Civista Bancshares (CIVB) 10-Q 2010 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2010

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number: 0-25980

First Citizens Banc Corp

(Exact name of registrant as specified in its charter)

Ohio	34-1558688
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
100 East Water Street, Sandusky, Ohio	44870
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (419) 625-4121

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filero	Accelerated filero	Non-accelerated filero	Smaller reporting companyþ
		(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, no par value, outstanding at May 7, 2010 - 7,707,917 common shares

FIRST CITIZENS BANC CORP
Index

PART I. Financial Information
Item 1.Financial Statements:
Consolidated Balance Sheets (Unaudited) March 31, 2010 and December 31, 2009	3
Consolidated Statements of Income (Unaudited) Three months ended March 31, 2010 and 2009	4
Consolidated Statements of Comprehensive Income (Unaudited) Three months ended March 31, 2010 and 2009	5
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) Three months ended March 31, 2010 and 2009	6
Condensed Consolidated Statement of Cash Flows (Unaudited) Three months ended March 31, 2010 and 2009	7
Notes to Interim Consolidated Financial Statements (Unaudited)	8-24
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations	25-31
Item 3.Quantitative and Qualitative Disclosures about Market Risk	32-34
Item 4.Controls and Procedures	34
PART II. Other Information
Item 1.Legal Proceedings	35
Item 1A.Risk Factors	35
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.Defaults upon Senior Securities	35
Item 4.[Removed and Reserved]	35
Item 5.Other Information	35
Item 6.Exhibits	35
Signatures	36
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Part I – Financial Information

ITEM 1. Financial Statements

FIRST CITIZENS BANC CORP

Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)

	March 31,				December 31,
	2010			2009
ASSETS
Cash and due from financial institutions	$	19,394			$	26,942
Federal funds sold		24,000				—
Cash and cash equivalents		43,394				26,942
Securities available for sale		202,364				207,292
Loans, net of allowance of $16,639 and $15,271		767,661				775,547
Other securities		15,382				15,382
Premises and equipment, net		19,512				19,702
Accrued interest receivable		5,668				5,425
Goodwill		21,720				21,720
Core deposit and other intangibles		6,187				6,492
Bank owned life insurance		11,968				11,848
Other assets		12,559				12,462
Total assets	$	1,106,415			$	1,102,812
LIABILITIES
Deposits
Noninterest-bearing	$	133,034			$	140,659
Interest-bearing		748,938				715,393
Total deposits		881,972				856,052
Federal Home Loan Bank advances		65,353				85,364
Securities sold under agreements to repurchase		19,643				21,920
U. S. Treasury interest-bearing demand note payable		1,328				2,394
Subordinated debentures		29,427				29,427
Accrued expenses and other liabilities		9,347				8,858
Total liabilities		1,007,070				1,004,015
SHAREHOLDERS’ EQUITY
Preferred stock, 200,000 shares authorized, 23,184 shares issued		23,121				23,117
Common stock, no par value, 20,000,000 shares authorized, 8,455,881 shares issued		114,447				114,447
Retained deficit		(18,032	)			(17,774	)
Treasury stock, 747,964 shares at cost		(17,235	)			(17,235	)
Accumulated other comprehensive loss		(2,956	)			(3,758	)
Total shareholders’ equity		99,345				98,797
Total liabilities and shareholders’ equity	$	1,106,415			$	1,102,812

See notes to interim unaudited consolidated financial statements

Page 3

FIRST CITIZENS BANC CORP
Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)

	Three months ended March 31,
	2010			2009
Interest and dividend income
Loans, including fees	$	11,107		$	12,057
Taxable securities		1,593			1,766
Tax-exempt securities		470			370
Federal funds sold and other		3			13
Total interest income		13,173			14,206
Interest expense
Deposits		1,996			3,150
Federal Home Loan Bank advances		744			678
Subordinated debentures		208			371
Other		25			140
Total interest expense		2,973			4,339
Net interest income		10,200			9,867
Provision for loan losses		3,740			2,102
Net interest income after provision for loan losses		6,460			7,765
Noninterest income
Service charges		1,065			1,097
Net gain on sale of securities		15			1
Net gain on sale of loans		1			2
ATM fees		411			346
Trust fees		440			384
Bank owned life insurance		120			121
Computer center item processing fees		69			103
Other		171			333
Total non-interest income		2,292			2,387
Noninterest expense
Salaries and wages		3,373			3,604
Benefits		883			710
Net occupancy expense		661			632
Equipment expense		402			528
Contracted data processing		264			283
State franchise tax		277			289
Professional services		378			287
Amortization of intangible assets		305			322
FDIC assessment		391			232
ATM Expense		177			161
Other real estate owned expense		51			188
Other operating expenses		1,834			2,010
Total noninterest expense		8,996			9,246
Income (loss) before income taxes		(244	)		906
Income tax expense (benefit)		(280	)		147
Net income	$	36		$	759
Preferred stock dividends		290			71
Net income (loss) available to common shareholders	$	(254	)	$	688
Earnings (loss) per common share, basic and diluted	$	(0.03	)	$	0.09

See notes to interim unaudited consolidated financial statements

Page 4

FIRST CITIZENS BANC CORP

Consolidated Comprehensive Income Statements (Unaudited)
(In thousands)

	Three months ended March 31,
	2010			2009
Net income	$	36		$	759
Unrealized holding gains on available for sale securities		1,215			205
Reclassification adjustment for gains later recognized in income		(15	)		(1	)
Net unrealized gains		1,200			204
Tax effect		(408	)		(69	)
Total other comprehensive income		792			135
Comprehensive income	$	828		$	894

See notes to interim unaudited consolidated financial statements

Page 5

FIRST CITIZENS BANC CORP

Consolidated Statements of Shareholders’ Equity (Unaudited)
Form 10-Q
(In thousands, except share data)

															Accumulated
	Preferred Stock				Common Stock										Other			Total
	Outstanding				Outstanding				Retained			Treasury			Comprehensive			Shareholders’
	Shares		Amount		Shares		Amount		Deficit			Stock			Income/(Loss)			Equity
Balance, January 1, 2010		23,184	$	23,117		7,707,917	$	114,447	$	(17,774	)	$	(17,235	)	$	(3,758	)	$	98,797
Net income										36									36
Change in unrealized gain/(loss) on securities available for sale, net of reclassifications and tax effects																802			802
Amortization of discount on preferred stock				4						(4	)								—
Preferred stock dividend										(290	)								(290	)
Balance, March 31, 2010		23,184	$	23,121		7,707,917	$	114,447	$	(18,032	)	$	(17,235	)	$	(2,956	)	$	99,345

