##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2004
 Commission File Number: 000-24149
 CIB MARINE BANCSHARES, INC.
  Wisconsin
    
    37-1203599(State of incorporation)
    
    (I.R.S. Employer Identification No.)N27 W24025 Paul Court, Pewaukee, Wisconsin
    
    53072(Address of principal executive offices)
    
    (Zip Code)
 (262) 695-6010
 None
  Common Stock, $1.00 Par Value Per Share
 o þ
 þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
    1




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##### 



EXPLANATORY NOTE
  FORM 10-K TABLE OF CONTENTS
  
 PagePart IItem 1
    
     Business
    
    
    3Item 2
    
     Properties
    
    
    19Item 3
    
     Legal Proceedings
    
    
    20Item 4
    
     Submission of Matters to a Vote of Security Holders
    
    
    23Part IIItem 5
    
     Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    23Item 6
    
     Selected Financial Data
    
    
    23Item 7
    
     Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 7A
    
     Quantitative and Qualitative Disclosures About Market Risk
    
    
    65Item 8
    
     Financial Statements and Supplementary Data
    
    
    68Item 9
    
     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    113Item 9A
    
     Controls and Procedures
    
    
    113Item 9B
    
     Other Information
    
    
    115Part IIIItem 10
    
     Directors and Executive Officers of the Registrant
    
    
    115Item 11
    
     Executive Compensation
    
    
    118Item 12
    
     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    120Item 13
    
     Certain Relationships and Related Transactions
    
    
    122Item 14
    
     Principal Accountant Fees and Services
    
    
    122Part IVItem 15
    
     Exhibits and Financial Statement Schedules
    
    
    122Signatures
    
    
    
    
    124SubsidiariesConsent of KPMG LLPCertification of Chief Executive OfficerCertification of Chief Financial OfficerSection 906 Certification of Chief Executive OfficerSection 906 Certification of Chief Financial Officer
  2




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 CIB MARINE
  
    
    Central Illinois Bank, with its main office in Champaign, Illinois;
    
    Marine Bank, with its main office in Wauwatosa, Wisconsin, a suburb of Milwaukee (Marine  Wisconsin);
    
    CIB Bank, with its main office in Indianapolis, Indiana (CIB  Indiana);
    
    Marine Bank, a federal savings bank with its main office in Scottsdale, Arizona (Marine FSB); and
    
    Citrus Bank, N.A., with its main office in Vero Beach, Florida (Citrus Bank).
    Summary of Events
  Delays in Filing Periodic SEC Reports
  January 2003
CIB  Chicago MOU and Credit Concerns Filings
  3




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##### Table of Contents



Fall 2003 Regulatory Examinations
  Independent Review and Investigation
  Announcement of Preliminary 2003 Consolidated Financial Results and Restatement of Previously
Issued Consolidated Financial Statements
   Receivables from Sale of Stock
  4




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##### Table of Contents



Provision for Credit Losses
  Reclassification of Securities
   2002
    
    2001As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    As
    
    Previously
    
    
    
    
    
    AsReported in
    
    
    
    
    
    Restated
    
    Reported in
    
    
    
    
    
    Restatedthe 2002
    
    
    
    
    
    in the 2003
    
    the 2002
    
    
    
    
    
    in the 200310K
    
    Adjustment
    
    10K
    
    10K
    
    Adjustment
    
    10K(Dollars in thousands, except share data)Selected Income Statement
Accounts:Interest income  loans
    
    $
    178,691
    
    
    $
    (191
    )
    
    $
    178,500
    
    
    $
    174,222
    
    
    $
    (125
    )
    
    $
    174,097Provision for credit losses
    
    
    (35,725
    )
    
    
    (10,785
    )
    
    
    (46,510
    )
    
    
    (12,743
    )
    
    
    (1,652
    )
    
    
    (14,395
    )Net interest income after
provision for credit losses
    
    
    71,132
    
    
    
    (10,976
    )
    
    
    60,156
    
    
    
    74,664
    
    
    
    (1,777
    )
    
    
    72,887Income tax (benefit) expense
    
    
    (6,748
    )
    
    
    4,152
    
    
    
    (2,596
    )
    
    
    (13,989
    )
    
    
    589
    
    
    
    (13,400
    )Income from continuing operations
    
    
    16,433
    
    
    
    (6,824
    )
    
    
    9,609
    
    
    
    26,917
    
    
    
    (1,188
    )
    
    
    25,729EPS-Diluted from continuing
operations
    
    $
    0.89
    
    
    $
    (0.37
    )
    
    $
    0.52
    
    
    $
    1.49
    
    
    $
    (0.07
    )
    
    $
    1.42Selected Balance Sheet Accounts:Total securities
    
    $
    514,003
    
    
    $
    2,741
    
    
    $
    516,744
    
    
    $
    418,357
    
    
    $
    2,150
    
    
    $
    420,507Loans, net of deferred loan fees
    
    
    2,711,943
    
    
    
    (7,937
    )
    
    
    2,704,006
    
    
    
    2,389,482
    
    
    
    (7,437
    )
    
    
    2,382,045Allowance for loan losses
    
    
    (52,369
    )
    
    
    (12,753
    )
    
    
    (65,122
    )
    
    
    (34,078
    )
    
    
    (1,777
    )
    
    
    (35,855
    )Net loans
    
    
    2,659,574
    
    
    
    (20,690
    )
    
    
    2,638,884
    
    
    
    2,355,404
    
    
    
    (9,214
    )
    
    
    2,346,190Retained earnings
    
    
    82,901
    
    
    
    (8,012
    )
    
    
    74,889
    
    
    
    67,270
    
    
    
    (1,188
    )
    
    
    66,082Total stockholders equity
    
    $
    261,801
    
    
    $
    (14,238
    )
    
    $
    247,563
    
    
    $
    237,142
    
    
    $
    (7,317
    )
    
    $
    229,825
 2000
    
    1999As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    As
    
    Previously
    
    
    
    
    
    AsReported
    
    Adjustment
    
    Restated
    
    Reported
    
    Adjustment
    
    Restated(Dollars in thousands)Selected Balance Sheet Accounts:Total securities
    
    $
    505,871
    
    
    $
    729
    
    
    $
    506,600
    
    
    $
    369,988
    
    
    $
    (1,854
    )
    
    $
    368,134Loans, net of deferred loan fees
    
    
    1,831,231
    
    
    
    (5,096
    )
    
    
    1,826,135
    
    
    
    1,455,581
    
    
    
    (4,710
    )
    
    
    1,450,871Net loans
    
    
    1,807,243
    
    
    
    (5,096
    )
    
    
    1,802,147
    
    
    
    1,439,367
    
    
    
    (4,710
    )
    
    
    1,434,657Total stockholders equity
    
    $
    203,367
    
    
    $
    (4,653
    )
    
    $
    198,714
    
    
    $
    169,703
    
    
    $
    (5,832
    )
    
    $
    163,871
 Early Action to Improve CIB Marines Financial Condition
  5




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##### Table of Contents




    
    In December 2003, Michael J. Miller was hired and named Chief Lending Officer of CIB
Marine.
    
    In February 2004, Board Member W. Scott Blake was appointed Chairman of the Board of
CIB Marine, succeeding Donald Trilling who remained on the Board of Directors.
    
    In February 2004, CIB Marine named Margaret A. Incandela as its Chief Credit Officer
replacing Stephen C. Bonnell, who resigned from CIB Marine in March 2004. Ms. Incandela
was hired as CIB Marines Loan Review Manager in October 2003.
    
    In March 2004, CIB  Chicagos President and CEO, and the Senior Loan Officer of that
bank, resigned from their positions.
    
    In April 2004, Stanley J. Calderon was hired and appointed President and CEO of CIB
Marine. He joined the Board of CIB Marine in November 2004. Mr. Calderon replaced J.
Michael Straka, who retired as CIB Marines President and CEO in February 2004 and retired
from all positions and the Board of CIB Marine in April 2004.
    
    In September 2004, Steven C. Hillard was appointed to serve as a Director of the Board
of CIB Marine.
    
    In October 2004, Gary L. Longman was appointed to serve on the Board of CIB Marine and
as Chairman of CIB Marines Audit Committee. The Board has determined that Mr. Longman is
an Audit Committee Financial Expert.
  
    
    Replaced the senior executives in charge of the companys credit function;
    
    Formed an Executive Loan Committee of the holding company to review and approve certain new and renewal loans;
    
    Restructured the Loan Committees of its subsidiary banks;
    
    Prohibited any new or additional loans secured by or for the purpose of purchasing CIB Marine stock;
    
    Enhanced underwriting procedures;
    
    Directed the loan review function to report directly to CIB Marines Board of Directors;
    
    Established an Early Identification/Warning Process to enhance the prompt
identification, evaluation and monitoring of weak credits;
    
    Implemented a loan grade certification program; and
    
    Reinforced procedures with regard to controls over loan collateral in its possession.
 Regulatory Orders and Agreements
  
    
    Maintenance of minimum capital levels;
    
    Restrictions on dividend payments and redemption of shares without prior regulatory approval;
    
    Limitations on asset and loan growth;
    
    Adoption of a comprehensive plan to improve earnings;
    
    Development of a plan to reduce concentrations of credit and loan relationships classified as substandard or doubtful;
    
    Development of a system to correct loan administration deficiencies; and
    
    Development of a plan to correct and prevent violations of banking laws and
regulations related to affiliate transactions.
  Additional Actions to Improve CIB Marines Financial Condition
  6




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
    
    Liquidity Enhancements. CIB Marine improved its liquidity position by deferring
interest payments on $60 million in junior subordinated debentures beginning in February
2004 and increasing investment securities and other liquid assets at the subsidiary
banks. Accrued and unpaid interest on the junior subordinated debentures was $11.5
million and $18.8 million at December 31, 2005 and September 30, 2006, respectively.
    
    Further Reductions in Nonperforming Assets. Beginning in 2004 and continuing into
2006, CIB Marine significantly reduced the level of nonperforming assets as a result of
the sale of CIB  Chicago, aggressive workout strategies and charge-offs. Nonperforming
assets were $58.8 million at December 31, 2004 compared to $195.7 million at December
31, 2003. At December 31, 2005, nonperforming assets were $33.5 million and $21.5
million at September 30, 2006. The allowance for loan losses was $109.9 million at
December 31, 2003, $29.6 million at December 31, 2004, $18.3 million at December 31,
2005 and $19.0 million at September 30, 2006.
    
    Further Reductions in Credit Concentrations. Beginning in 2004 and continuing into
2006, CIB Marine worked with its largest borrowers to significantly reduce the level of
credit concentrations. At December 31, 2003, CIB Marine had fifteen secured borrowing
relationships (loans to one borrower or a related group of borrowers) that exceeded 25%
of stockholders equity as compared to one relationship at December 31, 2004 and
December 31, 2005 and none at September 30, 2006.
    
    Sale of CIB  Chicago. The Board of Directors evaluated a wide range of alternatives
to improve the capital and liquidity position of the company, including the sale of
additional common stock, sale of the company, sale of one or more of the bank
subsidiaries and other asset reduction strategies. An investment banker was hired to
assist in evaluating the financial condition of the company and various strategic
alternatives. Upon evaluation, the Board determined that under the circumstances the
sale of CIB  Chicago, its Chicago banking subsidiary, was the most prudent course of
action for the company and its shareholders. On August 12, 2004, CIB Marine signed an
agreement to sell CIB  Chicago. The sale of CIB  Chicago closed on November 30, 2004.
The final sale price was $67.4 million in cash. CIB Marine used $23.6 million of the
proceeds to repay all indebtedness under its revolving line of credit, injected $15.0
million of new capital into Central Illinois Bank and repaid a $5.4 million short-term
loan from the purchaser. The balance of the proceeds is being utilized to help fund
ongoing operations and to meet the liquidity needs of the parent company. The sale
resulted in a pretax gain for financial statement purposes of approximately $15.6
million. At the time of sale, CIB  Chicago had approximately $1.2 billion in assets and
$1.1 billion in deposits. The total consolidated assets of CIB Marine immediately after
the sale were approximately $1.4 billion. The sale of CIB  Chicago significantly
improved the financial condition of the company. As a result of the sale of CIB 
Chicago, CIB Marine and all of its subsidiary banks currently meet the capital
requirements of the regulatory orders and agreements and are expected to meet their
respective liquidity needs through 2006.
    
    Sale and Wind Down of Nonbank Subsidiaries. During 2004, 2005 and 2006 CIB Marine
divested itself of certain nonbank subsidiaries and commenced the wind down of certain
other nonbank subsidiaries in order to more narrowly focus its resources on its core
commercial and retail banking strategies.
 o
    
    CIB Marine Commercial Finance, LLC. In June 2004, CIB  Chicago sold
substantially all of the assets and operations of its factoring subsidiary, CIB
Marine Commercial Finance, LLC (Commercial Finance). This company was subsequently
dissolved in November 2004.o
    
    Mortgage Services, Inc (MSI). During the third quarter of 2004, CIB Marine
sold substantially all of the assets and operations of Mortgage Services, Inc, its
mortgage banking subsidiary. CIB Marine is in the process of winding down the
remaining affairs, and has incurred certain liabilities with respect to the
operations of this company. These liabilities, totaling $1.8 million, $1.4 million,
and $1.0 million as of December 31, 2004, December 31, 2005, and September 30, 2006,
respectively, include repurchase obligations relative to certain mortgage loans as a
result of external fraud and/or documentation issues, and certain reporting
penalties.o
    
    CIB Marine Capital, LLC. During 2004, 2005, and 2006 CIB Marine continued to
wind down CIB Marine Capital, LLC, its mezzanine lending company. There was $3.4
million, $0.7 million and $0.7 million in loans outstanding at December 31, 2004,
December 31, 2005 and September 30, 2006, respectively.o
    
    Canron. In 2002, CIB Construction LLC, a wholly owned subsidiary of CIB 
Chicago, acquired 84% of Canron, a steel fabrication company in foreclosure. During
2003, Canron commenced a voluntary liquidation and wind down of its affairs. During
2004 and since that date, Canron continued this plan and sold several of its
properties and operations. At December 31, 2004 and December 31, 2005, Canron had
assets of approximately $14.6 million and $6.1 million, respectively and liabilities
of $9.3 million and $3.1 million, respectively. In August 2005, Canron authorized and
began liquidation distributions to its shareholders. Between August 2005 and
September 2006 Canron paid capital distributions to its shareholders, including $3.1
million to its parent company CIB Construction and CIB Construction paid dividends
totaling $4.2 million to CIB Marine, which CIB Marine recorded as a reduction of
investment in CIB Construction.
 7




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##### Table of Contents



o
    
    MICR, Inc. (MICR) In January 2005, CIB Marine retained the services of an
investment banker to assist in the marketing and sale of MICR, a manufacturer of
payment processing systems that was acquired from a borrower in
lieu of foreclosure in 2000. At December 31, 2004, MICR had assets of approximately
$2.7 million and liabilities of approximately $0.9 million. During 2004 and 2003 MICR
generated income before income tax expenses of $1.3 million and $1.1 million,
respectively but impairment write downs of CIB Marines investment in MICR were $1.9
million and $2.0 million, respectively. In November 2005, CIB Marine sold
substantially all of the assets of MICR. No gain or loss was recognized on the sale.
 
    
    Cost Controls and Reduction in Force Program.In June 2004, CIB Marine began an
overall cost cutting program which included restrictions on salaries and hiring, tight
expense controls, and some executive management salary reductions. CIB Marine reduced
its workforce by 34 full time equivalent employees in 2004, 90 in 2005 and an additional
15 during the first nine months of 2006, incurred severance expenses of $0.1 million,
$0.9 million and $0.2 million in those periods, respectively, and trimmed its annual
base pay by a total of $6.3 million by December 31, 2005 and $7.0 million by September
30, 2006 under that program.
    
    Branches Planned for Sale.In 2005, each of CIB Marines subsidiary banks performed
an evaluation of the effectiveness of their respective branch networks and in the fourth
quarter of 2005 twelve branches were actively solicited for sale, one was sold and three
were closed. Four additional branches were sold in June through September of 2006. The
2005 branch activities had a minimal immediate effect on income. Gains on the branch
sales during the first nine months of 2006 were $2.0 million. As of September 30, 2006
CIB Marine had signed agreements to sell an additional three branches.
    
    Charter Consolidation. On March 1, 2006 and August 1, 2006, CIB Marine merged Marine
FSB and CIBIndiana, respectively, into Marine  Wisconsin. CIB Marine may also consider
the consolidation of additional charters in the future as part of its strategy to become
more efficient.
    
    Intangible Assets. By the end of the first quarter of 2007, if all planned branch
sales are consummated per their agreements, CIB Marine will not have any goodwill or
intangible assets on its balance sheet.
    
    Foreclosed Properties. By September 30, 2006, CIB Marine reduced its foreclosed
properties to $0.1 million from $2.9 million at both December 31, 2004 and 2005.
 Additional Plans and Developments
   
    
    Rick Nisbeth as Chairman and CEO of Citrus Bank, in January 2005;
    
    A new President and CEO of Marine FSB was hired in March 2005 and served as President
of Marine  Wisconsins western operations upon the merger of the two banks in March
2006 until his resignation in September, 2006;
    
    Joseph Henderson as President and CEO of Central Illinois Bank in July 2005;
    
    Michael Paoletta was appointed Chief Credit Officer as of January 2006 replacing
Margaret A. Incandela who resigned in December 2005;
    
    John P. Hickey as President and CEO of Marine  Wisconsin in April 2006, replacing
Michael Miller who resigned in February 2006.
  8




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##### Table of Contents



Additional Information
  Markets Served
  Operated
    
    BankingBank
    
    Geographic Market/Region
    
    Since
    
    Facilities
    
    Assets
    
    Deposits(Dollars in millions)Central Illinois Bank
    
    Central Illinois
    
    
    1987
    
    
    
    17
    
    
    $
    685.7
    
    
    $
    586.0Marine  Wisconsin (1)
    
    Milwaukee metropolitan area
    
    
    1997
    
    
    
    7
    
    
    $
    273.8
    
    
    $
    246.4Citrus Bank
    
    Floridas southeastern coast
    
    
    2001
    
    
    
    8
    
    
    $
    189.3
    
    
    $
    169.6CIB  Indiana (1)
    
    Indianapolis metropolitan area
    
    
    1998
    
    
    
    5
    
    
    $
    126.4
    
    
    $
    105.1Marine FSB (1)
    
    Omaha, Phoenix and Las Vegas
    
    
    1999
    
    
    
    4
    
    
    $
    82.0
    
    
    $
    72.3metropolitan areas
 
 (1)
    
    Marine FSB was merged into Marine  Wisconsin on March 1, 2006 and CIB  Indiana
was merged into Marine  Wisconsin on August 1, 2006. In addition, in June 2006,
Marine  Wisconsin sold its Omaha facility, thereby exiting this market. Development of Banking Operations
  Central Illinois
    Chicago Metropolitan Area
   9




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##### Table of Contents



Milwaukee Metropolitan Area
   Indianapolis Metropolitan Area
  Omaha Metropolitan Area
  Florida
  Phoenix Metropolitan Area
  Las Vegas Metropolitan Area
  Operations of Nonbank Subsidiaries
  10




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##### Table of Contents



Mortgage Services, Inc.
  CIB Marine Capital, LLC
  CIB Marine Information Services, Inc.
  MICR, Inc.
  CIB Construction, LLC
  11




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Management Support Services
  Total Employees
  COMPETITION
   SUPERVISION AND REGULATION
 General
     12




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##### Table of Contents



Expansion Activities
  Capital Standards
  
    
    core capital (commonly referred to as Tier 1 capital), which generally includes common
equity, qualifying noncumulative perpetual preferred stock, and for bank holding
companies, a limited amount of qualifying cumulative perpetual preferred stock, and
minority interests in equity accounts of consolidated subsidiaries (including trust
preferred securities, provided that not more than 25% of the qualifying Tier 1 capital
may consist of trust preferred securities), less goodwill and certain other intangible
assets; and
    
    supplementary capital (commonly referred to as Tier 2 capital), which includes, among
other items, perpetual preferred stock not meeting the Tier 1 definition, mandatory
convertible securities, and limited amounts of subordinated debt and reserves for credit
losses.
      13




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Holding Company Obligations
  Safety and Soundness Guidelines
  Prompt Corrective Action
  14




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##### Table of Contents



Dividend Restrictions
   15




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Federal Deposit Insurance
  Restrictions on Affiliate Transactions
    16




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##### Table of Contents



Qualified Thrift Lender
  
    
    the association may not engage in any new activity or make any new investment,
directly or indirectly, unless such activity or investment is permissible for a national
bank;
    
    the branching powers of the association shall be restricted to those of a national bank;
    
    the institution shall not be eligible to obtain any advances from its FHLB; and
    
    payment of dividends by the association shall be subject to the rules regarding payment of dividends by a national bank.
  Community Reinvestment Act and Fair Lending
  Compliance with Consumer Protection Laws
  
    
    require banks to meet the credit needs of their communities;
    
    require banks to disclose credit terms in meaningful and consistent ways;
    
    prohibit discrimination against an applicant in any consumer or business credit transaction;
    
    prohibit discrimination in housing-related lending activities;
    
    require banks to collect and report applicant and borrower data regarding loans for
home purchases or improvement projects;
    
    require lenders to provide borrowers with information regarding the nature and cost of real estate settlements;
    
    prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; and
    
    prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations.
 USA Patriot Act of 2001
  17




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##### Table of Contents



Sarbanes-Oxley Act of 2002
  1934 Exchange Act
  Future Legislation
  AVAILABLE INFORMATION
  FORWARD LOOKING STATEMENTS
   
    
    Adverse changes in CIB Marines loan and investment portfolios;
    
    Changes in the financial condition or operating results of one or more borrowers or
related groups of borrowers or borrowers within a single industry or small geographic
region where CIB Marine has a concentration of credit extended to those borrowers or
related groups or to borrowers within that single industry or small geographic region;
    
    CIB Marines ability to maintain adequate capital;
    
    CIB Marines ability to operate profitably;
    
    CIB Marines ability to originate loans;
    
    CIB Marines ability to comply with regulatory orders and agreements;
    
    The costs and effects of outstanding and/or potential litigation and of unexpected or
adverse outcomes in such litigations;
 18




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##### Table of Contents




    
    CIB Marines ability to bring current its delinquent filings of periodic reports with
the Securities and Exchange Commission and other regulators;
    
    CIB Marines ability to bring current the deferred interest payments on its trust preferred securities;
    
    CIB Marines ability to submit a timely filing of its federal and state income tax returns;
    
    CIB Marines ability to attract and retain key personnel;
    
    CIB Marines ability to attract and retain core deposits;
    
    Adverse changes in business conditions in the banking industry generally and in the
markets in which CIB Marine operates;
    
    Changes in the legislative and regulatory environment which adversely affect CIB Marine;
    
    Changes in accounting policies and practices;
    
    Changes in interest rates and changes in monetary and fiscal policies which could
negatively affect net interest margins, asset valuations and expense expectations;
    
    Increased competition from other financial and nonfinancial institutions;
    
    Adverse changes in the valuation of assets held for disposal and/or additional losses
resulting from operations or disposition thereof;
    
    The competitive impact of technological advances in the banking industry; and
    
    Other risks set forth from time to time in CIB Marines filings with the Securities and Exchange Commission.
  
