Citizens Republic Bancorp (UNKNOWN:CRBC.DL) reported earnings for its third quarter yesterday afternoon, and the mixed results have pushed shares down slightly early this morning. With analysts expecting $0.48 in earnings per share, the bank checked in at $0.37. The bank also used its quarterly earnings release to remind investors of its pending merger with FirstMerit (Nasdaq: FMER), consolidating the Midwest operations of the two banks.

What I was watching
Beyond earnings per share, I was also watching for continued improvement of the bank's balance sheet. One way to measure balance sheet performance is to take a look at the nonperforming assets. These assets represent loans and other similar items that are not generating income for the bank because of nonpayment or other reasons.

Luckily for Citizens Republic, nonperforming assets declined both from the previous quarter and from the third quarter last year, checking in at $86.2 million. This represents a very respectable 1.18% of total loans and a dramatic improvement from the previous quarter.

What to expect going forward
Citizens' merger with FirstMerit may leave other banks out in the cold -- including rumored potential suitor Huntington Bancshares (NASDAQ:HBAN). For Citizens investors, however, the focus should now turn to whether it's time to take the money and run, or hang around to become shareholders of the larger combined bank.

Robert Eberhard has no positions in the stocks mentioned above. Follow him on Twitter where he sometimes actually tweets about financial things. You can also check out his CAPS picks, which have lead him to a score in the high 80s by clicking here.

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