See notes to interim unaudited consolidated financial statements

Page 6

FIRST CITIZENS BANC CORP

Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)

	Three months ended
	March 31,
	2010			2009
Net cash from operating activities	$	4,000		$	3,549
Cash flows from investing activities
Maturities and calls of securities, available-for-sale		28,765			26,955
Purchases of securities, available-for-sale		(22,299	)		(55,582	)
Loans made to customers, net of principal collected		3,657			2,655
Proceeds from sale of OREO properties		258			53
Proceeds from sale of property		37			—
Net purchases of office premises and equipment		(242	)		(195	)
Net cash from investing activities		10,176			(26,114	)
Cash flows from financing activities
Repayment of FHLB borrowings		(11	)		(48	)
Net change in short-term FHLB advances		(5,000	)		(7,000	)
Repayment of long-term FHLB advances		(15,000	)		(2,500	)
Net change in deposits		25,920			74,426
Change in securities sold under agreements to repurchase		(2,277	)		1,199
Change in U. S. Treasury interest-bearing demand note payable		(1,066	)		(2,482	)
Repayment of long-term debt		—			(20,500	)
Issuance of preferred stock and common stock warrant		—			23,184
Dividends paid		(290	)		(1,227	)
Net cash from financing activities		2,276			65,052
Net change in cash and due from banks		16,452			42,487
Cash and cash equivalents at beginning of period		26,942			26,649
Cash and cash equivalents at end of period	$	43,394		$	69,136
Cash paid during the period for:
Interest	$	2,753		$	4,317
Income taxes	$	—		$	425
Supplemental cash flow information:
Transfer of loans from portfolio to other real estate owned	$	393		$	115

See notes to interim unaudited consolidated financial statements

Page 7

First Citizens Banc Corp

Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(1) Consolidated Financial Statements

Nature of Operations and Principles of Consolidation: The Consolidated Financial Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries: The Citizens Banking Company (Citizens), First Citizens Insurance Agency, Inc., and Water Street Properties, Inc. (Water St.). First Citizens Capital LLC (FCC) is wholly-owned by Citizens to hold inter-company debt that is eliminated in consolidation. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens to hold and manage its securities portfolio and is eliminated in consolidation. The operations of FCI are located in Wilmington, Delaware. The above companies together are referred to as the Corporation. Intercompany balances and transactions are eliminated in consolidation. SCC Resources, Inc. (SCC) was a subsidiary that provided item processing services to Citizens and other financial institutions. On June 30, 2009, SCC was merged with Citizens, but continues to provide item processing services.

The consolidated financial statements have been prepared by the Corporation without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Corporation’s financial position as of March 31, 2010 and its results of operations and changes in cash flows for the periods ended March 31, 2010 and 2009 have been made. The accompanying consolidated financial statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended March 31, 2010 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Corporation described in the notes to financial statements contained in the Corporation’s 2009 annual report. The Corporation has consistently followed these policies in preparing this Form 10-Q.

The Corporation provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Summit, Huron, Ottawa, and Richland. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customer’s ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and Federal Funds sold. First Citizens Insurance Agency Inc. was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue is less than 1.0% of total revenue through March 31, 2010. Water St. revenue was less than 1.0% of total revenue through March 31, 2010. Management considers the Corporation to operate primarily in one reportable segment, banking.

Page 8

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, impairment of goodwill, fair values of financial instruments and pension obligations are particularly subject to change.

Income Taxes: Income tax expense is based on the effective tax rate expected to be applicable for the entire year. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

New Accounting Pronouncements:

In June 2009, the FASB issued new authoritative accounting guidance under ASC Topic 810,Consolidation, which amends prior guidance to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. The new authoritative accounting guidance requires additional disclosures about the reporting entity’s involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its affect on the entity’s financial statements. The new authoritative accounting guidance under ASC Topic 810 was effective January 1, 2010 and did not have a significant impact on the Corporation’s financial statements.

In June 2009, the FASB issued an accounting standard related to the accounting for transfers of financial assets, which is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. This standard enhances reporting about transfers of financial assets, including securitizations, and where companies have continuing exposure to the risks related to transferred financial assets. This standard eliminates the concept of a “qualifying special-purpose entity” and changes the requirements for derecognizing financial assets. This standard also requires additional disclosures about all continuing involvements with transferred financial assets including information about gains and losses resulting from transfers during the period. This accounting standard was subsequently codified into ASC Topic 860. The adoption of this standard did not have a material effect on the Corporation’s results of operations or financial position.

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First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

In June 2009, the FASB issued FAS No. 167, Amendments to FASB Interpretation No. 46(R). FAS 167, which amends FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, (FIN 46(R)). Under FASB’s Codification at ASC 105-10-65-1-d, FAS No. 167 will remain authoritative until integrated into the FASB Codification. This statement prescribes a qualitative model for identifying whether a company has a controlling financial interest in a variable interest entity (VIE) and eliminates the quantitative model prescribed by FIN 46(R). The new model identifies two primary characteristics of a controlling financial interest: (1) provides a company with the power to direct significant activities of the VIE, and (2) obligates a company to absorb losses of and/or provides rights to receive benefits from the VIE. FAS No. 167 requires a company to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. This statement is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. The adoption of FAS No. 167 did not have an impact the corporation’s consolidated financial statements.

In August 2009, the FASB issued ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU provides amendments for fair value measurements of liabilities. It provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more techniques. ASU 2009-05 also clarifies that when estimating a fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. ASU 2009-05 is effective for the first reporting period (including interim periods) beginning after issuance or fourth quarter 2009. The adoption of ASU 2009-05 (Topic 820) did not have an impact the Corporation’s consolidated financial statements.

In September 2009, the FASB issued new guidance impacting Topic 820. This creates a practical expedient to measure the fair value of an alternative investment that does not have a readily determinable fair value. This guidance also requires certain additional disclosures. This guidance is effective for interim and annual periods ending after December 15, 2009. The adoption of this guidance did not have a material impact on the Corporation’s financial position.