 ITEM 2. PROPERTIES
  Owned or
    
    Date OpenedLocation
    
    Leased
    
    or AcquiredSUBSIDIARY BANKS (1):CENTRAL ILLINOIS BANK FACILITIESSidney, Illinois
    
    Owned
    
    
    09/87Champaign, Illinois
    
    Owned
    
    
    09/88Urbana, Illinois
    
    Owned
    
    
    03/90Arrowsmith, Illinois
    
    Owned
    
    
    10/91Champaign, Illinois (Midtown)
    
    Owned
    
    
    04/94Rantoul, Illinois
    
    Leased
    
    
    11/94Monticello, Illinois
    
    Leased
    
    
    05/95Danville, Illinois
    
    Owned
    
    
    08/95Decatur, Illinois
    
    Leased
    
    
    10/95Arthur, Illinois
    
    Owned
    
    
    10/96Peoria, Illinois
    
    Leased
    
    
    09/97East Peoria, Illinois
    
    Owned
    
    
    10/97Springfield, Illinois
    
    Leased
    
    
    04/99Lincoln, Illinois
    
    Owned
    
    
    04/00Bloomington, Illinois
    
    Owned
    
    
    10/00Peoria, Illinois (Knoxville)
    
    Leased
    
    
    12/01Peoria, Illinois (Grand Prairie)
    
    Leased
    
    
    04/03MARINE  WISCONSIN FACILITIESCedarburg, Wisconsin
    
    Owned
    
    
    09/97Grafton, Wisconsin
    
    Owned
    
    
    09/97Pewaukee, Wisconsin
    
    Leased
    
    
    02/98Wauwatosa, Wisconsin
    
    Leased
    
    
    05/98Milwaukee, Wisconsin
    
    Leased
    
    
    04/99Franklin, Wisconsin
    
    Leased
    
    
    08/00Brookfield, Wisconsin
    
    Leased
    
    
    09/01CIB  INDIANA FACILITIESIndianapolis, Indiana (Fox Road)
    
    Leased
    
    
    03/98Indianapolis, Indiana (Emerson Way)
    
    Leased
    
    
    09/98Indianapolis, Indiana (Monument Circle)
    
    Leased
    
    
    04/99Indianapolis, Indiana (Rockville Road)
    
    Owned
    
    
    03/00Carmel, Indiana
    
    Leased
    
    
    08/00MARINE FSB FACILITIESOmaha, Nebraska
    
    Leased
    
    
    11/99Scottsdale, Arizona
    
    Leased
    
    
    10/01Henderson, Nevada
    
    Leased
    
    
    01/02Sun City, Arizona
    
    Leased
    
    
    02/04CITRUS BANK FACILITIESVero Beach, Florida
    
    Owned
    
    
    04/90
 19




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##### Table of Contents



Owned or
    
    Date OpenedLocation
    
    Leased
    
    or AcquiredSebastian, Florida
    
    Owned
    
    
    02/93Barefoot Bay, Florida
    
    Owned
    
    
    09/96North Miami Beach, Florida
    
    Leased
    
    
    12/01Sebring, Florida
    
    Leased
    
    
    01/02Biscayne Bay, Florida
    
    Leased
    
    
    04/03Coral Gables, Florida
    
    Leased
    
    
    04/03Boca Raton, Florida
    
    Leased
    
    
    04/03NONBANK SUBSIDIARIES:CIB MARINE BANCSHARES, INC.Champaign, Illinois
    
    Leased
    
    
    10/99
 
 (1)
    
    CIB Marines subsidiary banks are in the
process of evaluating the effectiveness of their respective
branch networks, which may result in the sale or closure of
certain of these branches. See Item 7 Managements Discussion
and Analysis of Financial Condition and Results of Operations 
Subsequent Events  Branch Activities.  Owned or
    
    Date Opened
    
    Date Sold or LeaseLocation
    
    Leased
    
    or Acquired
    
    TerminatedCANRON CORPORATIONRexdale, Ontario
    
    Owned
    
    
    10/02
    
    
    
    4/05MICR, INC.Mukilteo, Washington
    
    Leased
    
    
    10/00
    
    
    
    10/05
  
 ITEM 3. LEGAL PROCEEDINGS
   Dennis Lewis, et al. v. CIB Marine Bancshares, Inc., et al
 20




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##### Table of Contents



21




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##### Table of Contents



22




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
    Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares That May YetTotal Number of
    
    
    Average Price Paid
    
    
    Part of a Publicly
    
    
    be Purchased UnderPeriod
    
    Shares Purchased (1)
    
    
    per Share (2)
    
    
    Announced Plan
    
    
    the PlanOctober 1-31, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    November 1-30, 2004
    
    
    71,000
    
    
    
    4.06
    
    
    
    
    
    
    
    December 1-31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (Fourth Quarter)
    
    
    71,000
    
    
    $
    4.06
    
    
    
    
    
    
    
    
 
 (1)
    
    Includes only shares pledged as collateral and received through collection efforts when the borrowers defaulted on loans.(2)
    
    Valuations reflect the lower of the loan balance or the estimated fair market value of CIB Marines stock at time of acquisition.  
 ITEM 6. SELECTED FINANCIAL DATA
  23




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##### Table of Contents



TOTAL COMPANY-CONTINUING AND DISCONTINUED OPERATIONS:
 Selected Consolidated Financial DataAt or for the Year Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands, except share and per share data)Selected Statements of Operations DataInterest and dividend income
    
    $
    69,979
    
    
    $
    96,663
    
    
    $
    101,868
    
    
    $
    102,344
    
    
    $
    100,228Interest expense
    
    
    37,287
    
    
    
    46,578
    
    
    
    51,079
    
    
    
    60,865
    
    
    
    61,469Net interest income
    
    
    32,692
    
    
    
    50,085
    
    
    
    50,789
    
    
    
    41,479
    
    
    
    38,759Provision for credit losses
    
    
    17,432
    
    
    
    50,506
    
    
    
    19,074
    
    
    
    6,768
    
    
    
    4,541Net interest income after provision for credit losses
    
    
    15,260
    
    
    
    (421
    )
    
    
    31,715
    
    
    
    34,711
    
    
    
    34,218Noninterest income(1)
    
    
    5,001
    
    
    
    6,235
    
    
    
    6,748
    
    
    
    5,314
    
    
    
    2,796Noninterest expense
    
    
    54,650
    
    
    
    53,348
    
    
    
    44,620
    
    
    
    35,042
    
    
    
    29,933Income (loss) from continuing operations before
income taxes
    
    
    (34,389
    )
    
    
    (47,534
    )
    
    
    (6,157
    )
    
    
    4,983
    
    
    
    7,081Income tax expense (benefit)
    
    
    (4,840
    )
    
    
    2,299
    
    
    
    (3,760
    )
    
    
    1,444
    
    
    
    2,274Income (loss) from continuing operations
    
    
    (29,549
    )
    
    
    (49,833
    )
    
    
    (2,397
    )
    
    
    3,539
    
    
    
    4,807Discontinued operations:Pretax income (loss) from discontinued operations
    
    
    16,216
    
    
    
    (91,269
    )
    
    
    17,712
    
    
    
    34,146
    
    
    
    24,654Income tax expense (benefit)
    
    
    4,014
    
    
    
    (3,454
    )
    
    
    6,508
    
    
    
    11,956
    
    
    
    8,790Income (loss) from discontinued operations
    
    
    12,202
    
    
    
    (87,815
    )
    
    
    11,204
    
    
    
    22,190
    
    
    
    15,864Net income (loss)
    
    $
    (17,347
    )
    
    $
    (137,648
    )
    
    $
    8,807
    
    
    $
    25,729
    
    
    $
    20,671Common Share DataBasic earnings (loss) per share:Income (loss) from continuing operations
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )
    
    $
    0.20
    
    
    $
    0.28Discontinued operations
    
    
    0.67
    
    
    
    (4.80
    )
    
    
    0.61
    
    
    
    1.25
    
    
    
    0.91Net income (loss)
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.48
    
    
    $
    1.45
    
    
    $
    1.19Diluted earnings (loss) per share:Income (loss) from continuing operations
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )
    
    $
    0.19
    
    
    $
    0.27Discontinued operations
    
    
    0.67
    
    
    
    (4.80
    )
    
    
    0.60
    
    
    
    1.23
    
    
    
    0.90Net income (loss)
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.47
    
    
    $
    1.42
    
    
    $
    1.17Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value per share
    
    $
    4.83
    
    
    $
    5.94
    
    
    $
    13.52
    
    
    $
    12.86
    
    
    $
    11.30Weighted average shares outstanding  basic
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,167,379
    
    
    
    17,751,752
    
    
    
    17,381,478Weighted average shares outstanding  diluted
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,547,515
    
    
    
    18,083,013
    
    
    
    17,622,964Financial Condition DataTotal assets
    
    $
    1,385,908
    
    
    $
    3,186,237
    
    
    $
    3,650,705
    
    
    $
    2,942,018
    
    
    $
    2,459,298Loans
    
    
    746,615
    
    
    
    2,360,041
    
    
    
    2,704,006
    
    
    
    2,382,045
    
    
    
    1,826,135Allowance for loan losses
    
    
    (29,551
    )
    
    
    (109,872
    )
    
    
    (65,122
    )
    
    
    (35,855
    )
    
    
    (23,988
    )Securities
    
    
    379,024
    
    
    
    637,356
    
    
    
    516,744
    
    
    
    420,507
    
    
    
    506,600Deposits
    
    
    1,178,488
    
    
    
    2,821,218
    
    
    
    2,848,404
    
    
    
    2,269,710
    
    
    
    2,038,093Borrowings, including junior subordinated debentures
and guaranteed trust preferred securities
    
    
    87,916
    
    
    
    200,734
    
    
    
    494,086
    
    
    
    421,870
    
    
    
    204,779Stockholders equity
    
    
    92,892
    
    
    
    108,523
    
    
    
    247,563
    
    
    
    229,825
    
    
    
    198,714Financial Ratios and Other DataPerformance ratios:Net interest margin (2) (9)
    
    
    2.22
    %
    
    
    3.12
    %
    
    
    3.43
    %
    
    
    3.44
    %
    
    
    3.73
    %Net interest spread (3) (9)
    
    
    1.96
    
    
    
    2.81
    
    
    
    3.03
    
    
    
    2.84
    
    
    
    3.05Noninterest income to average assets(4)(9)
    
    
    1.05
    
    
    
    0.54
    
    
    
    0.41
    
    
    
    0.51
    
    
    
    0.35Noninterest expense to average assets (9)
    
    
    3.21
    
    
    
    2.91
    
    
    
    1.99
    
    
    
    1.94
    
    
    
    2.02Efficiency ratio (5) (9)
    
    
    99.37
    
    
    
    81.73
    
    
    
    52.86
    
    
    
    50.08
    
    
    
    51.02Return on average assets (6)
    
    
    (0.62
    )
    
    
    (3.94
    )
    
    
    0.27
    
    
    
    0.97
    
    
    
    0.94Return on average equity (7)
    
    
    (20.06
    )
    
    
    (63.02
    )
    
    
    3.57
    
    
    
    11.89
    
    
    
    11.53Asset quality ratios:Nonaccrual loans, restructured loans and loans 90
days or more past due and still accruing to total
loans
    
    
    8.41
    %
    
    
    6.58
    %
    
    
    1.80
    %
    
    
    1.62
    %
    
    
    1.00
    %Nonperforming assets and loans 90 days or more
past due and still accruing to total assets
    
    
    4.75
    
    
    
    6.15
    
    
    
    1.43
    
    
    
    1.42
    
    
    
    0.81Allowance for loan losses to total loans
    
    
    3.96
    
    
    
    4.66
    
    
    
    2.41
    
    
    
    1.51
    
    
    
    1.31Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or more past
due and still accruing
    
    
    47.08
    
    
    
    70.72
    
    
    
    134.09
    
    
    
    93.16
    
    
    
    130.71Net charge-offs to average loans
    
    
    3.85
    
    
    
    3.81
    
    
    
    0.64
    
    
    
    0.12
    
    
    
    0.10Capital ratios:Total equity to total assets
    
    
    6.70
    %
    
    
    3.41
    %
    
    
    6.78
    %
    
    
    7.81
    %
    
    
    8.08
    %Total risk-based capital ratio
    
    
    17.47
    
    
    
    7.19
    
    
    
    10.01
    
    
    
    10.37
    
    
    
    10.48Tier 1 risk-based capital ratio
    
    
    13.11
    
    
    
    5.03
    
    
    
    8.75
    
    
    
    9.12
    
    
    
    9.40Leverage capital ratio
    
    
    5.63
    
    
    
    4.23
    
    
    
    8.30
    
    
    
    9.01
    
    
    
    8.69Other data:Number of employees (full-time equivalent)(8)
    
    
    482
    
    
    
    898
    
    
    
    844
    
    
    
    685
    
    
    
    612Number of banking facilities
    
    
    41
    
    
    
    57
    
    
    
    52
    
    
    
    49
    
    
    
    45
 24




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##### Table of Contents



(1)
    
    Noninterest income includes pretax gains on investment securities of $3.1 million,
$4.0 million and $0.03 million for the years ended December 31, 2002, 2001 and 2000,
respectively. There were no pretax gains on investment securities in 2004 and 2003.(2)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets. For the years 2003, 2002, 2001 and 2000 the
effective tax rate used to calculate the tax-equivalent basis was 35%. Beginning in 2004, CIB
Marine does not expect to realize all the tax benefits associated with tax-exempt assets due to
the substantial losses incurred in 2004, and as of December 31, 2004, no US federal or
state loss carryback potential remains. Accordingly, the 2004 interest income on tax-exempt
earning assets has not been adjusted to reflect the tax-equivalent basis. If 2004 had been shown
on a tax equivalent basis of 35%, the net interest margin would have been 2.28%.(3)
    
    Net interest spread is the yield on average interest-earning assets less the rate on average
interest-bearing liabilities.(4)
    
    Noninterest income to average assets excludes gains and losses on securities.(5)
    
    The efficiency ratio is noninterest expense divided by the sum of net interest income, on a
tax-equivalent basis, plus noninterest income, excluding gains and losses on securities.(6)
    
    Return on average assets is net income divided by average total assets.(7)
    
    Return on average equity is net income divided by average common equity.(8)
    
    Does not include the employees of Canron and MICR which are companies held for disposal.
These companies had full-time equivalent employees of 37 in 2004, 49 in 2003, 914 in 2002, 40
in 2001 and 42 in 2000.(9)
    
    Ratio is calculated based on the total income/expense and average assets/liabilities for
continuing and discontinued operations.  CIB MARINE  CONTINUING OPERATIONS ONLY:
 Selected Consolidated Financial DataAt or for the Year Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands, except share and per share data)Selected Statements of Operations DataInterest and dividend income
    
    $
    69,979
    
    
    $
    96,663
    
    
    $
    101,868
    
    
    $
    102,344
    
    
    $
    100,228Interest expense
    
    
    37,287
    
    
    
    46,578
    
    
    
    51,079
    
    
    
    60,865
    
    
    
    61,469Net interest income
    
    
    32,692
    
    
    
    50,085
    
    
    
    50,789
    
    
    
    41,479
    
    
    
    38,759Provision for credit losses
    
    
    17,432
    
    
    
    50,506
    
    
    
    19,074
    
    
    
    6,768
    
    
    
    4,541Net interest income after provision for credit losses
    
    
    15,260
    
    
    
    (421
    )
    
    
    31,715
    
    
    
    34,711
    
    
    
    34,218Noninterest income(1)
    
    
    5,001
    
    
    
    6,235
    
    
    
    6,748
    
    
    
    5,314
    
    
    
    2,796Noninterest expense
    
    
    54,650
    
    
    
    53,348
    
    
    
    44,620
    
    
    
    35,042
    
    
    
    29,933Income (loss) from continuing operations before
income taxes
    
    
    (34,389
    )
    
    
    (47,534
    )
    
    
    (6,157
    )
    
    
    4,983
    
    
    
    7,081Income tax expense (benefit)
    
    
    (4,840
    )
    
    
    2,299
    
    
    
    (3,760
    )
    
    
    1,444
    
    
    
    2,274Net (loss) income from continuing operations
    
    $
    (29,549
    )
    
    $
    (49,833
    )
    
    $
    (2,397
    )
    
    $
    3,539
    
    
    $
    4,807Common Share DataEarnings (loss) per shareBasic-Income (loss) from continuing operations
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )
    
    $
    0.20
    
    
    $
    0.28Diluted income (loss) from continuing operations
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )
    
    $
    0.19
    
    
    $
    0.27Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value per share
    
    $
    4.83
    
    
    $
    5.94
    
    
    $
    13.52
    
    
    $
    12.86
    
    
    $
    11.30Weighted average shares outstanding  basic
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,167,379
    
    
    
    17,751,752
    
    
    
    17,381,478Weighted average shares outstanding  diluted
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,547,515
    
    
    
    18,083,013
    
    
    
    17,622,964Financial Condition DataTotal assets
    
    $
    1,371,043
    
    
    $
    1,704,149
    
    
    $
    1,749,064
    
    
    $
    1,479,700
    
    
    $
    1,283,892Loans
    
    
    746,615
    
    
    
    1,231,412
    
    
    
    1,400,964
    
    
    
    1,173,075
    
    
    
    962,471Allowance for loan losses
    
    
    (29,551
    )
    
    
    (54,382
    )
    
    
    (31,756
    )
    
    
    (18,109
    )
    
    
    (12,768
    )Securities
    
    
    379,024
    
    
    
    353,754
    
    
    
    268,523
    
    
    
    227,828
    
    
    
    260,648Deposits
    
    
    1,178,488
    
    
    
    1,515,574
    
    
    
    1,596,253
    
    
    
    1,238,929
    
    
    
    1,127,068Borrowings, including junior subordinated debentures
and guaranteed trust preferred securities
    
    
    87,916
    
    
    
    123,074
    
    
    
    242,403
    
    
    
    162,218
    
    
    
    73,620Stockholders equity
    
    
    92,892
    
    
    
    108,523
    
    
    
    247,563
    
    
    
    229,825
    
    
    
    198,714Financial Ratios and Other DataPerformance Ratios:Net interest margin (2)
    
