Proxy Statement

o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ Definitive Proxy Statement

o Definitive Additional Materials

o Soliciting Material Pursuant to §240.14a-12

CITIZENS REPUBLIC BANCORP, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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SEC 1913 (02-02)		Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

				Thomas W. Gallagher Executive Vice President, General Counsel and Secretary

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, TO BE HELD MAY 18, 2011

To the Shareholders of Citizens Republic Bancorp, Inc.:

     Notice is hereby given that the annual meeting of shareholders of Citizens Republic Bancorp, Inc. (the “Corporation”) will be held at the Riverfront Banquet Center (located within the new Riverfront Residence Hall, which is located next door to our headquarters), 1 Riverfront Center West, Flint, Michigan 48502 on Wednesday, May 18, 2011, at 10:00 a.m., local time, for the following purposes:

     (1) To elect ten (10) directors to serve a one (1) year term, or until their successors are duly elected and qualified;

     (2) To approve a nonbinding proposal to approve the compensation of certain of our executive officers;

     (3) To approve an amendment to the articles of incorporation to implement at anytime prior to December 31, 2011, a reverse stock split at a ratio ranging from 1-for 2 to 1-for 10 and a decrease in the number of authorized shares of our common stock on a proportional basis in each case as determined by the board of directors, and empowering the board of directors to abandon the reverse stock split and amendment if the board of directors determines that doing so would be in the best interests of the Corporation and our shareholders (the “Reverse Stock Split Proposal”);

     (4) To ratify the selection of Ernst & Young LLP as our independent auditors for the fiscal year ending December 31, 2011; and

     (5) To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE DIRECTORS NOMINATED, FOR THE APPROVAL OF THE NONBINDING COMPENSATION PROPOSAL, FOR THE APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL AND FOR THE RATIFICATION OF OUR INDEPENDENT AUDITORS.

     Shareholders of record of our common stock outstanding at the close of business on March 21, 2011 are entitled to notice of and to vote at the meeting.

     You are invited to attend this meeting. Please date, sign and return your proxy promptly in the enclosed, stamped envelope whether or not you plan to be present at the meeting. In the alternative, you may vote via the Internet or by telephone by following the procedures set forth on the enclosed proxy card. You may still vote in person if you attend the meeting and are a shareholder of record or have a legal proxy from a shareholder of record.

Flint, Michigan
April 4, 2011

Citizens Republic Bancorp, Inc.
328 South Saginaw Street
Flint, Michigan 48502

PROXY STATEMENT

Meeting Information

          We are delivering this proxy statement to our shareholders in connection with the solicitation of proxies by our board of directors for our annual meeting of shareholders to be held on May 18, 2011 and any adjournments of the meeting. This proxy statement, the proxy and the notice of annual meeting of shareholders are being provided to our shareholders on or about April 4, 2011. The meeting will be held at the Riverfront Banquet Center (located inside of the Riverfront Residence Hall, which is located next door to our headquarters), 1 Riverfront Center West, Flint, Michigan 48502. Directions to attend the meeting in person may be obtained by contacting Ms. Kristine Brenner, Director of Investor Relations, at 810-257-2506 or at www.citizensbanking.com/shareholdermeeting.

Voting Information

Record Date

          Shareholders as of the close of business on March 21, 2011 will be entitled to be present and to vote at the meeting. Each share of our common stock is entitled to one vote on each matter to be voted upon at the meeting. There are no other classes of our stock entitled to vote at the meeting. On March 21, 2011, there were 397,149,004 shares of our common stock outstanding and entitled to vote and 300,000 shares of our fixed rate cumulative perpetual preferred stock, Series A outstanding. Our outstanding preferred stock is not entitled to vote on the matters to be voted upon at the meeting.

How to Vote

          The board of directors requests that you execute and return the proxy promptly, whether or not you plan to attend the meeting.

          If you hold your shares of our stock under your own name (also known as “record ownership”), you can vote your shares in one of the following manners:

	•		By proxy via the Internet at www.citizensbanking.com/shareholdermeeting or www.proxyvote.com and following the instructions;
	•		By proxy via telephone at 1-800-690-6903 on a touch-tone phone and following the recorded instructions;
	•		By proxy via mail by signing and returning the enclosed proxy card in the postage-paid envelope; and
	•		By coming to the meeting and voting your shares in person.

          We also have posted our proxy statement, proxy card, directions to our shareholder meeting and 2010 annual report to shareholders at the www.citizensbanking.com address noted above.

          Any vote by proxy, Internet or telephone may be revoked by you at any time before the meeting by (1) giving written notice of such revocation to the corporate secretary, (2) by executing another proxy or using the Internet or telephone voting procedures as of a date subsequent to the prior proxy or Internet or telephone vote, or (3) if you are a shareholder of record or have a legal proxy from a shareholder of record, by voting in person at the annual meeting. Shareholders who vote via the Internet or by telephone need not mail their proxy cards and doing so will revoke any prior vote or proxy.

          If a broker, bank or other nominee holds your shares (“street name” ownership), you will receive a voting instruction form directly from them. Follow the instructions on the form they provide to have your shares voted by proxy. If you wish to attend the meeting and vote in person, you must obtain a proxy, executed in your favor, from the broker, bank or nominee to do so.

          We will bear the cost of soliciting proxies, which will be solicited primarily by mail. We have retained Alliance Advisors, specialists in proxy solicitation, to solicit proxies from brokers, bank nominees, and other institutional holders of our common stock at an anticipated cost of $7,000 plus certain out-of-pocket expenses. Proxies may also be solicited by our directors and employees personally, and by telephone, facsimile, or other means. No additional compensation will be paid to these individuals for proxy solicitation nor is it expected to result in more than a minimal cost to us. We may make arrangements directly with banks, brokerage houses, custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of our common stock held of record by them and to obtain authorization for the execution of proxies. We expect to reimburse these institutional holders for their reasonable expenses in connection with these activities.

Voting Requirements and Manner of Voting Proxies

	•		The shareholders will elect directors. Each outstanding share is entitled to vote for each director position. A director will be elected if he or she receives the affirmative vote of a majority of the votes cast for that director. Votes cast includes votes cast to withhold authority to vote for a director and excludes abstentions and broker non-votes. An incumbent director who does not receive a majority of the votes cast for that director position is required to tender his or her resignation to the board of directors, and the resignation will be reviewed by our corporate governance and nominating committee, which will make a recommendation to the board of directors as to whether it should accept or reject the resignation. This process is more fully described in our Bylaws.
	•		The shareholders will vote on a nonbinding proposal to approve the compensation of our executives. The nonbinding resolution to approve the compensation of certain of our executive officers will be approved if authorized by a majority of the votes cast by shareholders on the matter.
	•		The shareholders will vote on approval of the Reverse Stock Split Proposal. The Reverse Stock Split Proposal will be approved if approved by a majority of the outstanding shares of our common stock entitled to vote at the meeting.
	•		The shareholders will vote on the ratification of the appointment of our independent auditors. The appointment will be ratified if approved by a majority of the votes cast by shareholders on the matter.

          The shares represented by properly executed proxies received by Internet, telephone or by mail will be voted in the manner specified, and where there are no instructions given, will be voted in favor of the director nominees and in favor of the other matters specified in this proxy statement.

          Withheld votes, abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the meeting. Broker non-votes will have the effect of a vote against the reverse stock split proposal, but will not affect the vote on other matters listed in the proxy statement. “Broker non-votes” result when shareholders hold their shares in street name and do not provide voting instructions to their broker or other nominee. Those shares will not be voted on any proposal on which the broker or other nominee does not have discretionary authority to vote under applicable rules.

          The persons named in the proxy to represent shareholders who are present by proxy at the meeting are Lizabeth A. Ardisana and Stephen J. Lazaroff.

Meeting Attendance

          If you plan to attend the meeting and your shares of common stock are registered in your name, your admission ticket is either the top-half of your proxy card or your Notice Regarding the Availability of Proxy Materials. If you hold your shares in street name, you will need to bring with you a letter from your broker or nominee confirming your beneficial ownership of common stock as of the record date.

Important Notice Regarding Delivery of Annual Report and Proxy Statement

          To reduce the expenses of delivering duplicate materials to our shareholders, we are taking advantage of householding rules that permit us to deliver only one set of proxy solicitation materials, our Annual Report for the fiscal year ended December 31, 2010, and the Notice Regarding the Availability of Proxy Materials to shareholders who share the same address, unless otherwise requested. Each shareholder retains a separate right to vote on all matters presented at the meeting.

          If you share an address with another shareholder and have received only one set of materials, you may write or call us to request a separate copy of these materials at no cost to you. For future annual meetings, you may request separate materials or request that we only send one set of materials to you if you are receiving multiple copies by writing to us at sendmaterial@proxyvote.com, or calling us at 1-800-579-1639.

SECURITY OWNERSHIP

Certain Beneficial Owners

          The table below includes all of our shareholders that we know to beneficially own more than five percent of our common stock as of December 31, 2010, unless otherwise indicated.

																														Common Stock
																														Beneficially Owned
																														as a Percentage of
		Common Stock				Investment Power												Voting Power												Outstanding Common
Name and address of Beneficial Owner		Beneficially Owned				Sole				Shared				None				Sole				Shared				None				Stock
BlackRock, Inc. 40 East 52nd Street New York, NY 10022(1)			21,934,415				21,934,415				-0-				-0-				21,934,415				-0-				-0-				5.5	%
Wellington Management Company, LLP 280 Congress Street Boston, MA 02210(2)			38,416,535				-0-				38,416,535				-0-				-0-				38,416,535				-0-				9.7	%
Bay Pond Partners, L.P. Wellington Hedge Management, LLC c/o 280 Congress Street Boston, MA 02210(3)			26,413,441				-0-				26,413,441				-0-				-0-				26,413,441				-0-				6.7	%

Management

          The following table reflects the beneficial ownership of our common stock as of March 21, 2011 by:

	•		Each director and nominee for election to our board of directors;
	•		Each executive officer named in the “Executive Compensation — Summary Compensation Table,” whom we refer to as our Named Executive Officers; and
	•		Our current directors and all executive officers as a group.

The information in the table has been obtained from these individuals and is reported in accordance with the applicable rules of the Securities and Exchange Commission, or Commission. Under these rules, a person is deemed to beneficially own stock if they have or share the power to vote or dispose of the stock or have the right to acquire the power to vote or dispose of the stock within the next 60 days. As a result, the amounts shown in the table do not necessarily reflect stock ownership for any purpose other than compliance with the Commission’s reporting requirements.