In October 2009, the FASB issued ASU 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. ASU 2009-15 amends Subtopic 470-20 to expand accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The adoption of this guidance did not have a significant impact on the Corporation’s financial statements.

In December 2009, the FASB issued ASU 2009-16, Accounting for Transfer of Financial Assets. ASU 2009-16 provides guidance to improve the relevance, representational faithfulness, and comparability of the information that an entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. ASU 2009-16 is effective for annual periods beginning after November 15, 2009 and for interim periods within those fiscal years. The adoption of this guidance did not have a significant impact on the Corporation’s financial statements.

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First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

In December 2009, the FASB issued ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. The objective of ASU 2009-17 is to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. ASU 2009-17 is effective for annual periods beginning after November 15, 2009 and for interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Corporation’s financial position or results of operation.

In January 2010, the FASB issued ASU 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash – a consensus of the FASB Emerging Issues Task Force. ASU 2010-01 clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend. ASU 2010-01 is effective for interim and annual periods ending on or after December 15, 2009 and should be applied on a retrospective basis. The adoption of this guidance did not have a material impact on the Corporation’s financial position.

In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810): Accounting and reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. ASU 2010-02 amends Subtopic 810-10 to address implementation issues related to changes in ownership provisions including clarifying the scope of the decrease in ownership and additional disclosures. ASU 2010-02 is effective beginning in the period that an entity adopts Statement 160. If an entity has previously adopted Statement 160, ASU 2010-02 is effective beginning in the first interim or annual reporting period ending on or after December 15, 2009 and should be applied retrospectively to the first period Statement 160 was adopted. The adoption of this guidance did not have a material impact on the Corporation’s financial position or results of operation.

In January 2010, the FASB issued ASU 2010-04, Accounting for Various Topics – Technical Corrections to SEC Paragraphs. ASU 2010-04 makes technical corrections to existing SEC guidance including the following topics: accounting for subsequent investments, termination of an interest rate swap, issuance of financial statements — subsequent events, use of residential method to value acquired assets other than goodwill, adjustments in assets and liabilities for holding gains and losses, and selections of discount rate used for measuring defined benefit obligation. ASU 2010-04 is effective January 15, 2010. The adoption of this guidance did not have a material impact on the Corporation’s financial position.

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First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

In January 2010, the FASB issued ASU 2010-05, Compensation – Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation. ASU 2010-05 updates existing guidance to address the SEC staff’s views on overcoming the presumption that for certain shareholders escrowed share arrangements represent compensation. ASU 2010-05 is effective January 15, 2010. The adoption of this guidance did not have a material impact on the Corporation’s financial position.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends Subtopic 820-10 to clarify existing disclosures, require new disclosures, and includes conforming amendments to guidance on employers’ disclosures about postretirement benefit plan assets. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of this guidance is not expected to have a significant impact on the Company’s financial statements.

In February 2010, the FASB issued ASU 2010-08, Technical Corrections to Various Topics. ASU 2010-08 clarifies guidance on embedded derivatives and hedging. ASU 2010-08 is effective for interim and annual periods beginning after December 15, 2009. The adoption of this guidance did not have a material impact on the Corporation’s financial position or results of operation.

Impact of Not Yet Effective Authoritative Accounting Pronouncements

In March 2010, the FASB issued ASU 2010-11, Derivatives and Hedging. ASU 2010-11 provides clarification and related additional examples to improve financial reporting by resolving potential ambiguity about the breadth of the embedded credit derivative scope exception in ASC 815-15-15-8. ASU 2010-11 is effective at the beginning of the first fiscal quarter beginning after June 15, 2010. The adoption of this guidance is not expected to have a significant impact on the Corporation’s financial statements.

In April 2010, the FASB issued ASU 2010-13, Compensation – Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2010 and is not expected to have a significant impact on the Corporation’s financial statements.

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First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(2) Securities

Available for sale securities at March 31, 2010 and December 31, 2009 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
March 31, 2010	Cost		Gains		Losses			Fair Value
U.S. Treasury securities and obligations of U.S. Government agencies	$	79,797	$	640	$	(372	)	$	80,065
Obligations of states and political subdivisions		51,949		892		(285	)		52,556
Mortgage-backed securities		67,105		2,019		(57	)		69,067
Total debt securities		198,851		3,551		(714	)		201,688
Equity securities		481		195		—			676
Total	$	199,332	$	3,746	$	(714	)	$	202,364

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2009	Cost		Gains		Losses			Fair Value
U.S. Treasury securities and obligations of U.S. Government agencies	$	90,296	$	401	$	(1,147	)	$	89,550
Obligations of states and political subdivisions		51,701		1,023		(304	)		52,420
Mortgage-backed securities		62,997		1,663		(14	)		64,646
Total debt securities		204,994		3,087		(1,465	)		206,616
Equity securities		481		195		—			676
Total	$	205,475	$	3,282	$	(1,465	)	$	207,292

The amortized cost and fair value of securities at March 31, 2010, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities are shown separately.

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First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

Available for sale	Fair Value
Due in one year or less	$	5,212
Due after one year through five years		7,291
Due after five years through ten years		30,600
Due after ten years		89,518
Mortgage-backed securities		69,067
Equity securities		676
Total securities available for sale	$	202,364

Gains from securities called or settled by the issuer during the quarter ended March 31, 2010 were $15. Gains from securities called or settled by the issuer during the quarter ended March 31, 2009 were $1.

Securities with a carrying value of approximately $169,291 and $164,804 were pledged as of March 31, 2010 and December 31, 2009, respectively, to secure public deposits, other deposits and liabilities as required by law.

Securities with unrealized losses at March 31, 2010 and December 31, 2009 not recognized in income are as follows.

