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CITIZENS ADOPTS POSTRETIREMENT BENEFIT ACCOUNTING (SFAS 106), RESTRUCTURES LEASING COMPANY

 FLINT, Mich., Dec. 2 ~PRNewswire~ -- Charles R. Weeks, president and chief executive officer, Citizens Banking Corporation (NASDAQ-NMS: CBCF), stated that the corporation will adopt the Financial Accounting Standards Board Statement No. 106 ("SFAS 106") "Employers' Accounting for Postretirement Benefits Other Than Pensions" during the fourth quarter of 1992.
 SFAS 106 requires accrual of the expected costs of retiree benefits such as payments for medical and life insurance over the periods that employees render service rather than as benefits are paid during retirement ("cash basis"), as is the present practice. Upon adoption, the accumulated obligation for accrued postretirement benefits ("transition obligation") of $19,600,000 ($12,900,000 after income taxes) will be recognized immediately as the cumulative effect of an accounting change. In accordance with applicable accounting principles, the transition obligation will be recorded as if it occurred in the first quarter of 1992. In addition, a provision for an increase in employee benefits costs of approximately $800,000 after income taxes will be recorded in 1992 to recognize the difference between the periodic service cost as provided for by SFAS 106 and the "cash basis" expense recorded under the previous practice. For 1993 the net annual periodic postretirement benefit expense to be recorded pursuant to SFAS 106 is expected to be approximately $400,000 after income taxes, a net after-tax reduction of $100,000 from 1992 "cash basis" expense.
 Current retiree benefit plans provide for nearly 100 percent coverage of health care costs for retirees regardless of their age upon retirement. Due to escalating health care costs, a new benefit plan will be in effect for employees that elect to retire after Jan. 1, 1993. Weeks emphasized that the new plan does not affect present retirees. The new retiree benefit plan will provide a partial benefit subsidy for employees that retire at normal retirement age after Jan. 1, 1993, and meet certain minimum age and credited service requirements.
 In accordance with generally accepted accounting principles this modification in benefit plans will be recorded in the fourth quarter of 1992 as a partial plan curtailment gain of $4,500,000 ($2,900,000 after income taxes). However, regardless of the amount of corporate subsidy provided, future retirees will be eligible to participate in the company's group medical plan at their own cost. Weeks further stated that the corporation's 401-K plan will be enhanced to afford an opportunity for active staff members to provide for health care benefits after retirement through a savings plan to which the corporation contributes during their working career. The total charge to earnings for the full year 1992 resulting from the adoption of SFAS 106 and retiree benefit plan modifications will total approximately $10,800,000 after income taxes, or $1.65 per share.
 The corporation also expects to take an after-tax charge of approximately $950,000, or $0.14 per share, for a restructuring at its leasing subsidiary. The corporation plans to close certain offices of its leasing subsidiary, and significantly scale back its operations. This subsidiary, a start up begun in March 1989, has been adversely impacted since its inception by changes in tax law and the recent faltering economy. As a result, the leasing subsidiary has not achieved anticipated profitability levels. The restructuring charge represents a provision for the cost of closing offices, severance compensation and the write down of goodwill and business-related assets. None of the restructuring charge is attributed to a charge off for assets in the lease portfolio arising from credit quality problems. Leases presently booked will continue to be retained by the corporation.
 Neither the adoption of SFAS 106 nor the restructuring charge is expected to have an adverse impact on the results of continuing operations in future years. The pattern of operating earnings previously reported and shown in the following table is expected to continue.
 Quarter Full
 1 2 3 4 Year
 1991 ACTUAL
 Net income (000) $5,124 $5,188 $5,133 $5,630 $21,075
 Per share $0.78 $0.80 $0.79 $0.86 $3.23
 1992 ACTUAL Projected
 Net income (000) $5,607 $5,346 $5,474 $5,900(a) $22,327(a)
 Per share $0.86 $0.82 $0.84 $0.90(a) $3.41(a)
 1992 AS RESTATED Projected
 Net income
 (loss) (000) ($7,563) $5,081 $5,209 $7,850(b) $10,577(b)
 Per share ($1.16) $0.78 $0.80 $1.20(b) $1.62(b)
 (a) Projected net income before special charges and non-recurring gain.
 (b) Projected net income after special charges and non-recurring gain.
 The earnings for the corporation during the fourth quarter 1992 will be significantly impacted by both the benefit plan curtailment gain and the restructuring charge for the leasing company and to a somewhat lesser extent by the net periodic service cost recorded in accordance with SFAS 106. The net impact upon fourth-quarter income due to those items will be an increase in income after taxes of approximately $1,950,000, or $0.30 per share.
 The company does not anticipate any change in its dividend policy as a result of these non-recurring charges. Citizens paid a regular quarterly cash dividend of $0.35 per share on Nov. 13, 1992. Citizens and its predecessor, Citizens Commercial and Savings Bank, has paid a dividend every year since 1892 except for several years during the Depression of the 1930s. Citizens has a strong capital base and after the effects of the aforementioned charges, will continue to exceed both the required regulatory capital minimum standards and the capital ratios of its peer group as indicated below:
 Capital Ratios Citizens Citizens Peer
 Sept. 30, 1992: Prior to After Regulatory Group
 Restatement Restatement Minimums (6~30~92)
 Equity~assets 9.23 pct 8.65 pct N~A 7.26 pct
 Leverage 8.89 8.32 3.0 pct 7.09
 Risk based:
 Tier 1 13.34 12.46 4.0 11.49
 Total capital 14.55 13.66 8.0 13.11
 Citizens Banking Corporation is the sixth-largest commercial bank holding company headquartered in Michigan and is the parent of Citizens Commercial and Savings Bank of Flint, Second National Bank of Saginaw, Second National Bank of Bay City, State Bank of Standish, Grayling State Bank, Century Life Insurance Company of Michigan, a credit life reinsurance company, and Commercial National Bank of Berwyn, Ill. The corporation's common stock is traded in the over-the-counter market (NASDAQ trading symbol: CBCF).
 -0- 12~2~92
 ~CONTACT: Wayne G. Schaeffer, senior vice president, treasurer and chief financial officer, Citizens Banking Corporation, 313-766-7978~
 (CBCF)


CO: Citizens Banking Corporation ST: Michigan IN: FIN SU: RCN

ML -- DE007 -- 2792 12~02~92 10:02 EST
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Date:Nov 30, 1992
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