Bloomberg News

Citizens Republic Said to Seek Buyers

August 03, 2012

Citizens Republic Bancorp Inc. (CRBC:US), the Michigan lender that has yet to repay a $300 million U.S. government bailout, is soliciting takeover bids from competitors, said three people with knowledge of the matter.

The bank hired JPMorgan Chase & Co. (JPM:US) to find a buyer and has contacted suitors in recent weeks, according to the people, who spoke on condition of anonymity because the effort is private. The company, which had a market value (CRBC:US) of more than $700 million yesterday, has also explored other ways to pay back its 2008 rescue, including by issuing equity, they said.

Huntington Bancshares Inc. (HBAN:US), a Columbus, Ohio-based lender that operates in Michigan, may be interested, said one of the people. Flint-based Citizens Republic has lost more than $1 billion since 2007 on bad commercial and residential real-estate loans, forcing the lender to operate under a supervisory agreement with the Federal Reserve Bank of Chicago.

Huntington intends “to significantly invest in Michigan” and would like to expand in the cities of Lansing and Ann Arbor, Chief Executive Officer Steve D. Steinour, 54, said in a July 19 conference call. The bank added 15 Michigan branches in April when it bought failed Dearborn-based lender Fidelity Bank, which had been taken over the Federal Deposit Insurance Corp.

Huntington announced in May it plans to open outlets in about 80 Meijer Inc. grocery stores throughout Michigan over the next several years, which will give the bank more than 215 branches in the state.

Michigan Branches

Citizens Republic has 156 offices in Michigan, according to the FDIC. Fourteen are located in the same counties as Lansing and Ann Arbor.

Kristine Brenner, director of investor relations at Citizens Republic, declined to comment. A spokeswoman at JPMorgan declined to comment. Maureen Brown, a Huntington spokeswoman, said the company doesn’t comment on speculation or rumor.

Citizens Republic climbed 9.1 percent to close at $19.24 in New York, the highest in more than three years. The shares have gained 69 percent this year.

The U.S. Treasury Department appointed two directors to the board last year after the bank stopped paying dividends on the bailout funds. Michigan’s economy fared worse than the country’s as a whole during the latest recession, and the jobless rate stood at 8.6 percent in June, compared with 8.2 percent nationally.

Beats Estimates

Led by Chief Executive Officer Cathleen H. Nash, Citizens Republic’s book value per share was $25.85 and shareholders’ equity was $1.34 billion on June 30, up from $18.83 and $1.04 billion, respectively, at March 31. Tangible book value per share climbed to $24.97 at the end of June. The lender operates through its Citizens Bank subsidiary, founded in 1871.

Second-quarter profit, including a $277 million tax benefit, rose to $297 million from $18.5 million a year earlier, Citizens Republic said in a July 26 statement. Adjusted net income, excluding the tax benefit, was 50 cents a share, beating by 10 cents the average estimate (CRBC:US) of three analysts surveyed by Bloomberg.

Among the banks with the most deposits in Michigan are Huntington and Fifth Third Bancorp, both based in Ohio, and Pennsylvania’s PNC Financial Services Group Inc., according to the FDIC.

To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net


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