    
    2.21
    %
    
    
    3.02
    %
    
    
    3.33
    %
    
    
    3.22
    %
    
    
    3.45
    %Net interest spread (3)
    
    
    1.91
    
    
    
    2.70
    
    
    
    2.93
    
    
    
    2.15
    
    
    
    2.83Noninterest income to average assets (4)
    
    
    0.33
    
    
    
    0.35
    
    
    
    0.31
    
    
    
    0.30
    
    
    
    0.23Noninterest expense to average assets
    
    
    3.62
    
    
    
    2.98
    
    
    
    2.78
    
    
    
    2.60
    
    
    
    2.50Efficiency ratio (5)
    
    
    144.99
    
    
    
    92.55
    
    
    
    78.07
    
    
    
    75.01
    
    
    
    69.96Return on average assets (6)
    
    
    (1.15
    )
    
    
    (7.70
    )
    
    
    0.55
    
    
    
    1.91
    
    
    
    1.73Return on average equity (7)
    
    
    (20.06
    )
    
    
    (63.02
    )
    
    
    3.57
    
    
    
    11.89
    
    
    
    11.53Asset Quality Ratios:Nonaccrual, restructured and 90 days or more past
due and still accruing loans to total loans
    
    
    8.41
    %
    
    
    4.56
    %
    
    
    1.67
    %
    
    
    1.39
    %
    
    
    1.19
    %
 25




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##### Table of Contents



Selected Consolidated Financial DataAt or for the Year Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands, except share and per share data)Nonperforming assets and 90 days or more past due
and still accruing loans to total assets
    
    
    4.79
    
    
    
    3.47
    
    
    
    1.50
    
    
    
    1.22
    
    
    
    1.02Allowance for loan losses to total loans
    
    
    3.96
    
    
    
    4.42
    
    
    
    2.27
    
    
    
    1.54
    
    
    
    1.33Allowance for loan losses to nonaccrual,
restructured and 90 days or more past due and
still accruing loans
    
    
    47.08
    
    
    
    96.85
    
    
    
    136.12
    
    
    
    110.02
    
    
    
    111.94Net charge-offs to average loans
    
    
    4.06
    
    
    
    2.04
    
    
    
    0.42
    
    
    
    0.13
    
    
    
    0.15Capital Ratios:Total equity to total assets
    
    
    6.78
    %
    
    
    6.37
    %
    
    
    14.15
    %
    
    
    15.53
    %
    
    
    15.48
    %Total risk-based capital ratio
    
    
    17.47
    
    
    
    7.19
    
    
    
    10.01
    
    
    
    10.37
    
    
    
    10.48Tier 1 risk-based capital ratio
    
    
    13.11
    
    
    
    5.03
    
    
    
    8.75
    
    
    
    9.12
    
    
    
    9.40Leverage capital ratio
    
    
    5.63
    
    
    
    4.23
    
    
    
    8.30
    
    
    
    9.01
    
    
    
    8.69Other Data:Number of employees (full-time equivalent)
    
    
    482
    
    
    
    590
    
    
    
    544
    
    
    
    475
    
    
    
    434Number of banking facilities
    
    
    41
    
    
    
    41
    
    
    
    38
    
    
    
    36
    
    
    
    32
 
 (1)
    
    Noninterest income from continuing operations includes pretax gains on investment securities
of $1.7 million, $1.2 million and $0.03 million for the years ended December 31, 2002, 2001
and 2000, respectively. There were no pretax gains on investment securities in 2004 and 2003.(2)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets. For the years 2003, 2002, 2001 and 2000 the effective tax
rate used to calculate the tax-equivalent basis was 35%. Beginning in 2004, CIB Marine does
not expect to realize all the tax benefits associated with tax-exempt assets due to the
substantial losses incurred in 2004, and as of December 31, 2004 no US federal or
state loss carryback potential remains. Accordingly, the 2004 interest income on tax-exempt
earning assets has not been adjusted to reflect the tax-equivalent basis. If 2004 had been
shown on a tax-equivalent basis of 35%, the net interest margin would have been 2.29%.(3)
    
    Net interest spread is the yield on average interest-earning assets less the rate on average
interest-bearing liabilities.(4)
    
    Noninterest income to average assets excludes gains and losses on securities.(5)
    
    The efficiency ratio is noninterest expense divided by the sum of net interest income, on a
tax-equivalent basis, plus noninterest income, excluding gains and losses on securities.(6)
    
    Return on average assets is net income divided by average total assets.(7)
    
    Return on average equity is net income divided by average common equity. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES
   Allowance for Loan Losses
  Accounting by Creditors for Impairment
of a Loan, Accounting by Creditors for Impairment of a Loan  Income Recognition
and Disclosures. Accounting for Contingencies
 26




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##### Table of Contents



a)
    
    CIB Marines policies and procedures to identify credit downgrades on a
timely basis and establish suitable loan workout plans were not effectively followed;b)
    
    CIB Marine lacked adequate credit procedures to analyze borrowers global
cash flow; andc)
    
    CIB Marine lacked adequate procedures to monitor loan collateral and
valuation on collateral dependent loans.
  Other Investments
  Assets of Companies Held for Sale or Disposal
  27




---



##### Table of Contents



Income Taxes
    INTRODUCTION
  OVERVIEW
    28




---



##### Table of Contents



RESULTS OF OPERATIONS
  Net Income
       Net Interest Income
  29




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##### Table of Contents



TOTAL COMPANY-CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31,2004
    
    
    2003
    
    
    2002Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)AssetsInterest-earning assets (TE):Securities:Taxable
    
    $
    673,100
    
    
    $
    15,535
    
    
    
    2.31
    %
    
    $
    509,944
    
    
    $
    13,622
    
    
    
    2.67
    %
    
    $
    425,602
    
    
    $
    18,284
    
    
    
    4.30
    %Tax-exempt (1)
    
    
    43,022
    
    
    
    1,660
    
    
    
    3.86
    
    
    
    61,646
    
    
    
    3,411
    
    
    
    5.53
    
    
    
    61,270
    
    
    
    3,910
    
    
    
    6.38Total securities
    
    
    716,122
    
    
    
    17,195
    
    
    
    2.40
    
    
    
    571,590
    
    
    
    17,033
    
    
    
    2.98
    
    
    
    486,872
    
    
    
    22,194
    
    
    
    4.56Loans (2)(3):Commercial
    
    
    528,242
    
    
    
    27,251
    
    
    
    5.16
    
    
    
    764,251
    
    
    
    46,076
    
    
    
    6.03
    
    
    
    805,009
    
    
    
    52,960
    
    
    
    6.58Commercial real estate
    
    
    1,289,930
    
    
    
    77,033
    
    
    
    5.97
    
    
    
    1,834,966
    
    
    
    118,272
    
    
    
    6.45
    
    
    
    1,707,594
    
    
    
    122,056
    
    
    
    7.15Consumer
    
    
    37,409
    
    
    
    2,240
    
    
    
    5.99
    
    
    
    52,463
    
    
    
    3,295
    
    
    
    6.28
    
    
    
    61,291
    
    
    
    4,029
    
    
    
    6.57Total loans
    
    
    1,855,581
    
    
    
    106,524
    
    
    
    5.74
    
    
    
    2,651,680
    
    
    
    167,643
    
    
    
    6.32
    
    
    
    2,573,894
    
    
    
    179,045
    
    
    
    6.96Federal funds sold
    
    
    126,717
    
    
    
    1,891
    
    
    
    1.49
    
    
    
    35,775
    
    
    
    466
    
    
    
    1.30
    
    
    
    28,654
    
    
    
    539
    
    
    
    1.88Loans held for sale
    
    
    24,259
    
    
    
    1,484
    
    
    
    6.12
    
    
    
    117,962
    
    
    
    6,281
    
    
    
    5.32
    
    
    
    72,062
    
    
    
    4,137
    
    
    
    5.74Total interest-earning assets (1)
    
    
    2,722,679
    
    
    
    127,094
    
    
    
    4.67
    
    
    
    3,377,007
    
    
    
    191,423
    
    
    
    5.67
    
    
    
    3,161,482
    
    
    
    205,915
    
    
    
    6.51Noninterest-earning assets:Cash and due from banks
    
    
    48,120
    
    
    
    
    
    
    
    
    
    
    
    51,078
    
    
    
    
    
    
    
    
    
    
    
    36,892Premises and equipment
    
    
    26,993
    
    
    
    
    
    
    
    
    
    
    
    29,343
    
    
    
    
    
    
    
    
    
    
    
    27,979Allowance for loan losses
    
    
    (100,286
    )
    
    
    
    
    
    
    
    
    
    
    (94,243
    )
    
    
    
    
    
    
    
    
    
    
    (46,191
    )Receivables from sale of stock
    
    
    (3,775
    )
    
    
    
    
    
    
    
    
    
    
    (7,242
    )
    
    
    
    
    
    
    
    
    
    
    (7,814
    )Accrued interest receivable and other
assets
    
    
    89,312
    
    
    
    
    
    
    
    
    
    
    
    137,012
    
    
    
    
    
    
    
    
    
    
    
    67,722Total noninterest-earning assets
    
    
    60,364
    
    
    
    
    
    
    
    
    
    
    
    115,948
    
    
    
    
    
    
    
    
    
    
    
    78,588Total assets
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955
    
    
    
    
    
    
    
    
    
    
    $
    3,240,070Liabilities and Stockholders EquityInterest-bearing liabilities:Deposits:Interest-bearing demand deposits
    
    $
    85,979
    
    
    $
    994
    
    
    
    1.16
    %
    
    $
    70,731
    
    
    $
    742
    
    
    
    1.05
    %
    
    $
    57,831
    
    
    $
    590
    
    
    
    1.02
    %Money market
    
    
    343,764
    
    
    
    4,981
    
    
    
    1.45
    
    
    
    427,919
    
    
    
    6,993
    
    
    
    1.63
    
    
    
    285,178
    
    
    
    5,829
    
    
    
    2.04Other savings deposits
    
    
    192,847
    
    
    
    2,672
    
    
    
    1.39
    
    
    
    245,781
    
    
    
    4,326
    
    
    
    1.76
    
    
    
    124,189
    
    
    
    2,936
    
    
    
    2.36Time deposits (4)
    
    
    1,674,168
    
    
    
    48,973
    
    
    
    2.93
    
    
    
    1,953,816
    
    
    
    64,316
    
    
    
    3.29
    
    
    
    1,960,349
    
    
    
    76,129
    
    
    
    3.88Total interest-bearing deposits
    
    
    2,296,758
    
    
    
    57,620
    
    
    
    2.51
    
    
    
    2,698,247
    
    
    
    76,377
    
    
    
    2.83
    
    
    
    2,427,547
    
    
    
    85,484
    
    
    
    3.52Borrowings  short-term
    
    
    61,317
    
    
    
    2,364
    
    
    
    3.86
    
    
    
    212,363
    
    
    
    3,449
    
    
    
    1.62
    
    
    
    274,490
    
    
    
    5,958
    
    
    
    2.17Borrowings  long-term (4)
    
    
    37,447
    
    
    
    882
    
    
    
    2.36
    
    
    
    46,771
    
    
    
    1,161
    
    
    
    2.48
    
    
    
    46,396
    
    
    
    1,370
    
    
    
    2.95Junior subordinated debentures and
guaranteed trust preferred securities
    
    
    61,857
    
    
    
    5,710
    
    
    
    9.23
    
    
    
    60,005
    
    
    
    5,198
    
    
    
    8.66
    
    
    
    45,260
    
    
    
    4,523
    
    
    
    9.99Total borrowed funds
    
    
    160,621
    
    
    
    8,956
    
    
    
    5.58
    
    
    
    319,139
    
    
    
    9,808
    
    
    
    3.07
    
    
    
    366,146
    
    
    
    11,851
    
    
    
    3.24Total interest-bearing liabilities
    
    
    2,457,379
    
    
    
    66,576
    
    
    
    2.71
    
    
    
    3,017,386
    
    
    
    86,185
    
    
    
    2.86
    
    
    
    2,793,693
    
    
    
    97,335
    
    
    
    3.48Noninterest-bearing Liabilities:Noninterest-bearing demand deposits
    
    
    185,606
    
    
    
    
    
    
    
    
    
    
    
    206,815
    
    
    
    
    
    
    
    
    
    
    
    173,080Accrued interest and other liabilities
    
    
    53,588
    
    
    
    
    
    
    
    
    
    
    
    50,329
    
    
    
    
    
    
    
    
    
    
    
    26,366Total noninterest-bearing liabilities
    
    
    239,194
    
    
    
    
    
    
    
    
    
    
    
    257,144
    
    
    
    
    
    
    
    
    
    
    
    199,446Stockholders equity
    
    
    86,470
    
    
    
    
    
    
    
    
    
    
    
    218,425
    
    
    
    
    
    
    
    
    
    
    
    246,931Total liabilities and stockholders equity
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955
    
    
    
    
    
    
    
    
    
    
    $
    3,240,070Net interest income and net interest
spread (1)(5)
    
    
    
    
    
    $
    60,518
    
    
    
    1.96
    %
    
    
    
    
    
    $
    105,238
    
    
    
    2.81
    %
    
    
    
    
    
    $
    108,580
    
    
    
    3.03
    %Net interest-earning assets
    
    $
    265,300
    
    
    
    
    
    
    
    
    
    
    $
    359,621
    
    
    
    
    
    
    
    
    
    
    $
    367,789Net interest margin (1)(6)
    
    
    
    
    
    
    
    
    
    
    2.22
    %
    
    
    
    
    
    
    
    
    
    
    3.12
    %
    
    
    
    
    
    
    
    
    
    
    3.43
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    1.11
    %
    
    
    
    
    
    
    
    
    
    
    1.12
    %
    
    
    
    
    
    
    
    
    
    
    1.13
    %
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax-exempt assets due to the substantial losses
incurred in 2004, and as of December 31, 2004, no US federal or state loss carryback
potential remains. Accordingly, 2004 is not presented on a tax-equivalent basis. If 2004 had
been shown on a tax equivalent basis of 35%, the net interest margin would have been 2.28%.(2)
    
    Loan balance totals include nonaccrual loans.(3)
    
    Interest earned on loans includes amortized loan fees of $2.9 million, $10.0 million, and
$9.1 million for the years ended December 31, 2004, 2003 and 2002, respectively.(4)
    
    Interest amounts include the effects of derivatives entered into for interest rate risk
management and accounted for as fair value hedges.(5)
    
    Net interest rate spread is the difference between the average rates on interest-earning
assets and interest-bearing liabilities.(6)
    
    Net interest margin is the ratio of net interest income to average interest-earning assets. 30




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##### Table of Contents



Reconciliation of Net Interest Income
 Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Interest income reported in margin table(1)
    
    $
    127,094
    
    
    $
    191,423
    
    
    $
    205,915Taxable equivalent adjustment  tax-exempt securities
    
    
    
    
    
    
    (651
    )
    
    
    (773
    )Taxable equivalent adjustment  tax-exempt loans
    
    
    
    
    
    
    (672
    )
    
    
    (545
    )Taxable equivalent adjustment  tax-exempt securities-discontinued
    
    
    
    
    
    
    (543
    )
    
    
    (596
    )Interest income included in discontinued operations
    
    
    (57,115
    )
    
    
    (92,894
    )
    
    
    (102,133
    )Interest income as reported in consolidated statements of operations
    
    
    69,979
    
    
    
    96,663
    
    
    
    101,868Interest expense reported in margin table
    
    
    66,576
    
    
    
    86,185
    
    
    
    97,335Interest expense included in discontinued operations
    
    
    (29,289
    )
    
    
    (39,607
    )
    
    
    (46,256
    )Interest expense as reported in consolidated statements of
operations
    
    
    37,287
    
    
    
    46,578
    
    
    
    51,079Net interest income reported in margin table(1)
    
    
    60,518
    
    
    
    105,238
    
    
    
    108,580Tax equivalent adjustment
    
    
    
    
    
    
    (1,866
    )
    
    
    (1,914
    )Net discontinued operations
    
    
    (27,826
    )
    
    
    (53,287
    )
    
    
    (55,877
    )Net interest income from continuing operations, net of
adjustments as reported in consolidated statement of operations
    
    $
    32,692
    
    
    $
    50,085
    
    
    $
    50,789
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax-exempt assets due to the substantial losses
incurred in 2004. Accordingly, 2004 is not presented on a tax-equivalent basis. CIB MARINE  CONTINUING OPERATIONS ONLY:
 Year Ended December 31,2004
    
    
    2003
    
    
    2002Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)AssetsInterest-earning assets (TE):Securities:Taxable
    
    $
    361,455
    
    
    $
    9,062
    
    
    
    2.51
    %
    
    $
    276,535
    
    
    $
    8,022
    
    
    
    2.90
    %
    
    $
    232,495
    
    
    $
    10,627
    
    
    
    4.57
    %Tax-exempt (1)
    
    
    20,060
    
    
    
    866
    
    
    
    4.32
    
    
    
    33,272
    
    
    
    1,859
    
    
    
    5.59
    
    
    
    33,222
    
    
    
    2,208
    
    
    
    6.65Total securities
    
    
    381,515
    
    
    
    9,928
    
    
    
    2.60
    
    
    
    309,807
    
    
    
    9,881
    
    
    
    3.19
    
    
    
    265,717
    
    
    
    12,835
    
    
    
    4.83Loans (2)( 3):Commercial
    
    
    295,138
    
    
    
    15,022
    
    
    
    5.09
    
    
    
    444,560
    
    
    
    26,800
    
    
    
    6.03
    
    
    
    489,833
    
    
    
    32,524
    
    
    
    6.64Commercial real estate
    
    
    696,582
    
    
    
    41,829
    
    
    
    6.00
    
    
    
    884,284
    
    
    
    58,619
    
    
    
    6.63
    
    
    
    751,050
    
    
    
    54,264
    
    
    
    7.23Consumer
    
    
    31,372
    
    
    
    1,860
    
    
    
    5.93
    
    
    
    38,058
    
    
    
    2,395
    
    
    
    6.29
    
    
    
    46,250
    
    
    
    3,110
    
    
    
    6.72Total loans
    
    
    1,023,092
    
    
    
    58,711
    
    
    
    5.74
    
    
    
    1,366,902
    
    
    
    87,814
    
    
    
    6.42
    
    
    
    1,287,133
    
    
    
    89,898
    
    
    
    6.98Federal funds sold
    
    
    70,776
    
    
    
    1,127
    
    
    
    1.59
    
    
    
    23,688
    
    
    
    291
    
    
    
    1.23
    
    
    
    11,330
    
    
    
    453
    
    
    
    4.00Loans held for sale
    
    
    1,612
    
    
    
    213
    
    
    
    13.21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest-earning assets (1)
    
    
    1,476,995
    
    
    
    69,979
    
    
    
    4.74
    
    
    
    1,700,397
    
    
    
    97,986
    
    
    
    5.76
    
    
    
    1,564,180
    
    
    
    103,186
    
    
    
    6.60Noninterest-earning assets:Cash and due from banks
    
    
    32,605
    
    
    
    
    
    
    
    
    
    
    
    32,860
    
    
    
    
    
    
    
    
    
    
    
    21,779Premises and equipment
    
    
    15,910
    
    
    
    
    
    
    
    
    
    
    
    17,191
    
    
    
    
    
    
    
    
    
    
    
    16,296Allowance for loan losses
    
    
    (52,237
    )
    
    
    
    
    
    
    
    
    
    
    (45,222
    )
    
    
    
    
    
    
    
    
    
    
    (23,834
    )Receivables from sale of stock
    
    
    (2,157
    )
    
    
    
    
    
    
    
    
    
    
    (2,199
    )
    
    
    
    
    
    
    
    
    
    
    (1,657
    )Accrued interest receivable and other
assets
    
    
    39,086
    
    
    
    
    
    
    
    
    
    
    
    85,081
    
    
    
    
    
    
    
    
    
    
    
    26,446Total noninterest-earning assets
    
    
    33,207
    
    
    
    
    
    
    
    
    
    
    
    87,711
    
    
    
    
    
    
    
    
    
    
    
    39,030Total assets of continuing operations
    
    
    1,510,202
    
    
    
    
    
    
    
    
    
    
    
    1,788,108
    
    
    
    
    
    
    
    
    
    
    
    1,603,210Assets of companies held for disposal(7)
    
    
    1,272,841
    
    
    
    
    
    
    
    
    
    
    
    1,704,847
    
    
    
    
    
    
    
    
    
    
    
    1,636,860Total assets
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955
    
    
    
    
    
    
    
    
    
    
    $
    3,240,070Liabilities and Stockholders EquityInterest-bearing liabilities:Deposits:Interest-bearing demand deposits
    
    $
    63,291
    
    
    $
    754
    
    
    