														Common Stock
														Beneficially Owned
		Common Stock				Sole Voting								as a Percentage of
		Beneficially				and Dispositive				Shared Voting and				Outstanding Common
Name		Owned(1)				Power				Dispositive Power				Stock
Lizabeth A. Ardisana			45,660				45,660				-0-				*
George J. Butvilas			244,829				244,829				-0-				*
Charles D. Christy			49,055				49,055				-0-				*
Robert S. Cubbin			107,390				107,390				-0-				*
Richard J. Dolinski			64,117				64,117				-0-				*
Thomas W. Gallagher			89,661				89,661				-0-				*
Gary J. Hurand			594,158				103,113				491,045				*
Dennis J. Ibold			193,353				193,353				-0-				*
Judith L. Klawinski			212,716				212,716				-0-				*
Benjamin W. Laird			47,790				47,790				-0-				*
Stephen J. Lazaroff			163,310				163,310				-0-				*
Lisa T. McNeely			340,631				340,631				-0-				*
Cathleen H. Nash			645,370				645,370				-0-				*
Mark W. Widawski			88,799				88,799				-0-				*
Kendall B. Williams			58,198				57,484				714				*
James L. Wolohan(2)			372,760				372,760				-0-				*
Steven E. Zack			106,643				106,643				-0-				*
All current directors and executive officers as a group (25 persons)			3,990,081				3,493,827				496,254				1	%

						Restricted Shares
Name		Options				or RSUs				Pledged Shares
Lizabeth A. Ardisana			3,425				-0-				-0-
George J. Butvilas			-0-				-0-				198,196
Charles D. Christy			-0-				-0-				-0-
Robert S. Cubbin			-0-				-0-				-0-
Richard J. Dolinski			5,925				-0-				-0-
Thomas W. Gallagher			52,712				19,445				-0-
Gary J. Hurand			2,371				-0-				80,205
Dennis J. Ibold			2,371				-0-				-0-
Judith L. Klawinski			15,449				174,834				-0-
Benjamin W. Laird			5,925				-0-				-0-
Stephen J. Lazaroff			5,925				-0-				-0-
Lisa T. McNeely			38,281				297,800				-0-
Cathleen H. Nash			-0-				556,197				-0-
Mark W. Widawski			2,000				74,868				-0-
Kendall B. Williams			5,925				-0-				-0-
James L. Wolohan			5,925				-0-				-0-
Steven E. Zack			-0-				-0-				22,611
All current directors and executive officers as a group (25 persons)			267,250				1,438,650				301,012

PROPOSAL 1 — ELECTION OF DIRECTORS

          The terms of all directors expire at the 2011 annual meeting of shareholders. The following ten nominees have been nominated for reelection at the 2011 annual meeting of shareholders.

		Lizabeth A. Ardisana		Benjamin W. Laird
		George J. Butvilas		Stephen J. Lazaroff
		Robert S. Cubbin		Cathleen H. Nash
		Richard J. Dolinski		Kendall B. Williams
		Gary J. Hurand		James L. Wolohan

          Mr. Ibold is not standing for reelection and Mr. Zack passed away in March 2011. In light of Mr. Zack’s death, Mr. Dolinski, who had previously indicated his desire not to be renominated to the board, has agreed to be nominated and, if reelected, to continue to serve as a director until a suitable replacement has been found. As a result, the number of directors on the board has been reduced to ten effective immediately preceding the annual meeting of shareholders. You may vote for no more than ten directors on your proxy card. The term for directors elected at the 2011 annual meeting will expire at the 2012 annual meeting of shareholders and upon the election and qualification of their successors. If any of the nominees should be unable to serve, the board of directors may choose to nominate a replacement candidate. If the board of directors chooses to nominate a replacement candidate, then the proxies may be voted for the election of such other person or persons as the board of directors may recommend.

          On the basis of information presently available to the board of directors, only the ten persons named above as nominees will be nominated for election as directors.

          THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.

          The name and age of each nominee and incumbent director, his or her five-year business experience, and the year each became a director, according to information furnished by such nominees, are set forth below. Each is a director of the Corporation and its Citizens Bank and Citizens Bank Wealth Management, N.A. subsidiaries.

          Lizabeth A. Ardisana, 59, has served on our board since 2004. Ms. Ardisana has been the Chief Executive Officer and owner of ASG Renaissance, a technical and communications firm since 1994. Ms. Ardisana has extensive management and marketing experience as the founder of her own business. With her demonstrated leadership skills, business expertise and entrepreneurial spirit, Ms. Ardisana provides valuable management and financial insight to the board.

          George J. Butvilas, 65, has served on our board since 2006. He has been the President and Chief Executive Officer of Quincy Hill Advisors, LLC, a financial services industry consulting firm, from 2007 to the present. He has served as Chairman of the Michigan Technological University Foundation since 1996. He also served as Vice Chairman of Republic Bancorp Inc. from 1999 to 2006. In his 35 years of service in the banking industry, Mr. Butvilas has served as Chief Executive Officer of D&N Financial Corporation, a publicly traded bank holding company, for 9 years, and as a chief operating officer, commercial banker, community banker and director. Mr. Butvilas brings strong financial and risk management expertise to the board and as Chairman of the risk management committee because of his extensive expertise in the banking and financial services industry, as well as institutional knowledge regarding the Republic portion of our business.

          Robert S. Cubbin, 53, has served on our board since 2008. Mr. Cubbin has been the President and Chief Executive Officer of Meadowbrook Insurance Group, Inc., a publicly traded company, since May 2002 and has been a director since 1995. From February 1999 to May 2002, Mr. Cubbin served as the President and Chief Operating Officer of Meadowbrook Insurance Group, Inc. Mr. Cubbin joined Meadowbrook Insurance Group, Inc. in 1987 as Vice President and General Counsel. Mr. Cubbin’s public company background and his extensive skills and experience pertaining to risk, capital, and financial management enable him to assist the board in assessing risk and developing capital planning strategies, which are particularly relevant in today’s financial services industry.

          Richard J. Dolinski, 70, has served on our board since 2001. Mr. Dolinski has been the President and Chief Executive Officer of Dolinski Associates, Inc., a management consulting firm since 1997, and has been President of The Legacy Center for Student Success, a non-profit organization focusing on non-school related learning impediments since 2004. Mr. Dolinski had over 30 years of experience as a Vice President of the Dow Chemical Company with experience in human resources development and systems integration, product development, and research. Mr. Dolinski’s human resource experience allows him to provide insight to the board with regard to leadership development, talent management and corporate culture.

          Gary J. Hurand, 64, has served on our board since 2006. Mr. Hurand has been the President of Dawn Donut Systems, Inc., a property development management company since 1988. Mr. Hurand, a successful business owner in the Michigan commercial real estate market, brings an entrepreneurial vision and valuable business and leadership skills to the board. Mr. Hurand also has public company board experience as a trustee of BRT Realty Trust for 20 years and as a director at Republic Bancorp Inc. for 16 years. With this background, Mr. Hurand provides the board with valuable insights regarding the current economic environment in Michigan.

          Benjamin W. Laird, 61, has served on our board since 2001. Mr. Laird has been Of Counsel to the law firm of Godfrey & Kahn, S.C. since January 2008. He had been an attorney at Godfrey & Kahn, S.C. since 1985. Mr. Laird has also been a co-partner in Schoen-Laird Development, LLC, a real estate investment company since 1999. Mr. Laird has over 30 years of experience as an attorney practicing general business law representing large and small companies, including banks. Mr. Laird also has a long history of service on the board of directors of a paper converting machine company and various public and private financial institutions, which, together with his law practice, has given him valuable experience in corporate governance and oversight matters. As a Wisconsin resident and member of its business community, Mr. Laird provides a unique point of view with regard to our business in Wisconsin.

          Stephen J. Lazaroff, 57, has served as a director on our board since 1997. Mr. Lazaroff has been the President of Diversified Precision Products, Inc., a special cutting tool manufacturer serving the automotive and hydraulic fittings industry, for the last 20 years. Mr. Lazaroff brings strong leadership management abilities to the board. His professional experience as a small business owner and manager allows him to provide the board with a solid understanding of business opportunities and customer views. He also has significant financial and operational expertise, which gives him unique oversight capabilities.

          Cathleen H. Nash, 48, has served on our board since 2009. Ms. Nash has served as our President and Chief Executive Officer since February 2009 and was formerly our Executive Vice President responsible for regional banking from August 2007 to February 2009, and Executive Vice President and Head of Consumer Banking from July 2006 to August 2007. She was the director of Branch Banking at SunTrust Corporation from September 2003 to June 2006. Ms. Nash, as our current President and Chief Executive Officer, brings to the board extensive knowledge regarding the financial services industry and the current operational, economic and regulatory environment in which we operate, allowing her to provide critical insight into operational requirements and strategic planning. In that position, she is also able to promote the flow of information between the board and management and provide management’s perspective on issues facing the board.

          Kendall B. Williams, 58, has served on our board since 1992. Mr. Williams is an attorney and counselor with The Williams Firm, P.C., which was established in 1997. Mr. Williams has over 30 years of experience as an attorney specializing in employment and labor law, general civil litigation, corporate law and municipal law. This expertise allows him to bring a unique and informed point of view with regard to management and human resources issues to the board. Furthermore, Mr. Williams’ legal experience allows him to make valuable contributions with regard to risk management and corporate governance issues.

          James L. Wolohan, 59, has served on our board since 1997. Mr. Wolohan has been President of Wolohan Investments, LLC, a financial investment company since January 2008. He served as Chairman of Wolohan Capital Strategies, a real estate and financial investment company from April 2006 to December 2007. Mr. Wolohan was formerly the President and Chief Executive Officer of Wolohan Lumber Co., a publicly traded retailer of lumber, building materials and home improvement products from June 1987 to March 2006 and also served as Chairman of the board of directors for nine years. Mr. Wolohan’s previous public company experience as Chairman, President and Chief Executive Officer of Wolohan Lumber Co. has provided him with valuable financial and management expertise, as well as leadership abilities that are valuable to the board. Because of these skills and his ability to communicate and encourage discussion, Mr. Wolohan served as our lead independent director for four years and, beginning in May 2009, has served as our Chairman. He also brings strong accounting and financial skills to our audit committee and board and is an “audit committee financial expert” as defined by applicable Commission rules.

          Biographical information regarding Mr. Ibold and Mr. Zack, who are not standing for reelection is set forth below.

          Dennis J. Ibold, 62, has served on our board since 2006. Mr. Ibold is President of Petersen & Ibold, Attorneys at Law, which was established in 1980. Mr. Ibold has over 37 years of experience as an attorney in Ohio with an emphasis in family law, real estate and general corporate law, and has served on the board of directors of public and private financial institutions since 1982, including as a director at Republic Bancorp Inc. from 1993 to 2006.

          Steven E. Zack, 60, had served on our board since 2006. Mr. Zack had been Chairman of Global Commercial Credit, a specialty credit insurance firm since 2001 and Vice President of LSG Insurance Partners, a retail insurance agency, specializing in products for business or industry since 2000. Mr. Zack also served on the board of Republic Bancorp Inc. from 1999 to 2006.

Compensation Of Directors

          In 2010, our non-employee directors were compensated as follows:

•		Annual retainer: $20,000.
•		Meeting fee for board and committee meetings: $1,500 if attended in person, $750 if attended by telephone.
•		Non-Executive Chairman: additional $40,000 annual retainer.
•		Chairperson of the audit committee: additional $10,000 annual retainer.
•		Chairperson of the compensation and human resources committee and the risk management committee: additional $7,500 annual retainer.
•		Chairperson of the corporate governance and nominating committee: additional $5,000 annual retainer.

          Directors may participate in our directors deferred compensation plan, which allows directors to elect to defer up to 100% of their retainer, meeting and committee fees. The investment options available under the directors deferred compensation plan are the same as those available under our 401(k) plan. As a general rule, amounts deferred and investment returns are required to be distributed no earlier than upon the director’s termination of all directorships with us and our subsidiaries. No additional compensation is paid pursuant to this plan. Other than Mr. Butvilas, non-employee directors generally do not receive perquisites or other personal benefits for their service as a director. Mr. Butvilas received medical benefits during 2010 under an employment agreement with his former employer, Republic Bancorp Inc., which we acquired in 2006. This benefit ended at the beginning of 2011. Directors who are also our employees do not receive any additional compensation for their service as a director.

          The following table provides information regarding compensation that was paid to the individuals who served as our directors during 2010, other than Ms. Nash. As a Named Executive Officer, Ms. Nash’s compensation is included in the “Executive Compensation” section of this proxy statement.

