Citizens Republic Bancorp Inc. in Flint. Mich., would need to increase its size by roughly 25% to offset any costs associated with crossing the $10 billion-asset threshold, according to Chief Executive Cathleen Nash.

The company now has $9.5 billion of assets, meaning it is just $500 million away from an entering an asset class that would subject it to lower fees on debit transactions, direct oversight from the new Consumer Financial Protection Bureau and eventual stress tests from federal regulators.

Addressing analysts and investors at a conference in Boston Wednesday, Nash said that she is interested in acquiring banks in Michigan, Ohio and Wisconsin that would fill in gaps in the company's branch network, but added that deals would make sense only if they "substantially" add to the asset base. The company would not only lose significant debit income from crossing the $10 billion mark, it would also have to hire more personnel to deal with the additional regulatory oversight, Nash said.

"You want to consider acquisitions in such a way that offset those additional costs," Nash said at the conference hosted by Keefe, Bruyette & Woods Inc.

While acquisitions are on her radar, Nash said that the company's top priorities for 2012 are recovering a $300 million deferred tax asset stemming from steep losses it suffered on real estate loans; resuming dividend payments on its trust-preferred securities; and examining its options for exiting the Troubled Asset Relief Program.

In her remarks, she also expressed frustration with the Federal Reserve Board for failing to lift an enforcement order against its bank subsidiary, despite its recent performance.

After 12 straight money-losing quarters, Citizens Republic has now made money in each of the last three quarters and, according to Nash, its bank unit is now in full compliance with a memorandum of understanding it signed with the Fed at the height of its troubles. Nash said that Fed officials have acknowledged that the conditions of the order have been met, but that process of lifting it is now stuck in what she called a "bureaucratic loop."

Nash said she has voiced her displeasure with the delay to Fed officials.

"We are reticent to leave the Fed," Nash said at the conference Wednesday, "but [lifting the order] is a big deal to us and we're going to push this thing as hard as we can."

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