    1.19
    %
    
    $
    50,984
    
    
    $
    530
    
    
    
    1.04
    %
    
    $
    42,583
    
    
    $
    482
    
    
    
    1.13
    %Money market
    
    
    293,044
    
    
    
    4,326
    
    
    
    1.48
    
    
    
    368,219
    
    
    
    6,273
    
    
    
    1.70
    
    
    
    215,726
    
    
    
    4,695
    
    
    
    2.18Other savings deposits
    
    
    40,611
    
    
    
    501
    
    
    
    1.23
    
    
    
    28,161
    
    
    
    364
    
    
    
    1.29
    
    
    
    22,641
    
    
    
    273
    
    
    
    1.21Time deposits (4)
    
    
    814,691
    
    
    
    24,154
    
    
    
    2.96
    
    
    
    952,320
    
    
    
    32,289
    
    
    
    3.39
    
    
    
    982,736
    
    
    
    38,036
    
    
    
    3.87Total interest-bearing deposits
    
    
    1,211,637
    
    
    
    29,735
    
    
    
    2.45
    
    
    
    1,399,684
    
    
    
    39,456
    
    
    
    2.82
    
    
    
    1,263,686
    
    
    
    43,486
    
    
    
    3.44Borrowings  short-term
    
    
    32,065
    
    
    
    1,325
    
    
    
    4.13
    
    
    
    45,165
    
    
    
    1,116
    
    
    
    2.47
    
    
    
    65,101
    
    
    
    2,209
    
    
    
    3.39Borrowings  long-term (4)
    
    
    10,060
    
    
    
    517
    
    
    
    5.14
    
    
    
    15,750
    
    
    
    808
    
    
    
    5.13
    
    
    
    16,629
    
    
    
    861
    
    
    
    5.18Junior subordinated debentures and
guaranteed trust preferred securities
    
    
    61,857
    
    
    
    5,710
    
    
    
    9.23
    
    
    
    60,005
    
    
    
    5,198
    
    
    
    8.66
    
    
    
    45,260
    
    
    
    4,523
    
    
    
    9.99Total borrowed funds
    
    
    103,982
    
    
    
    7,552
    
    
    
    7.26
    
    
    
    120,920
    
    
    
    7,122
    
    
    
    5.89
    
    
    
    126,990
    
    
    
    7,593
    
    
    
    5.98Total interest-bearing liabilities
    
    
    1,315,619
    
    
    
    37,287
    
    
    
    2.83
    
    
    
    1,520,604
    
    
    
    46,578
    
    
    
    3.06
    
    
    
    1,390,676
    
    
    
    51,079
    
    
    
    3.67Noninterest-bearing liabilities:Noninterest-bearing demand deposits
    
    
    124,108
    
    
    
    
    
    
    
    
    
    
    
    130,918
    
    
    
    
    
    
    
    
    
    
    
    99,155Accrued interest and other liabilities
    
    
    25,495
    
    
    
    
    
    
    
    
    
    
    
    49,255
    
    
    
    
    
    
    
    
    
    
    
    8,738Total noninterest-bearing liabilities
    
    
    149,603
    
    
    
    
    
    
    
    
    
    
    
    180,173
    
    
    
    
    
    
    
    
    
    
    
    107,893Liabilities of continuing operations
    
    
    1,465,222
    
    
    
    
    
    
    
    
    
    
    
    1,700,777
    
    
    
    
    
    
    
    
    
    
    
    1,498,569
 31




---



##### Table of Contents



Year Ended December 31,2004
    
    
    2003
    
    
    2002Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)Liabilities of companies held for disposal
    
    
    1,231,351
    
    
    
    
    
    
    
    
    
    
    
    1,573,753
    
    
    
    
    
    
    
    
    
    
    
    1,494,570Total liabilities
    
    $
    2,696,573
    
    
    
    
    
    
    
    
    
    
    $
    3,274,530
    
    
    
    
    
    
    
    
    
    
    $
    2,993,139Stockholders equity
    
    
    86,470
    
    
    
    
    
    
    
    
    
    
    
    218,425
    
    
    
    
    
    
    
    
    
    
    
    246,931Total liabilities and stockholders equity
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955
    
    
    
    
    
    
    
    
    
    
    $
    3,240,070Net interest income and net interest
spread (1)(5)
    
    
    
    
    
    $
    32,692
    
    
    
    1.91
    %
    
    
    
    
    
    $
    51,408
    
    
    
    2.70
    %
    
    
    
    
    
    $
    52,107
    
    
    
    2.93
    %Net interest-earning assets
    
    $
    161,376
    
    
    
    
    
    
    
    
    
    
    $
    179,793
    
    
    
    
    
    
    
    
    
    
    $
    173,504Net interest margin (1)(6)
    
    
    
    
    
    
    
    
    
    
    2.21
    %
    
    
    
    
    
    
    
    
    
    
    3.02
    %
    
    
    
    
    
    
    
    
    
    
    3.33
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    1.12
    %
    
    
    
    
    
    
    
    
    
    
    1.12
    %
    
    
    
    
    
    
    
    
    
    
    1.12
    %
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax-exempt assets due to the substantial losses
incurred in 2004, and as of December 31, 2004 no US federal or state loss carryback
potential remains. Accordingly, 2004 is not presented on a tax-equivalent basis. If 2004 had
been shown on a tax-equivalent basis of 35%, the net interest margin would have been 2.29%.(2)
    
    Loan balance totals include nonaccrual loans.(3)
    
    Interest earned on loans includes amortized loan fees of $1.5 million, $4.7 million, and $3.2
million for the years ended December 31, 2004, 2003 and 2002, respectively.(4)
    
    Interest amounts include the effects of derivatives entered into for interest rate risk
management and accounted for as fair value hedges.(5)
    
    Net interest rate spread is the difference between the average rates on interest-earning
assets and interest-bearing liabilities.(6)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets.(7)
    
    Excludes average loans of $1.6 million, $5.0 million and $6.2 million for 2004, 2003 and
2002, respectively, held by CIB-Chicago, which on a consolidated basis are classified as
receivables from sale of stock. See Note 13-Stockholders Equity in Item 8 of this form 10-K
for information on receivables from sale of stock.   TOTAL COMPANY-CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31, 2004 Compared to
    
    
    Year Ended December 31, 2003 Compared toYear Ended December 31, 2003 (2)
    
    
    Year Ended December 31, 2002 (2)Volume
    
    
    Rate
    
    
    Total
    
    
    % Change
    
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    % Change(Dollars in thousands)Interest Income (1)Securities  taxable
    
    $
    3,942
    
    
    $
    (2,029
    )
    
    $
    1,913
    
    
    
    14.04
    %
    
    $
    3,139
    
    
    $
    (7,801
    )
    
    $
    (4,662
    )
    
    
    (25.50
    )%Securities  tax-exempt
    
    
    (875
    )
    
    
    (876
    )
    
    
    (1,751
    )
    
    
    (51.33
    )
    
    
    (92
    )
    
    
    (407
    )
    
    
    (499
    )
    
    
    (12.76
    )Total securities
    
    
    3,067
    
    
    
    (2,905
    )
    
    
    162
    
    
    
    0.95
    
    
    
    3,047
    
    
    
    (8,208
    )
    
    
    (5,161
    )
    
    
    (23.25
    )Commercial
    
    
    (12,831
    )
    
    
    (5,994
    )
    
    
    (18,825
    )
    
    
    (40.86
    )
    
    
    (2,579
    )
    
    
    (4,305
    )
    
    
    (6,884
    )
    
    
    (13.00
    )Commercial real estate
    
    
    (33,061
    )
    
    
    (8,178
    )
    
    
    (41,239
    )
    
    
    (34.87
    )
    
    
    8,701
    
    
    
    (12,485
    )
    
    
    (3,784
    )
    
    
    (3.10
    )Consumer
    
    
    (907
    )
    
    
    (148
    )
    
    
    (1,055
    )
    
    
    (32.02
    )
    
    
    (560
    )
    
    
    (174
    )
    
    
    (734
    )
    
    
    (18.22
    )Total loans (including fees)
    
    
    (46,799
    )
    
    
    (14,320
    )
    
    
    (61,119
    )
    
    
    (36.46
    )
    
    
    5,562
    
    
    
    (16,964
    )
    
    
    (11,402
    )
    
    
    (6.37
    )Federal funds sold
    
    
    1,348
    
    
    
    77
    
    
    
    1,425
    
    
    
    305.79
    
    
    
    116
    
    
    
    (189
    )
    
    
    (73
    )
    
    
    (13.54
    )Loans held for sale
    
    
    (5,614
    )
    
    
    817
    
    
    
    (4,797
    )
    
    
    (76.37
    )
    
    
    2,463
    
    
    
    (319
    )
    
    
    2,144
    
    
    
    51.82Total interest income (1)
    
    
    (47,998
    )
    
    
    (16,331
    )
    
    
    (64,329
    )
    
    
    (33.61
    )
    
    
    11,188
    
    
    
    (25,680
    )
    
    
    (14,492
    )
    
    
    (7.04
    )Interest ExpenseInterest-bearing demand deposits
    
    
    171
    
    
    
    81
    
    
    
    252
    
    
    
    33.96
    
    
    
    135
    
    
    
    17
    
    
    
    152
    
    
    
    25.76Money market
    
    
    (1,276
    )
    
    
    (736
    )
    
    
    (2,012
    )
    
    
    (28.77
    )
    
    
    2,500
    
    
    
    (1,336
    )
    
    
    1,164
    
    
    
    19.97Other savings deposits
    
    
    (832
    )
    
    
    (822
    )
    
    
    (1,654
    )
    
    
    (38.23
    )
    
    
    2,293
    
    
    
    (903
    )
    
    
    1,390
    
    
    
    47.34Time deposits
    
    
    (8,628
    )
    
    
    (6,715
    )
    
    
    (15,343
    )
    
    
    (23.86
    )
    
    
    55
    
    
    
    (11,868
    )
    
    
    (11,813
    )
    
    
    (15.52
    )Total deposits
    
    
    (10,565
    )
    
    
    (8,192
    )
    
    
    (18,757
    )
    
    
    (24.56
    )
    
    
    4,983
    
    
    
    (14,090
    )
    
    
    (9,107
    )
    
    
    (10.65
    )Borrowings  short-term
    
    
    (3,602
    )
    
    
    2,517
    
    
    
    (1,085
    )
    
    
    (31.46
    )
    
    
    (1,265
    )
    
    
    (1,244
    )
    
    
    (2,509
    )
    
    
    (42.11
    )Borrowings  long-term
    
    
    (222
    )
    
    
    (57
    )
    
    
    (279
    )
    
    
    (24.03
    )
    
    
    11
    
    
    
    (220
    )
    
    
    (209
    )
    
    
    (15.26
    )Junior subordinated debentures
and guaranteed trust preferred
securities
    
    
    163
    
    
    
    349
    
    
    
    512
    
    
    
    9.85
    
    
    
    1,335
    
    
    
    (660
    )
    
    
    675
    
    
    
    14.92Total borrowed funds
    
    
    (3,661
    )
    
    
    2,809
    
    
    
    (852
    )
    
    
    (8.69
    )
    
    
    81
    
    
    
    (2,124
    )
    
    
    (2,043
    )
    
    
    (17.24
    )Total interest expense
    
    
    (14,226
    )
    
    
    (5,383
    )
    
    
    (19,609
    )
    
    
    (22.75
    )
    
    
    5,064
    
    
    
    (16,214
    )
    
    
    (11,150
    )
    
    
    (11.46
    )Net interest income (1)
    
    $
    (33,772
    )
    
    $
    (10,948
    )
    
    $
    (44,720
    )
    
    
    (42.49
    )%
    
    $
    6,124
    
    
    $
    (9,466
    )
    
    $
    (3,342
    )
    
    
    (3.08
    )%
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax exempt assets due to the substantial
losses incurred in 2004, and as of December 31, 2004, no US federal or state loss
carryback potential remains. Accordingly, 2004 is not presented on a tax-equivalent basis.(2)
    
    Variances which were not specifically attributable to volume or rate have been
allocated proportionally between volume and rate using absolute values as a basis for the
allocation. Nonaccruing loans were included in the average balances used in determining
yields. 32




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 Year Ended December 31, 2004 Compared to
    
    
    Year Ended December 31, 2003 Compared toYear Ended December 31, 2003 (2)
    
    
    Year Ended December 31, 2002 (2)Volume
    
    
    Rate
    
    
    Total
    
    
    % Change
    
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    % Change(Dollars in thousands)Interest Income (1)Securities  taxable
    
    $
    2,231
    
    
    $
    (1,191
    )
    
    $
    1,040
    
    
    
    12.96
    %
    
    $
    3,949
    
    
    $
    (6,554
    )
    
    $
    (2,605
    )
    
    
    (24.51
    )%Securities  tax-exempt
    
    
    (631
    )
    
    
    (362
    )
    
    
    (993
    )
    
    
    (53.42
    )
    
    
    295
    
    
    
    (644
    )
    
    
    (349
    )
    
    
    (15.81
    )Total securities
    
    
    1,600
    
    
    
    (1,553
    )
    
    
    47
    
    
    
    0.48
    
    
    
    4,244
    
    
    
    (7,198
    )
    
    
    (2,954
    )
    
    
    (23.02
    )Commercial
    
    
    (8,049
    )
    
    
    (3,729
    )
    
    
    (11,778
    )
    
    
    (43.95
    )
    
    
    228
    
    
    
    (5,952
    )
    
    
    (5,724
    )
    
    
    (17.60
    )Commercial real estate
    
    
    (11,632
    )
    
    
    (5,158
    )
    
    
    (16,790
    )
    
    
    (28.64
    )
    
    
    12,589
    
    
    
    (8,234
    )
    
    
    4,355
    
    
    
    8.03Consumer
    
    
    (402
    )
    
    
    (133
    )
    
    
    (535
    )
    
    
    (22.34
    )
    
    
    (214
    )
    
    
    (501
    )
    
    
    (715
    )
    
    
    (22.99
    )Total loans (including fees)
    
    
    (20,083
    )
    
    
    (9,020
    )
    
    
    (29,103
    )
    
    
    (33.14
    )
    
    
    12,603
    
    
    
    (14,687
    )
    
    
    (2,084
    )
    
    
    (2.32
    )Federal funds sold
    
    
    728
    
    
    
    108
    
    
    
    836
    
    
    
    287.29
    
    
    
    353
    
    
    
    (515
    )
    
    
    (162
    )
    
    
    (35.76
    )Loans held for sale
    
    
    213
    
    
    
    
    
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest income (1)
    
    
    (17,542
    )
    
    
    (10,465
    )
    
    
    (28,007
    )
    
    
    (28.58
    )
    
    
    17,200
    
    
    
    (22,400
    )
    
    
    (5,200
    )
    
    
    (5.04
    )Interest ExpenseInterest-bearing demand deposits
    
    
    140
    
    
    
    84
    
    
    
    224
    
    
    
    42.26
    
    
    
    112
    
    
    
    (64
    )
    
    
    48
    
    
    
    9.96Money market
    
    
    (1,178
    )
    
    
    (769
    )
    
    
    (1,947
    )
    
    
    (31.04
    )
    
    
    2,963
    
    
    
    (1,385
    )
    
    
    1,578
    
    
    
    33.61Other savings deposits
    
    
    154
    
    
    
    (17
    )
    
    
    137
    
    
    
    37.64
    
    
    
    90
    
    
    
    1
    
    
    
    91
    
    
    
    33.33Time deposits
    
    
    (4,352
    )
    
    
    (3,783
    )
    
    
    (8,135
    )
    
    
    (25.19
    )
    
    
    3,277
    
    
    
    (9,024
    )
    
    
    (5,747
    )
    
    
    (15.11
    )Total deposits
    
    
    (5,236
    )
    
    
    (4,485
    )
    
    
    (9,721
    )
    
    
    (24.64
    )
    
    
    6,442
    
    
    
    (10,472
    )
    
    
    (4,030
    )
    
    
    (9.27
    )Borrowings  short-term
    
    
    (389
    )
    
    
    598
    
    
    
    209
    
    
    
    18.73
    
    
    
    97
    
    
    
    (1,190
    )
    
    
    (1,093
    )
    
    
    (49.48
    )Borrowings  long-term
    
    
    (292
    )
    
    
    1
    
    
    
    (291
    )
    
    
    (36.01
    )
    
    
    (37
    )
    
    
    (16
    )
    
    
    (53
    )
    
    
    (6.16
    )Junior subordinated debentures
and guaranteed trust preferred
securities
    
    
    
    
    
    
    512
    
    
    
    512
    
    
    
    9.85
    
    
    
    1,335
    
    
    
    (660
    )
    
    
    675
    
    
    
    14.92Total borrowed funds
    
    
    (681
    )
    
    
    1,111
    
    
    
    430
    
    
    
    6.04
    
    
    
    1,395
    
    
    
    (1,866
    )
    
    
    (471
    )
    
    
    (6.20
    )Total interest expense
    
    
    (5,917
    )
    
    
    (3,374
    )
    
    
    (9,291
    )
    
    
    (19.95
    )
    
    
    7,837
    
    
    
    (12,338
    )
    
    
    (4,501
    )
    
    
    (8.81
    )Net interest income (1)
    
    $
    (11,625
    )
    
    $
    (7,091
    )
    
    $
    (18,716
    )
    
    
    (36.41
    )%
    
    $
    9,363
    
    
    $
    (10,062
    )
    
    $
    (699
    )
    
    
    (1.34
    )%
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax exempt assets due to the substantial
losses incurred in 2004, and as of December 31, 2004, no US federal or state loss
carryback potential remains. Accordingly, 2004 is not presented on a tax-equivalent basis.(2)
    
    Variances which were not specifically attributable to volume or rate have been
allocated proportionally between volume and rate using absolute values as a basis for the
allocation. Nonaccruing loans were included in the average balances used in determining
yields. Interest Income
   Interest Expense
   33




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##### Table of Contents



Net Interest Margin/Net Interest Spread
   Provision for Credit Losses
   Noninterest Income
   Noninterest Expense
  
    
    Professional services increased $3.7 million in 2004 as compared to 2003. In October
2003, a Special Review Committee of the Board of Directors of CIB Marine was established
to evaluate credit and other issues which had come to the attention of the Board of
Directors. The committee engaged the assistance of outside advisors, including
independent legal counsel and an external loan review firm, to conduct an independent
investigation of these developments. The investigation was completed in the fourth
quarter of 2004 at a cost of approximately $2.3 million. See Item 1 of this Form 10-K
for further information on this investigation. In early 2004, the Board of Directors
also engaged a consulting firm to
investigate various strategic alternatives to strengthen the capital position of the
company. Professional services costs related to this process were approximately $0.9
million in 2004.
 34




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##### Table of Contents




    
    FDIC and state assessment expenses increased $1.1 million during 2004 as compared to
the same period in 2003. The increase was driven by certain of CIB Marines subsidiary
banks being assigned a higher risk assessment classification by the FDIC in 2004 as
compared to 2003. The change in risk classification was due to credit issues at certain
of these banks as previously noted in the overview discussion.
    
    In 2004, CIB Marine recognized $2.0 million in losses related to the impairment and
sale of other investments, loans and foreclosed properties as compared to $3.2 million
in 2003. During 2003, CIB Marine recognized a $1.2 million market value loss relating to
the unconsolidated interest CIB Marine has in a closely held information services
business as compared to a $0.5 million market value loss on this investment in 2004. In
2003 CIB Marine recognized a $0.7 million impairment loss on interests in limited
partnerships which were sold in the first quarter of 2004 at a loss of $0.2 million.
Additionally, loss on foreclosed properties declined from $1.2 million in 2003 to $0.6
million in 2004. These decreases in losses were partially offset by a $0.6 million loss
on sale of loans in 2004 as compared to none in 2003.
    
    Compensation and employee benefits expense is the largest component of noninterest
expense and represented 52.6% of total noninterest expense for 2004 compared to 58.2%
for 2003. Compensation and employee benefits expense decreased $2.3 million or 7.4% from
$31.1 million in 2003 to $28.8 million in 2004. The decrease in compensation and benefit
expense is primarily due to an overall cost savings program begun by CIB Marine in June
2004. The program included a reduction in force program, restrictions on salaries and
hiring, tight expense controls and some executive management salary reductions. The
total number of full-time equivalent employees of companies included in continuing
operations, excluding MICR, decreased from 590 at December 31, 2003 to 482 at December
31, 2004. The net operating results of MICR, including its compensation expense is
included in other noninterest income. Additionally, CIB Marines total contribution to
its employee 401(k) plan and employee stock ownership plan decreased $0.4 million during
2004 as compared to 2003. In 2003, CIB Marine matched employee contributions to the
401(k) plan up to 1% of compensation and contributed 1% of compensation to the employee
stock ownership plan. During 2004, CIB Marine did not make any contributions to its
employee stock ownership plan, and during the first quarter of 2004, CIB Marine
suspended the matching contribution to the 401(k) plan. In 2005, CIB Marine reinstated
and increased the matching contribution to the 401(k) plan up to 3% of compensation.
  