DIRECTOR COMPENSATION

		Fees Earned or				All Other
		Paid in Cash(1)				Compensation				Total
Name		($)				($)				($)
Lizabeth A. Ardisana			38,750				-0-				38,750
George J. Butvilas			44,000				9,960				53,960
Robert S. Cubbin			71,250				-0-				71,250
Richard J. Dolinski			41,750				-0-				41,750
Gary J. Hurand			48,500				-0-				48,500
Dennis J. Ibold			42,500				-0-				42,500
Benjamin W. Laird			59,750				-0-				59,750
Stephen J. Lazaroff			62,500				-0-				62,500
Kendall B. Williams			42,500				-0-				42,500
James L. Wolohan			108,750				-0-				108,750
Steven E. Zack			46,250				-0-				46,250

          Prior to 2008, as part of our standard non-employee director compensation arrangement, we made awards to our directors either in the form of restricted common shares or stock options. The table below sets forth for each director the number of options held as of December 31, 2010. All prior grants of restricted stock held by the directors have vested.

		Options
		Outstanding
Name		(#)
Lizabeth A. Ardisana			3,425
George J. Butvilas			-0-
Robert S. Cubbin			-0-
Richard J. Dolinski			5,925
Gary J. Hurand			2,371
Dennis J. Ibold			2,371
Benjamin W. Laird			5,925
Stephen J. Lazaroff			5,925
Kendall B. Williams			5,925
James L. Wolohan			5,925
Steven E. Zack			-0-

          Since September 2002, we have maintained common stock ownership guidelines for our non-employee directors. In August 2010, our stock ownership guidelines were amended. Prior to August, our stock ownership guidelines required directors to hold at least 25,000 shares, with directors not meeting the guideline required to take grants of our common stock under our Stock Compensation Plan in lieu of his or her annual cash retainer fee at the time of the annual organizational meeting, until the director is in compliance. At the time of our 2010 annual organizational meeting, all of our directors were in compliance with the stock ownership guidelines in existence at the time. The board of directors amended our stock ownership guidelines because the board thought it was important for the directors to show an increased commitment to our shareholders by more closely aligning the financial interests of the directors with the interests of the other shareholders. The new guidelines require our non-employee directors to own shares of our common stock with an aggregate fair value of at least five times the annual board retainer. In the event that any director does not possess such ownership level at the time of the annual organizational meeting, which immediately follows the annual meeting of shareholders, he or she will be required to take all or such portion of their annual retainer fee in restricted stock or restricted stock units until such time as the aforementioned stock ownership guidelines are achieved. In the event that a director shall terminate his or her directorship prior to the next annual organizational meeting of the board, he or she shall forfeit, on a pro rata basis, that portion of the annual retainer amount paid in restricted stock or restricted stock units.

          The corporate governance and nominating committee is responsible for monitoring compliance with these guidelines and receives periodic updates from management with regard to progress towards complying with the guidelines. The table below shows the stock ownership of our non-employee directors as of March 21, 2011.

		Shares				Other				Total
		Owned				Ownership(1)				Holdings				Value(2)				Ownership Guideline
		(#)				(#)				(#)				($)				($)
Lizabeth A. Ardisana			42,235				-0-				42,235				37,167				100,000
George J. Butvilas			244,694				135				244,829				215,450				100,000
Robert S. Cubbin			107,390				-0-				107,390				94,503				100,000
Richard J. Dolinski			55,192				3,000				58,192				51,209				100,000
Gary J. Hurand			100,742				491,045				591,787				520,773				100,000
Dennis J. Ibold			99,650				91,332				190,982				168,064				100,000
Benjamin W. Laird			41,865				-0-				41,865				36,841				100,000
Stephen J. Lazaroff			157,385				-0-				157,385				138,499				100,000
Kendall B. Williams			51,558				714				52,272				45,999				100,000
James L. Wolohan			366,835				-0-				366,835				322,815				100,000
Steven E. Zack			106,643				-0-				106,643				93,846				100,000

CORPORATE GOVERNANCE

General

          We are governed by a board of directors and various committees of the board that meet throughout the year. Directors fulfill their responsibilities at board and committee meetings and also through telephone contact and other communications with the chairman, chief executive officer, and others regarding matters of concern and interest to the Corporation. In this portion of our proxy statement, we describe some of our key governance practices and related matters.

Meetings Of Directors And Committees Of The Board Of Directors

          During 2010, our board of directors held seven meetings. All incumbent directors attended at least 75% of the total number of meetings of our board of directors and the number of meetings held by our committees on which they served during 2010.

          We have several standing committees of our board of directors, including a compensation and human resources committee, a corporate governance and nominating committee, a risk management committee, and an audit committee. Our board of directors has adopted a charter for each of these committees. The charters are accessible on the Governance Documents page of the Investor Relations Section of our website at www.citizensbanking.com. The audit committee and the risk management committee meet quarterly and on call when needed. The compensation and human resources committee and the corporate governance and nominating committee meet on call. Our board of directors has determined that, except for Ms. Nash, all of our directors, including all the committee members, are “independent directors” as defined in Marketplace Rule 5605 of The NASDAQ Stock Market, or NASDAQ.

          The compensation and human resources committee met seven times during 2010 and is currently comprised of the following directors: Benjamin W. Laird, chairman; Lizabeth A. Ardisana, Robert S. Cubbin, Dennis J. Ibold, and Stephen J. Lazaroff. The responsibilities of the committee include approval of all aspects of corporate executive compensation and oversight of our compensation and benefits plans.

          The corporate governance and nominating committee met three times during 2010 and is currently comprised of the following directors: Stephen J. Lazaroff, chairman; Dennis J. Ibold, Kendall B. Williams and James L. Wolohan. Steven E. Zack also served on the corporate governance and nominating committee prior to his death. The responsibilities of the committee are:

	•		To establish criteria for board and committee membership and to recommend committee appointments;
	•		To review candidates, qualifications and possible conflicts;
	•		To assess contributions of current directors in relation to whether they should be renominated;
	•		To ensure that a substantial majority of directors are independent;
	•		To review our process for providing information to the board of directors;
	•		To recommend corporate governance principles to the board of directors;
	•		To oversee and evaluate the effectiveness of the board;
	•		To determine a desirable balance of expertise among board members;
	•		To identify qualified candidates to fill board positions and provide aid in attracting them to the board of directors;
	•		To recommend the slate of director nominees to the board of directors for inclusion in our proxy statement for election by the shareholders at the annual meetings;

	•		To recommend to the board of directors qualified nominees to fill vacancies on the board;
	•		To consider director nominees proposed by shareholders;
	•		To recommend and oversee compliance with stock ownership guidelines for the chief executive officer, other senior executives and members of the board of directors;
	•		To nominate and recommend a candidate for non-executive chairman and review the non-executive chairman’s duties annually; and
	•		To handle such other matters as may be properly delegated to the committee by the board.

The committee uses a number of means to identify director candidates, including requesting recommendations from existing board members and others, hiring an independent search firm or consultant, and considering candidates submitted by shareholders. If the committee hires an independent search firm or consultant, such firm or consultant will provide the committee with the names of director candidates who meet criteria established by the committee. When evaluating a director candidate, the committee looks at the candidate’s qualifications in light of our needs at that time given the then current mix of director expertise. While the committee does not have a formal policy with regard to diversity, the committee believes that the board will function best when its members possess a broad range of backgrounds and expertise so that the board as a whole reflects diverse and complementary skills and viewpoints. For a description of procedures for submitting nominations to the committee, see “Corporate Governance — Shareholder Proposals” and “Corporate Governance — Shareholder Nomination of Director Candidates.”

          The audit committee met twelve times during 2010 and is currently comprised of the following directors: Robert S. Cubbin, chairman; Gary J. Hurand, Benjamin W. Laird and James L. Wolohan. Steven E. Zack also served on the audit committee prior to his death. Our board of directors has determined that each of the members of the committee is “independent,” as defined in the applicable NASDAQ and Commission rules for audit committee members. Our board of directors has also determined that Mr. Wolohan is an “audit committee financial expert” as defined by applicable Commission rules and that each of the audit committee members satisfies all other qualifications for audit committee members set forth in the applicable NASDAQ rules. The responsibilities of the committee are:

	•		To oversee our financial reporting process and the internal accounting controls for our internal audit function;
	•		To appoint, compensate, oversee, evaluate and replace, if necessary, the external auditors;
	•		To approve in advance all audit services to ensure that a written statement is received from the external auditors setting forth all relationships with us;
	•		To review and approve any related party transactions;
	•		To review the annual audit plan with the independent auditors and the General Auditor;
	•		To oversee our legal, compliance, and ethics policies; and
	•		To review the results of our internal and independent audits.

          The risk management committee assists our board in overseeing our risk management practices, including our ability to assess and manage our risks related to credit, market, interest rate, liquidity, reputation, strategic, fiduciary, legal, compliance and operations. The committee met six times during 2010 and is currently comprised of the following directors: George J. Butvilas, chairman; Richard J. Dolinski, Gary J. Hurand, Kendall B. Williams and James L. Wolohan. The responsibilities of the committee are:

	•		To review, evaluate and approve risk management programs;
	•		To provide guidance on strategies and practices that pertain to the management of credit, market, fiduciary, reputation, strategic, legal, compliance and operational risks;

	•		To review and approve management’s risk assessment and risk mitigation and ensure that risks are managed within our tolerance levels;
	•		To evaluate and provide guidance on significant risk exposure;
	•		To receive and evaluate information relating to asset and liability management including our capital position, our liquidity position, our earnings sensitivity under varying interest rate scenarios and appropriate liquidity and capital levels;
	•		To review and assess information relating to credit risk, including nonperforming assets, charge-offs, level and adequacy of the allowance for loan and lease losses, the policies and procedures relating to loan and credit risk management; and
	•		To act as the Qualified Legal Compliance Committee.

          We have an enterprise risk management program overseen by our executive vice president and corporate risk officer, who reports directly to Ms. Nash and is responsible for identifying potential material risks and implementing appropriate controls to mitigate risks. Information is presented to the committee at each meeting about the various risks facing us and key risk indicators are reviewed by the committee in detail. In addition, each of the board committees considers risks within its areas of responsibility. For example, the audit committee considers financial risks including those related to internal controls and the annual financial audit and financial reporting. The compensation and human resources committee oversees the management of risks associated with our executive compensation plans and ensures that our compensation programs do not encourage excessive risk taking. The entire board of directors receives a monthly report of key risk indicators and is regularly informed at its meetings through committee reports. The board’s oversight role in this area has not affected its approach to the board’s leadership structure at least in part due to the level of direct communication between the board, its risk management and other committees and employees involved in risk management.

Report Of The Audit Committee

          In accordance with its written charter adopted by our board of directors, the audit committee assists the board of directors in fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing and financial reporting practices.

          The committee reviewed with the independent auditors, its judgments as to the quality, not just the acceptability, of our accounting principles and such other matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA Professional Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Committee has discussed with the independent auditors, the auditors’ independence from our management and our Corporation, including the matters in the letter from the auditors required by Public Company Accounting Oversight Board Rule 3526, Communication with Audit Committees Concerning Independence, and considered the compatibility of non-audit services with the auditors’ independence.

          The audit committee reviewed and discussed our audited financial statements as of and for the year ended December 31, 2010 with management and the independent auditors.

          Based on the above-mentioned review and discussions with management and the independent auditors, the audit committee recommended to our board of directors that our audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2010 for filing with the Securities and Exchange Commission. The audit committee also reappointed the independent auditors to serve as such for 2011.