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First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

	12 Months or less					More than 12 months					Total
March 31, 2010	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	17,664	$	(372	)	$	—	$	—		$	17,664	$	(372	)
Obligations of states and political subdivisions		14,942		(225	)		2,547		(60	)		17,489		(285	)
Mortgage-backed securities		7,212		(57	)		—		—			7,212		(57	)
Total temporarily impaired	$	39,818	$	(654	)	$	2,547	$	(60	)	$	42,365	$	(714	)

	12 Months or less					More than 12 months					Total
December 31, 2009	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury securities and obligations of U.S. government agencies	$	58,384	$	(1,147	)	$	—	$	—		$	58,384	$	(1,147	)
Obligations of states and political subdivisions		12,000		(241	)		2,574		(63	)		14,574		(304	)
Mortgage-backed securities		3,283		(14	)		—		—			3,283		(14	)
Total temporarily impaired	$	73,667	$	(1,402	)	$	2,574	$	(63	)	$	76,241	$	(1,465	)

There are sixty-four securities in the portfolio with unrealized losses. Unrealized losses on securities have not been recognized into income because the issuers’ securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to market yields increasing across the municipal sector partly due to higher risk premiums associated with municipal insurers. The fair value is expected to recover as the securities approach their maturity date or reset date. The Corporation does not intend to sell until recovery and does not believe selling will be required before recovery.

Page 15

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(3) Loans

Loans at March 31, 2010 and December 31, 2009 were as follows:

	3/31/2010			12/31/2009
Commercial and agriculture	$	86,326		$	96,298
Commercial real estate		340,300			335,653
Real estate — mortgage		310,687			314,552
Real estate — construction		33,478			30,068
Consumer		13,415			14,250
Other		377			231
Leases		32			82
Total loans		784,615			791,134
Allowance for loan losses		(16,639	)		(15,271	)
Deferred loan fees		(315	)		(316	)
Net loans	$	767,661		$	775,547

(4) Allowance for Loan Losses

A summary of the activity in the allowance for loan losses for the three months ended March 31, 2010 and 2009 was as follows:

	2010			2009
Balance January 1,	$	15,271		$	8,862
Loans charged-off		(2,516	)		(775	)
Recoveries		144			146
Provision for loan losses		3,740			2,102
Balance March 31,	$	16,639		$	10,335

Page 16

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

Information regarding impaired loans was as follows for the three months ended March 31:

	2010		2009
Average investment in impaired loans	$	20,349	$	17,282
Interest income recognized on impaired loans including interest income recognized on cash basis		104		111
Interest income recognized on impaired loans on cash basis		104		111

Information regarding impaired loans at March 31, 2010 and December 31, 2009 was as follows:

	3/31/2010			12/31/2009
Balance impaired loans	$	17,963		$	22,736
Less portion for which no allowance for loan losses is allocated		(8,472	)		(12,856	)
Portion of impaired loan balance for which an allowance for credit losses is allocated	$	9,491		$	9,880
Portion of allowance for loan losses allocated to impaired loans	$	3,311		$	3,326

Nonperforming loans were as follows:

	3/31/10		12/31/09
Loans past due over 90 days still on accrual	$	2,752	$	514
Nonaccrual	$	23,731	$	25,198

Nonperforming loans and impaired loans are defined differently. Some loans may be included in both categories, whereas other loans may only be included in one category. A loan is considered non-performing if it is maintained on a cash basis because of deterioration in the borrower’s financial condition, where payment in full of principal or interest is not expected and where the principal and interest have been in default for 90 days, unless the asset is both well-secured and in process of collection. Restructured loans (loans restructured for credit reasons at a below-market interest rate) are also considered non-performing. A loan is considered impaired when it is probable that all of the interest and principal due will not be collected according to the terms of the contractual agreement.

Page 17

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(5) Earnings per Common Share:

Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options, computed using the treasury stock method.

	Three months ended March 31,
	2010			2009
Basic
Net Income	$	36		$	759
Preferred stock dividends		290			71
Net Income (loss) available to common shareholders	$	(254	)	$	688
Weighted average common shares outstanding		7,707,917			7,707,917
Basic earnings (loss) per common share	$	(0.03	)	$	0.09
Diluted
Net Income	$	36		$	759
Preferred stock dividends		290			71
Net Income (loss) available to common shareholders	$	(254	)	$	688
Weighted average common shares outstanding for basic earnings per common share		7,707,917			7,707,917
Add: Dilutive effects of assumed exercises of stock options		—			—
Average shares and dilutive potential common shares outstanding		7,707,917			7,707,917
Diluted earnings (loss) per common share	$	(0.03	)	$	0.09

Stock options for 29,500 shares of common stock and warrants for 469,312 shares of common stock were not considered in computing diluted earnings per common share for March 31, 2010 and March 31, 2009 because they were anti-dilutive.

Page 18

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(6) Commitments, Contingencies and Off-Balance Sheet Risk

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection are issued to meet customers financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. The contractual amount of financial instruments with off-balance-sheet risk was as follows for March 31, 2010 and December 31, 2009:

	Contract Amount
	March 31, 2010				December 31, 2009
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Commitment to extend credit:
Lines of credit and construction loans	$	2,742	$	104,087	$	2,136	$	98,420
Overdraft protection		—		12,536		—		12,617
Letters of credit		52		1,609		52		1,974
	$	2,794	$	118,232	$	2,188	$	113,011

Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 3.25% to 9.50% at March 31, 2010 and 3.25% to 9.50% at December 31, 2009. Maturities extend up to 30 years.

Citizens is required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The average reserve balance maintained in accordance with such requirements was $2,850 on March 31, 2010 and $2,515 on December 31, 2009.

(7) Pension Information

Net periodic pension expense was as follows for the three months ended March 31, 2010 and March 31, 2009:

	Three months ended March 31
	2010			2009
Service cost	$	210		$	207
Interest cost		190			190
Expected return on plan assets		(151	)		(255	)
Other components		65			17
Net periodic pension cost	$	314		$	159

The total amount of contributions expected to be paid by the Corporation in 2010 total $2,016, compared to $1,000 in 2009. Also, effective January 1, 2007, no new employees will be added to the retirement plan.

Page 19

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(8) Stock Options

Options to buy stock may be granted to directors, officers and employees under the Corporation’s Stock Option and Stock Appreciation Rights Plan, which provides for issue of up to 225,000 options. The exercise price of stock options is determined based on the market price of the Corporation’s common stock at the date of grant. The maximum option term is ten years, and options normally vest after three years.

The Corporation did not grant any stock options during the first three months of 2010 and 2009. Additionally, no stock options became vested during the first three months of 2010 and 2009.