    
    Compensation and employee benefits expense is the largest component of noninterest
expense and represented 58.2% of total noninterest expense for 2003 compared to 60.9% for
2002. Compensation and employee benefits expense increased $3.9 million, or 14.3%, from
$27.2 million in 2002 to $31.1 million in 2003. The increase in compensation and employee
benefits is the result of a number of factors, including the hiring of personnel to staff
the new banking facilities, the hiring of additional management personnel, and increases
in the salaries of existing personnel. The total number of full-time equivalent
employees, excluding companies held for disposal, increased 8.5% from 544 at December 31,
2002 to 590 at December 31, 2003. The net operating results of MICR, including its
compensation expense, are included in other noninterest income.
    
    In 2003, CIB Marine recognized $3.2 million in losses related to the impairment and
sale of other investments, loans and foreclosed properties as compared to $0.1 million in
2002. The increase was primarily due to $1.7 million market value loss relating to CIB
Marines interests in a closely held information services business and limited
partnerships. There were no impairment losses on these investments during 2002.
Additionally, loss on foreclosed properties increased $1.2 million in 2003 as compared to
2002 primarily due to impairment losses recognized on two foreclosed properties.
    
    Litigation expense decreased $1.7 million from $1.8 million in 2002 to $0.1 million in
2003. The 2002 expense was mainly due to the settlement of two lawsuits related to CIB
Marines commercial lending business. Professional services increased $0.5 million from
$1.8 million in 2002 to $2.3 million 2003 as a result of additional accounting, legal and
consulting fees primarily related to the previously mentioned problems in the loan
portfolio.
 Pretax Loss from Discontinued Operations
 Overview-Discontinued Operations
  35




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##### Table of Contents



Net Interest income-discontinued operations
  DISCONTINUED OPERATIONS:
 Year Ended December 31,2004
    
    
    2003
    
    
    2002(as restated)Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)AssetsInterest-earning assets (TE):Securities:Taxable
    
    $
    311,645
    
    
    $
    6,473
    
    
    
    2.08
    %
    
    $
    233,409
    
    
    $
    5,600
    
    
    
    2.40
    %
    
    $
    193,107
    
    
    $
    7,657
    
    
    
    3.97
    %Tax-exempt (1)
    
    
    22,962
    
    
    
    794
    
    
    
    3.46
    
    
    
    28,374
    
    
    
    1,552
    
    
    
    5.47
    
    
    
    28,048
    
    
    
    1,702
    
    
    
    6.07Total securities
    
    
    334,607
    
    
    
    7,267
    
    
    
    2.17
    
    
    
    261,783
    
    
    
    7,152
    
    
    
    2.73
    
    
    
    221,155
    
    
    
    9,359
    
    
    
    4.23Loans (2, 3):Commercial
    
    
    233,104
    
    
    
    12,229
    
    
    
    5.25
    
    
    
    319,691
    
    
    
    19,276
    
    
    
    6.03
    
    
    
    315,176
    
    
    
    20,436
    
    
    
    6.48Commercial real estate
    
    
    593,348
    
    
    
    35,205
    
    
    
    5.93
    
    
    
    950,682
    
    
    
    59,653
    
    
    
    6.27
    
    
    
    956,544
    
    
    
    67,792
    
    
    
    7.09Consumer
    
    
    6,037
    
    
    
    380
    
    
    
    6.29
    
    
    
    14,405
    
    
    
    900
    
    
    
    6.25
    
    
    
    15,041
    
    
    
    919
    
    
    
    6.11Total loans
    
    
    832,489
    
    
    
    47,814
    
    
    
    5.74
    
    
    
    1,284,778
    
    
    
    79,829
    
    
    
    6.21
    
    
    
    1,286,761
    
    
    
    89,147
    
    
    
    6.93Federal funds sold
    
    
    55,941
    
    
    
    764
    
    
    
    1.37
    
    
    
    12,087
    
    
    
    175
    
    
    
    1.45
    
    
    
    17,324
    
    
    
    86
    
    
    
    0.50Loans held for sale
    
    
    22,647
    
    
    
    1,270
    
    
    
    5.61
    
    
    
    117,962
    
    
    
    6,281
    
    
    
    5.32
    
    
    
    72,062
    
    
    
    4,137
    
    
    
    5.74Total interest-earning assets (1)
    
    
    1,245,684
    
    
    
    57,115
    
    
    
    4.59
    
    
    
    1,676,610
    
    
    
    93,437
    
    
    
    5.57
    
    
    
    1,597,302
    
    
    
    102,729
    
    
    
    6.43Noninterest-earning assets:Cash and due from banks
    
    
    15,515
    
    
    
    
    
    
    
    
    
    
    
    18,218
    
    
    
    
    
    
    
    
    
    
    
    15,113Premises and equipment
    
    
    11,083
    
    
    
    
    
    
    
    
    
    
    
    12,152
    
    
    
    
    
    
    
    
    
    
    
    11,683Allowance for loan losses
    
    
    (48,049
    )
    
    
    
    
    
    
    
    
    
    
    (49,021
    )
    
    
    
    
    
    
    
    
    
    
    (22,357
    )Receivables from sale of stock
    
    
    (1,618
    )
    
    
    
    
    
    
    
    
    
    
    (5,043
    )
    
    
    
    
    
    
    
    
    
    
    (6,157
    )Accrued interest receivable and other
assets
    
    
    50,226
    
    
    
    
    
    
    
    
    
    
    
    51,931
    
    
    
    
    
    
    
    
    
    
    
    41,276Total noninterest-earning assets
    
    
    27,157
    
    
    
    
    
    
    
    
    
    
    
    28,237
    
    
    
    
    
    
    
    
    
    
    
    39,558Total assets
    
    $
    1,272,841
    
    
    
    
    
    
    
    
    
    
    $
    1,704,847
    
    
    
    
    
    
    
    
    
    
    $
    1,636,860Liabilities and Stockholders EquityInterest-bearing liabilities:Deposits:Interest-bearing demand deposits
    
    $
    22,688
    
    
    $
    240
    
    
    
    1.06
    %
    
    $
    19,747
    
    
    $
    212
    
    
    
    1.07
    %
    
    $
    15,248
    
    
    $
    108
    
    
    
    0.71
    %Money market
    
    
    50,720
    
    
    
    655
    
    
    
    1.29
    
    
    
    59,700
    
    
    
    720
    
    
    
    1.21
    
    
    
    69,452
    
    
    
    1,134
    
    
    
    1.63Other savings deposits
    
    
    152,236
    
    
    
    2,171
    
    
    
    1.43
    
    
    
    217,620
    
    
    
    3,962
    
    
    
    1.82
    
    
    
    101,548
    
    
    
    2,663
    
    
    
    2.62Time deposits (4)
    
    
    859,477
    
    
    
    24,819
    
    
    
    2.89
    
    
    
    1,001,496
    
    
    
    32,027
    
    
    
    3.20
    
    
    
    977,613
    
    
    
    38,093
    
    
    
    3.90Total interest-bearing deposits
    
    
    1,085,121
    
    
    
    27,885
    
    
    
    2.57
    
    
    
    1,298,563
    
    
    
    36,921
    
    
    
    2.84
    
    
    
    1,163,861
    
    
    
    41,998
    
    
    
    3.61Borrowings  short-term
    
    
    29,252
    
    
    
    1,039
    
    
    
    3.55
    
    
    
    167,198
    
    
    
    2,333
    
    
    
    1.40
    
    
    
    209,389
    
    
    
    3,749
    
    
    
    1.79Borrowings  long-term (4)
    
    
    27,387
    
    
    
    365
    
    
    
    1.33
    
    
    
    31,021
    
    
    
    353
    
    
    
    1.14
    
    
    
    29,767
    
    
    
    509
    
    
    
    1.71Junior subordinated debentures and
guaranteed trust preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total borrowed funds
    
    
    56,639
    
    
    
    1,404
    
    
    
    2.48
    
    
    
    198,219
    
    
    
    2,686
    
    
    
    1.36
    
    
    
    239,156
    
    
    
    4,258
    
    
    
    1.78Total interest-bearing liabilities
    
    
    1,141,760
    
    
    
    29,289
    
    
    
    2.57
    
    
    
    1,496,782
    
    
    
    39,607
    
    
    
    2.65
    
    
    
    1,403,017
    
    
    
    46,256
    
    
    
    3.30Noninterest-bearing Liabilities:Noninterest-bearing demand deposits
    
    
    61,498
    
    
    
    
    
    
    
    
    
    
    
    75,897
    
    
    
    
    
    
    
    
    
    
    
    73,925Accrued Interest and other liabilities
    
    
    28,093
    
    
    
    
    
    
    
    
    
    
    
    1,074
    
    
    
    
    
    
    
    
    
    
    
    17,628
 36




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##### Table of Contents



Year Ended December 31,2004
    
    
    2003
    
    
    2002(as restated)Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)Total noninterest-bearing liabilities
    
    
    89,591
    
    
    
    
    
    
    
    
    
    
    
    76,971
    
    
    
    
    
    
    
    
    
    
    
    91,553Stockholders equity
    
    
    43,108
    
    
    
    
    
    
    
    
    
    
    
    136,137
    
    
    
    
    
    
    
    
    
    
    
    148,447Receivables from sale of stock
    
    
    (1,618
    )
    
    
    
    
    
    
    
    
    
    
    (5,043
    )
    
    
    
    
    
    
    
    
    
    
    (6,157
    )Total liabilities
    
    $
    1,272,841
    
    
    
    
    
    
    
    
    
    
    $
    1,704,847
    
    
    
    
    
    
    
    
    
    
    $
    1,636,860Net interest income and net interest
spread (1)(5)
    
    
    
    
    
    $
    27,826
    
    
    
    2.02
    %
    
    
    
    
    
    $
    53,830
    
    
    
    2.92
    %
    
    
    
    
    
    $
    56,473
    
    
    
    3.13
    %Net interest-earning assets
    
    $
    103,924
    
    
    
    
    
    
    
    
    
    
    $
    179,828
    
    
    
    
    
    
    
    
    
    
    $
    194,285Net interest margin (1)(6)
    
    
    
    
    
    
    
    
    
    
    2.23
    %
    
    
    
    
    
    
    
    
    
    
    3.21
    %
    
    
    
    
    
    
    
    
    
    
    3.54
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    1.09
    %
    
    
    
    
    
    
    
    
    
    
    1.12
    %
    
    
    
    
    
    
    
    
    
    
    1.14
    %
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax-exempt assets due to the substantial losses
incurred in 2004, and as of December 31, 2004, no US federal or state loss carryback
potential remains. Accordingly, 2004 is not presented on a tax-equivalent basis. If 2004 had
been shown on a tax-equivalent basis of 35%, the net interest margin would have been 2.27%.(2)
    
    Loan balance totals include nonaccrual loans.(3)
    
    Interest earned on loans includes amortized loan fees of $1.4 million, $5.3 million, and $5.9
million for the years ended December 31, 2004, 2003 and 2002, respectively.(4)
    
    Interest amounts include the effects of derivatives entered into for interest rate risk
management and accounted for as fair value hedges.(5)
    
    Net interest rate spread is the difference between the average rates on interest-earning
assets and interest-bearing liabilities.(6)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets.  DISCONTINUED OPERATIONS:
 Year Ended December 31, 2004 Compared to
    
    
    Year Ended December 31, 2003 Compared toYear Ended December 31, 2003 (2)
    
    
    Year Ended December 31, 2002 (2)Volume
    
    
    Rate
    
    
    Total
    
    
    % Change
    
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    % Change(Dollars in thousands)Interest Income (1)Securities  taxable
    
    $
    1,696
    
    
    $
    (823
    )
    
    $
    873
    
    
    
    15.59
    %
    
    $
    3,215
    
    
    $
    (5,272
    )
    
    $
    (2,057
    )
    
    
    (26.86
    )%Securities  tax-exempt
    
    
    (259
    )
    
    
    (499
    )
    
    
    (758
    )
    
    
    (48.84
    )
    
    
    171
    
    
    
    (321
    )
    
    
    (150
    )
    
    
    (8.81
    )Total securities
    
    
    1,437
    
    
    
    (1,322
    )
    
    
    115
    
    
    
    1.61
    
    
    
    3,386
    
    
    
    (5,593
    )
    
    
    (2,207
    )
    
    
    (23.58
    )Commercial
    
    
    (4,762
    )
    
    
    (2,285
    )
    
    
    (7,047
    )
    
    
    (36.56
    )
    
    
    1,625
    
    
    
    (2,785
    )
    
    
    (1,160
    )
    
    
    (5.68
    )Commercial real estate
    
    
    (21,356
    )
    
    
    (3,092
    )
    
    
    (24,448
    )
    
    
    (40.98
    )
    
    
    6,581
    
    
    
    (14,720
    )
    
    
    (8,139
    )
    
    
    (12.01
    )Consumer7
    
    
    (527
    )
    
    
    7
    
    
    
    (520
    )
    
    
    (57.78
    )
    
    
    (19
    )
    
    
    
    
    
    
    (19
    )
    
    
    (2.07
    )Total loans (including fees)
    
    
    (26,645
    )
    
    
    (5,370
    )
    
    
    (32,015
    )
    
    
    (40.10
    )
    
    
    8,187
    
    
    
    (17,505
    )
    
    
    (9,318
    )
    
    
    (10.45
    )Federal funds sold
    
    
    600
    
    
    
    (11
    )
    
    
    589
    
    
    
    336.57
    
    
    
    31
    
    
    
    58
    
    
    
    89
    
    
    
    103.49Loans held for sale
    
    
    (5,332
    )
    
    
    321
    
    
    
    (5,011
    )
    
    
    (79.78
    )
    
    
    2,463
    
    
    
    (319
    )
    
    
    2,144
    
    
    
    51.82Total interest income (1)
    
    
    (29,940
    )
    
    
    (6,382
    )
    
    
    (36,322
    )
    
    
    (38.87
    )
    
    
    14,067
    
    
    
    (23,359
    )
    
    
    (9,292
    )
    
    
    (9.05
    )Interest ExpenseInterest-bearing demand deposits
    
    
    31
    
    
    
    (3
    )
    
    
    28
    
    
    
    13.21
    
    
    
    91
    
    
    
    13
    
    
    
    104
    
    
    
    96.30Money market
    
    
    (113
    )
    
    
    48
    
    
    
    (65
    )
    
    
    (9.03
    )
    
    
    170
    
    
    
    (584
    )
    
    
    (414
    )
    
    
    (36.51
    )Other savings deposits
    
    
    (1,040
    )
    
    
    (751
    )
    
    
    (1,791
    )
    
    
    (45.20
    )
    
    
    2,409
    
    
    
    (1,110
    )
    
    
    1,299
    
    
    
    48.78Time deposits
    
    
    (4,280
    )
    
    
    (2,928
    )
    
    
    (7,208
    )
    
    
    (22.51
    )
    
    
    6,446
    
    
    
    (12,512
    )
    
    
    (6,066
    )
    
    
    (15.92
    )Total deposits
    
    
    (5,402
    )
    
    
    (3,634
    )
    
    
    (9,036
    )
    
    
    (24.47
    )
    
    
    9,116
    
    
    
    (14,193
    )
    
    
    (5,077
    )
    
    
    (12.09
    )Borrowings  short-term
    
    
    (2,961
    )
    
    
    1,667
    
    
    
    (1,294
    )
    
    
    (55.47
    )
    
    
    (145
    )
    
    
    (1,271
    )
    
    
    (1,416
    )
    
    
    (37.77
    )Borrowings  long-term
    
    
    (44
    )
    
    
    56
    
    
    
    12
    
    
    
    3.40
    
    
    
    117
    
    
    
    (273
    )
    
    
    (156
    )
    
    
    (30.65
    )Junior subordinated debentures
and guaranteed trust preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total borrowed funds
    
    
    (3,005
    )
    
    
    1,723
    
    
    
    (1,282
    )
    
    
    (47.73
    )
    
    
    (28
    )
    
    
    (1,544
    )
    
    
    (1,572
    )
    
    
    (36.92
    )Total interest expense
    
    
    (8,407
    )
    
    
    (1,911
    )
    
    
    (10,318
    )
    
    
    (26.05
    )
    
    
    9,088
    
    
    
    (15,737
    )
    
    
    (6,649
    )
    
    
    (14.37
    )Net interest income (1)
    
    $
    (21,533
    )
    
    $
    (4,471
    )
    
    $
    (26,004
    )
    
    
    (48.31
    )%
    
    $
    4,979
    
    
    $
    (7,622
    )
    
    $
    (2,643
    )
    
    
    (4.68
    )%
 
 (1)
    
    Tax-equivalent basis of 35% for 2003 and 2002. In the future, CIB Marine may not realize
all of the tax benefits associated with these tax exempt assets due to the substantial
losses incurred in 2004, and as of December 31, 2004, no US federal or state loss
carryback potential remains. Accordingly, 2004 is not presented on a tax-equivalent basis.(2)
    
    Variances which were not specifically attributable to volume or rate have been
allocated proportionally between volume and rate using absolute values as a basis for the
allocation. Nonaccruing loans were included in the average balances used in determining
yields.  Provision for credit losses-discontinued operations
  37




---



##### Table of Contents



DISCONTINUED OPERATIONS:
 Years Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Balance at beginning of year
    
    $
    55,490
    
    
    $
    33,366
    
    
    $
    17,746
    
    
    $
    11,220
    
    
    $
    6,623Loans charged-off:Commercial:Commercial
    
    
    (22,333
    )
    
    
    (19,896
    )
    
    
    (10,382
    )
    
    
    (1,115
    )
    
    
    (131
    )Factored receivables
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    (11,306
    )
    
    
    (13,775
    )
    
    
    (1,073
    )
    
    
    (99
    )
    
    
    (150
    )Commercial real estate construction
    
    
    (822
    )
    
    
    (39,992
    )
    
    
    
    
    
    
    (86
    )
    
    
    Consumer:Residential real estate
    
    
    (95
    )
    
    
    (147
    )
    
    
    
    
    
    
    
    
    
    
    (16
    )Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    (44
    )
    
    
    (64
    )
    
    
    (8
    )
    
    
    (6
    )
    
    
    (29
    )Total loans charged-off
    
    
    (34,600
    )
    
    
    (73,969
    )
    
    
    (11,463
    )
    
    
    (1,306
    )
    
    
    (326
    )Recoveries of loans charged-off:Commercial:Commercial
    
    
    2,387
    
    
    
    706
    
    
    
    227
    
    
    
    193
    
    
    
    5Factored receivables
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    1,990
    
    
    
    39
    
    
    
    294
    
    
    
    5
    
    
    
    Commercial real estate construction
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer:Residential real estate
    
    
    215
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    8
    
    
    
    
    
    
    
    4
    
    
    
    7
    
    
    
    5Total loan recoveries
    
    
    4,713
    
    
    
    753
    
    
    
    525
    
    
    
    205
    
    
    
    10Net loans charged-off
    
    
    (29,887
    )
    
    
    (73,216
    )
    
    
    (10,938
    )
    
    
    (1,101
    )
    
    
    (316
    )Allowance acquired
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    Allowance on loans sold
    
    
    (38,842
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfer from accrual for unfunded
standby letters of credit for funded
standby letters of credit
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    8,239
    
    
    
    95,340
    
    
    
    26,436
    
    
    
    7,627
    
    
    
    4,913Balance at end of year
    
    $
    
    
    
    $
    55,490
    
    
    $
    33,366
    
    
    $
    17,746
    
    
    $
    11,220Provision for credit losses  discontinued
operationsProvision for loan losses
    
    $
    8,239
    
    
    $
    95,340
    
    
    $
    26,436
    
    
    $
    7,627
    
    
    $
    4,913Provision for losses on unfunded
commitments and standby letters of
credit
    
    
    (1,900
    )
    
    
    14,747
    
    
    
    1,000
    
    
    
    
    
    
    
    Total provision for credit losses
    
    $
    6,339
    
    
    $
    110,087
    
    
    $
    27,436
    
    
    $
    7,627
    
    
    $
    4,913
 Impairment losses-discontinued operations
  Income Taxes
  38




---



##### Table of Contents



FINANCIAL CONDITION
 Overview
   Loans Held for Sale
  Securities
   TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31 (1)2004
    
    
    2003
    
    
    2002Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toAmount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity(Dollars in thousands)Available for saleU.S. Treasuries
    
    $
    
    
    
    
    
    %
    
    $
    20,070
    
    
    
    1.35
    %
    
    $
    10,024
    
    
    