By the Audit Committee of the Board of Directors:

Robert S. Cubbin, Chairman
Gary J. Hurand
Benjamin W. Laird
James L. Wolohan

Board Leadership Structure

          Our board believes that it is the chief executive officer’s primary responsibility to run the Corporation and the chairman’s responsibility to run the board. In making its decision to appoint an independent chairman, our board considered the time that Ms. Nash would be required to devote to the chief executive officer position in the current economic environment. By having another director serve as chairman, Ms. Nash would be able to focus her entire energy on running the Corporation. We continue to believe this structure is best for the Corporation and our shareholders at this time. Mr. Wolohan was elected to serve again as the non-executive chairman by the independent members of our board in May 2010. Mr. Wolohan served as our lead independent director since 2005 until his appointment as non-executive chairman in May 2009, and has previously served as both a director and chair on other public company boards. The non-executive chairman position is reviewed each year at the annual organizational meeting of the board of directors.

Annual Meeting Attendance

          We encourage all members of the board to attend the annual shareholders meetings but we have not adopted a formal policy requiring such attendance. All of the members of our board who were directors at the time of the 2010 annual meeting of shareholders attended that meeting.

Code of Ethics

          We have a code of ethics that applies to all of our employees and directors. The code of ethics, as currently in effect (together with any amendments that may be adopted from time to time), is posted on the Governance Documents page of the Investor Relations Section of our website at www.citizensbanking.com. In the future, to the extent any waiver is granted with respect to the code of ethics that requires disclosure under applicable Commission rules, we intend to post the waiver on the website at the address specified above.

Shareholder Proposals

          Any proposal by a shareholder intended to be included in the proxy statement for the 2012 annual meeting must be received by Thomas W. Gallagher, the secretary of the Corporation, by the close of business on December 6, 2011. In addition to applicable rules of the Commission for inclusion of shareholder proposals in our proxy statement, our Bylaws provide that, in order for a shareholder proposal to be properly brought before the annual meeting, written notice of such proposal must be given by the shareholder to our corporate secretary, either by personal delivery or by United States mail, postage prepaid, not later than February 18, 2012, which is the 90^th day prior to the first anniversary of the 2011 annual meeting. If the annual meeting date has been advanced to a date earlier than April 18, 2012, which is the 30^th day prior to the first anniversary of the 2011 annual meeting or delayed to a date later than July 17, 2012, which is the 60^th day after the first anniversary of the 2011 annual meeting, then notice of the proposal must be given within 10 days after the first public disclosure of the date of such meeting in accordance with the procedures set forth in our Bylaws. We also expect the persons named as proxies for the 2011 annual meeting of shareholders to use their discretionary voting authority, to the extent permitted by law, with respect to any proposal properly presented at that meeting by a shareholder who does not provide us with written notice of the proposal during the period provided in our Bylaws.

Shareholder Nomination of Director Candidates

          Shareholders proposing director nominees at the 2012 annual meeting of shareholders must provide written notice of their intention, along with certain information regarding the proponent and the nominees as provided in our Bylaws, to our corporate secretary not later than the close of business on February 18, 2012, which is the 90^th day prior to the first anniversary of the 2011 annual meeting. If the annual meeting date has been advanced to a date earlier than April 18, 2012, which is the 30^th day prior to the first anniversary of the 2011 annual meeting or delayed to a date later than July 17, 2012, which is the 60^th day after the first anniversary of the 2011 annual meeting, then notice of their intention must be given within 10 days after the first public disclosure of the date of the annual meeting. With respect to an election to be held at a special meeting of shareholders, such notice must be given by the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. The corporate governance and nominating committee may seek additional biographical and background information from any candidate that must be received on a timely basis to be considered by the committee. The corporate governance and nominating committee reviews the qualifications of candidates submitted for nomination by shareholders and evaluates them using the same criteria used to evaluate candidates submitted by the board for nomination.

Shareholder Communications with the Board of Directors

          Although we have not developed formal processes by which shareholders may communicate directly with directors, we believe that our informal process, by which any communication sent to our board of directors either generally or in care of the chief executive officer, corporate secretary or another corporate officer and forwarded to the addressee, has served the needs of both our board of directors and our shareholders.

          The corporate governance and nominating committee will monitor this matter and may develop more specific procedures. Until any other procedures are developed and posted on the Corporate Governance page in the Investor Relations section of our website at www.citizensbanking.com, any communication to the board of directors may be mailed to the board, in care of our corporate secretary, at 328 South Saginaw Street, Flint, Michigan 48502. The mailing envelope should contain a clear notation indicating that the enclosed letter is a “Shareholder-Board Communication” or “Shareholder-Director Communication.” All such communications should identify the author as a shareholder and clearly state whether the intended recipients are all members of the board of directors or just certain specified individual directors. Our corporate secretary will make copies of all such communications and circulate them to the appropriate director or directors.

Executive Officers

     The following information is provided for those officers currently designated as executive officers by our board of directors.

								Year Became
								Executive Officer of
Name		Age				Five-Year Business Experience		the Corporation
Gerald D. Bettens			51			Executive Vice President and Chief Information Officer and Director of Operations of the Corporation and of Citizens Bank (July 2009 to present); Senior Vice President and Chief Information Officer of Citizens Bank (August 2007 to July 2009); Senior Vice President and Chief Technology Officer of Citizens Bank (December 2005 - August 2007).			2009
Brian D.J. Boike			34			Senior Vice President and Treasurer of the Corporation and of Citizens Bank (October 2009 to present); Vice President and Asset Liability Manager of Citizens Bank (October 2005 to October 2009).			2009
Susan P. Brockett			61			Executive Vice President and Director of Corporate Human Resources of the Corporation and of Citizens Bank (February 2008 to present); Executive Vice President and Senior Human Resources Director at KeyCorp (March 1996 to January 2008).			2008
Joseph C. Czopek			53			Senior Vice President and Controller of the Corporation and of Citizens Bank (July 2009 to present) and Principal Accounting Officer of the Corporation and of Citizens Bank (October 2009 to present); Vice President and Assistant Controller of Citizens Bank (March 2009 to July 2009); Chief Financial Officer of Ace Holding Company, LLC and Ace Mortgage Funding, LLC (July 2007 to November 2008)1; Controller of Ace Holding Company, LLC and Ace Mortgage Funding, LLC (December 2006 to June 2007); Controller of Oak Street Mortgage (September 2003 to September 2006).			2009

								Year Became
								Executive Officer of
Name		Age				Five-Year Business Experience		the Corporation
Stephen Figliuolo			54			Executive Vice President and Corporate Risk Officer of the Corporation and of Citizens Bank (May 2005 to present) and Director of Core Sales Administration of the Corporation and of Citizens Bank (September 2009 to present).			2005
Thomas W. Gallagher			58			Executive Vice President, General Counsel and Secretary of the Corporation and of Citizens Bank (June 2007 to present); General Counsel of the Corporation (August 1988 to present); Secretary of the Corporation (January 1989 to present); General Counsel and Secretary of Citizens Bank (August 1988 to June 2007).			1989
Judith L. Klawinski			51			Executive Vice President and Director of Core Banking of the Corporation and of Citizens Bank (September 2009 to present); Executive Vice President and Director of Client Segmentation and Delivery of the Corporation and of Citizens Bank (February 2009 to September 2009); Senior Vice President and Head of Retail Delivery of the Corporation (July 2005 to February 2009).			2009
Lisa T. McNeely			52			Executive Vice President and Chief Financial Officer of the Corporation and of Citizens Bank (August 2010 to present); Executive Vice President and Interim Chief Financial Officer of the Corporation and of Citizens Bank (May 2010 to August 2010); Senior Vice President and Director of Credit Analytics of Citizens Bank (November 2008 to May 2010); Senior Vice President and Director of Consumer Administration and Sales Strategy of Citizens Bank (March 2005 to November 2008).			2010
Cathleen H. Nash			48			President, Chief Executive Officer and a Director of the Corporation and of Citizens Bank (February 2009 to present); Executive Vice President, Regional Banking of the Corporation (August 2007 to February 2009); Vice Chair of Regional Banking of Citizens Bank (August 2007 to February 2009); Executive Vice President and Head of Consumer Banking of the Corporation (July 2006 to August 2007); Director of Branch Banking of SunTrust Corporation (September 2003 to June 2006).			2006

								Year Became
								Executive Officer of
Name		Age				Five-Year Business Experience		the Corporation
Louise N. O’Connell			51			Executive Vice President and General Auditor of the Corporation and of Citizens Bank (September 2009 to present); Senior Vice President and General Auditor of the Corporation and of Citizens Bank (November 2007 to September 2009); Senior Vice President and Michigan Region Audit Director, LaSalle Bank (October 2003 to November 2007).			2007
Peter W. Ronan			66			Executive Vice President and Director of Wealth Management of the Corporation and President of Citizens Bank Wealth Management, N.A. (October 2007 to present); Senior Vice President and Group Business Manager of Personal Trust, Comerica Bank (April 2004 to July 2007).			2007
Clinton A. Sampson			65			Executive Vice President and Commercial Banking Consulting Advisor of the Corporation and of Citizens Bank (January 2009 to present); Executive Vice President and Regional Chairman of the Corporation-Michigan (November 2003 to January 2009); Vice Chair of Commercial Banking of Citizens Bank (August 2007 to December 2008).			2003
Mark W. Widawski			53			Executive Vice President and Chief Credit Officer of the Corporation and of Citizens Bank (February 2009 to present); Senior Vice President and Managing Director of Asset Based Lending of Citizens Bank (March 2006 to February 2009).			2009

EXECUTIVE COMPENSATION

Compensation Discussion And Analysis

Executive Summary and Key Highlights of 2010 Executive Compensation Decisions

          In 2010, the Compensation Committee and the board of directors made the following decisions with regard to executive compensation:

	•		We increased base salaries for Named Executive Officers for the first time in two years and determined to pay a substantial amount of the increase during 2010 in common stock;

•

We did not pay short-term incentive awards to our Named Executive Officers for the third year in a row; and

•

We granted long-term equity incentive awards to our Named Executive Officers, half of which have performance criteria designed to further focus our senior executives’ attention on returning to profitability and managing credit risk, and half of which are time vested to encourage retention.

          Our executive compensation program is designed to reward financial performance that creates shareholder value and is based on advice from an independent compensation consultant retained by the Compensation Committee. We provide the opportunity to earn compensation at levels that are competitive with our peer institutions, but actual compensation paid to our senior executives varies based on our financial performance. We are legally restricted in our ability to pay certain types of compensation due to our participation in the U.S. Treasury’s Capital Purchase Program and due to a written supervisory agreement with our regulators to which we are a party. Our compensation philosophy and program are described below, along with a discussion and analysis of the compensation we paid to our Named Executive Officers during the year.

Overview of Compensation Philosophy and Program

          Our compensation philosophy is to offer competitive total compensation that is aligned with performance goals that motivate our executives to achieve strategic goals prudently and within acceptable risk tolerances while driving financial performance and generating long term, sustainable shareholder value. Our compensation philosophy is based on three objectives:

	•		Align total compensation opportunity with shareholder interests with a focus on funding at-risk pay opportunities, in whole or in part, based on our performance;
	•		Ensure appropriate risk mitigation measures are integrated into compensation programs and practices; and
	•		Design a total compensation opportunity that is competitive and will attract, motivate and retain talent.

          Our executive compensation program generally has four basic elements:

	•		Base salary;
	•		Annual short-term, cash incentive awards;
	•		Long-term, typically equity-based awards; and
	•		Employee and retirement benefits.