A summary of the activity in the plan is as follows:

	Three months ended				Three months ended
	March 31, 2010				March 31, 2009
	Total options				Total options
	outstanding				outstanding
			Weighted				Weighted
			Average				Average
			Price				Price
	Shares		Per Share		Shares		Per Share
Outstanding at beginning of year		29,500	$	25.42		29,500	$	25.42
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Options outstanding, end of period		29,500	$	25.42		29,500	$	25.42
Options exercisable, end of period		29,500	$	25.42		29,500	$	25.42

Page 20

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

The following table details stock options outstanding:

	Outstanding Options
			Weighted
			Average	Weighted
			Remaining	Average
			Contractual	Exercise
Exercise price	Number		Life	Price
$20.50		19,500	3 yrs. 3 mos.	$	20.50
$35.00		10,000	4 yrs. 0.5 mos.		35.00
Outstanding at quarter-end		29,500	3 yrs. 6 mos.	$	25.42

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common stock as of the reporting date. As of March 31, 2010 and December 31, 2009, the aggregate intrinsic value of the stock options was $0.

(9) Fair Value Measurement

ASC Topic 820 establishes a fair value hierarchy about the assumptions used to measure fair value. The topic describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices or identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Corporation’s own view about the assumptions that market participants would use in pricing an asset.

Securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Impaired loans: The fair value of impaired loans is determined using the fair value of collateral for collateral dependent loans. The Corporation uses appraisals and other available data to estimate the fair value of collateral (Level 2 inputs).

Page 21

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

Assets measured at fair value are summarized below.

	Fair Value Measurements at March 31, 2010 Using:
	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	80,065	$	—
Obligations of states and political subdivisions		—		52,556		—
Mortgage-backed securities		—		69,067		—
Equity securities		676		—		—
Assets measured at fair value on a nonrecurring basis:
Impaired Loans	$	—	$	14,652	$	—
Other Real Estate Owned		—		1,958		—
Mortgage Servicing Rights		—		15		—

	Fair Value Measurements at December 31, 2009 Using:
	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Assets:	(Level 1)		(Level 2)		(Level 3)
Assets measured at fair value on a recurring basis:
U.S. Treasury securities and obligations of U.S. Government agencies	$	—	$	89,550	$	—
Obligations of states and political subdivisions		—		52,420		—
Mortgage-backed securities		—		64,646		—
Equity securities		676		—		—
Assets measured at fair value on a nonrecurring basis:
Impaired Loans	$	—	$	19,410	$	—
Other Real Estate Owned		—		1,834		—
Mortgage Servicing Rights		—		78		—

Page 22

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

The carrying amount and fair values of financial instruments not previously presented were as follows.

	March 31, 2010						December 31, 2009
	Carrying						Carrying
	Amount			Fair Value			Amount			Fair Value
Financial Assets:
Cash and due from financial institutions	$	19,394		$	19,394		$	26,942		$	26,942
Federal funds sold		24,000			24,000			—			—
Loans, net of allowance for loan losses		767,661			787,912			775,547			796,783
Accrued interest receivable		5,668			5,668			5,425			5,425
Financial Liabilities:
Deposits		(881,972	)		(888,897	)		(856,102	)		(863,156	)
Federal Home Loan Bank advances		(65,353	)		(66,603	)		(85,364	)		(82,353	)
U.S. Treasury interest-bearing demand note payable		(1,328	)		(1,328	)		(2,394	)		(2,394	)
Securities sold under agreement to repurchase		(19,643	)		(19,643	)		(21,920	)		(21,920	)
Subordinated debentures		(29,427	)		(15,347	)		(29,427	)		(14,501	)
Accrued interest payable		(686	)		(686	)		(466	)		(466	)

The fair value approximates carrying amount for all items except those described below. The fair value for securities is based on quoted market values for the individual securities or for equivalent securities. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the cash flow analysis or underlying collateral values. Fair value of debt is based on current rates for similar financing. The fair value of off-balance-sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements and are considered nominal.

For certain homogeneous categories of loans, such as some residential mortgages, credit card receivables, and other consumer loans, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Page 23

First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)

(10) Participation in the Treasury Capital Purchase Program

On January 23, 2009, the Corporation completed the sale to the U.S. Treasury of $23,184 of newly-issued non-voting preferred shares as part of the Capital Purchase Program (CPP) enacted by the U.S. Treasury as part of the Troubled Assets Relief Program (TARP) under the Emergency Economic Stabilization Act of 2008 (EESA). To finalize the Corporation’s participation in the CPP, the Corporation and the Treasury entered into a Letter Agreement, dated January 23, 2009, including the Securities Purchase Agreement – Standard Terms attached thereto. Pursuant to the terms of the Securities Purchase Agreement, the Corporation issued and sold to Treasury (1) 23,184 shares of Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (Series A Preferred Shares), and (2) a Warrant to purchase 469,312 common shares of the Corporation, each without par value, at an exercise price of $7.41 per share. The Warrant has a ten-year term. All of the proceeds from the sale of the Series A Preferred Shares and the Warrant by the Corporation to the U.S. Treasury under the CPP qualify as Tier 1 capital for regulatory purposes. Under the standardized CPP terms, cumulative dividends on the Series A Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter, but will be paid only if, as and when declared by the Corporation’s Board of Directors. The Series A Preferred Shares have no maturity date and rank senior to the common shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Corporation.

Page 24

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion focuses on the consolidated financial condition of the Corporation at March 31, 2010 compared to December 31, 2009 and the consolidated results of operations for the three-month period ending March 31, 2010 compared to the same period in 2009. This discussion should be read in conjunction with the consolidated financial statements and footnotes included in this Form 10-Q.

Forward-Looking Statements

When used in this Form 10-Q or future filings by the Corporation with the Securities and Exchange Commission, in press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “believe,” or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national economic conditions, changes in levels of market interest rates, credit risks of lending activities and competitive and regulatory factors, could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except to the extent required by law.

Financial Condition

Total assets of the Corporation at March 31, 2010 were $1,106,415 compared to $1,102,812 at December 31, 2009, an increase of $3,603, or 0.3 percent. The increase in total assets was mainly attributed to increases in cash and cash equivalents, primarily overnight federal funds sold. Total liabilities at March 31, 2010 were $1,007,070 compared to $1,004,015 at December 31, 2009, an increase of $3,055, or 0.3 percent. The increase in total liabilities was mainly attributed to increases in interest-bearing deposits, which was partially offset by decreases in Federal Home Loan Bank advances.

