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, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from -------------- to --------------
Commission file Number 000-10535
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 ........................................................... 16
EXHIBIT INDEX ........................................................ 17
2
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Citizens Banking Corporation Amended and Restated Section 401(k) Plan
December 31, 2003 and 2002 and Year ended December 31, 2003 with Report of
Independent Registered Public Accounting Firm
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
Financial Statements
and Supplemental Schedule
December 31, 2003 and 2002 and
Year ended December 31, 2003
CONTENTS
Report of Independent Registered Public Accounting Firm........ 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 4i -- Schedule of Assets (Held at End of Year) 10
Report of Independent Registered Public Accounting Firm
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, 2003 and 2002, and the related statement of changes in assets
available for benefits for the year ended December 31, 2003. 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 the standards of the Public Company
Accounting Oversight Board (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, 2003 and 2002, and the changes in its assets available for benefits for the
year ended December 31, 2003, in conformity with U.S. generally accepted
accounting principles.
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, 2003, is presented for the purpose of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of 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 25, 2004
1
Citizens Banking Corporation Amended
And Restated Section 401(k) Plan
Statements of Assets Available for Benefits
DECEMBER 31
2003 2002
------------ ------------
ASSETS
Investments, at fair value:
Common stock:
Citizens Banking Corporation $ 43,051,504 $ 34,788,747
Mutual funds 83,033,699 66,894,718
Money market account 7,631,595 8,901,205
Loans to participants 3,151,548 3,358,984
------------ ------------
Assets available for benefits $136,868,346 $113,943,654
============ ============
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, 2003
ADDITIONS
Investments income:
Dividends:
Citizens Banking Corporation $ 1,551,776
Other 1,159,121
Interest income 195,486
------------
Total investment income 2,906,383
Contributions:
Employer 3,033,801
Employee 6,257,940
------------
9,291,741
DEDUCTIONS
Benefit payments to participants 15,333,106
Management fees 63,109
------------
15,396,215
Net realized and unrealized appreciation
in fair value of investments (Note 3) 26,122,783
------------
Net increase 22,924,692
Assets available for benefits at beginning of year 113,943,654
------------
Assets available for benefits at end of year $136,868,346
============
See accompanying notes.
3
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
Notes to Financial Statements
December 31, 2003 and 2002
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 2003 and 2002, participants were able to contribute up to 50% of their annual
salary, not to exceed the annual IRS limitation of the current year ($12,000 and
$11,000 for 2003 and 2002, 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
4
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
Notes to Financial Statements(continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
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.
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 are paid by the Corporation except for specialized
fees charged to individual participants.
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.
Purchases and sales are recorded on a trade-date basis. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
5
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
Notes to Financial Statements(continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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.
3. INVESTMENTS
During 2003, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated in fair value as determined by quoted
market prices as follows:
NET REALIZED AND
UNREALIZED APPRECIATION
IN FAIR VALUE OF
INVESTMENTS
-----------------------
Citizens Banking Corporation Common Stock $10,837,697
Mutual funds 15,285,086
-----------
$26,122,783
===========
Investments that represent 5% or more of fair value of the Plan's net assets are
as follows:
DECEMBER 31
2003 2002
----------- -----------
**Citizens Banking Corporation Common Stock $43,051,504 $34,788,747
**Golden Oak Prime Obligation Class A 7,631,595 8,901,205
**Golden Oak Intermediate Income Fund 8,154,891 8,370,170
**Golden Oak Small Capital Value Fund 7,116,826 6,063,568
**Invesco Total Return Fund 11,876,986 *
Janus Advisor International Retirement Class Fund 6,898,991 *
**Invesco Balanced Fund * 12,477,960
* 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.