          Decisions about compensation of our executive officers are made by the Compensation and Human Resources Committee, or Compensation Committee, all of the members of which are “independent” as defined under applicable NASDAQ rules. To help with its decision making each year, the Compensation Committee hires its own independent compensation consultants to advise it. Towers Watson provided independent advice on executive compensation matters to the Compensation Committee in 2010. Towers Watson was retained by and reported directly to the Compensation Committee.

          For 2010, the Compensation Committee reviewed competitive market data for comparable executive positions prepared by our human resources department. These data generally compare total compensation and plan design for nationwide banking and financial services organizations and are adjusted to reflect our asset size in comparison to these organizations. In addition, the Compensation Committee also reviews market data of comparable banks in a customized peer group on a periodic basis in order to better understand actual market practices and trends. The banks in the peer group are reviewed annually and we make adjustments to the group when necessary due to changes in circumstances during the prior year. The Compensation Committee, with assistance from its consultant, selected the customized peer group for 2010 with the intention of creating a group consisting of comparable banks having similar size, business and/or geographic characteristics. The key considerations for peer group selection were industry and size, specifically financial service companies that are regional commercial banks with assets from $4 billion to $60 billion. The Compensation Committee also considered certain other qualitative factors for peer group inclusion such as mix of business, geography, sources of executive talent, participation in the Capital Purchase Program, and whether the entity is a direct business competitor. Below is a list of the banks in the customized peer group for 2010.

	•		Associated Banc-Corp
	•		BancorpSouth, Inc.
	•		BOK Financial Corporation
	•		Capitol Bancorp, Ltd.
	•		Chemical Financial Corporation
	•		Comerica, Inc.
	•		Commerce Bancshares, Inc.
	•		Cullen/Frost Bankers, Inc.
	•		First Citizens Bancshares, Inc.
	•		FirstMerit Corporation
	•		First Midwest Bancorp, Inc.
	•		Fulton Financial Group
	•		NewAlliance Bancshares, Inc.
	•		Old National Bancorp
	•		Park National Corporation
	•		Sterling Financial Corporation
	•		Susquehanna Bancshares, Inc.
	•		TFS Financial Corporation
	•		UMB Financial Corporation
	•		Valley National Bancorp
	•		Whitney Holding Corporation
	•		Wilmington Trust Corporation

          We intend for our total direct compensation (which includes base salary, short-term incentive awards, and long-term incentive awards) for our executive officers to be at or around the 50^th percentile of the market, which includes the national banking and financial services companies whose size has been adjusted to our asset size, as well as our customized peer group. Based on an evaluation by our human resources team in 2010, total direct compensation for our Current Named Executive Officers in 2010 was slightly below the 50^th percentile. Actual realized compensation depends on actual performance and has been significantly below those levels in recent years.

          In making compensation decisions, the Compensation Committee considers each element of our compensation program individually and in relation to the total direct compensation of each executive officer. We believe that a significant portion of executive compensation should be in the form of annual incentive awards and long-term incentive awards, or at-risk pay. We believe this pay mix emphasizes both a short-term and a long-term perspective that is directly tied to shareholder value. The at-risk pay portion of compensation recognizes the significance of our executive officers’ efforts on our overall financial performance. For instance, our Named Executive Officers and our other executive officers did not receive a Management Incentive Plan, or MIP, award for 2008, 2009 and 2010 due in part to our financial performance. In addition, while we remain committed to our pay-for-performance philosophy, our ability to offer to our executive officers competitive total compensation and reward financial performance results that drive shareholder value is limited due to restrictions imposed by applicable law because of our participation in the Capital Purchase Program, or CPP, as discussed in more detail in “Executive Compensation- Compensation Discussion and Analysis — Regulatory Requirements — Capital Purchase Program” below.

          References in this discussion to the Named Executive Officers are to the individuals listed in the Summary Compensation Table. References to our Current Named Executive Officers are to Mses. Nash, McNeely and Klawinski and Messrs. Widawski and Gallagher. Mr. Christy resigned in June 2010.

Regulatory Requirements

          Capital Purchase Program

          We are subject to various restrictions on our ability to compensate our senior executives, including the Named Executive Officers, as long as the preferred shares issued to the U.S. Department of the Treasury, or Treasury under the CPP remain outstanding. Like other participants in the CPP, our ability to deduct compensation in excess of $500,000 paid to our Named Executive Officers and to use certain arrangements to compensate our executives is limited by the Emergency Economic Stabilization Act of 2008, or EESA, the American Recovery and Reinvestment Act, or ARRA, and the Treasury regulations issued thereunder. These restrictions on executive compensation significantly affect our executive compensation program, and include, among others:

	•		A prohibition on paying or accruing any bonuses, retention awards, or incentive compensation to our Named Executive Officers and the next 10 most highly compensated employees, other than (i) restricted shares with a prescribed minimum vesting period, which are not fully transferable until the CPP assistance has been repaid in full, which have a value on the grant date that is no greater than one-third of the executive’s annual compensation, and which are subject to such other conditions as the Secretary of the Treasury may determine; and (ii) bonus payments pursuant to pre-existing employment contracts executed on or before February 11, 2009 and not determined invalid by the Secretary of the Treasury;
	•		A prohibition on paying any golden parachute payments (defined as any payment for departure from a company for any reason except for payment for services performed or benefits accrued, and any payment due to a change in control of the CPP participant) to our Named Executive Officers and the next five most highly compensated employees;
	•		A requirement to seek the return of any bonus, retention award, or incentive compensation paid to our Named Executive Officers and any of the next 20 most highly compensated employees based on financial statements or performance metrics later determined to have been materially inaccurate;
	•		A requirement to ask our shareholders to vote on a non-binding advisory resolution each year to approve the compensation of our Named Executive Officers;

	•		A prohibition on tax gross-ups for our Named Executive Officers and the next 20 most highly compensated employees;
	•		A requirement to establish a Corporation-wide policy on excessive or luxury expenditures;
	•		A requirement to disclose to the Treasury any perquisites in excess of $25,000 paid or provided to our Named Executive Officers or the next 10 most highly compensated employees;
	•		A requirement that our Compensation Committee review on a semi-annual basis employee compensation plans to limit any features that would encourage our Named Executive Officers to take “unnecessary and excessive risks,” identify and eliminate any provisions in such plans that encourage the manipulation of reported earnings to enhance employee compensation and certify each year in the annual meeting proxy statement that it has done so; and
	•		A requirement that our chief executive officer and our chief financial officer provide a written certification as an exhibit to our Annual Report on Form 10-K of compliance with these compensation standards.

            Other Regulatory Requirements

          In July 2010, we entered into a written supervisory agreement with the Federal Reserve Bank of Chicago and the State of Michigan Office of Financial and Insurance Regulation. Among other requirements contained in the written supervisory agreement, we are required to comply with the restrictions on golden parachute payments under Part 359 of the Federal Deposit Insurance Corporation’s rules and regulations, which are similar to the CPP restrictions on golden parachute payments noted above. Under Part 359, we are prohibited from making payments to our Named Executive Officers that are payable due to their termination, with certain exceptions. We would generally be permitted to make payments made by reason of death or disability, mandated by state law or pursuant to:

	•		a qualified pension or retirement plan;
	•		an employee welfare plan;
	•		a bona-fide deferred compensation plan; and
	•		a non-discriminatory severance pay plan.

            Therefore, while we are subject to the written supervisory agreement, we would generally be prohibited from making payments to Ms. Nash pursuant to the terms of her letter agreement and to all of our Current Named Executive Officers that are payable pursuant to the terms of our change in control agreements with them.

Base Salary

            We believe that if we want to attract and retain high performing executive officers, the base salaries we pay must be competitive, and must reflect individual performance. As a result, we typically use the previously discussed market data for salaries along with the results of annual performance evaluations to determine salary levels.

            Each year, our chief executive officer reviews the performance of the other executive officers and assigns a performance rating to each executive officer based on the financial performance of the executive officer’s line of business, the executive’s unique contributions to us and our need for the executive’s expertise. Additionally, executives are evaluated on core competencies that are used to evaluate all of our staff members. These core competencies are centered on collaboration, prerequisites, and results. Each executive is also measured on core management competencies like decision making and talent management, as well as strategic capabilities like vision and strategy and technical expertise. These competencies and capabilities link our executives’ behavior to our vision and are designed to enhance our

financial performance. Our chief executive officer reviews the performance ratings and salary recommendations for the other executive officers that report directly to her with the Compensation Committee. Following a discussion of our chief executive officer’s recommendations and a review of the competitive market data, the Compensation Committee either approves the recommendations or adjusts executive salaries as appropriate in its judgment.

          Ms. Nash’s performance as the chief executive officer is evaluated each year by the board of directors as a whole, based on the same core competencies described above and our financial performance. She also conducts a self-assessment of her performance and prepares goals for the following year. The chairman of the board of directors and the chairman of the Compensation Committee prepare a performance appraisal and development plan, and prepare a recommendation to the Compensation Committee with regard to Ms. Nash’s total compensation. The Compensation Committee then reviews the performance evaluation, the development plan, Ms. Nash’s self-assessment, the recommendation of the chairman of the board and the chairman of the Committee and the competitive market data and determines the appropriate salary level for Ms. Nash for the year. The Compensation Committee recommends any salary adjustments to our board of directors, who after reviewing the recommendation and the performance review make the final determination with regard to Ms. Nash’s salary.

          2010 Base Salary Determinations

          As a result of the process described above, in May 2010, our Current Named Executive Officers received base salary increases that reflected the limitations placed on executive compensation because of our participation in the CPP. Our participation in the CPP has required us to place more emphasis on base salary and to use base salary increases in ways that also align the interests of our executives with those of our shareholders. The laws and regulations applicable to CPP participants permit our Compensation Committee to pay salary increases in the form of shares of our common stock, which we refer to as Stock Salary, as long as such Stock Salary is granted in dollars and not shares, is fully earned and accrues like salary. The Compensation Committee and the board of directors determined that base salary increases in the form of Stock Salary would link compensation to our financial performance, as a portion of their compensation would be directly tied to an increase or decrease in the price of our stock price. Additionally, the Compensation Committee and the board of directors determined, primarily based on peer group market data and competitive market data, that base salary increases were appropriate in order to maintain competitive salaries and retain our Current Named Executive Officers. As a result, our Current Named Executive Officers, except for Mr. Gallagher, received salary increases to be paid in Stock Salary. Stock Salary is paid to these individuals as part of each bi-weekly pay period for one year, with the number of shares determined by dividing the dollar amount of salary to be paid in stock for that pay period, net of applicable withholdings and deductions, by the reported closing price per share on the NASDAQ Capital Market on the pay date for such period. The Stock Salary so granted is fully earned and not forfeitable at the time of the grant, but transfer restrictions on the shares do not lapse until the earliest to occur of May 4, 2012, or the death, disability, retirement or termination of employment resulting in benefits being payable under our severance plan. Those Current Named Executive Officers receiving Stock Salary have voting and dividend rights with respect to the restricted stock prior to the lapse of the transfer restrictions. The Stock Salary will not continue to be paid after May 2011 without further action by the Compensation Committee. The Compensation Committee intends to review the Stock Salary arrangement each year and will determine at that time whether to renew the Stock Salary grant for an additional year or convert the Stock Salary to cash salary.

          As a result of the salary increases in May 2010, Ms. Klawinski’s base salary is slightly above the 50^th percentile for her position compared to competitive market data and Mr. Gallagher’s base salary remains slightly below the 50^th percentile compared to competitive market data. Mr. Widawski’s base salary is at the 75^th percentile of chief credit officer compensation compared to competitive market data. The Compensation Committee determined that it was appropriate to increase Mr. Widawski’s base salary above the 50^th percentile given the importance of Mr. Widawski’s role in managing our credit issues during this economic cycle.

