SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year end December 31, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file Number 000-10535
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A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
CITIZENS BANKING CORPORATION
AMENDED AND RESTATED SECTION
401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
CITIZENS BANKING CORPORATION
One Citizens Banking Center
328 South Saginaw Street
Flint, Michigan 48502
CITIZENS BANKING CORPORATION
Index to Form 11-K
FINANCIAL INFORMATION
Financial Statements and Supplemental Schedule for Citizens Banking
Corporation's Amended And Restated Section 401(k) Plan ............... 3
SIGNATURES ..................................................................15
EXHIBIT INDEX ...............................................................16
2
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Citizens Banking Corporation Amended and Restated Section 401(k) Plan
December 31, 2002 and 2001 and Year ended December 31, 2002
with Report of Independent Auditors
3
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
Financial Statements
and Supplemental Schedule
December 31, 2002 and 2001 and
Year ended December 31, 2002
CONTENTS
Report of Independent Auditors..............................................1
Financial Statements
Statements of Assets Available for Benefits.................................2
Statement of Changes in Assets Available for Benefits.......................3
Notes to Financial Statements...............................................4
Supplemental Schedule
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year).............9
Report of Independent Auditors
Administrative Committee
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
We have audited the accompanying statements of assets available for benefits of
the Citizens Banking Corporation Amended and Restated Section 401(k) Plan as of
December 31, 2002 and 2001, and the related statements of changes in assets for
the year ended December 31, 2002. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Plan at December
31, 2002 and 2001, and the changes in its assets available for benefits for the
year ended December 31, 2002, in conformity with accounting principles generally
accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental Schedule of Assets
(Held at End of Year) as of December 31, 2002, is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department for Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. This supplemental schedule is the responsibility of
the Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young
Detroit, Michigan
June 20, 2003
1
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Statements of Assets Available for Benefits
DECEMBER 31
2002 2001
------------------------------------
Assets
Investments, at fair value:
Common stock:
Citizens Banking Corporation $ 34,788,747 $ 53,431,089
Mutual funds 66,894,718 73,211,155
Money market account 8,901,205 9,602,155
Loans to participants 3,358,984 3,311,436
------------------------------------
Assets available for benefits $ 113,943,654 $ 139,555,835
====================================
See accompanying notes.
2
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Statement of Changes in Assets Available for Benefits
Year ended December 31, 2002
ADDITIONS
Investments income:
Dividends:
Citizens Banking Corporation $ 1,672,303
Other 2,111,082
Interest income 251,461
-------------------
Total investment income 4,034,846
Contributions:
Employer 3,295,051
Employee 6,739,393
-------------------
10,034,444
DEDUCTIONS
Benefit payments to participants (12,890,930)
Management fees (64,683)
-------------------
(12,955,613)
Net realized and unrealized appreciation (depreciation)
in fair value of investments (Note 4) (26,725,858)
-------------------
Net decrease (25,612,181)
Assets available for benefits at beginning of year 139,555,835
-------------------
Assets available for benefits at end of year $ 113,943,654
===================
See accompanying notes.
3
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Notes to Financial Statements
December 31, 2002 and 2001
1. DESCRIPTION OF THE PLAN
The following description provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
The Citizens Banking Corporation Amended and Restated Section 401(k) Plan (the
Plan) is a defined contribution plan which includes a 401(k) salary deferral
feature. The Plan covers substantially all employees of Citizens Banking
Corporation (the Corporation) and its banking subsidiaries.
Effective January 2001, the plan was amended to reduce the hours of required
service to become eligible. Salaried employees are eligible for the Plan on the
first business day of the calendar quarter coincident with or following their
date of hire. Additionally, hourly employees are eligible for the Plan on the
first business day of the month coincident with or next following the completion
of ninety consecutive days of employment with the Corporation in which the
employee is credited with at least 180 hours of credited service. If an hourly
employee fails to be credited with at least 180 hours of credited service in the
first ninety days of employment, he shall commence participation in the Plan on
the first day of the month following any calendar quarter in which he is
credited with at least 180 hours of credited service. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
In 2002 and 2001, participants were able to contribute up to 50% of their annual
salary, not to exceed the annual IRS limitation of the current year ($11,000 and
$10,500 for 2002 and 2001, respectively). On an after-tax basis employees may
contribute up to 10% of their compensation.
