AUDIT COMMITTEE CHARTER





         This charter governs the operations of the audit committee (the

         "Committee") of Citizens Banking Corporation (the "Company"). The

         Committee shall review and reassess the adequacy of this charter at

         least annually and obtain the approval of the Company's board of

         directors for any proposed amendments to this charter. The Committee

         shall be appointed by the board of directors and shall be comprised of

         at least three directors, each of whom shall be determined to be an

         "independent director" pursuant to the applicable rules of The Nasdaq

         Stock Market and the U.S. Securities and Exchange Commission (the

         "SEC"). All committee members shall be financially literate, or shall

         become financially literate within a reasonable period of time after

         appointment to the Committee, and at least one member shall have

         accounting or related financial management expertise based on past

         employment experience, professional certification in accounting or any

         other comparable experience or background. No member may have

         participated in the preparation of the financial statements of the

         Company or any current subsidiary of the Company at any time during the

         past three years.


Statement of Policy


         The Committee shall provide assistance to the board of directors in

         fulfilling their oversight responsibility to the shareholders,

         potential shareholders, the investment community, regulatory agencies

         and others relating to the Company's financial statements and the

         financial reporting process, the systems of internal accounting and

         financial controls, the internal audit function, the annual independent

         audit of the Company's financial statements, and the legal, compliance

         and ethics programs as established by management and the board of

         directors. In so doing, it is the responsibility of the Committee to

         maintain free and open communication between the Committee, the

         independent auditors, the internal auditors and management of the

         Company. In discharging its oversight role, the Committee is empowered

         to investigate any matter brought to its attention with full access to

         all books, records, facilities, and personnel of the Company and the

         power to retain outside counsel, or other experts for this purpose.


Responsibilities and Processes


         The primary responsibility of the Committee is to oversee the Company's

         financial reporting process on behalf of the board of directors and

         report the results of their activities to the board. Management is

         responsible for preparing the Company's financial statements, and the

         independent auditors are responsible for auditing those financial

         statements. The Committee in carrying out its responsibilities believes

         its policies and procedures should remain flexible, in










         order to best react to changing conditions and circumstances. The

         Committee should take the appropriate actions to set the overall

         corporate tone for quality financial reporting, sound business risk

         practices, and ethical behavior.


         The following shall be the principal responsibilities and the recurring

         processes of the Committee in carrying out its responsibilities. The

         responsibilities and processes are set forth as a guide with the

         understanding that the Committee may supplement them as appropriate.


         o    The Committee shall have a clear understanding with management and

              the independent auditors that the independent auditors are

              ultimately accountable to the board of directors and the

              Committee, as representatives of the Company's shareholders. The

              Committee shall have the ultimate authority and responsibility to

              appoint, compensate, oversee, evaluate and, where appropriate,

              replace the independent auditors, and to approve in advance all

              audit services and permissible non-audit services (other than de

              minimus non-audit services as defined under SEC rules) provided by

              the independent auditors. Annually, the Committee shall review and

              recommend to the board the selection of the Company's independent



         o    The Committee shall ensure that the independent auditors prepare

              and deliver annually to the Committee a formal written statement

              delineating all relationships between the independent auditors and

              the Company, consistent with Independent Standards Board Standard

              No. 1; actively engage in dialogue with the independent auditors

              with respect to all relationships or services disclosed in the

              Statement that may impact the independent auditors' objectivity

              and independence; and take, or recommend that the board of

              directors take, appropriate action to satisfy itself of the

              independent auditors' independence.


         o    The Committee shall discuss with the internal auditors and the

              independent auditors the overall scope and plans for their

              respective audits including the adequacy of staffing and

              compensation. Also, the Committee shall discuss with management,

              the internal auditors, and the independent auditors the adequacy

              and effectiveness of the accounting and financial controls,

              including the Company's system to monitor and manage business

              risk, and legal and ethical compliance programs. Further, the

              Committee shall meet separately with the internal auditors and the

              independent auditors, with and without management present, to

              discuss the results of their examinations.


         o    The Committee shall review the interim financial statements with

              management and the independent auditors prior to the filing of the

              Company's Quarterly Report on Form 10-Q. Also, the Committee shall

              discuss the results of the quarterly review and any other matters

              required to be communicated to the Committee by the independent

              auditors under generally accepted auditing standards.










         o    The Committee shall review with management and the independent

              auditors the financial statements to be included in the Company's

              Annual Report on Form 10-K (or the annual report to shareholders

              if distributed prior to the filing of Form 10-K), including their

              judgment about the quality, not just the acceptability, of

              accounting principles, the reasonableness of significant

              judgments, and the clarity of the disclosures in the financial

              statements. Also, the Committee shall discuss the results of the

              annual audit and any other matters required to be communicated to

              the Committee by the independent auditors under generally accepted

              auditing standards.


         o    The Committee has been designated by the board of directors as the

              Qualified Legal Compliance Committee of the Company. In this

              capacity, the Committee has the authority to: (i) receive reports

              of evidence of a material violation by the Company or any of its

              officers, directors, employees or agents, of an applicable U.S.

              federal or state securities law, a material breach of a fiduciary

              duty arising under U.S. federal or state law, or similar material

              violation of any U.S. federal or state law; (ii) inform the

              Company's chief legal officer and chief executive officer of any

              report of evidence of a material violation; (iii) determine

              whether an investigation is necessary, and if so, to notify the

              board of directors, initiate an investigation, and retain

              additional expert personnel as necessary; (iv) at the conclusion

              of any such investigation, recommend implementation of an

              "appropriate response" (as defined by rule or regulation of the

              SEC) and inform the chief legal officer and chief executive

              officer of the results of such investigation and the appropriate

              remedial measures to be adopted; and (v) take all other

              appropriate action, including notifying the SEC if the Company

              fails to implement an appropriate response recommended by the



         o    The Committee shall establish procedures for (a) the receipt,

              retention and treatment of complaints received by the Company or

              the Committee regarding accounting, internal accounting controls,

              or auditing matters, and (b) the confidential, anonymous

              submission by employees of the Company of concerns regarding

              accounting or auditing matters.


         The Committee shall also have the following general responsibilities:


         o    Review and approve any related-party transactions required to be

              disclosed in the Company's annual proxy statement pursuant to Item

              404 of SEC Regulation S-K.


         o    Prepare, or assist in the preparation of, the report of the

              Committee required by the SEC for inclusion in the proxy









         o    Oversee compliance with the requirements of the SEC for disclosure

              of auditors' services and Committee members, member qualifications

              and activities.


         o    Determine appropriate compensation for (i) any registered public

              accounting firm engaged for the purpose of rendering or issuing an

              audit report or related work or performing other audit, review or

              attestation services for the Company, and (ii) any independent

              counsel or advisors employed by the Committee. The Company shall

              provide appropriate funding, as determined by the Committee, for

              payment of such compensation as well as for the ordinary expenses

              of the Committee that are necessary or appropriate in carrying out

              its duties.