          Additionally, in May 2010, the Compensation Committee increased Ms. McNeely’s base salary when she was appointed interim chief financial officer in view of the additional responsibilities of her new role. In August 2010, the Compensation Committee further increased Ms. McNeely’s base salary when she was appointed Chief Financial Officer to bring it more in line with the most recent competitive market data. The Compensation Committee also determined that the additional increase was in the Corporation’s best interests given Ms. McNeely’s performance in the interim role as chief financial officer and the importance of her role in assisting in navigating us through the prolonged and adverse economic cycle. After the August base salary increase, Ms. McNeely’s base salary was slightly above the 60^th percentile of chief financial officer compensation compared to market data.

          In September 2010, the Compensation Committee recommended that the board of directors approve an additional base salary increase for Ms. Nash. The board of directors determined that Ms. Nash would receive an additional salary increase of $300,000 paid in cash. The board determined that her salary increase was appropriate for the following reasons:

	•		She has demonstrated her ability as a leader during her tenure;
	•		She has further enhanced our relationship with our banking regulators and has played a critical role in responding to and complying with the written supervisory agreement;
	•		She has played a critical role in leading us through the current adverse economic condition; and
	•		The importance, in the board’s view, of retaining Ms. Nash’s services in view of our current posture, and the legal limitations imposed currently on our ability to grant short-term compensation.

Prior to Ms. Nash’s September salary increase, updated peer group information indicated that Ms. Nash was currently being paid at a rate significantly below the 50^th percentile of the peer group chief executive officers. The base salary increase resulted in Ms. Nash’s base salary being slightly higher than the 50^th percentile of chief executive compensation in our peer group.

          The table below sets forth the cumulative effect of the above described increases to our Current Named Executive Officers’ base salaries in 2010 and in what form the base salary increases were paid to our Current Named Executive Officers.

CURRENT NAMED		PRE-MAY				CASH				STOCK SALARY				MODIFIED				TOTAL INCREASE
EXECUTIVE OFFICER		2010 BASE SALARY				INCREASE				INCREASE				BASE SALARY				%
Cathleen H. Nash		$	600,000			$	300,000			$	200,000			$	1,100,000				83.3	%
Lisa T. McNeely		$	205,004			$	119,996			$	125,000			$	450,000				119.5	%
Mark W. Widawski		$	240,000			$	70,000			$	60,000			$	370,000				54.2	%
Judith L. Klawinski		$	250,000			$	40,000			$	40,000			$	330,000				32.0	%
Thomas W. Gallagher		$	248,464			$	6,460				-0-			$	254,924				2.6	%

          Despite the salary increases described above, total compensation for our Current Named Executive Officers is below the 50^th percentile. Salaries for the Named Executive Officers are reflected in the “Executive Compensation — Summary Compensation Table.”

Bonus

          Management Incentive Plan

          In past years, we have made annual short-term cash incentive awards to our executives under our MIP. This plan is designed to advance our pay for performance culture by focusing management on achieving annual financial goals that are intended to drive shareholder value. It also rewards management for corporate and individual performance while creating a better understanding of our goals and performance.

          In December 2009, consistent with Ms. Nash’s recommendations, the Compensation Committee determined that the Named Executive Officers would not participate in the MIP for 2010 due to the prolonged adverse economic conditions and our anticipated unfavorable financial results for 2010. The laws and regulations applicable to CPP participants described above prohibit us from paying cash bonuses and other cash incentive compensation to our Named Executive Officers and our next ten most highly compensated employees as long as the preferred shares issued to Treasury under the CPP remain outstanding. In December 2009, the Compensation Committee determined that even in the absence of the CPP-related restrictions on executive compensation, our Named Executive Officers would not participate in the MIP for 2010. In late 2010, the Compensation Committee made the same determination with regard to the Named Executive Officers’ participation in the MIP for 2011.

          Cash Component of 2009 Award

          In January of 2009, the Compensation Committee approved long-term incentive awards to our Named Executive Officers (except for Ms. McNeely, who was not an executive officer at the time), which consisted of a cash component that would vest and be paid in three annual installments each January 29^th beginning in 2010 as long as the Named Executive Officer remains employed with us. The table below shows the cash component portion of the award that was granted to our Named Executive Officers in 2009. The bonus column in the “Executive Compensation — Summary Compensation Table,” reflects the January 2010 installment of the cash component of the 2009 award.

NAMED EXECUTIVE		2009 TOTAL				ANNUAL
OFFICER		CASH COMPONENT				INSTALLMENT
Cathleen H. Nash		$	300,000			$	100,000
Lisa T. McNeely		$	0			$	0
Mark W. Widawski		$	72,500			$	24,167
Judith L. Klawinski		$	80,000			$	26,667
Thomas W. Gallagher		$	50,000			$	16,667
Charles D. Christy		$	240,000			$	80,000

Long-Term Equity-Based Compensation

          We believe long-term equity awards will encourage executive officers to have a long-term focus with regard to our financial success, motivate and engage our executive officers to achieve financial success during these challenging times, and better align our executive officers’ long-term financial interests with those of our shareholders. We believe these types of awards further align our executives’ financial interests with our shareholders’ interests by linking a portion of executive compensation directly to stock price growth or decline. As a result, we have previously made annual equity-based grants early in the calendar year to some or all of our executive officers under our Stock Compensation Plan.

          In May 2010, the Compensation Committee and the board approved long-term incentive awards in the form of restricted stock and restricted stock units for our Current Named Executive Officers. Mr. Christy did not receive an award as he tendered his resignation at about the same time the awards were made. Mr. Widawski and Mr. Gallagher received restricted stock units because of the more favorable tax treatment for those who are retirement eligible. Also, Mr. Widawski and Mr. Gallagher would receive a pro-rata portion of any unvested restricted stock units upon retirement, while other Current Named Executive Officers who retire with unvested restricted stock would forfeit any unvested shares. Ms. McNeely received an additional award due to the added responsibilities associated with her appointment as interim chief financial officer effective June 4, 2010 and as chief financial officer in August 2010. Generally, fifty percent of the long-term incentive award granted to each Current Named Executive Officer is subject to certain performance-based restrictions and fifty percent of the award is subject to time-based vesting restrictions. The 2010 long-term incentive awards granted to our Named Executive Officers are listed in the table below.

Current Named
Executive Officers		Performance-Based Portion		Time- Based Portion
Cathleen H. Nash		163,934 shares of restricted stock		163,934 shares of restricted stock
Lisa T. McNeely*		105,958 shares of restricted stock		121,948 shares of restricted stock
Judith L. Klawinski		59,426 shares of restricted stock		59,426 shares of restricted stock
Mark W. Widawski		61,474 restricted stock units		61,476 restricted stock units
Thomas W. Gallagher		52,238 restricted stock units		52,238 restricted stock units

          The restrictions as to one-half of the performance-based portion of the award will lapse on May 4, 2011, if the Current Named Executive Officer remains employed by us, but only to the extent we attain the designated pre-tax, pre-provision profit threshold for 2010, and we attain the designated total provision expense threshold for 2010. To the extent either of the performance conditions are not met, the restricted shares or restricted stock units related to such portion of the award shall be forfeited. The restrictions as to the remaining one-half of the performance-based portion of the award will lapse on May 4, 2012 if the individual remains employed by us, but only to the extent we attain the designated pre-tax, pre-provision income threshold for 2011 and we attain the designated total provision expense threshold

for 2011. To the extent either of the performance conditions are not met, the restricted shares or restricted stock units related to this portion of the award shall be forfeited. The restrictions as to the time-based portion of the award will lapse on May 4, 2013, the third anniversary of the grant date, if the Current Named Executive Officer remains employed by us.

          The restricted stock or restricted stock units meeting the performance-based restrictions will become earned and no longer forfeitable on May 4, 2011 and May 4, 2012, but may not be transferred, until the later of May 4, 2012 or the date on which the restricted shares or restricted stock units are no longer subject to the limitations placed on us as participants in the CPP.

          The table below shows the performance thresholds for 2010 and 2011 of the performance-based portion of the award.

Financial Measure

Weight

2010 Threshold

2011 Threshold

Pre-Tax, Pre-Provision Profit

75%

At least $102 million

At least $108 million

Total Provision Expense

25%

Less than $275 million

Less than $122 million

          Pre-tax pre-provision profit, or PTPP, represents total revenue (total net interest income and noninterest income) excluding any securities gains/losses, fair-value adjustments on loans held for sale, interest rate swaps, and bank owned life insurance, less noninterest expense excluding any goodwill impairment charges, credit writedowns, fair-value adjustments and special assessments. While certain of these items are an integral part of our banking operations, in each case, the excluded items are items that we believe are particularly impacted by economic stress or significant changes in the credit cycle and are therefore likely to make it more difficult to understand our underlying performance trends and the ability of our banking operations to generate revenue. The use of PTPP as a metric focuses the attention of our Named Executive Officers on improving PTPP, which the Compensation Committee believes is a key metric for our business, as it represents our ability to generate capital to cover credit losses and other credit related or impairment charges through the peak of a credit cycle. This underlying ability to generate capital directly impacts our long-term value and viability. Improving PTPP increases our long-term value and thus aligns the Named Executive Officers’ incentives with the creation of shareholder value. These awards are designed so that this portion of compensation does not depend on management’s performance with regard to managing loan losses, securities impairments, and other asset impairments. The Compensation Committee chose total provision expense as a means of encouraging our executives to manage our credit risk through the credit cycle while focusing on returning to profitability.

          Our PTPP of $137.5 million for 2010 exceeded the threshold for PTPP, while our total provision expense for 2010 was greater than $275 million. As we did not satisfy the 2010 threshold for total provision expense, the portion of the award relating to that goal for 2010 will be forfeited.

          The terms regarding forfeiture of these awards are described in more detail under “Executive Compensation — Other Potential Post-Employment Payments — Stock Compensation Plan.”

          Each restricted stock unit will be settled for one share of our common stock at the time the applicable restrictions lapse, with a portion of these shares withheld to satisfy income and employment tax withholding requirements. Holders of restricted stock units will have no voting or dividend rights prior to settlement of the units for shares of stock. Holders of restricted shares, however, will have voting and dividend rights with respect to those shares from the date of grant except to the extent such restricted shares are forfeited.

          With respect to other grants of equity based compensation, as long as the preferred shares issued to Treasury under the CPP remain outstanding, we are limited by ARRA in the amount of long-term restricted stock that may be paid to our Named Executive Officers and certain of our other most highly compensated employees as noted above. Long-term restricted stock awards (not including Stock Salary) are limited to one-third of the recipient’s total annual compensation, must have a minimum two-year vesting requirement, and will not fully vest while the preferred shares issued to Treasury under the CPP remain outstanding.

Employment Agreements

          Nash Letter Agreement

          In connection with Ms. Nash’s appointment as our president and chief executive officer effective February 1, 2009, we entered into a letter agreement with Ms. Nash on January 22, 2009. The Compensation Committee proposed the initial terms based on competitive market and peer group data and taking into account Ms. Nash’s relevant experience. The Compensation Committee negotiated the final terms of the letter agreement with Ms. Nash, which are designed to be competitive and motivate Ms. Nash to focus on our long-term growth and profitability. This agreement is described in more detail under “Executive Compensation — Other Potential Post-Employment Payments — Nash Letter Agreement.”