    2.53
    %U.S. government agencies
    
    
    194,164
    
    
    
    2.17
    
    
    
    291,000
    
    
    
    2.03
    
    
    
    145,185
    
    
    
    3.18Obligations of states and political subdivisions
    
    
    15,738
    
    
    
    4.82
    
    
    
    56,816
    
    
    
    5.43
    
    
    
    62,585
    
    
    
    5.97Other notes and bonds
    
    
    350
    
    
    
    6.73
    
    
    
    1,050
    
    
    
    6.27
    
    
    
    1,050
    
    
    
    6.83
 39




---



##### Table of Contents



Year Ended December 31 (1)2004
    
    
    2003
    
    
    2002Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toAmount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity(Dollars in thousands)Corporate commercial paper
    
    
    12,658
    
    
    
    2.48
    
    
    
    7,369
    
    
    
    1.46
    
    
    
    8,300
    
    
    
    1.77Mortgage-backed securities
    
    
    143,005
    
    
    
    3.56
    
    
    
    247,736
    
    
    
    3.26
    
    
    
    271,750
    
    
    
    4.03Federal Home Loan Bank and Federal Reserve Bank
stock
    
    
    13,751
    
    
    
    5.93
    
    
    
    11,131
    
    
    
    6.40
    
    
    
    10,394
    
    
    
    5.97Total securities before market value adjustment
    
    
    379,666
    
    
    
    2.95
    %
    
    
    635,172
    
    
    
    2.87
    %
    
    
    509,288
    
    
    
    4.01
    %Available for sale market value adjustment
    
    
    (642
    )
    
    
    
    
    
    
    2,184
    
    
    
    
    
    
    
    7,456Total securities
    
    $
    379,024
    
    
    
    
    
    
    $
    637,356
    
    
    
    
    
    
    $
    516,744
 
 (1)
    
    Yields to maturity are presented on a tax-equivalent basis for 2003 and 2002. In the
future, CIB Marine may not realize all of the tax benefits associated with tax exempt assets due
to the substantial losses incurred in 2004. Accordingly, 2004 is not presented on a
tax-equivalent basis. CIB MARINE  CONTINUING OPERATIONS ONLY
 Year Ended December 31(1)2004
    
    
    2003
    
    
    2002Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toAmount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity(Dollars in thousands)Available for saleU.S. Treasuries
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %U.S. government agencies
    
    
    194,164
    
    
    
    2.17
    
    
    
    174,119
    
    
    
    1.99
    
    
    
    92,577
    
    
    
    3.25Obligations of states and political subdivisions
    
    
    15,738
    
    
    
    4.82
    
    
    
    23,507
    
    
    
    6.41
    
    
    
    30,817
    
    
    
    6.30Other notes and bonds
    
    
    350
    
    
    
    6.73
    
    
    
    550
    
    
    
    7.23
    
    
    
    550
    
    
    
    7.23Corporate commercial paper
    
    
    12,658
    
    
    
    2.48
    
    
    
    5,286
    
    
    
    1.40
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    143,005
    
    
    
    3.56
    
    
    
    141,353
    
    
    
    3.35
    
    
    
    133,056
    
    
    
    4.30Federal Home Loan Bank and Federal Reserve Bank
stock
    
    
    13,751
    
    
    
    5.93
    
    
    
    7,231
    
    
    
    6.34
    
    
    
    6,780
    
    
    
    5.96Total securities before market value adjustment
    
    
    379,666
    
    
    
    2.95
    %
    
    
    352,046
    
    
    
    2.92
    %
    
    
    263,780
    
    
    
    4.21
    %Available for sale market value adjustment
    
    
    (642
    )
    
    
    
    
    
    
    1,708
    
    
    
    
    
    
    
    4,743Total securities
    
    $
    379,024
    
    
    
    
    
    
    $
    353,754
    
    
    
    
    
    
    $
    268,523
 
 (1)
    
    Yields to maturity are presented on a tax-equivalent basis for 2003 and 2002. In the
future, CIB Marine may not realize all of the tax benefits associated with tax exempt assets due
to the substantial losses incurred in 2004. Accordingly, 2004 is not presented on a
tax-equivalent basis.     40




---



##### Table of Contents



December 31, 20041 Year and Less
    
    
    1 to 5 Years
    
    
    5 to 10 Years
    
    
    Over 10 Years
    
    
    TotalYield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toBalance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity(Dollars in thousands)Available for saleU.S. Treasuries
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %U.S. government agencies
    
    
    155,377
    
    
    
    2.01
    
    
    
    37,721
    
    
    
    2.79
    
    
    
    1,066
    
    
    
    4.54
    
    
    
    
    
    
    
    
    
    
    
    194,164
    
    
    
    2.17Obligations of states and
political subdivisions
    
    
    1,713
    
    
    
    3.46
    
    
    
    9,988
    
    
    
    4.87
    
    
    
    3,497
    
    
    
    5.24
    
    
    
    540
    
    
    
    5.39
    
    
    
    15,738
    
    
    
    4.82Other notes and bonds
    
    
    
    
    
    
    
    
    
    
    350
    
    
    
    6.73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350
    
    
    
    6.73Commercial paper
    
    
    12,658
    
    
    
    2.48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,658
    
    
    
    2.48Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    14,231
    
    
    
    3.74
    
    
    
    31,625
    
    
    
    3.37
    
    
    
    97,149
    
    
    
    3.59
    
    
    
    143,005
    
    
    
    3.56Federal Home Loan Bank
and Federal Reserve Bank
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,751
    
    
    
    5.93
    
    
    
    13,751
    
    
    
    5.93Total securities before
market value adjustment
    
    $
    169,748
    
    
    
    2.06
    %
    
    $
    62,290
    
    
    
    3.36
    %
    
    $
    36,188
    
    
    
    3.59
    %
    
    $
    111,440
    
    
    
    3.89
    %
    
    $
    379,666
    
    
    
    2.95
    %Available for sale market
value adjustment (FAS
115)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (642
    )Total securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    379,024
 Loans
 General.
   TOTAL
COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %(Dollars in thousands)Commercial
    
    $
    193,574
    
    
    
    25.9
    %
    
    $
    708,252
    
    
    
    29.9
    %
    
    $
    928,992
    
    
    
    34.3
    %
    
    $
    913,962
    
    
    
    38.2
    %
    
    $
    626,270
    
    
    
    34.2
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    11,447
    
    
    
    0.5
    
    
    
    6,780
    
    
    
    0.2
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ACommercial real estate
    
    
    404,503
    
    
    
    54.1
    
    
    
    1,184,542
    
    
    
    50.1
    
    
    
    1,157,136
    
    
    
    42.7
    
    
    
    975,904
    
    
    
    40.8
    
    
    
    855,390
    
    
    
    46.8Commercial real estate
construction
    
    
    109,676
    
    
    
    14.7
    
    
    
    363,822
    
    
    
    15.4
    
    
    
    513,804
    
    
    
    18.9
    
    
    
    394,081
    
    
    
    16.5
    
    
    
    282,000
    
    
    
    15.4Residential real estate
    
    
    31,027
    
    
    
    4.1
    
    
    
    85,893
    
    
    
    3.6
    
    
    
    91,577
    
    
    
    3.4
    
    
    
    92,022
    
    
    
    3.9
    
    
    
    36,508
    
    
    
    2.0Home equity loans
    
    
    7,701
    
    
    
    1.0
    
    
    
    12,272
    
    
    
    0.5
    
    
    
    15,100
    
    
    
    0.6
    
    
    
    12,728
    
    
    
    0.5
    
    
    
    16,364
    
    
    
    0.9Consumer loans
    
    
    2,124
    
    
    
    0.3
    
    
    
    3,554
    
    
    
    0.2
    
    
    
    6,032
    
    
    
    0.2
    
    
    
    8,469
    
    
    
    0.4
    
    
    
    18,852
    
    
    
    1.0Receivables from sale of
stock
    
    
    (946
    )
    
    
    (0.1
    )
    
    
    (5,208
    )
    
    
    (0.2
    )
    
    
    (7,937
    )
    
    
    (0.3
    )
    
    
    (7,437
    )
    
    
    (0.3
    )
    
    
    (5,096
    )
    
    
    (0.3
    )Gross loans
    
    
    747,659
    
    
    
    100.0
    %
    
    
    2,364,574
    
    
    
    100.0
    %
    
    
    2,711,484
    
    
    
    100.0
    %
    
    
    2,389,729
    
    
    
    100.0
    %
    
    
    1,830,288
    
    
    
    100.0
    %Deferred loan fees
    
    
    (1,044
    )
    
    
    
    
    
    
    (4,533
    )
    
    
    
    
    
    
    (7,478
    )
    
    
    
    
    
    
    (7,684
    )
    
    
    
    
    
    
    (4,153
    )Total loans
    
    
    746,615
    
    
    
    
    
    
    
    2,360,041
    
    
    
    
    
    
    
    2,704,006
    
    
    
    
    
    
    
    2,382,045
    
    
    
    
    
    
    
    1,826,135Allowance for loan losses
    
    
    (29,551
    )
    
    
    
    
    
    
    (109,872
    )
    
    
    
    
    
    
    (65,122
    )
    
    
    
    
    
    
    (35,855
    )
    
    
    
    
    
    
    (23,988
    )Net loans
    
    $
    717,064
    
    
    
    
    
    
    $
    2,250,169
    
    
    
    
    
    
    $
    2,638,884
    
    
    
    
    
    
    $
    2,346,190
    
    
    
    
    
    
    $
    1,802,147
 CIB MARINE  CONTINUING OPERATIONS ONLY:
 December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %(Dollars in thousands)Commercial
    
    $
    193,574
    
    
    
    25.9
    %
    
    $
    416,323
    
    
    
    33.8
    %
    
    $
    556,754
    
    
    
    39.6
    %
    
    $
    530,226
    
    
    
    45.0
    %
    
    $
    385,392
    
    
    
    39.9
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    404,503
    
    
    
    54.1
    
    
    
    537,791
    
    
    
    43.6
    
    
    
    508,474
    
    
    
    36.2
    
    
    
    396,050
    
    
    
    33.6
    
    
    
    397,234
    
    
    
    41.1Commercial real estate
construction
    
    
    109,676
    
    
    
    14.7
    
    
    
    205,359
    
    
    
    16.6
    
    
    
    263,625
    
    
    
    18.7
    
    
    
    174,856
    
    
    
    14.8
    
    
    
    134,048
    
    
    
    13.9
 41




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##### Table of Contents



December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %(Dollars in thousands)Residential real estate
    
    
    31,027
    
    
    
    4.1
    
    
    
    63,120
    
    
    
    5.1
    
    
    
    60,469
    
    
    
    4.3
    
    
    
    55,607
    
    
    
    4.7
    
    
    
    20,274
    
    
    
    2.1Home equity loans
    
    
    7,701
    
    
    
    1.0
    
    
    
    9,876
    
    
    
    0.8
    
    
    
    10,478
    
    
    
    0.8
    
    
    
    14,103
    
    
    
    1.2
    
    
    
    10,398
    
    
    
    1.1Consumer loans
    
    
    2,124
    
    
    
    0.3
    
    
    
    3,030
    
    
    
    0.2
    
    
    
    5,389
    
    
    
    0.4
    
    
    
    7,824
    
    
    
    0.7
    
    
    
    17,967
    
    
    
    1.9Receivables from sale of
stock
    
    
    (946
    )
    
    
    (0.1
    )
    
    
    (1,530
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross loans
    
    
    747,659
    
    
    
    100.0
    %
    
    
    1,233,969
    
    
    
    100.0
    %
    
    
    1,405,189
    
    
    
    100.0
    %
    
    
    1,178,666
    
    
    
    100.0
    %
    
    
    965,313
    
    
    
    100.0
    %Deferred loan fees
    
    
    (1,044
    )
    
    
    
    
    
    
    (2,557
    )
    
    
    
    
    
    
    (4,225
    )
    
    
    
    
    
    
    (5,591
    )
    
    
    
    
    
    
    (2,842
    )Total loans
    
    
    746,615
    
    
    
    
    
    
    
    1,231,412
    
    
    
    
    
    
    
    1,400,964
    
    
    
    
    
    
    
    1,173,075
    
    
    
    
    
    
    
    962,471Allowance for loan losses
    
    
    (29,551
    )
    
    
    
    
    
    
    (54,382
    )
    
    
    
    
    
    
    (31,756
    )
    
    
    
    
    
    
    (18,109
    )
    
    
    
    
    
    
    (12,768
    )Net loans
    
    $
    717,064
    
    
    
    
    
    
    $
    1,177,030
    
    
    
    
    
    
    $
    1,369,208
    
    
    
    
    
    
    $
    1,154,966
    
    
    
    
    
    
    $
    949,703
 Commercial Loans.
 Factoring Receivables.
 Commercial Real Estate Loans.
 Commercial Real Estate Construction Loans.
 Residential Real Estate Loans.
 Home Equity and Consumer Loans.
 42




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##### Table of Contents



Leveraged Financing.
 Receivables from Sale of Stock.
 Loan Maturities.
 1 year
    
    
    1 to 5
    
    
    Overand less
    
    
    years
    
    
    5 years
    
    
    Total(Dollars in thousands)Commercial
    
    $
    48,632
    
    
    $
    13,320
    
    
    $
    131,622
    
    
    $
    193,574Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    127,409
    
    
    
    5,265
    
    
    
    271,829
    
    
    
    404,503Commercial real estate construction
    
    
    27,951
    
    
    
    
    
    
    
    81,725
    
    
    
    109,676Residential real estate
    
    
    8,623
    
    
    
    892
    
    
    
    21,512
    
    
    
    31,027Home equity loans
    
    
    2,765
    
    
    
    
    
    
    
    4,936
    
    
    
    7,701Consumer loans
    
    
    477
    
    
    
    2
    
    
    
    1,645
    
    
    
    2,124Loans to Purchase stock
    
    
    (946
    )
    
    
    
    
    
    
    
    
    
    
    (946
    )Total gross loans
    
    $
    214,911
    
    
    $
    19,479
    
    
    $
    513,269
    
    
    $
    747,659Sensitivity to changes in interest ratesFixed rates
    
    
    80,840
    
    
    
    18,620
    
    
    
    176,576
    
    
    
    276,036Variable rates
    
    
    134,071
    
    
    
    859
    
    
    
    336,693
    
    
    
    471,623Total gross loans
    
    $
    214,911
    
    
    $
    19,479
    
    
    $
    513,269
    
    
    $
    747,659
 Credit Concentrations
   % ofOutstanding
    
    % of
    
    StockholdersINDUSTRY
    
    Balance
    
    Loans
    
    Equity(Dollars in millions)Commercial Real Estate Developers
    
    $
    221.8
    
    
    
    30
    %
    
    
    239
    %Residential Real Estate Developers
    
    
    108.8
    
    
    
    15
    
    
    
    117Motel and Hotel
    
    
    77.9
    
    
    
    10
    
    
    
    84Manufacturing
    
    
    57.3
    
    
    
    8
    
    
    
    62
 43




---



##### Table of Contents



% ofOutstanding
    
    % of
    
    StockholdersINDUSTRY
    
    Balance
    
    Loans
    
    Equity(Dollars in millions)Retail Trade
    
    
    37.1
    
    
    
    5
    
    
    
    40Health Care Facilities
    
    
    31.4
    
    
    
    4
    
    
    
    34Nursing/Convalescent Homes
    
    
    29.0
    
    
    
    4
    
    
    
    31
 Credit Procedures and Review
  Loan Underwriting.
 Loan Approval.
 Loan Review.
  44




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##### Table of Contents



Allowance for Loan Losses
    TOTAL
COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Years Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Balance at beginning of year
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855
    
    
    $
    23,988
    
    
    $
    16,214Loans charged-off:Commercial:Commercial
    
    
    (53,848
    )
    
    
    (31,011
    )
    
    
    (14,443
    )
    
    
    (1,893
    )
    
    
    (930
    )Factored receivables
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    (21,432
    )
    
    
    (18,115
    )
    
    
    (2,752
    )
    
    
    (660
    )
    
    
    (470
    )Commercial real estate construction
    
    
    (4,487
    )
    
    
    (53,668
    )
    
    
    
    
    
    
    (100
    )
    
    
    Consumer:Residential real estate
    
    
    (95
    )
    
    
    (153
    )
    
    
    (79
    )
    
    
    (74
    )
    
    
    (152
    )Home equity
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    
    
    
    
    Consumer
    
    
    (117
    )
    
    
    (97
    )
    
    
    (155
    )
    
    
    (272
    )
    
    
    (372
    )Total charged-off
    
    
    (79,979
    )
    
    
    (103,139
    )
    
    
    (17,499
    )
    
    
    (2,999
    )
    
    
    (1,924
    )Recoveries of loans charged-off:Commercial:Commercial
    
    
    4,382
    
    
    
    1,830
    
    
    
    757
    
    
    
    357
    
    
    
    59Factored receivables
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    3,796
    
    
    
    155
    
    
    
    294
    
    
    
    39
    
    
    
    20Commercial real estate construction
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer:Residential real estate
    
    
    215
    
    
    
    3
    
    
    
    20
    
    
    
    16
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    Consumer
    
    
    48
    
    
    
    51
    
    
    
    57
    
    
    
    59
    
    
    
    165Total recoveries
    
    
    8,554
    
    
    
    2,043
    
    
    
    1,134
    
    
    
    471
    
    
    
    244Net loans charged-off
    
    
    (71,425
    )
    
    
    (101,096
    )
    
    
    (16,365
    )
    
    
    (2,528
    )
    
    
    (1,680
    )Allowance acquired
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    Allowance on loans sold
    
    
    (38,842
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfer from accrual for unfunded
standby letters of credit for funded
standby letters of credit
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    24,946
    
    
    
    145,846
    
    
    
    45,510
    
    
    
    14,395
    
    
    
    9,454Balance at end of year
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855
    
    
    $
    23,988Ratios
 45




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##### Table of Contents



Years Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Allowance for loan losses to total loans
    
    
    3.96
    %
    
    
    4.66
    %
    
    
    2.41
    %
    
    
    1.51
    %
    
    
    1.31
    %Allowance for loan losses to nonaccrual
loans, restructured loans and loans 90
days or more past due and still
accruing
    
    
    47.08
    
    
    
    70.72
    
    
    
    134.09
    
    
    
    93.16
    
    
    
    130.71Net charge-offs to average loan types:Commercial
    
    
    9.36
    
    
    
    3.83
    
    
    
    1.70
    
    
    
    0.21
    
    
    
    0.15Commercial real estate
    
    
    1.71
    
    
    
    3.90
    
    
    
    0.14
    
    
    
    0.06
    
    
    
    0.04Consumer
    
    
    (0.14
    )
    
    
    0.36
    
    
    
    0.36
    
    
    
    0.39
    
    
    
    0.51Total loans
    
    
    3.85
    
    
    
    3.81
    
    
    
    0.64
    
    
    
    0.12
    
    
    
    0.10Ratio of recoveries to loans charged-off
    
    
    10.70
    
    
    
    1.98
    
    
    
    6.48
    
    
    
    15.71
    
    
    
    12.67Total loans
    
    $
    746,615
    
    
    $
    2,360,041
    
    
    $
    2,704,006
    
    
    $
    2,382,045
    
    
    $
    1,826,135Average total loans
    
    
    1,855,581
    
    
    
    2,651,680
    
    
    
    2,573,894
    
    
    
    2,082,775
    
    
    
    1,664,246Provision for credit losses  total companyProvision for loan loss-continuing
operations
    
    $
    16,707
    
    
    $
    50,506
    
    
    $
    19,074
    
    
    $
    6,768
    
    
    $
    4,541Provision for loan loss-discontinued
operations
    
    
    8,239
    
    
    
    95,340
    
    
    
    26,436
    
    
    
    7,627
    
    
    
    4,913Provision for losses on unfunded
commitments and standby letters of
credit-continuing operations
    
    
    725
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for losses on unfunded
commitments and standby letters of
credit-discontinued operations
    
    
    (1,900
    )
    
    
    14,747
    
    
    
    1,000
    
    
    
    
    
    
    
    Total provision for credit losses
    
    $
    23,771
    
    
    $
    160,593
    
    
    $
    46,510
    
    
    $
    14,395
    
    
    $
    9,454
 CIB MARINE  CONTINUING OPERATIONS ONLY:
 Years Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Balance at beginning of year
    
    $
    54,382
    
    
    $
    31,756
    
    
    $
    18,109
    
    
    $
    12,768
    
    
    $
    9,591Loans charged-off:Commercial:Commercial
    
    
    (31,515
    )
    
    
    (11,115
    )
    
    
    (4,061
    )
    
    
    (778
    )
    
    
    (799
    )Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    (10,126
    )
    
    
    (4,340
    )
    
    
    (1,679
    )
    
