2012. The transaction creates a unique, contiguous Midwest
banking franchise, expanding FirstMerit's footprint into
Michigan and Wisconsin, as well as strengthening its presence
in Northeast Ohio.
Under the terms of the agreement, which was unanimously
approved by the Boards of Directors of both companies,
Citizens' shareholders will receive a fixed 1.37 shares of
FirstMerit common stock in exchange for each share of
Citizens' common stock. Based on FirstMerit's average ten-day
closing stock price ended September 12, 2012, the implied
value of a Citizens' share would be $22.50.
Upon completion of the transaction, the combined company will
have approximately:
• $24 billion in total assets
• $15 billion in loans
• $19 billion in deposits
• 415 branches, 452 ATMs and more than 5,000 employees across the five contiguous states of Pennsylvania, Ohio, Michigan, Illinois, and Wisconsin
"We are excited to bring FirstMerit to new customers and communities throughout Michigan and Wisconsin. These two states offer a strong cultural fit for our proven super community bank model of providing world-class products and services through local delivery by bankers our customers know and trust," said Paul G. Greig, chairman, president and CEO of FirstMerit. "With a five-state reach that will extend from Western Pennsylvania to Wisconsin, FirstMerit looks to become the bank of choice among businesses and individuals across the upper Midwest. As we have successfully demonstrated with our new customers in Chicago, we will provide a seamless transition of existing Citizens Republic relationships.
FIRSTMERIT CORPORATION AND CITIZENS REPUBLIC BANCORP / page 2
"FirstMerit enters our new markets as one of the country's
strongest and most stable banks with a long history of
profitability and capital levels among the highest in the
industry. We look forward to serving our new customers and
working with our new colleagues as members of the FirstMerit
family," said Greig.
Greig, who will continue as chairman, president and CEO of
the combined company, has extensive experience in Wisconsin
where he was president and CEO of the Wisconsin market for
Bank One and Chase, from 1999 to 2005. "Wisconsin and
Michigan are both great geographic and demographic additions
to our strong and successful franchise. This transaction also
strengthens our position in Northeast Ohio. Our business
model, our customers and the communities both banks serve all
create opportunities that will have an immediate positive
effect on FirstMerit and its ability to serve clients and
grow shareholder value," Greig said.
"Citizens Republic has made a strong comeback in recent years
under Cathy Nash's leadership. Combining Citizens'
organization, operating philosophy and talented employees
with those of FirstMerit will make for an even stronger
company," said Greig.
"The Citizens Board and management team believe that
combining with FirstMerit will deliver significant value for
our shareholders, while allowing them to participate in the
tremendous upside potential of a stronger bank with increased
scale," stated Cathleen Nash, president and CEO of Citizens.
"For our clients, this merger doubles the branch network,
expanding it across the upper Midwest, and provides access to
an enhanced suite of products and services. Furthermore, with
shared core values and a similar culture, the combined
company will provide increased opportunities to many of our
bankers. On behalf of the entire Citizens Board and
management team, we thank our dedicated employees for their
continued hard work - especially over the past several years
- and look forward to working with Paul and the FirstMerit
team to complete this exciting transaction."
Subject to the receipt of requisite approvals, FirstMerit
also expects to repay Citizens' approximately $345 million of
TARP preferred stock, which includes $45 million of estimated
deferred dividends, held by the U.S. Treasury at closing.
FirstMerit expects to realize substantial net cost savings of
$59 million on a pre-tax basis (approximately 22% of
Citizens' non-interest expenses), and anticipates that the
transaction will be 7.5% accretive to earnings in 2014.
Following the merger, FirstMerit expects to retain its strong
capital position with pro forma Tier 1 Ratio of approximately
10.36%, Total Risk-Based Capital of 12.67% and Tangible
Common Equity to Tangible Assets of 7.15%, after
restructuring charges and an anticipated capital raise of
approximately $100 million of Tier 1 Preferred and $250
million of Tier 2 debt.
FirstMerit will also appoint two Citizens board members to
its board of directors.
The acquisition is subject to customary closing conditions,
including receipt of regulatory approvals and approval by
both companies' shareholders. The transaction is expected to
close in the second quarter of 2013.
Citizens will be rebranded to the FirstMerit name. It is
anticipated that the combined company will maintain its level
of community involvement through charitable giving and other
philanthropic activities following completion of the
transaction.
RBC Capital Markets, LLC acted as financial advisor to
FirstMerit and rendered a fairness opinion in connection with
the transaction, and Jones Day acted as FirstMerit's legal
counsel. J.P. Morgan Securities LLC acted as financial
advisor to Citizens and rendered a fairness opinion in
connection with the transaction, and Dykema Gossett acted as
Citizens' legal counsel.
The senior executives of FirstMerit and Citizens will hold a webcast and conference call to discuss the details of this announcement on September 13, 2012, at 9:30 a.m. EDT. To participate in the conference call, please dial (888) 693-3477 ten minutes before start time and provide the reservation number: 30962389. The live audio webcast and presentation slides will be available on both companies' web sites under the investor relations home page at www.firstmerit.com or www.citizensbanking.com, where a replay of the call will be available.