Retirement Benefits

          Pension Benefits

          We maintain the Citizens Republic Bancorp Amended and Restated Cash Balance Pension Plan for Employees, or the Qualified Plan, which provides funded, tax-qualified retirement benefits up to the limits on compensation permitted under the Internal Revenue Code. The Qualified Plan is a cash balance pension plan that was frozen effective December 31, 2006. The accrual of future benefits under the Qualified Plan, other than the accrual of interest, has ceased, so that pay and service after December 31, 2006 will not increase benefits payable under this plan although post-2006 service will count towards vesting requirements for benefits already accrued.

          In 2007 and 2008, we paid an annual non-elective contribution of 2.5% of eligible compensation to the 401(k) plan on behalf of each eligible employee, regardless of participation in the 401(k) plan. This non-elective contribution served as a vehicle to supplement retirement savings in the absence of an active pension plan. In 2009, the Qualified Plan was amended to make the non-elective contribution discretionary. The Compensation Committee and the board determined that there would be no contribution for 2010 based in part on our corporate performance during the year and in an effort to accelerate our financial performance toward profitability.

          Benefits payable under the Qualified Plan are paid in the form of a lump sum or an equivalent annuity immediately following retirement and the attainment of age 55 with 3 years of service or prior to age 55 with at least 10 years of service. All of our Current Named Executive Officers earned an interest credit benefit under the Qualified Plan in 2010. As of the end of 2010, all of our Current Named Executive Officers have earned a vested interest in the Qualified Plan (completed at least 3 years of credited service). The present value of accumulated benefits under the Qualified Plan for each Named Executive Officer is disclosed in the “Executive Compensation — Pension Benefits” table and the change in those benefits during 2010 is disclosed in the “Executive Compensation — Summary Compensation Table.”

Other Executive Perquisites and Benefits

          All of our Named Executive Officers participated in our 401(k) plan in 2010. Prior to August 2009, we matched up to 4% of eligible compensation per year. In 2009 and 2010, the Compensation Committee, pursuant to a recommendation by Ms. Nash, eliminated the 401(k) matching benefit based in part on our corporate performance during the year and in an effort to accelerate our financial performance toward profitability.

          Ms. Nash and Ms. Klawinski participate in our Deferred Compensation Plan for Executives, or Deferred Compensation Plan. Under our Deferred Compensation Plan, we may make matching contributions in the form of our common stock, not to exceed 30% in value of the participant’s own contribution. The Compensation Committee has the discretion to determine whether to make matching contributions, and in 2010, determined not to make any matching contributions under the Deferred Compensation Plan for the same reasons the 401(k) matching benefit was eliminated.

          We reimbursed certain of our Named Executive Officers for initiation fees and annual dues, as applicable, for membership in country clubs in 2010. We believe country club memberships enable our executives to develop business contacts within the communities in which we operate and entertain clients. Club fees and dues we paid for the Named Executive Officers are disclosed in the “Executive Compensation — Summary Compensation Table.”

          The Compensation Committee adopted an excessive or luxury expenditures policy, which prohibits excessive or luxury expenditures of our funds on entertainment or events, office or facility renovation, aviation or other transportation services, or other similar items, activities, or events, if such expenditures are not reasonable expenditures for staff development, reasonable performance incentives, or other similar measures conducted in the normal course of the operation of our business. The policy was adopted to comply with the requirements imposed on participants in the CPP. The policy is accessible on the Governance Documents page of the Investor Relations section of our website at www.citizensbanking.com.

Employment Termination Severance Benefits

          We provide our Named Executive Officers with severance benefits upon termination of employment in connection with a change in control of the Corporation and in certain other circumstances as deemed appropriate by the Compensation Committee. Each of our Current Named Executive Officers is entitled to benefits upon termination in connection with a change in control pursuant to our Amended and Restated Change in Control Agreement, or Change in Control Agreement. The Compensation Committee believes it is important to provide this protection in order to ensure our Current Named Executive Officers will remain engaged and committed to us during an acquisition of the Corporation or other transition in management.

          We amended our Change in Control Agreements in 2010 to gain consistency and provide more structure around who is eligible to receive such benefits and the length of such benefits. The amended Change in Control Agreements generally reduce the value of the benefit payable to the Current Named Executive Officers upon termination following a change in control. Each Change in Control Agreement provides for severance benefits in a lump sum payment equal to two times (or in the case of Ms. Nash three times) the Current Named Executive Officer’s annual base salary immediately prior to the change in control plus two times (three times in the case of Ms. Nash) the average of the annual bonuses paid to the Current Named Executive Officers in the last three full calendar years of employment under our MIP. The severance benefits under the Change in Control Agreements were reduced for Mr. Gallagher and Ms.

McNeely from three to two times. In addition, we may negotiate severance benefits with other individual executives upon termination in other circumstances when the Compensation Committee deems appropriate. Ms. Nash’s letter agreement provides that she will be entitled to two years of base salary plus outplacement services if her employment is terminated by the Corporation without cause that is not in connection with a change in control. These benefits and arrangements are described in detail under “Executive Compensation — Other Potential Post-Employment Payments.”

          Due to our participation in the CPP, as long as the preferred shares issued to Treasury under the CPP remain outstanding, and also pursuant to the terms of our written supervisory agreement, we are generally not permitted to pay amounts to our Named Executive Officers and our next five highest paid employees for a change in control of the Corporation or their departure from the Corporation for any reason other than death or disability, except payments for services performed or benefits accrued and payments pursuant to qualified retirement plans or that are required by applicable law.

Section 162(m) Compliance

          Section 162(m) of the Internal Revenue Code of 1986, or the Code, restricts the ability of publicly traded companies such as ours to deduct executive compensation paid to each of our Named Executive Officers in excess of $1,000,000 in annual compensation. In years when the preferred shares issued to Treasury under the CPP are not outstanding, certain performance-based compensation is exempt from this limitation if it complies with various conditions described in Section 162(m). The Stock Compensation Plan and its predecessor plans contain provisions intended to cause compensation realized in connection with certain awards under the Stock Compensation Plan and its predecessor plans to be exempt from the Section 162(m) restrictions. As part of our CPP obligations, in years when the preferred shares issued to Treasury under the CPP are outstanding, the $1,000,000 annual federal compensation deduction is reduced to $500,000 and the performance-based compensation exemption is not applicable.

          Our compensation program will result in payments from time to time that are subject to these restrictions on deductibility, but we do not believe the effect of these restrictions on us is currently material. It may be appropriate to exceed the limitation on deductibility to ensure that executive officers are compensated in a manner that is consistent with our best interests, the best interests of our shareholders and our executive compensation philosophy and objectives, and we reserve the authority to approve non-deductible compensation in appropriate circumstances.

Stock Ownership Guidelines

          Since September 2002, we have maintained common stock ownership guidelines for our executive officers. We believe that it is important for executive officers to own our common stock to ensure that their financial interests are directly aligned with those of our shareholders. Under our stock ownership guidelines, the chief executive officer is required to hold 100,000 shares of our stock, and is provided a period of three years to attain such ownership level. The other Named Executive Officers whose base salaries are $250,000 or more are required to hold at least 30,000 shares of our common stock, and those Named Executive Officers whose base salaries are less than $250,000 are required to hold at least 10,000 shares of our common stock. The Named Executive Officers have five years from their date of appointment to attain such ownership. Shares owned through our 401(k) plan, by the officer’s spouse or other family members, by controlled trusts, and unvested shares of restricted stock, in addition to shares owned outright are included in the officer’s ownership for purposes of this guideline. The corporate governance and nominating committee is responsible for monitoring compliance with these guidelines and receives periodic updates from management with regard to progress towards complying

with the guidelines. All of the Current Named Executive Officers are in full compliance with the stock ownership guidelines, as shown in the table below as of March 21, 2011.

		Shares				401(k)				Restricted				Restricted Stock								Ownership
		Owned				Shares				Shares				Units				Total				Guideline
Cathleen H. Nash			89,173				-0-				556,197				-0-				645,370				100,000
Lisa T. McNeely			4,550				-0-				297,800				-0-				302,350				30,000
Mark W. Widawski			11,931				-0-				74,868				122,950				209,749				30,000
Judith L. Klawinski			13,850				8,583				174,834				-0-				197,267				30,000
Thomas W. Gallagher			17,504				-0-				19,445				104,476				141,425				30,000

Executive Compensation Clawback Policy

          Our general pay-for-performance philosophy means that we will not reward executive officers for performance if we discover that the applicable performance was due to the officer’s fraud or other misconduct. To implement this principle, our board of directors has adopted an Executive Compensation Clawback Policy to allow us in certain circumstances to recover bonus and incentive compensation paid to an executive officer. Under this policy, if the board subsequently determines that, as a result of the executive’s misconduct, we are required to materially restate all or a significant portion of our financial statements for the period for which the compensation was paid, we have the right to require that the executive officer reimburse us for the amount of any related bonus or incentive compensation received, forfeit any vested options or restricted stock, or cancel any related unvested restricted or deferred equity awards granted on the basis of having met or exceeded performance goals if, according to the restated financial statements, such goals were not in fact met or exceeded. In deciding whether to pursue the remedies provided in the policy, the board may consider all relevant facts, including whether the misconduct by the executive officer that caused or partially caused the need for the restatement was negligent, intentional, or gross misconduct. In addition to the remedies provided in this policy, we may dismiss or pursue other legal remedies against the executive officer.

          In addition, to comply with the Treasury’s requirements with respect to the CPP, we are required to make cash or equity incentive compensation paid to Named Executive Officers and certain other highly compensated employees subject to recovery or “clawback” if the payments are based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria. Section 304 of the Sarbanes-Oxley Act of 2002 also contains a requirement that the chief executive officer and the chief financial officer forfeit any bonus, incentive based compensation or equity-based compensation received and any profits from sales of our securities during the twelve month period following an accounting restatement due to our material non-compliance, as a result of misconduct, with any financial reporting requirement under the securities laws.

Compensation And Human Resources Committee Report

          In accordance with its written charter adopted by the board of directors, the Compensation Committee determines and implements compensation and benefit systems for our executive officers and other employees.

          The Compensation Committee certifies that:

(1)

It has reviewed with senior risk officers the Named Executive Officers’ compensation plans and has made all reasonable efforts to ensure that these plans do not encourage Named Executive Officers to take unnecessary and excessive risks that threaten the value of the Corporation;

(2)

It has reviewed with senior risk officers the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to the Corporation; and

(3)

It has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of the Corporation to enhance the compensation of any employee.

          Risk Review and Assessment Process

          As required by ARRA and the Treasury regulations promulgated thereunder, our compensation plans will be reviewed every six months by our Compensation Committee. Our senior risk officer will approve the certification of the plans by considering whether any compensation plans might promote unnecessary risk taking and threaten the value of the financial institution and encourage manipulation of reported earnings, specifically including the following:

•

How the level and structure of compensation compares to the peer group;

•

If there is an appropriate balance between fixed and variable pay;

•

If the maximum annual payouts are reasonable; and

•

If the financial metrics are fair and balanced.

          Our senior risk officer focused his review on our incentive based compensation plans and determined to exclude from detailed review those plans and arrangements that have no incentive component and therefore no risk of promoting or encouraging excessive or unnecessary risk taking or encouraging the manipulation of reported earnings. Upon his certification of the plans, the senior risk officer presented his findings to the Compensation Committee. Based on a review of the above factors, the senior risk officer has determined that our compensation plans do not promote or encourage excessive or unnecessary risk taking or encourage the manipulation of reported earnings and his report and conclusion has obtained the consensus and approval of the Compensation Committee.