Net loans have decreased $7,886, or 1.0 percent since December 31, 2009. The commercial real estate, real estate construction and other loan portfolios increased by $4,647, $3,410 and $146, respectively. The commercial and agricultural real estate loan portfolios decreased $9,972 and $3,865, respectively, while consumer and lease loan portfolios decreased a total of $835 and $50, respectively. The current increase in commercial real estate loans is mainly due to calling efforts by the commercial lending officers and increased opportunities from our larger markets. The current decrease in commercial and agriculture loans is the result of seasonality. The current decrease in real estate and consumer loans is mainly the result of a decline in the housing market and the Corporation’s decision to originate and sell the majority of mortgage loans on the secondary market.

Page 25

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

The Corporation had no loans held for sale at March 31, 2010 or December 31, 2009. At March 31, 2010, the net loan to deposit ratio was 87.0 percent compared to 90.6 percent at December 31, 2009. This ratio declined in 2010 due to increased deposits.

For the first three months of operations in 2010, $3,740 was placed into the allowance for loan losses from earnings, compared to $2,102 in the first quarter of 2009. In general, the increase in provision can be attributed to the continued economic downturn and high unemployment rates in our market area, which have impaired the ability of our customers to make payments on their loans. Net charge-offs have increased compared to 2009. Nonperforming loans have increased by $771, of which $2,238 was due to increased loans past due 90 days still accruing, offset by a decrease in loans on nonaccrual status of $1,467. Impaired loans decreased, from $22,736 at December 31, 2009 to $17,963 at March 31, 2010. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance. Management specifically evaluates loans that are impaired, or graded as doubtful by the internal grading function for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for loan losses.

Management analyzes commercial and commercial real estate loans, with balances of $350 or larger, on an individual basis and classifies a loan as impaired when an analysis of the borrower’s operating results and financial condition indicates that underlying cash flows are not adequate to meet its debt service requirements. Often this is associated with a delay or shortfall in payments of 90 days or more. In addition, loans held for sale and leases are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans or portions thereof, are charged-off when deemed uncollectible. The March 31, 2010 allowance for loan losses as a percent of total loans was 2.17 percent compared to 1.97 percent at December 31, 2009.

The available for sale security portfolio decreased by $4,928 from $207,292 at December 31, 2009, to $202,364 at March 31, 2010. The decrease is the result of securities scheduled to mature in time with FHLB advances related to the pre-funding FHLB advance strategy made during the third quarter of 2009. The Corporation continued utilizing letters of credit from the Federal Home Loan Bank (FHLB) to replace maturing securities that were pledged for public entities. As of March 31, 2010, the Corporation was in compliance with all pledging requirements.

Page 26

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

Bank owned life insurance (BOLI) increased $120 from December 31, 2009 due to income earned on the investment. BOLI was purchased in 2006 as an alternative to replacing maturing securities, and is being used to help recover healthcare, group term life, and 401(k) expenses.

Office premises and equipment, net, have decreased $190 from December 31, 2009 to March 31, 2010, as a result of depreciation of $395 and disposals of $37 offset by new purchases of $242.

Total deposits at March 31, 2010 increased $25,920 from year-end 2009. Noninterest-bearing deposits decreased $7,625 from year-end 2009 while interest-bearing deposits, including savings and time deposits, increased $33,545 from December 31, 2009. The interest-bearing deposit increase was due to increases in savings accounts and the Corporation’s participation in the Certificate of Deposit Account Registry Service (CDARS). This service allows the Corporation’s large depositors to access full FDIC insurance on deposits of up to $50 million. Savings accounts increased $21,767 from year end 2009, which included increases of $2,600 in statement savings and $20,600 in public fund money market savings. CDARS accounts increased $12,850 from year end 2009. The year to date average balance of total deposits increased $18,602 compared to the average balance of the same period in 2009. The increase in average balance is mainly due to public money market savings.

Total borrowed funds have decreased $23,354 from December 31, 2009 to March 31, 2010. At March 31, 2010, the Corporation had $65,353 in outstanding Federal Home Loan Bank advances compared to $85,364 at December 31, 2009. On March 12, 2010, an FHLB advance in the amount of $15,000 matured. This advance had terms of thirty-six months with a fixed rate of 4.78%. The advance was not replaced. In addition, during the first quarter of 2010 overnight advances in the amount of $5,000 were paid off. Securities sold under agreements to repurchase, which tend to fluctuate due to timing of deposits, have decreased $2,277 and U.S. Treasury Tax Demand Notes have decreased $1,066 from December 31, 2009 to March 31, 2010.

Shareholders’ equity at March 31, 2010 was $99,345, or 9.0 percent of total assets, compared to $98,797 at December 31, 2009, or 9.0 percent of total assets. The increase in shareholders’ equity resulted from earnings of $36, less preferred dividends paid of $290, and the increase in the market value of securities available for sale, net of tax, of $802. Total outstanding common shares at March 31, 2010 and at March 31, 2009 were 7,707,917.

Under the Corporation’s stock repurchase program, the Corporation is authorized to buy up to 5.0 percent of the total common shares outstanding. However, the Corporation has participated in the U.S. Treasury’s Capital Purchase Program (CPP), which was announced by the U.S. Treasury on October 14, 2008 as part of the Troubled Asset Relief Program (“TARP”) established under the Emergency Economic Stabilization Act of 2008 (EESA). On January 23, 2009, the Corporation issued to the U.S. Treasury $23,184,000 of cumulative perpetual preferred shares (Senior Preferred Shares), with a liquidation preference of $1,000 per share, and a warrant to purchase 469,312 of the Corporation’s common shares at an exercise price of $7.41 (which is equal to 15% of the aggregate amount of the Senior Preferred Shares purchased by the U.S. Treasury). As a participant in the CPP, the Corporation is required to comply with a number of restrictions and provisions, including limits on executive compensation, stock redemptions and the declaration and payment of dividends. Due to these restrictions, the Corporation is precluded from repurchasing its common shares without the approval of the U.S. Treasury for a period of three years.

Page 27

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

Results of Operations

Three Months Ended March 31, 2010 and 2009

Net income for the three months ended March 31, 2010 was $36, a decrease of $723 or 95.3 percent from $759 for the first three months of 2009. Basic and diluted earnings (loss) per common share were $(0.03) for the first quarter of 2010, compared to $0.10 for the same period in 2009. The primary reasons for the changes in net income are explained below.