CB Capital Management, Inc., 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 GOLDEN OAK GOLDEN OAK
BANKING PRIME VALUE GOLDEN OAK GOLDEN OAK GOLDEN OAK GOLDEN OAK
CORP. COMMON OBLIGATION PORTFOLIO DIVERSIFIED INTERMEDIATE SMALL INTERNATIONAL
STOCK CLASS A FUND GROWTH FUND INCOME FUND CAPITAL FUND EQUITY FUND
------------ ----------- ---------- ----------- ------------ ------------ -------------
Balance at January 1, 2002 $29,991,107 $ 9,602,156 $8,607,177 $12,316,305 $6,682,159 $6,217,107 $428,099
Purchases in 2002 5,683,738 9,352,090 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
Purchases in 2003 6,065,113 8,444,682 835,526 2,810,417 2,017,949 1,203,455 748,742
Sales in 2003 6,776,294 9,847,541 1,927,801 4,174,964 2,147,511 2,260,022 627,023
----------- ----------- ---------- ----------- ---------- ------------ ---------
Balance at December 31,
2003 $26,376,388 $ 7,498,346 $6,830,071 $ 8,953,190 $7,754,988 $6,376,529 $983,936
=========== =========== ========== =========== ========== ============ =========
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated August 20, 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. Subsequent to determination by the Internal Revenue Service, the
Plan was amended. 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, as amended, 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
2003 2002
-------------- --------------
Assets available for benefits per the
financial statements $ 136,868,346 $ 113,943,654
Amounts allocated to withdrawn participants (1,491,324) (59,422)
-------------- --------------
Net assets available for benefits per the
Form 5500 $ 135,377,022 $ 113,884,232
============== ==============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
YEAR ENDED
DECEMBER 31,
2003
------------
Benefits paid to participants per the financial statements $ 15,333,106
Add: Amounts allocated on Form 5500 to withdrawn participants at
December 31, 2003 1,491,324
Less: Amounts allocated on Form 5500 to withdrawn participants at
December 31, 2002 (59,422)
------------
Benefits paid to participants per the Form 5500 $ 16,765,008
============
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
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
Notes to Financial Statements(continued)
6. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements of
assets available for benefits.
9
SUPPLEMENTAL SCHEDULE
Citizens Banking Corporation Amended
and Restated Section 401(k) Plan
EIN: 38-2378932 Plan Number: 002
Schedule H, Line 4i -- Schedule of Assets (Held at End of Year)
December 31, 2003
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 1,315,755 Shares $ 43,051,504
-------------
Total Common Stock $ 43,051,504
Mutual Funds:
*Golden Oak Diversified Growth Fund 720,441 Units $ 5,662,670
*Golden Oak Intermediate Income Fund 782,619 Units 8,154,891
*Golden Oak Value Portfolio Fund 768,356 Units 6,523,342
*Golden Oak Small Capital Fund 607,756 Units 7,116,826
*Golden Oak International Equity Fund 146,471 Units 1,121,966
AIM Mid-Cap Equity Fund 100,027 Units 2,692,725
American Balanced Fund 164,564 Units 2,845,314
American Growth Fund 270,603 Units 6,640,595
American Washington Mutual Investors Fund 63,678 Units 1,832,653
Fidelity Advisor Mortgage Securities Fund 374,081 Units 4,197,193
Fidelity Advisor Small Cap Fund T 43,918 Units 875,726
*Invesco Small Company Growth Fund 463,809 Units 5,157,560
*Invesco Total Return Fund 496,115 Units 11,876,986
Janus Mid-Cap Value Investor Fund 192,516 Units 3,925,395
Janus Advisor International Retirement Class
Fund 284,260 Units 6,898,991
State Street Global Advisors S&P 500 Index
Fund 353,570 Units 6,491,554
Templeton Foreign Fund 1,019,312
-------------
Total Mutual Funds 95,800 Units $ 83,033,699
Money Market Account:
*Golden Oak Prime Obligation Class A $7,631,595 principal amount $ 7,631,595
-------------
Total Money Market Account $ 7,631,595
*Participant Loans Interest rate range: 5.0% -
10.5%; with various
maturity dates $ 3,151,548
------------- -------------
$ -- $ 136,868,346
============= =============
*Party-in-interest.
Note: Historical cost information is not required for participant directed
investments.
10
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, 2004 /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
16
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 Registered Public Accounting Firm
17