About FirstMerit Corporation
FirstMerit Corporation is a diversified financial services
company headquartered in Akron, Ohio, with assets of $14.6
billion as of June 30, 2012 and 196 banking offices and 204
ATM locations in Ohio, Western Pennsylvania, and Chicago,
Illinois areas. FirstMerit provides a complete range of
banking and other financial services to
consumers and businesses through its core operations.
Principal affiliates include:
FirstMerit Bank, N.A., FirstMerit Mortgage Corporation,
FirstMerit Title Agency, Ltd. and
FirstMerit Community Development Corporation.
Citizens Republic Bancorp, Inc. is a diversified financial services company providing a wide range of commercial, consumer, mortgage banking, trust and financial planning services to a broad client base. Citizens serves communities in Michigan, Ohio, and Wisconsin with 219 offices and 248 ATMs. Citizens is the largest bank holding company headquartered in Michigan with roots dating back to 1871 and is the 57th largest bank holding company headquartered in the United States. More information about Citizens is available at www.citizensbanking.com.
Forward Looking StatementsThis release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as "believe," "expect", "anticipate", "intend", "target", "estimate", "continue", "positions", "prospects", "potential" "would", "should", "could" "will" or "may". These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time, and these statements may not be realized. Forward-looking statements speak only as of the date they are made and neither FirstMerit nor Citizens have any duty to update forward-looking statements.
FIRSTMERIT CORPORATION AND CITIZENS REPUBLIC BANCORP / page 4
In addition to factors previously disclosed in
FirstMerit's and Citizens' reports filed with the SEC
and those identified elsewhere in this press release, the
following factors, among others, could cause actual results
to differ materially from forward-looking statements or
historical performance: the possibility that regulatory and
other approvals and conditions to the transaction are not
received or satisfied on a timely basis or at all, or contain
unanticipated terms and conditions; the possibility that
modifications to the terms of the transactions may be
required in order to obtain or satisfy such approvals or
conditions; the timing of approvals by Citizens' and
FirstMerit's shareholders; delays in closing the merger
and the merger of the parties' bank subsidiaries;
difficulties, delays and unanticipated costs in integrating
the merging organizations' businesses or realizing
expected cost savings and other benefits; business
disruptions as a result of the integration of the merging
organizations, including possible loss of customers;
diversion of management time to address transaction related
issues; changes in asset quality and credit risk as a result
of the merger; changes in customer borrowing, repayment,
investment and deposit behaviors and practices; changes in
interest rates, capital markets, and local economic and
national economic conditions; markets for and terms
realizable on the proposed issuances of debt and preferred
stock by First Merit; the timing and success of new business
initiatives; competitive conditions; and regulatory
conditions.
Annualized, pro forma, projected and estimated numbers are
used for illustrative purposes only, are not forecasts and
may not reflect actual results.
This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between FirstMerit and Citizens, FirstMerit will file with the U.S. Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 that will include a joint proxy statement of FirstMerit and Citizens that also constitutes a prospectus of FirstMerit. FirstMerit and Citizens will deliver the joint proxy statement/prospectus to their respective shareholders. FirstMerit and Citizens urge investors and shareholders to read the joint proxy statement/prospectus regarding the proposed merger when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (www.sec.gov). You may also obtain these documents, free of charge, from FirstMerit's website (www.firstmerit.com) under the heading "Investors" and then under the heading "Publications and Filings." You may also obtain these documents, free of charge, from Citizens' website (www.citizensbanking.com) under the tab "Investors" and then under the heading "Financial Documents" and then under the heading "SEC Filings."
FIRSTMERIT CORPORATION AND CITIZENS REPUBLIC BANCORP / page 5
PARTICIPANTS IN THE MERGER SOLICITATION
FirstMerit, Citizens, and their respective directors,
executive officers and certain other members of management
and employees may be soliciting proxies from FirstMerit and
Citizens shareholders in favor of the merger and related
matters. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation
of FirstMerit and Citizens shareholders in connection with
the proposed merger will be set forth in the joint proxy
statement/prospectus when it is filed with the SEC. You can
find information about FirstMerit's executive officers and
directors in its definitive proxy statement filed with the
SEC on March 8, 2012. You can find information about
Citizens' executive officers and directors in its definitive
proxy statement filed with the SEC on March 12, 2012.
Additional information about FirstMerit's executive officers
and directors and Citizens' executive officers and directors
can be found in the above- referenced Registration Statement
on Form S-4 when it becomes available. You can obtain free
copies of these documents from FirstMerit and Citizens using
the contact information above.
Thomas O'Malley
Investor Relations Officer
Phone: 330.384.7109
Robert Townsend Media Relations Officer Phone: 330.384.7075
Citizens Republic
Kristine D. Brenner
Director of Investor Relations (810) 257-2506 kristine.brenner@citizensbanking.com
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