September 17, 2012 / 3:42 PM / 5 years ago

TEXT-Fitch may raise Citizens Republic Bancorp's 'B' IDRs

Sept 17 - Fitch Ratings has placed Citizen Republic Bancorp's 
(CRBC) ratings including its long- and short-term Issuer Default Ratings (IDRs)
of 'B' on Rating Watch Positive. The action follows the announcement that CRBC
and Akron, OH based First Merit (FMER) have entered into a definitive merger
agreement. A complete list of rating actions follows at the end of this release.

The all-stock deal creates a company with approximately $24 billion in assets,
$15 billion in loans and over 400 branches in five contiguous states in the
Great Lakes Region. The merger is expected to close before Sept. 12, 2013 in a
stock for stock transaction valued at $912 million. While Fitch does not
currently rate FMER, Fitch believes the combined company's rating would exceed
CRBC's current rating.

Fitch expects CRBC's outstanding trust preferred shares to become current and
FMER's is expected to repay CRBC's $345 million of TARP preferred stock and
dividends at closing of the transaction.

CRBCs ratings had a Positive Outlook (as opposed to watch) prior to this
announcement due to positive earnings, asset quality and capital trends and if
the deal does not close as expected, Fitch would still anticipate positive
rating momentum consistent with the Positive Outlook.

CRBC is a $9.7 billion holding company based in Flint, MI with branches in
Michigan, Wisconsin and Ohio. First Merit is a $15 billion holding company
headquartered in Akron, OH with branches in Indiana, Ohio, and Illinois.

The following ratings have been placed on Rating Watch Positive:

Citizens Republic Bancorp, Inc.
--Long term IDR 'B';
--Short-term IDR 'B';
--Viability 'b';
--Subordinated debt 'C/RR6';
--Preferred stock at 'C/RR6';

Citizens Bank
--Long term IDR 'B';
--Long-term deposits 'B+/RR3';
--Short-term IDR 'B';
--Short-term deposits 'B';
--Viability 'b';

Citizens Funding Trust I
--Preferred stock 'C/RR6'.

The following ratings have been affirmed:

Citizens Republic Bancorp, Inc.
--Support '5';
--Support floor 'NF'.

Citizens Bank
--Support '5';
--Support floor 'NF'.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);
--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);
--Recovery Ratings for Financial Institutions' (Aug. 15, 2012);
--'Treatment of Hybrids in Bank Capital Analysis' (July 9, 2012).

Applicable Criteria and Related Research:
Recovery Ratings for Financial Institutions
Treatment of Hybrids in Bank Capital Analysis
Global Financial Institutions Rating Criteria
Rating FI Subsidiaries and Holding Companies

Our Standards:The Thomson Reuters Trust Principles.
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