Net interest income for the first quarter of 2010 was $10,200, an increase of $333 or 3.4 percent from $9,867 in the first quarter of 2009. Net interest income, the difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities, is the most significant component of the Corporation’s earnings. Net interest income is affected by changes in volume, rates and composition of interest-earning assets and interest-bearing liabilities. Average earning assets increased 2.3 percent from the first quarter last year from organic growth. Average loans for the quarter decreased 0.8 percent compared to the first quarter of 2009, as new loans written have not quite kept up with pay-downs and pay-offs over the last twelve months. The Corporation’s net interest margin for the three months ended March 31, 2010 and 2009 was 3.95% and 3.91%, respectively. Net interest margin increased 4 basis points as net interest income increased 3.4 percent while average earning assets increased 2.3 percent.

The Corporation provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required on the allowance for loan losses. Provisions for loan losses totaled $3,740 for the first quarter of 2010, compared to $2,102 for the same period of 2009. The Corporation’s provision for loan losses increased during 2010 in conjunction with an increase in the Corporation’s level of non-performing loans resulting from a continued deterioration in local economic conditions. At the beginning of 2008, the Corporation reduced the period of time for which it reviewed loan charge-offs from three years to two years. Management believes the higher volume of loan charge-offs in the last two years are more indicative of future losses in the loan portfolio, and this trend continues in the first quarter of 2010.

Non-interest income for the first quarter of 2010 was $2,292, a decrease of $95 or 4.0 percent from $2,387 in the first quarter of 2009. Service charge fee income for the first quarter of 2010 was $1,065, down $32 or 2.9 percent over the first quarter of 2009. The decline is related to a decline in the number of accounts paying service charges. Trust fee income was $440, up $56 or 14.6 percent over the same period in 2009. The increase is related to the recoveries in the financial markets and the related effect on assets under management. Net gain on sale of securities was $15, up $14 over the same period in 2009. ATM fee income for the first quarter of 2010 was $411, up $65 or 18.8 percent over the first quarter of 2009. This increase can be attributed to a 25 percent increase in foreign transaction fees charged during the first quarter of 2010. Computer center item processing fee income for the first quarter of 2010 was $69, down $34 or 33.0 percent over the first quarter of 2009. Bank owned life insurance contributed $120 to non-interest income during the first quarter of 2010. Other non-interest income was $171, down $162 or 48.6 percent over the same period in 2009. This decrease is due to the resolution, during the first quarter in 2009, of three loans obtained in a merger which resulted in income of $237. These loans were recorded at fair value at the time of the merger and subsequently settled at a higher value.

Page 28

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

Non-interest expense for the first quarter of 2010 was $8,996, a decrease of $250 or 2.7 percent, from $9,246 reported for the same quarter of 2009. Salary and other employee costs were $4,256, down $58 or 1.3 percent as compared to the first quarter of 2009. This decrease is mainly due to staff reductions as a result of the merger of SCC with Citizens in June 2009, as well as a change in the commission structure. Occupancy and equipment costs were $1,063, down $97 or 8.4 percent compared to the same period of 2009. Contracted data processing cost were $264, down $19, or 6.7 percent compared to last year. State franchise taxes decreased by $12 compared to the same period of 2009. Amortization expense decreased $17, or 5.3 percent from the first quarter of 2009, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were up by $159 during the first quarter of 2010 compared to the same period of 2009. The increase is due to an increase in the assessment rate charged. Professional service costs were $378, up $91 or 31.7 percent compared to the same period of 2009. The increase is due to consulting services for loan work outs and core banking software analysis. Other operating expenses were $1,834, down $176 or 8.8 percent compared to the same period of 2009. This decrease is mainly the result of the following: losses sustained on the sale of OREO properties decreased by $44, courier expenses decreased by $37, trust data processing decreased by $48 and fee expense related to CDARS account opening decreased by $15 compared to first quarter 2009.

Income tax benefit for the first three months of 2010 totaled ($281) compared to an income tax expense of $147 for the first three months of 2009. This was a decrease of $428, or 291.2 percent. The decrease in the federal income taxes is mainly a result of total nontaxable securities income being a larger percentage of income before taxes.

Page 29

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

Capital Resources

Shareholders’ equity totaled $99,345 at March 31, 2010 compared to $98,797 at December 31, 2009. The increase in shareholders’ equity resulted primarily from an $802 change in the unrealized gain on the securities. This was offset by preferred dividends paid. All of the Corporation’s capital ratios exceeded the regulatory minimum guidelines as of March 31, 2010 and December 31, 2009 as identified in the following table:

										To Be Well
										Capitalized
										Under Prompt
							For Capital			Corrective
	Corporation Ratios						Adequacy			Action
	3/31/2010			12/31/2009			Purposes			Provisions
Total Risk Based Capital		14.3	%		14.3	%		8.0	%		10.0	%
Tier I Risk Based Capital		13.2	%		13.0	%		4.0	%		6.0	%
Leverage Ratio		9.6	%		9.6	%		4.0	%		5.0	%

The Corporation did not pay a cash dividend on its common shares during the first quarter of 2010. On February 1, 2009, the Corporation paid a dividend of $.15 per common share. The Corporation also paid a 5% cash dividend on preferred shares of $290 on February 16, 2010.

Liquidity

Citizens maintains a conservative liquidity position. All securities are classified as available for sale. At March 31, 2010, securities with maturities of one year or less totaled $5,212, or 2.6 percent of the total security portfolio. The available for sale portfolio helps to provide the Corporation with the ability to meet its funding needs. The Consolidated Statements of Cash Flows (Unaudited) contained in the consolidated financial statements detail the Corporation’s cash flows from operating activities resulting from net earnings.

Cash from operations for the quarter ended March 31, 2010 was $4,000. This includes net income of $36 plus net adjustments of $3,964 to reconcile net earnings to net cash provided by operations. Cash from investing activities was $10,176 for the quarter ended March 31, 2010. The use of cash from investing activities is primarily due to securities purchases. Cash received from maturing and called securities totaled $28,765. This increase in cash was offset by the purchase of securities of $22,299. Cash from financing activities in the first quarter of 2010 totaled $2,276. A major source of cash for financing activities is the net change in deposits. Cash provided by the net change in deposits was $25,920 in the first quarter of 2010. The large increase in deposits was primarily due to public money market savings accounts, which added $20,600 in deposits during the first quarter of 2010. Cash was used by the decreases in FHLB overnight funds and a maturity of a FHLB long-term advance of $5,000 and $15,000, respectively. Cash from operating activities and financing activities exceeded cash from investing activities by $16,452. Cash and cash equivalents increased from $26,942 at December 31, 2009 to $43,394 at March 31, 2010 as a result of the increase in cash during the first quarter.