    
    (561
    )
    
    
    (320
    )Commercial real estate construction
    
    
    (3,665
    )
    
    
    (13,676
    )
    
    
    
    
    
    
    (14
    )
    
    
    Consumer:Residential real estate
    
    
    
    
    
    
    (6
    )
    
    
    (79
    )
    
    
    (74
    )
    
    
    (136
    )Home equity
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    
    
    
    
    Consumer
    
    
    (73
    )
    
    
    (33
    )
    
    
    (147
    )
    
    
    (266
    )
    
    
    (343
    )Total charged-off
    
    
    (45,379
    )
    
    
    (29,170
    )
    
    
    (6,036
    )
    
    
    (1,693
    )
    
    
    (1,598
    )Recoveries of loans charged-off:Commercial:Commercial
    
    
    1,995
    
    
    
    1,124
    
    
    
    530
    
    
    
    164
    
    
    
    54Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    1,806
    
    
    
    116
    
    
    
    
    
    
    
    34
    
    
    
    20Commercial real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer:Residential real estate
    
    
    
    
    
    
    (1
    )
    
    
    20
    
    
    
    16
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    Consumer
    
    
    40
    
    
    
    51
    
    
    
    53
    
    
    
    52
    
    
    
    160Total recoveries
    
    
    3,841
    
    
    
    1,290
    
    
    
    609
    
    
    
    266
    
    
    
    234Net loans charged-off
    
    
    (41,538
    )
    
    
    (27,880
    )
    
    
    (5,427
    )
    
    
    (1,427
    )
    
    
    (1,364
    )Allowance acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowance on loans sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    16,707
    
    
    
    50,506
    
    
    
    19,074
    
    
    
    6,768
    
    
    
    4,541Balance at end of year
    
    $
    29,551
    
    
    $
    54,382
    
    
    $
    31,756
    
    
    $
    18,109
    
    
    $
    12,768RatiosAllowance for loan losses to total loans
    
    
    3.96
    %
    
    
    4.42
    %
    
    
    2.27
    %
    
    
    1.54
    %
    
    
    1.33
    %Allowance for loan losses to nonaccrual
loans, restructured loans and loans 90
days or more past due and still
accruing
    
    
    47.08
    
    
    
    96.85
    
    
    
    136.12
    
    
    
    110.02
    
    
    
    111.94Net charge-offs to average loans:Commercial
    
    
    10.00
    
    
    
    2.25
    
    
    
    0.72
    
    
    
    0.15
    
    
    
    0.22Commercial real estate
    
    
    1.72
    
    
    
    2.02
    
    
    
    0.24
    
    
    
    0.09
    
    
    
    0.09Consumer
    
    
    0.10
    
    
    
    (0.03
    )
    
    
    0.27
    
    
    
    0.39
    
    
    
    0.24Total loans
    
    
    4.06
    
    
    
    2.04
    
    
    
    0.42
    
    
    
    0.13
    
    
    
    0.15Ratio of recoveries to loans charged-off
    
    
    8.46
    
    
    
    4.42
    
    
    
    10.06
    
    
    
    15.71
    
    
    
    14.64Total loans
    
    $
    746,615
    
    
    $
    1,231,412
    
    
    $
    1,400,964
    
    
    $
    1,173,075
    
    
    $
    962,471Average total loans
    
    
    1,023,092
    
    
    
    1,366,902
    
    
    
    1,287,133
    
    
    
    1,066,812
    
    
    
    900,118
  46




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##### Table of Contents



TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATONS:
 December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofLoans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans inAllowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    eachAmount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category(Dollars in thousands)Commercial
    
    $
    10,080
    
    
    
    5.22
    %
    
    $
    48,504
    
    
    
    6.85
    %
    
    $
    25,937
    
    
    
    2.79
    %
    
    $
    16,631
    
    
    
    1.82
    %
    
    $
    8,742
    
    
    
    1.40
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    355
    
    
    
    3.10
    
    
    
    237
    
    
    
    3.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    16,211
    
    
    
    4.02
    
    
    
    48,813
    
    
    
    4.12
    
    
    
    22,658
    
    
    
    1.96
    
    
    
    11,918
    
    
    
    1.22
    
    
    
    8,616
    
    
    
    1.01Commercial real estate
construction
    
    
    2,258
    
    
    
    2.07
    
    
    
    9,456
    
    
    
    2.60
    
    
    
    11,012
    
    
    
    2.14
    
    
    
    3,981
    
    
    
    1.01
    
    
    
    2,006
    
    
    
    0.71Residential real estate
    
    
    871
    
    
    
    2.82
    
    
    
    2,027
    
    
    
    2.36
    
    
    
    3,802
    
    
    
    4.15
    
    
    
    1,541
    
    
    
    1.67
    
    
    
    317
    
    
    
    0.87Home equity loans
    
    
    83
    
    
    
    1.10
    
    
    
    104
    
    
    
    0.85
    
    
    
    225
    
    
    
    1.49
    
    
    
    213
    
    
    
    1.67
    
    
    
    142
    
    
    
    0.87Consumer loans
    
    
    48
    
    
    
    2.26
    
    
    
    47
    
    
    
    1.32
    
    
    
    160
    
    
    
    2.65
    
    
    
    232
    
    
    
    2.74
    
    
    
    212
    
    
    
    1.12Unallocated
    
    
    
    
    
    
    
    
    
    
    566
    
    
    
    
    
    
    
    1,091
    
    
    
    
    
    
    
    1,339
    
    
    
    
    
    
    
    3,953
    
    
    
    Total allowance
    
    $
    29,551
    
    
    
    3.96
    %
    
    $
    109,872
    
    
    
    4.66
    %
    
    $
    65,122
    
    
    
    2.41
    %
    
    $
    35,855
    
    
    
    1.51
    %
    
    $
    23,988
    
    
    
    1.31
    %
 CIB MARINE  CONTINUING OPERATIONS ONLY:
 December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofLoans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans inAllowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    eachAmount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category(Dollars in thousands)Commercial
    
    $
    10,080
    
    
    
    5.22
    %
    
    
    28,450
    
    
    
    6.83
    %
    
    
    15,650
    
    
    
    2.81
    %
    
    
    9,390
    
    
    
    1.77
    %
    
    
    5,622
    
    
    
    1.46
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    16,211
    
    
    
    4.02
    
    
    
    19,858
    
    
    
    3.69
    
    
    
    9,210
    
    
    
    1.81
    
    
    
    4,060
    
    
    
    1.03
    
    
    
    3,950
    
    
    
    0.99Commercial real estate
construction
    
    
    2,258
    
    
    
    2.07
    
    
    
    4,098
    
    
    
    2.00
    
    
    
    3,436
    
    
    
    1.30
    
    
    
    1,694
    
    
    
    0.97
    
    
    
    818
    
    
    
    0.61Residential real estate
    
    
    871
    
    
    
    2.82
    
    
    
    1,722
    
    
    
    2.73
    
    
    
    1,366
    
    
    
    2.26
    
    
    
    945
    
    
    
    1.70
    
    
    
    128
    
    
    
    0.63Home equity loans
    
    
    83
    
    
    
    1.10
    
    
    
    88
    
    
    
    0.89
    
    
    
    139
    
    
    
    1.33
    
    
    
    170
    
    
    
    1.21
    
    
    
    90
    
    
    
    0.87Consumer loans
    
    
    48
    
    
    
    2.26
    
    
    
    43
    
    
    
    1.42
    
    
    
    148
    
    
    
    2.75
    
    
    
    224
    
    
    
    2.86
    
    
    
    200
    
    
    
    1.11Unallocated
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    1,806
    
    
    
    
    
    
    
    1,617
    
    
    
    
    
    
    
    1,960
    
    
    
    Total allowance
    
    $
    29,551
    
    
    
    3.96
    %
    
    
    54,382
    
    
    
    4.42
    %
    
    
    31,755
    
    
    
    2.27
    %
    
    
    18,100
    
    
    
    1.54
    %
    
    
    12,768
    
    
    
    1.33
    %
 Nonperforming Assets and Loans 90 Days or More Past Due and Still Accruing
   TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Nonperforming assetsNonaccrual loans:Commercial
    
    $
    25,431
    
    
    $
    58,161
    
    
    $
    17,329
    
    
    $
    20,026
    
    
    $
    2,391Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    23,020
    
    
    
    77,960
    
    
    
    15,507
    
    
    
    15,678
    
    
    
    12,682Commercial real estate construction
    
    
    5,399
    
    
    
    13,310
    
    
    
    5,221
    
    
    
    
    
    
    
    Residential real estate
    
    
    477
    
    
    
    2,622
    
    
    
    756
    
    
    
    610
    
    
    
    586Home equity loans
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    220
    
    
    
    Consumer loans
    
    
    
    
    
    
    11
    
    
    
    45
    
    
    
    110
    
    
    
    93Total nonaccrual loans
    
    
    54,327
    
    
    
    152,064
    
    
    
    38,958
    
    
    
    36,644
    
    
    
    15,752Foreclosed property
    
    
    3,038
    
    
    
    40,715
    
    
    
    3,678
    
    
    
    3,168
    
    
    
    1,626Restructured loans
    
    
    1,536
    
    
    
    2,946
    
    
    
    3,210
    
    
    
    309
    
    
    
    1,505Total nonperforming assets
    
    $
    58,901
    
    
    $
    195,725
    
    
    $
    45,846
    
    
    $
    40,121
    
    
    $
    18,883Loans 90 days or more past due and
still accruingCommercial
    
    
    1,009
    
    
    $
    
    
    
    $
    3,022
    
    
    $
    758
    
    
    $
    235Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    5,902
    
    
    
    352
    
    
    
    2,292
    
    
    
    195
    
    
    
    20Commercial real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    Residential real estate
    
    
    
    
    
    
    
    
    
    
    1,076
    
    
    
    408
    
    
    
    797
 47




---



##### Table of Contents



December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    7
    
    
    
    6
    
    
    
    22
    
    
    
    43Total loans 90 days or more past due
and still accruing
    
    $
    6,911
    
    
    $
    359
    
    
    $
    6,396
    
    
    $
    1,535
    
    
    $
    1,095Allowance for loan losses
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855
    
    
    $
    23,988Loans at end of period
    
    $
    746,615
    
    
    $
    2,360,041
    
    
    $
    2,704,006
    
    
    $
    2,382,045
    
    
    $
    1,826,135RatiosNonaccrual loans to total loans
    
    
    7.28
    %
    
    
    6.44
    %
    
    
    1.44
    %
    
    
    1.54
    %
    
    
    0.86
    %Foreclosed properties to total assets
    
    
    0.22
    
    
    
    1.28
    
    
    
    0.10
    
    
    
    0.11
    
    
    
    0.07Nonperforming assets to total assets
    
    
    4.25
    
    
    
    6.14
    
    
    
    1.26
    
    
    
    1.36
    
    
    
    0.77Nonaccrual loans, restructured loans
and loans 90 days or more past due
and still accruing to total loans
    
    
    8.41
    
    
    
    6.58
    
    
    
    1.80
    
    
    
    1.62
    
    
    
    1.00Nonperforming assets and loans 90
days or more past due and still
accruing to total assets
    
    
    4.75
    
    
    
    6.15
    
    
    
    1.43
    
    
    
    1.42
    
    
    
    0.81
 CIB MARINE  CONTINUING OPERATIONS ONLY:
 December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(Dollars in thousands)Nonperforming assetsNonaccrual loans:Commercial
    
    $
    25,431
    
    
    $
    34,156
    
    
    $
    11,852
    
    
    $
    7,476
    
    
    $
    2,391Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    23,020
    
    
    
    16,099
    
    
    
    3,263
    
    
    
    6,430
    
    
    
    6,274Commercial real estate construction
    
    
    5,399
    
    
    
    189
    
    
    
    
    
    
    
    
    
    
    
    Residential real estate
    
    
    477
    
    
    
    2,397
    
    
    
    653
    
    
    
    610
    
    
    
    285Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    Consumer loans
    
    
    
    
    
    
    10
    
    
    
    45
    
    
    
    110
    
    
    
    93Total nonaccrual loans
    
    
    54,327
    
    
    
    52,851
    
    
    
    15,813
    
    
    
    14,631
    
    
    
    9,043Foreclosed property
    
    
    2,938
    
    
    
    3,027
    
    
    
    2,928
    
    
    
    1,810
    
    
    
    1,626Restructured loans
    
    
    1,536
    
    
    
    2,939
    
    
    
    3,200
    
    
    
    294
    
    
    
    1,488Total nonperforming assets
    
    $
    58,801
    
    
    $
    58,817
    
    
    $
    21,941
    
    
    $
    16,735
    
    
    $
    12,157Loans 90 days or more past due and
still accruingCommercial
    
    $
    1,009
    
    
    $
    
    
    
    $
    943
    
    
    $
    758
    
    
    $
    161Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    5,902
    
    
    
    352
    
    
    
    2,292
    
    
    
    195
    
    
    
    20Commercial real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    Residential real estate
    
    
    
    
    
    
    
    
    
    
    1,076
    
    
    
    408
    
    
    
    740Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    7
    
    
    
    6
    
    
    
    22
    
    
    
    43Total loans 90 days or more past due
and still accruing
    
    $
    6,911
    
    
    $
    359
    
    
    $
    4,317
    
    
    $
    1,535
    
    
    $
    964Allowance for loan losses
    
    $
    29,551
    
    
    $
    54,382
    
    
    $
    31,756
    
    
    $
    18,109
    
    
    $
    12,868Loans at end of period
    
    $
    746,615
    
    
    $
    1,227,734
    
    
    $
    1,400,964
    
    
    $
    1,173,075
    
    
    $
    962,471RatiosNonaccrual loans to total loans
    
    
    7.28
    %
    
    
    4.29
    %
    
    
    1.13
    %
    
    
    1.23
    %
    
    
    0.94
    %Foreclosed properties to total assets
    
    
    0.21
    
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.12
    
    
    
    0.13Nonperforming assets to total assets
    
    
    4.29
    
    
    
    3.45
    
    
    
    1.25
    
    
    
    1.12
    
    
    
    0.95Nonaccrual loans, restructured loans
and loans 90 days or more past due
and still accruing to total loans
    
    
    8.41
    
    
    
    4.56
    
    
    
    1.67
    
    
    
    1.39
    
    
    
    1.19Nonperforming assets and 90 days or
more past due and still accruing
loans to total assets
    
    
    4.79
    
    
    
    3.47
    
    
    
    1.50
    
    
    
    1.22
    
    
    
    1.02
  48




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##### Table of Contents




    
    Commercial loans totaling $9.0 million to related borrowers secured by a first lien
on business assets and intellectual property. At December 31, 2004, specific reserves of
$3.5 million were allocated to this borrowing relationship and during 2004, certain
loans previously reserved for were charged down by $5.0 million based on new appraisals.
The loans were further charged down $0.3 million in 2005. In the third quarter of 2005,
CIB Marine sold the majority of the group of loans resulting in recoveries of
$4.6 million.
    
    Commercial and commercial real estate loans in the total amount of $7.3 million
secured by business assets and first mortgages on two industrial properties. At December
31, 2004, there were specific reserves of $0.7 million allocated to these loans. During
2004, CIB Marine charged-off $7.2 million with respect to this relationship. In 2005, an
additional $0.4 million, net of recoveries, was charged-off and the remaining balance
paid in full.
    
    Commercial real estate loans in the total amount of $6.2 million to related borrowers
secured by first mortgages on three commercial properties and two developments. During
2004, $3.8 million was charged-off with respect to this relationship, and as of December 31, 2004,
specific reserves of $2.6 million were allocated to this relationship. As of
December 31, 2005, the $4.2 million remaining of this relationship was classified as
nonaccrual with an allocated specific reserve of $0.8 million,
and during 2006, CIB Marine collected all but $0.9 million of the
$4.2 million.  As of September 30, 2006, the remaining $0.9 million
was classified as nonaccrual. CIB Marine is pursuing the guarantor for
any deficiencies.  While CIB Marine believes that the value
of the collateral securing the obligation approximates the net book value of the loan,
CIB Marine cannot provide assurances that the value will be maintained or that there
will be no further losses with respect to this relationship.
    
    Commercial and commercial real estate loans totaling $3.6 million to a borrower
secured by all business assets and a first mortgage on two commercial real estate
properties. During 2004, $5.7 million was charged-off based on updated collateral
evaluations obtained and $1.2 million was subsequently recovered. During 2005, an
additional $0.07 million was recovered. As of December 31, 2005 the remaining $1.3
million balance of this relationship was classified as nonaccrual. As of September 30,
2006, $1.1 million remained classified as nonaccrual. While CIB Marine believes the
collateral securing the obligations approximates the net book value of the loan, CIB
Marine cannot provide assurances that the value will be maintained or that there will be
no further losses with respect to this relationship.
    
    Commercial real estate loans totaling $3.6 million to a borrower secured by a first
mortgage and business assets. At December 31, 2004, specific reserves in the amount of
$0.4 million were allocated to this relationship. During 2005, CIB Marine charged-off
$0.4 million, net of recoveries and sold the remaining balance of these loans.
    
    Commercial real estate loan totaling $3.5 million to a borrower secured by a second
mortgage on two office buildings and business assets with $0.8 million of specific
reserves allocated to this relationship. During 2005, $0.8 million was charged-off and
the remaining balance of $2.7 million as of December 31, 2005 was classified as
nonaccrual. During 2006, a settlement was reached and the remaining balance was
collected.
    
    Commercial and commercial real estate loans totaling $2.8 million to related
borrowers secured by a first mortgage on a commercial property and a third mortgage on a
mixed use development and business assets. During 2004, CIB Marine charged-off $5.2
million related to this relationship and during 2006, the remaining balance was paid in
full.
    
    Commercial real estate loans totaling $2.6 million to a borrower secured by first
mortgages on three commercial warehouse properties with specific reserves of $0.3
million. During 2004, $0.9 million was charged-off and as of December 31, 2004, specific
reserves of $0.3 million were allocated to this relationship. As of December 31, 2005
and September 30, 2006 respectively, $2.3 million and $2.0 million were classified as
nonaccrual. While CIB Marine believes that the value of the collateral securing the
obligation approximates the net book value, CIB Marine cannot provide assurances that
the value will be maintained or that there will be no further losses with respect to
this relationship.
    
    Commercial and commercial real estate loans totaling $2.5 million to related
borrowers secured by business assets and first mortgages on three commercial properties.
Specific reserves in the amount of $0.9 million were allocated based on new collateral
appraisals obtained. As of December 31, 2005 and September 30, 2006 $2.0 million of this
relationship was classified as nonaccrual with $0.9 million was allocated in specific
reserves. During the first nine months of 2006, $0.04 million was charged off. While CIB
Marine believes that the value of the collateral securing the obligation approximates
the net book value of the loan, CIB Marine cannot provide assurances that the value will
be maintained or that there will be no further losses with respect to this relationship.
    
    Commercial and commercial real estate loans totaling $2.1 million to a borrower
secured by a first lien on business assets, closely held stock, and first mortgages on a
landfill property and four transfer stations in Florida. During 2004, $4.5 million was
charged-off related to this borrowing relationship. At December 31, 2004, there were
specific reserves of $1.2 million allocated to these loans, and in the first quarter of
2005, the balance remaining on these loans was paid with an additional $0.04 million
being charged off.
 49




---



##### Table of Contents




    
    Commercial real estate loans totaling $1.4 million to a borrower secured by a first
mortgage lien on commercial property. At December 31, 2004, $0.2 million of specific
reserves were allocated to this relationship. During 2005, $0.2 million was charged-off
and the remaining loans related to this relationship were sold in the third quarter of
2005 and a $0.01 million loss was recognized on the sale.
  
    
    A commercial office building located in Chicago which had a balance of $25.2 million
at December 31, 2003 and was subject to a $26.7 million first mortgage held by a
nonaffiliated financial institution. The building was being converted into residential
condominiums and was acquired through a Deed in Lieu of Foreclosure Settlement Agreement
(DIL Agreement) from a borrower who was in default on its obligation. CIB  Chicago
held the second position on the property. During 2003, CIB Marine charged-off $41.7
million of loans secured by the second position and recognized a $1.5 million impairment
loss on the foreclosed property. Pursuant to the DIL Agreement, CIB Marine acquired the
property subject to the first lien held by an outside financial institution (Lender)
and assumed the borrowers financial obligation relating to that first lien. The assumed
financial obligation is reported as an outstanding nonrecourse mortgage note payable and
had a balance of $26.7 million at December 31, 2003. Under the terms of the assumption,
CIB Marines liability to the Lender for payment on the assumed obligation was limited
to monies received through the liquidation of the acquired collateral. In the second
quarter of 2004, CIB  Chicago transferred its interest in the acquired property to the
Lender in exchange for the satisfaction of the assumed mortgage note payable. The
decision was made after exhaustive efforts to sell the property proved carrying the
property was not economically feasible. The transfer of interest in the acquired
property to the Lender in return for the satisfaction of the assumed mortgage note
payable resulted in no additional gain or loss. During 2004, CIB Marine recognized $1.4
million in expenses related to the carrying costs of this property and $0.7 million of
interest expense on the mortgage note payable.
    