The Corporation will match the participant's pre-tax contribution up to 6% of
the participant's compensation (includes regular base salary or wages,
commissions, overtime, shift premiums, incentive pay and referral pay). The
Corporation will match 100% on the first 3% of pre-tax salary deferral and 50%
on the next 3% of pre-tax salary deferral, for a total of a 75% match on a 6%
pre-tax salary deferral. In addition, a retiree medical savings account was
established for each participant. One third of the employer matching
contribution is automatically directed into this account. Employees may not
borrow against any monies residing in this account.
Participants are immediately vested in their contributions and the Corporation's
matching contributions plus actual earnings thereon. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account. Participants direct the investment of their accounts,
inclusive of the employer contribution balance, among the investments offered by
the Plan.
4
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account balance.
Loan terms range from 1-5 years or up to 15 years for the purchase of a primary
residence. The loans are secured by the balance in the participant's account and
bear interest at a rate commensurate with the prime rate plus 1%. Principal and
interest is paid ratably through bi-weekly payroll deductions.
On termination of service, death, disability, or retirement, the participant
will elect to receive, defer, or rollover a single lump-sum amount equal to the
vested value of his or her account.
All administrative expenses of the Plan are paid by the Corporation.
Although it has not expressed any intent to do so, the Corporation has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
Prior year amounts may have been reclassified to conform with current year
presentation.
2. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments are stated at aggregate fair value. Securities traded on a national
securities exchange are valued at the last reported sales price on the last
business day of the year; investments traded in the over-the-counter market and
listed securities for which no sale was reported on that date are valued at the
average of the last reported bid and ask prices. The shares of registered
investment companies are valued at quoted market prices which represent the net
asset values of shares held by the Plan at year-end.
The participant loans are valued at their outstanding balances, which
approximate fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
5
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
During the year ended December 31, 2002, the Plan's investments (including
investments purchased, sold as well as held during the year) appreciated
(depreciated) in fair value as determined by quoted market prices as follows:
<Table>
Common stock:
Citizens Banking Corporation $ (11,694,874)
Mutual funds (15,030,984)
----------------
$ (26,725,858)
================
</Table>
Investments that represent 5% or more of fair value of the Plan's net assets are
as follows:
DECEMBER 31
2002 2001
-------------------------------
**Citizens Banking Corporation Common Stock $34,788,747 $53,431,089
**Golden Oak Prime Obligation Class A 8,901,205 9,602,155
**Golden Oak Value Portfolio Fund * 7,215,613
**Golden Oak Diversified Growth Fund * 7,097,946
Invesco Balanced Fund 12,477,960 18,368,816
Janus Advisor International Retirement Class Fund * 7,908,996
**Golden Oak Intermediate Income Fund 8,370,170 *
**Golden Oak Small Capital Value Fund 6,063,568 *
*Investment does not represent 5% or more of fair value of the Plan's net
assets.
**Party-in-interest.
6
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The Plan invests certain fund assets in the Golden Oak series of mutual funds.
Citizens Bank, a subsidiary of Citizens Banking Corporation, serves as the
investment advisor to these funds. The mutual fund portfolios were established
pursuant to the provisions of the Investment Company Act of 1940. Investments
within these portfolios were made in accordance with the applicable Department
of Labor rules and regulations concerning the investment of qualified plan
assets into mutual funds wherein the investment advisor to the portfolio is a
party-in-interest with respect to the plan.
The following is a summary of transactions (at cost) with parties-in-interest:
CITIZENS BANKING GOLDEN OAK GOLDEN OAK GOLDEN OAK GOLDEN OAK GOLDEN OAK GOLDEN OAK
CORP. COMMON PRIME OBLIGATION VALUE PORTFOLIO DIVERSIFIED INTERMEDIATE SMALL CAPITAL INTERNATIONAL
STOCK CLASS A FUND GROWTH FUND INCOME FUND FUND EQUITY FUND
-------------------------------------------------------------------------------------------------------
Balance at January 1, 2002 $35,042,832 $ 5,217,709 $ 7,869,668 $13,660,135 $5,619,133 $ 4,769,404 $ 142,651
Purchases in 2001 6,325,323 10,920,249 2,347,801 2,179,166 2,873,695 2,793,165 332,141
Sales in 2001 11,377,048 6,535,802 1,610,292 3,522,996 1,810,669 1,345,462 46,693
--------------------------------------------------------------------------------------------------------
Balance at December 31 , 29,991,107 9,602,155 8,607,177 12,316,305 6,682,159 6,217,107 428,099
2001
Purchases in 2002 5,683,738 9,496,113 1,492,895 1,882,878 3,271,156 3,043,766 820,627
Sales in 2002 8,587,276 10,053,041 2,177,726 3,881,446 2,068,765 1,827,777 386,509
Balance at December 31, --------------------------------------------------------------------------------------------------------
2002 $27,087,569 $ 8,901,205 $ 7,922,346 $10,317,737 $7,884,550 $ 7,433,096 $ 862,217
========================================================================================================
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated August 22, 2002 stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. Once qualified, the Plan is required to operate in conformity
with the Code to maintain its qualification. The Plan Administrator believes the
Plan is operating in compliance with the applicable requirements of the Code
and, therefore believes that the Plan is qualified and the related trust is tax
exempt.