Page 30

First Citizens Banc Corp
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)

Future loan demand of Citizens may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, the issuances of trust preferred obligations, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Citizens, through its correspondent banks, maintains federal funds borrowing lines totaling $10,000. As of March 31, 2010, Citizens had total credit availability with the FHLB of $120,153 of which $65,353 was outstanding.

Page 31

First Citizens Banc Corp
Form 10-Q
(Amounts in thousands, except share data)

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Corporation’s primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Corporation’s transactions are denominated in U.S. dollars with no specific foreign exchange exposure.

Interest-rate risk is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Corporation’s earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Corporation’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organization’s quantitative level of exposure. When assessing the interest-rate risk management process, the Corporation seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Corporation to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.

The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, adopted a Joint Agency Policy Statement on interest-rate risk, effective June 26, 1996. The policy statement provides guidance to examiners and bankers on sound practices for managing interest-rate risk, which will form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The policy statement also outlines fundamental elements of sound management that have been identified in prior Federal Reserve guidance and discusses the importance of these elements in the context of managing interest-rate risk. Specifically, the guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk. Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

Page 32

First Citizens Banc Corp
Form 10-Q
(Amounts in thousands, except share data)

Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Corporation is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Corporation’s primary asset/liability management technique is the measurement of the Corporation’s asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.

Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. The Corporation has not purchased derivative financial instruments in the past and does not intend to purchase such instruments in the near future. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Corporation’s interest income and overall asset yields. A large portion of an institution’s liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Corporation seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Corporation.

The following table provides information about the Corporation’s financial instruments that are sensitive to changes in interest rates as of December 31, 2009 and March 31, 2010, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Corporation’s Net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of 200 basis points and 100 basis points and an interest rate decrease of 100 basis points at March 31, 2010 and December 31, 2009. The Corporation had no derivative financial instruments or trading portfolio as of December 31, 2009 or March 31, 2010. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Corporation’s borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.

Page 33

First Citizens Banc Corp
Form 10-Q
(Amounts in thousands, except share data)

Net Portfolio Value

	March 31, 2010								December 31, 2009
Change in	Dollar		Dollar			Percent			Dollar		Dollar			Percent
Rates	Amount		Change			Change			Amount		Change			Change
+200bp		130,506		(6,616	)		-5	%		143,173		(6,648	)		-4	%
+100bp		138,851		1,729			1	%		151,656		1,835			1	%
Base		137,122		—			—			149,821		—			—
-100bp		144,731		7,609			6	%		157,937		8,116			5	%

The change in net portfolio value from December 31, 2009 to March 31, 2010, is primarily a result of two factors. While the yield curve is virtually unchanged from the end of the year, both the mix and overall size of assets and funding sources have changed. While assets decreased slightly, the mix also shifted away from loans and securities toward cash. Funding sources increased while the funding mix shifted from borrowed money to deposits. Beyond the change in the base level of net portfolio value, movements in rates would lead similar changes in the net portfolio value, both in absolute terms and percentage change, compared to the end of 2009. A 100 basis point upward movement in rates would lead to a faster decrease in the fair value of liabilities, compared to assets, which would lead to an increase in the net portfolio value. This effect is opposite for a 200 basis point movement in rates, dues to projected changes related to the investment portfolio. A downward change in rates would also lead to an increase in the net portfolio value as the fair value of liabilities would increase more slowly than the fair value of the asset portfolio.

ITEM 4. Controls and Procedures Disclosure

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of March 31, 2010, were effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Corporation’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Corporation’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Page 34

First Citizens Banc Corp
Other Information
Form 10-Q

Part II — Other Information

Item 1. Legal Proceedings

There are no pending legal proceedings to which the Corporation or any of its subsidiaries is a party or to which any of their property is subject, except for routine legal proceedings to which Citizens is a party incidental to its banking business. The Corporation considers none of those proceedings to be material.

Item 1A. Risk Factors

There were no material changes to the risk factors as presented in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. [Removed and Reserved]

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No. 31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
Exhibit No. 31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
Exhibit No. 32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit No. 32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Page 35

First Citizens Banc Corp

Signatures

Form 10-Q

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

First Citizens Banc Corp
/s/ James O. Miller	May 10, 2010
James O. Miller	Date
President, Chief Executive Officer
/s/ Todd A. Michel	May 10, 2010
Todd A. Michel	Date
Senior Vice President, Controller

Page 36

First Citizens Banc Corp
Index to Exhibits
Form 10-Q

Exhibits

Exhibit	Description	Location
3.1(a)	Articles of Incorporation, as amended, of First Citizens Banc Corp.	Filed as Exhibit 3.1 to First Citizens Banc Corp’sForm 10-K for the year ended December 31, 2005, filed on March 16, 2006 and incorporated herein by reference.
3.1(b)	Certificate of Amendment by Shareholders or Members as filed with the Ohio Secretary of State on January 12, 2009, evidencing the adoption by the shareholders of First Citizens Banc Corp on January 5, 2009 of an amendment to Article FOURTH to authorize the issuance of up to 200,000 preferred shares, without par value.	Filed as Exhibit 3.1(b) to First Citizens Banc Corp’s Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference.
3.1(c)	Certificate of Amendment by Directors or Incorporators to Articles, filed with the Ohio Secretary of State on January 21, 2009, evidencing adoption of an amendment by the Board of Directors of First Citizens Banc Corp to Article FOURTH to establish the express terms of the Fixed Rate Cumulative Perpetual Preferred Shares, Series A, of First Citizens.	Filed as Exhibit 3.1 to First Citizens Banc Corp’s Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference.
3.2	Amended and Restated Code of Regulations of First Citizens Banc Corp (adopted April 17, 2007).	Filed as Exhibit 3.2 to First Citizens Banc Corp’sForm 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference.
31.1	Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer.	Included herewith
31.2	Rule 13a-14(a)/15-d-14(a) Certification of Chief Financial Officer.	Included herewith
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included herewith

Page 37