          Below is a list of the Named Executive Officer compensation plans and other employee compensation plans reviewed by the Compensation Committee along with a discussion of the reasons why the compensation plans do not promote or encourage excessive or unnecessary risk taking or encourage the manipulation of reported earnings.

          Named Executive Officer Compensation Plans

Plan Name		Reason for Conclusion
Base Salary		Named Executive Officer salaries are fixed amounts determined based upon individual performance and peer group market data and are not based on the performance of the Corporation. While a portion of certain Named Executive Officer salaries are paid in Stock Salary, such amount of Stock Salary received is a fixed dollar amount paid and valued at the end of each pay period. Therefore, our Named Executive Officers are not encouraged to take unnecessary or excessive risks that threaten the Corporation’s value or manipulate reported earnings to enhance the compensation of any employee.
2009 Long-Term Incentive Awards		The structure of the awards includes a three year measurement period that rewards improvement in years two and three over results in the prior year, and the goals have been set on a “pass/fail” basis without a sliding scale that might encourage additional risk taking to increase the size of the incentive. The number of restricted shares to be vested upon satisfaction of the performance goals is also fixed, and the Compensation Committee has no discretion to increase the amounts paid out. In addition, the payout is relatively modest and restricted shares will only have significant value if the market value of the common shares rises significantly, which we believe is not as likely to occur if the Corporation takes unnecessary or excessive risk. The awards made to executives are subject to our Executive Compensation Clawback Policy, reducing the risk that reported earnings might be manipulated. The cash portion of the long-term incentive awards are time based rather than performance-based and therefore do not encourage unnecessary or excessive risk taking or manipulation of reported earnings.
2010 Long-Term Incentive Awards		The structure of the award includes a two-year measurement period that rewards attaining certain goals in each year, and the goals have been set on a “pass/fail” basis without a sliding scale that might encourage additional risk taking to increase the size of the incentive. The number of restricted shares or restricted stock units to be vested upon satisfaction of the performance goals is also fixed, and the Compensation Committee has no discretion to increase the amounts paid out. In addition, the payout is relatively modest and restricted shares will only have significant value if the market value of the common shares rises significantly, which we believe is not as likely to occur if the Corporation takes unnecessary or excessive risk. The awards made to executives are subject to our Executive Compensation Clawback Policy, reducing the risk that reported earnings might be manipulated. One-half of

Plan Name		Reason for Conclusion
		the long-term incentive awards are time based rather than performance-based and therefore do not encourage unnecessary or excessive risk taking or manipulation of reported earnings.
Qualified Plan 401(k) Plan Deferred Compensation Plan Change in Control Agreements Country Club Dues and Fees Severance Pay Plan Employment Agreements		Benefits paid pursuant to these programs are generally unrelated to the performance of the Corporation and therefore do not encourage unnecessary or excessive risk taking or the manipulation of reported earnings to enhance the compensation of any employee by our Named Executive Officers or other employees.

          Other Employee Compensation Plans

Plan Name		Reason for Conclusion
MIP		The MIP provides for incentive based compensation for certain employees who are not Named Executive Officers based on the Corporation’s pre-tax pre-provision profits and its total provision for loss expense. The portion of the award based on pre-tax pre-provision profit, a key value driver for our business, is capped, discouraging excessive risk taking. Pre-tax pre-provision profit, while a non-GAAP financial measure, is derived from our audited net income figures, and is subject to our stringent internal financial controls mitigating the risk of manipulation. The total provision factor, by its nature, discourages taking additional risk and the amount payable based on this factor is capped. Moreover, the provision for loss is determined in accordance with generally accepted accounting principles pursuant to a detailed methodology and is subject to audit by our independent public accountants, mitigating the risk of manipulation. In each case, the amount of the award may be adjusted down based on individual performance, which also reduces the likelihood of excessive risk taking or manipulation. The awards made to executive officers are subject to our Executive Compensation Clawback Policy, reducing the risk that reported earnings might be manipulated.
Core Banking Incentive Plans Corporate Banking Incentive Plans Credit Incentive Plans Wealth Management Incentive Plans		These plans provide for incentive based compensation to be paid to employees who are not Named Executive Officers based on multiple identified factors that drive the portion of our business in which they are engaged. Most of these factors are operational and not directly related to our earnings, and therefore have a low risk of encouraging manipulation of our earnings. Substantially all of the performance factors are inherently structured so that unnecessary or excessive risk taking is either discouraged by the other factors in the mix and operational policies and procedures we have in place, or is irrelevant to the goal. The use of multiple performance measures diversifies the risk associated with a single performance measure. Awards are also subject to downgrade if certain credit metrics are not satisfied, further reducing the likelihood of excessive risk taking relating to lending. Individual performance is measured against the performance measures of the plan and are reviewed monthly at accountability meetings with supervisors and managers. Any unnecessary or excessive risk taking or manipulation of earnings is subject to corrective disciplinary action.
Reward and Recognition Program Fraud Busters Program Business Owner Banking Certificate Program		These programs are generally unrelated to the performance of the Corporation and therefore, do not encourage unnecessary or excessive risk taking or the manipulation of reported earnings to enhance the compensation of any employee by our employees.

          The Compensation Committee has reviewed and discussed with management the “Compensation Discussion and Analysis” section of this proxy statement, or CD&A, for the year ended December 31, 2010. Based on such review and discussion, the Compensation Committee recommended to the board of directors that the CD&A be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2010.

By the Compensation Committee of the Board of Directors:

Benjamin W. Laird, Chairman
Lizabeth A. Ardisana
Robert S. Cubbin
Dennis J. Ibold
Stephen J. Lazaroff

Summary Compensation Table

          The following table provides compensation information for the years ended December 31, 2010, 2009 and 2008 for our chief executive officer, chief financial officer, the three other most highly paid executive officers who were serving as such at December 31, 2010, and our former chief financial officer. We refer to these individuals in this proxy statement as our Named Executive Officers. The material terms of plans and agreements pursuant to which certain items set forth below were paid are discussed elsewhere in “Executive Compensation.”

																		Change in
																		Pension Value
																		and
																		Nonqualified
																		Deferred
																		Compensation				All Other
						Salary				Bonus				Stock Awards				Earnings				Compensation				Total
Name and Principal Position		Year				($)				($)(1)				($)(2)				($)(3)				($)(4)				($)
Cathleen H. Nash			2010				813,846	(6)			100,000				400,000				398				708				1,314,952
President & Chief			2009				587,238				-0-				128,000				355				16,286				731,879
Executive Officer(5)			2008				459,000				-0-				-0-				384				20,956				480,340
Lisa T. McNeely			2010				328,051	(6)			-0-				225,000				1,570				-0-				554,621
Executive Vice President & Chief Financial Officer(7)
Mark W. Widawski			2010				325,692	(6)			24,167				150,000				569				-0-				500,428
Executive Vice President &			2009				235,020				-0-				30,933				508				4,970				271,431
Chief Credit Officer
Judith L. Klawinski			2010				302,769	(6)			26,667				145,000				5,918				-0-				480,354
Executive Vice President &			2009				246,535				-0-				34,134				5,281				4,721				290,671
Director of Core Banking
Thomas W. Gallagher			2010				252,688				16,667				127,462				13,056				-0-				409,873
Executive Vice President,			2009				248,464				-0-				21,334				11,651				5,352				286,801
General Counsel & Secretary			2008				255,435				-0-				70,320				12,597				14,825				353,177
Charles D. Christy			2010				149,423				80,000				-0-				1,758				852				232,033
Executive Vice President &			2009				350,000				-0-				102,400				1,569				15,593				469,562
Chief Financial			2008				363,462				-0-				-0-				1,696				21,685				386,843
Officer(8)

Grants of Plan-Based Awards

          The following table shows the estimated future payout under the grants made in 2010 pursuant to the Stock Compensation Plan.

																						Grant Date
																						Fair Value of
						Estimated Future Payouts Under																Stock and
						Equity Incentive Plan Awards(1)												All Other				Option
						Threshold				Target				Maximum				Stock Awards				Awards
Name		Grant Date				(#)				(#)				(#)				(#)(2)				($)(3)
Cathleen H. Nash			05/04/2010				20,492				163,934				163,934				264,484				400,000
Lisa T. McNeely			05/04/2010				1,498				11,986				11,986				35,758				84,127
			05/14/2010				1,359				10,868				10,868				10,871				12,502
			08/04/2010				10,388				83,104				83,104				126,401				150,625
Mark W. Widawski			05/04/2010				7,684				61,474				61,474				92,145				135,000
Judith L. Klawinski			05/04/2010				7,428				59,426				59,426				80,207				112,500
Thomas W. Gallagher			05/04/2010				6,528				52,238				52,238				52,2380				63,730
Charles D. Christy			-0-				-0-				-0-				-0-				-0-				-0-

          The Stock Compensation Plan, or Stock Plan, permits the Compensation Committee to make grants of stock options, stock appreciation rights, restricted stock, restricted stock units and various types of performance-based rights to acquire cash, common shares, other property or a combination thereof to directors and employees of the Corporation. To maintain the Compensation Committee’s ability to make equity-based grants for the purposes discussed above, the board determined in 2010 to amend the Stock Plan and shareholders approved an amendment and restatement of the Stock Plan that extended the expiration date to March 2020, increased the available shares to 24,000,000 and made certain other changes. See “Executive Compensation — Other Potential Post-Employment Payments — Stock Compensation Plan” for a summary of certain provisions of the Stock Plan relating to termination and change in control.

Outstanding Equity Awards at Year-End

          The following table shows all outstanding equity awards held by our Named Executive Officers as of December 31, 2010. Market value is based on the closing price of our common stock of $0.62 on December 31, 2010, as reported on the NASDAQ Capital Market^SM.

																		Stock Awards
																										Equity
		Option Awards																				Market				Incentive
		Number of				Number of																Value of				Plan				Equity Incentive
		Securities				Securities												Number of				Shares or				Awards:				Plan Awards:
		Underlying				Underlying												Shares or				Units of				Number of				Market Value of
		Unexercised				Unexercised				Option								Units of Stock				Stock That				Unearned Shares That				Unearned Shares
		Options				Options				Exercise				Option				That Have Not				Have Not				Have Not				That Have Not
		(#)				(#)				Price				Expiration				Vested				Vested				Vested				Vested
Name		Exercisable				Unexercisable				($)				Date				(#)(1)				($)				(#)(2)				($)
Cathleen H. Nash																			264,484				163,980				263,934				163,639
			-0-				-0-				-0-				-0-
Lisa T. McNeely																			174,141				107,967				105,958				65,694
			3,231				-0-				29.02				5/31/2015
			4,050				-0-				29.06				5/12/2014
			5,000				-0-				26.01				5/29/2013
			26,000				-0-				25.10				2/10/2013
Mark W. Widawski																			103,695				64,291				85,641				53,097
			2,000				-0-				29.34				6/01/2015
Judith L. Klawinski																			82,985				51,451				86,093				53,378
			2,349				-0-				29.02				5/31/2015
			2,700				-0-				29.06				5/12/2014
			4,000				-0-				26.01				5/29/2013
			3,000				-0-				33.41				5/17/2012
			3,400				-0-				25.42				5/22/2011
Thomas W. Gallagher																			55,016				34,110				68,905				42,721
			4,112				-0-				29.02				5/31/2015
			7,200				-0-				29.06				5/12/2014
			11,000				-0-				26.01				5/29/2013
			11,000				-0-				33.41				5/17/2012
			19,400				-0-				25.42				5/22/2011
Charles D. Christy																			-0-				-0-				-0-				-0-
			-0-				-0-				-0-				-0-