7
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Notes to Financial Statements (continued)
5. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of assets available for benefits per the
financial statements to the Form 5500:
DECEMBER 31
2002 2001
---------------------------------
Net assets available for benefits per the
financial statements $113,943,654 $139,555,835
Amounts allocated to withdrawn participants (59,422) (801,374)
---------------------------------
Net assets available for benefits per the $113,884,232 $138,754,461
Form 5500 =================================
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
YEAR ENDED
DECEMBER 31,
2002
----------------
Benefits paid to participants per the financial $ 12,890,930
statements
Add: amounts allocated on Form 5500 to withdrawn 59,422
withdrawn participants at December 31, 2002
Less: amounts allocated on Form 5500 to (801,374)
withdrawn participants at December 31, 2001 -----------------
Benefits paid to participants per the Form 5500 $ 12,148,978
=================
Amounts allocated to withdrawn participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
year-end but not yet paid.
8
Supplemental Schedule
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
EIN: 38-2378932 Plan Number: 002
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year)
December 31, 2002
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE, RATE OF
IDENTITY OF ISSUE, BORROWER, INTEREST, COLLATERAL, PAR OR CURRENT
LESSOR OR SIMILAR PARTY MATURITY VALUE COST VALUE
- -----------------------------------------------------------------------------------------------------------------
Common Stock:
*Citizens Banking Corporation 1,425,978 Shares $ 34,788,747
-------------
Total Common Stock 34,788,747
Mutual Funds:
*Golden Oak Diversified Growth Fund 776,584 Units 4,830,355
*Golden Oak Intermediate Income Fund 804,051 Units 8,370,170
*Golden Oak Value Portfolio Fund 874,515 Units 5,631,877
*Golden Oak Small Capital Fund 701,802 Units 6,063,568
*Golden Oak International Equity Fund 124,647 Units 725,447
AIM Mid-Cap Equity Fund 101,604 Units 2,151,981
American Balanced Fund 30,479 Units 439,503
American Growth Fund 222,535 Units 4,110,222
American Washington Mutual Investors Fund 15,852 Units 372,691
Berger Mid-Cap Value Fund 176,216 Units 2,592,134
Fidelity Advisor Mortgage Securities Fund 374,910 Units 4,217,738
Fidelity Advisor Small Cap Fund T 12,819 Units 183,699
*Invesco Small Company Growth Fund 502,941 Units 4,189,502
*Invesco Balanced Fund 1,040,697 Units 12,477,960
Janus Advisor International Retirement 304,363 Units
Class Fund 5,530,271
State Street Global Advisors S&P 500 334,627 Units
Index Fund 4,855,437
Templeton Foreign Fund 18,311 Units 152,163
-------------
Total Mutual Funds 66,894,718
Money Market Account:
*Golden Oak Prime Obligation Class A $8,901,205 principal amount 8,901,205
-------------
Total Money Market Account 8,901,205
*Participant Loans Interest rate range: 5.25% - 10.5%;
with various maturity dates $ - 3,358,984
=========== -------------
$ 113,943,654
=============
*PARTY-IN-INTEREST.
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date June 25, 2003 /s/Marilyn K. Allor
-------------------- -----------------------------------
Marilyn K. Allor
Chairman, Pension/401(k) Administration
Committee
/s/Kurt A. Schulze
-----------------------------------
Kurt A. Schulze
Secretary, Pension/401(k) Administration
Committee
15
EXHIBIT INDEX
The following documents are filed as part of this report. Exhibits not required
for this report have been omitted. Citizens' Commission file number is
000-10535.
Exhibit
No. Exhibit
- ----------- -------------------------------------------------------------------
23 Consent of Independent Auditors
99.1 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
99.2 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
16