    A parking structure located in Chicago which had a balance of $8.8 million at
December 31, 2003 and was sold in the second quarter of 2004, resulting in a $0.6
million loss.
  
    
    A single family home located in Florida which had a balance of $1.1 million at
December 31, 2004. The property was acquired through foreclosure proceedings in the
third quarter of 2004. The property was sold in June 2005, resulting in a gain of $0.2
million.
    
    A vacant commercial parcel located in Illinois which had a balance of $0.9 million at
December 31, 2004. The property was acquired through a deed in lieu of foreclosure in
2002. During both 2004 and 2003, CIB Marine recognized a $0.5 million market value
impairment losses on this property. In March 2006, this property was sold for $0.6
million resulting in additional loss of $0.3 million.
    
    An industrial building located in Wisconsin which had a balance of $0.8 million at
December 31, 2004. The property was acquired through foreclosure proceedings in 2003.
   50




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##### Table of Contents



Regulatory Matters
    §
    
    Maintenance of minimum capital levels;§
    
    Restrictions on dividend payments and redemption of shares of CIB Marine without regulatory approval;§
    
    Limitations on asset and loan growth;§
    
    Adoption of a comprehensive plan to improve earnings;§
    
    Development of a plan to reduce concentrations of credit and loan relationships
classified as substandard or doubtful;§
    
    Development of a system to correct loan administration deficiencies; and§
    
    Development of a plan to correct and prevent violations of banking laws and
regulations related to affiliate transactions.
    51




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##### Table of Contents



Companies Held For Disposal
 CIB Construction (includes Canron)
   December 31,2004
    
    
    2003(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    881
    
    
    $
    2,407Accounts receivable
    
    
    2,194
    
    
    
    12,807Inventories and contracts in progress
    
    
    
    
    
    
    1,438Other current assets
    
    
    3,547
    
    
    
    Current assets
    
    
    6,622
    
    
    
    16,652Property and equipment, net
    
    
    7,075
    
    
    
    12,312Total assets
    
    $
    13,697
    
    
    $
    28,964Liabilities and Stockholders Equity:Current portion of loans payable to CIB Marine
and its affiliates
    
    $
    2,700
    
    
    $
    11,625Income tax payable
    
    
    2,311
    
    
    
    1,074Other liabilities
    
    
    5,211
    
    
    
    13,623Current liabilities
    
    
    10,222
    
    
    
    26,322Loans payable to nonaffiliated banks
    
    
    
    
    
    
    2,137Total liabilities
    
    
    10,222
    
    
    
    28,459Stockholders equity
    
    
    3,475
    
    
    
    505Total liabilities and stockholders equity
    
    $
    13,697
    
    
    $
    28,964
  MICR
  52




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##### Table of Contents



MSI
   December 31,2004
    
    
    2003(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    341
    
    
    $
    12Loans held for sale
    
    
    53
    
    
    
    148Net loans
    
    
    
    
    
    
    202Property and equipment, net
    
    
    35
    
    
    
    1,019Other intangibles
    
    
    
    
    
    
    825Accrued tax receivable
    
    
    621
    
    
    
    512Other assets
    
    
    379
    
    
    
    254Total assets
    
    $
    1,429
    
    
    $
    2,972Liabilities and stockholders equity:Loans payable to unaffiliated banks
    
    $
    303
    
    
    $
    Other liabilities
    
    
    2,057
    
    
    
    1,434Total liabilities
    
    
    2,360
    
    
    
    1,434Stockholders equity
    
    
    (931
    )
    
    
    1,538Total liabilities and stockholders equity
    
    $
    1,429
    
    
    $
    2,972
  Other Assets
  December 31,2004
    
    
    2003(Dollars in thousands)Prepaid expenses
    
    $
    1,266
    
    
    $
    1,616Accounts receivable
    
    
    1,395
    
    
    
    1,531Fair value of derivatives
    
    
    
    
    
    
    3,945Trust preferred securities underwriting
fee, net of amortization
    
    
    1,445
    
    
    
    1,500Investment in trust common securities
    
    
    2,481
    
    
    
    2,310Other investments
    
    
    3,257
    
    
    
    9,572Deferred taxes
    
    
    
    
    
    
    911Income tax receivable
    
    
    7,945
    
    
    
    25,926Other
    
    
    90
    
    
    
    402$
    17,879
    
    
    $
    47,713
  53




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##### Table of Contents




    
    Investments in limited partnership interests in various affordable housing
partnerships. The carrying value of these investments was $2.1 million at December 31,
2004 and $5.7 million, including $3.2 million for CIB  Chicago, at December 31, 2003.
CIB Marine has engaged in these transactions to provide additional qualified
investments under the Community Reinvestment Act and to receive related income tax
credits. The partnerships provide affordable housing to low-income residents within CIB
Marines markets and other locations.
    
    Investment in three limited partnerships which had a carrying value of $2.2 million
at December 31, 2003, net of a $0.7 million impairment loss recognized in 2003. These
interests were sold in the first quarter of 2004. CIB Marine recognized a $0.2 million
loss on the sale.
    
    Investment in shares of the common stock of a closely held information services
business, which represented less than a 5% interest in the company. During 2004, CIB
Marine deemed the entire carrying value impaired and an impairment loss of $0.5 million
was recognized. At December 31, 2003, the carrying value of this investment, net of a
$1.2 million impairment loss recognized in 2003, was $0.5 million.
    
    Interest in two companies operating as small business investment companies under the
Small Business Investment Act of 1958, as amended. CIB Marine committed to a $1.1
million investment in these companies and as of December 31, 2004 had invested $0.9
million. The carrying value of these investments was estimated to be $0.8 million at
both December 31, 2004 and 2003 which represents cost less other than temporary
impairment.
 Deposits
   TOTAL
COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31,2004
    
    2003
    
    2002Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    AverageBalance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate(Dollars in thousands)Interest-bearing demand
    
    $
    85,979
    
    
    
    3.46
    %
    
    
    1.16
    %
    
    $
    70,731
    
    
    
    2.43
    %
    
    
    1.05
    %
    
    $
    57,831
    
    
    
    2.22
    %
    
    
    1.02
    %Money market
    
    
    343,764
    
    
    
    13.85
    
    
    
    1.45
    
    
    
    427,919
    
    
    
    14.73
    
    
    
    1.63
    
    
    
    285,178
    
    
    
    10.96
    
    
    
    2.04Other savings
    
    
    192,847
    
    
    
    7.77
    
    
    
    1.39
    
    
    
    245,781
    
    
    
    8.46
    
    
    
    1.76
    
    
    
    124,189
    
    
    
    4.78
    
    
    
    2.36Time deposits
    
    
    1,674,168
    
    
    
    67.44
    
    
    
    2.93
    
    
    
    1,953,816
    
    
    
    67.26
    
    
    
    3.29
    
    
    
    1,960,349
    
    
    
    75.38
    
    
    
    3.88Total interest-bearing deposits
    
    
    2,296,758
    
    
    
    92.52
    
    
    
    2.51
    
    
    
    2,698,247
    
    
    
    92.88
    
    
    
    2.83
    
    
    
    2,427,547
    
    
    
    93.34
    
    
    
    3.52Noninterest-bearing
    
    
    185,608
    
    
    
    7.48
    
    
    
    
    
    
    
    206,815
    
    
    
    7.12
    
    
    
    
    
    
    
    173,080
    
    
    
    6.66
    
    
    
    Total deposits
    
    $
    2,482,366
    
    
    
    100.00
    %
    
    
    2.32
    %
    
    $
    2,905,062
    
    
    
    100.00
    %
    
    
    2.62
    %
    
    $
    2,600,627
    
    
    
    100.00
    %
    
    
    3.29
    %
 CIB MARINE  CONTINUING OPERATIONS ONLY:
 Year Ended December 31,2004
    
    2003
    
    2002Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    AverageBalance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate(Dollars in thousands)Interest-bearing demand
    
    $
    63,291
    
    
    
    4.74
    %
    
    
    1.19
    %
    
    $
    50,984
    
    
    
    3.33
    %
    
    
    1.04
    %
    
    $
    42,583
    
    
    
    3.12
    %
    
    
    1.13
    %Money market
    
    
    293,044
    
    
    
    21.94
    
    
    
    1.48
    
    
    
    368,219
    
    
    
    24.06
    
    
    
    1.70
    
    
    
    215,726
    
    
    
    15.83
    
    
    
    2.18Other savings
    
    
    40,611
    
    
    
    3.04
    
    
    
    1.23
    
    
    
    28,161
    
    
    
    1.84
    
    
    
    1.29
    
    
    
    22,641
    
    
    
    1.66
    
    
    
    1.21Time deposits
    
    
    814,691
    
    
    
    60.99
    
    
    
    2.96
    
    
    
    952,320
    
    
    
    62.22
    
    
    
    3.39
    
    
    
    982,736
    
    
    
    72.11
    
    
    
    3.87Total interest-bearing deposits
    
    
    1,211,637
    
    
    
    90.71
    
    
    
    2.45
    
    
    
    1,399,684
    
    
    
    91.45
    
    
    
    2.82
    
    
    
    1,263,686
    
    
    
    92.72
    
    
    
    3.44Noninterest-bearing
    
    
    124,108
    
    
    
    9.29
    
    
    
    
    
    
    
    130,918
    
    
    
    8.55
    
    
    
    
    
    
    
    99,155
    
    
    
    7.28
    
    
    
    Total deposits
    
    $
    1,335,745
    
    
    
    100.00
    %
    
    
    2.22
    %
    
    $
    1,530,602
    
    
    
    100.00
    %
    
    
    2.58
    %
    
    $
    1,362,841
    
    
    
    100.00
    %
    
    
    3.19
    %
   54




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##### Table of Contents



December 31,2004(Dollars in thousands)Maturity3 months or less
    
    $
    57,986Over 3 through 6 months
    
    
    33,951Over 6 through 12 months
    
    
    36,631Over 12 months
    
    
    119,951$
    248,519
 Borrowings
    TOTAL
COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 As of December 31,2004
    
    
    2003
    
    
    2002Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of TotalBalance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings(Dollars in thousands)Short-Term BorrowingsFed funds purchased
    
    $
    
    
    
    
    
    %
    
    
    
    %
    
    $
    9,332
    
    
    
    1.00
    %
    
    
    4.65
    %
    
    $
    203,430
    
    
    
    1.23
    %
    
    
    41.17
    %Securities sold under repurchase
agreements
    
    
    13,269
    
    
    
    1.67
    
    
    
    15.09
    
    
    
    12,635
    
    
    
    1.15
    
    
    
    6.29
    
    
    
    39,757
    
    
    
    1.47
    
    
    
    8.05Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,848
    
    
    
    3.75
    
    
    
    15.37
    
    
    
    36,685
    
    
    
    3.09
    
    
    
    7.43Federal Home Loan Bank  short term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,500
    
    
    
    2.20
    
    
    
    20.34Commercial paper
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,436
    
    
    
    2.04
    
    
    
    0.90Treasury, tax and loan note
    
    
    5,540
    
    
    
    2.03
    
    
    
    6.30
    
    
    
    13,099
    
    
    
    0.73
    
    
    
    6.53
    
    
    
    2,137
    
    
    
    0.99
    
    
    
    0.43Mortgage note payable (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,687
    
    
    
    10.00
    
    
    
    13.29
    
    
    
    
    
    
    
    
    
    
    
    Total short-term borrowings
    
    
    18,809
    
    
    
    1.78
    
    
    
    21.39
    
    
    
    92,601
    
    
    
    4.49
    
    
    
    46.13
    
    
    
    386,945
    
    
    
    1.69
    
    
    
    78.32Long-Term BorrowingsFederal Home Loan Bank  long-term
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    42,247
    
    
    
    6.20
    
    
    
    21.04
    
    
    
    42,060
    
    
    
    6.19
    
    
    
    8.51Fair value adjustment related to hedge
accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,029
    
    
    
    (3.63
    )
    
    
    2.01
    
    
    
    5,081
    
    
    
    (3.33
    )
    
    
    1.03Total long-term FHLB borrowings
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    46,276
    
    
    
    2.57
    
    
    
    23.05
    
    
    
    47,141
    
    
    
    2.86
    
    
    
    9.54Junior subordinated debentures /
guaranteed trust preferred securities
    
    
    61,857
    
    
    
    9.00
    
    
    
    70.36
    
    
    
    61,857
    
    
    
    8.58
    
    
    
    30.82
    
    
    
    60,000
    
    
    
    8.74
    
    
    
    12.14Total long-term borrowings
    
    
    69,107
    
    
    
    8.58
    
    
    
    78.61
    
    
    
    108,133
    
    
    
    6.01
    
    
    
    53.87
    
    
    
    107,141
    
    
    
    6.15
    
    
    
    21.68Total borrowings
    
    $
    87,916
    
    
    
    7.12
    %
    
    
    100.00
    %
    
    $
    200,734
    
    
    
    5.31
    %
    
    
    100.00
    %
    
    $
    494,086
    
    
    
    2.66
    %
    
    
    100.00
    %
 
 (1)
    
    Mortgage note assumed on foreclosed property. 55




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 As of December 31,2004
    
    
    2003
    
    
    2002Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of TotalBalance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings(Dollars in thousands)Short-Term BorrowingsFed funds purchased
    
    $
    
    
    
    
    
    %
    
    
    
    %
    
    $
    1,867
    
    
    
    1.00
    %
    
    
    1.52
    %
    
    $
    36,800
    
    
    
    1.21
    %
    
    
    15.18
    %Securities sold under repurchase agreements
    
    
    13,269
    
    
    
    1.67
    
    
    
    15.09
    
    
    
    10,502
    
    
    
    0.68
    
    
    
    8.53
    
    
    
    1,333
    
    
    
    0.93
    
    
    
    0.55Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,595
    
    
    
    3.67
    
    
    
    19.17
    
    
    
    1,709
    
    
    
    0.99
    
    
    
    0.70Federal Home Loan Bank  short term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,000
    
    
    
    2.00
    
    
    
    37.13Commercial paper
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,436
    
    
    
    2.04
    
    
    
    1.83Treasury, tax and loan note
    
    
    5,540
    
    
    
    2.03
    
    
    
    6.30
    
    
    
    9,503
    
    
    
    0.73
    
    
    
    7.72
    
    
    
    32,375
    
    
    
    2.94
    
    
    
    13.36Mortgage note payable (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total short-term borrowings
    
    
    18,809
    
    
    
    1.78
    
    
    
    21.39
    
    
    
    45,467
    
    
    
    2.25
    
    
    
    36.94
    
    
    
    166,653
    
    
    
    1.99
    
    
    
    68.75Long-Term BorrowingsFederal Home Loan Bank  long-term
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    15,750
    
    
    
    5.06
    
    
    
    12.80
    
    
    
    15,750
    
    
    
    5.06
    
    
    
    6.50Fair value adjustment related to hedge
accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total long-term FHLB borrowings
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    15,750
    
    
    
    5.06
    
    
    
    12.80
    
    
    
    15,750
    
    
    
    5.06
    
    
    
    6.50Junior subordinated debentures /
guaranteed trust preferred securities
    
    
    61,857
    
    
    
    9.00
    
    
    
    70.36
    
    
    
    61,857
    
    
    
    8.58
    
    
    
    50.26
    
    
    
    60,000
    
    
    
    8.74
    
    
    
    24.75Total long-term borrowings
    
    
    69,107
    
    
    
    8.58
    
    
    
    78.67
    
    
    
    77,607
    
    
    
    7.87
    
    
    
    63.06
    
    
    
    75,750
    
    
    
    7.98
    
    
    
    31.25Total borrowings
    
    $
    87,916
    
    
    
    7.12
    %
    
    
    100.00
    %
    
    $
    123,074
    
    
    
    5.79
    %
    
    
    100.00
    %
    
    $
    242,403
    
    
    
    3.86
    %
    
    
    100.00
    %
 
 (1)
    
    Mortgage note assumed on foreclosed property.    Junior Subordinated Debentures and Guaranteed Trust Preferred Securities
  56




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##### Table of Contents



New Accounting Pronouncements
  Off-Balance Sheet Arrangements
  Commitments:
  57




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##### Table of Contents



Derivative Financial Instruments
  Trust Preferred Securities:
  Capital Calls:
  Residential Mortgage Recourse Obligations:
  Contractual obligations
  Payments due by periodMore than 5Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    years(Dollars in thousands)Certificate of deposit and
other time deposit
obligations
    
    $
    725,344
    
    
    $
    392,860
    
    
    $
    247,551
    
    
    $
    67,452
    
    
    $
    17,481Long-term debt
    
    
    7,250
    
    
    
    
    
    
    
    
    
    
    
    7,250
    
    
    
    Junior subordinated debentures
    
    
    61,857
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,857Operating leases
    
    
    7,782
    
    
    
    1,334
    
    
    
    2,420
    
    
    
    1,592
    
    
    
    2,436Total
    
    $
    802,233
    
    
    $
    394,194
    
    
    $
    249,971
    
    
    $
    76,294
    
    
    $
    81,774
 58




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##### Table of Contents



Liquidity
         59




---



##### Table of Contents



JuniorLong-Term
    
    
    Subordinated
    
    
    OperatingDebt
    
    
    Debentures
    
    
    Leases
    
    
    Total(Dollars in thousands)Maturity1 Year or less
    
    $
    
    
    
    $
    
    
    
    $
    1,333
    
    
    $
    1,3331 to 2 Years
    
    
    
    
    
    
    
    
    
    
    1,224
    
    
    
    1,2242 to 3 Years
    
    
    
    
    
    
    
    
    
    
    1,196
    
    
    
    1,1963 to 4 Years
    
    
    7,250
    
    
    
    
    
    
    
    913
    
    
    
    8,1634 to 5 Years
    
    
    
    
    
    
    
    
    
    
    680
    
    
    
    680Beyond 5 Years
    
    
    
    
    
    
    61,857
    
    
    
    2,436
    
    
    
    64,293$
    7,250
    
    
    $
    61,857
    
    
    $
    7,782
    
    
    $
    76,889
 Capital
  December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Risk weighted assets
    
    $
    942,040
    
    
    $
    2,737,049
    
    
    $
    3,305,510Average assets(1)
    
    $
    2,194,824
    
    
    $
    3,252,625
    
    
    $
    3,485,498Capital components
Stockholders equity
    
    $
    92,892
    
    
    $
    108,523
    
    
    $
    247,563Restricted core capital:Junior subordinated debentures net of
investment in trust
    
    
    60,000
    
    
    
    60,000
    
    
    
    60,000Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    133
    
    
    
    1,051Total restricted core capital elements
    
    
    60,000
    
    
    
    60,133
    
    
    
    61,051Disallowed amounts
    
    
    (29,036
    )
    
    
    (23,914
    )
    
    
    Maximum allowable in tier 1 capital
    
    
    30,964
    
    
    
    36,219
    
    
    
    61,051Nonfinancial equity items
    
    
    (15
    )
    
    
    (55
    )
    
    
    (149
    )Less: disallowed intangibles
    
    
    (982
    )
    
    
    (4,945
    )
    
    
    (14,822
    )Add/less: unrealized loss/(gain) on securities
    
    
    642
    
    
    
    (2,184
    )
    
    
    (4,516
    )Tier 1 capital
    
    
    123,501
    
    
    
    137,558
    
    
    
    289,127Allowable allowance for loan losses
    
    
    11,995
    
    
    
    35,342
    
    
    
    41,625Allowable subordinated debentures net of
investment in trust
    
    
    29,036
    
    
    
    23,914
    
    
    
    Total risk-based capital
    
    $
    164,532
    
    
    $
    196,814
    
    
    $
    330,752
 For CapitalActual
    
    Adequacy PurposesAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)December 31, 2004Total capital to risk-weighted assets
    
    $
    164,532
    
    
    
    17.47
    %
    
    $
    75,363
    
    
    
    8.00
    %Tier 1 capital to risk-weighted assets
    
    
    123,501
    
    
    
    13.11
    
    
    
    37,682
    
    
    
    4.00Tier 1 leverage to average assets
    
    
    123,501
    
    
    
    5.63
    
    
    
    87,793
    
    
    
    4.00December 31, 2003Total capital to risk-weighted assets
    
    $
    196,814
    
    
    
    7.19
    %
    
    $
    218,964
    
    
    
    8.00
    %Tier 1 capital to risk-weighted assets
    
    
    137,558
    
    
    
    5.03
    
    
    
    109,482
    
    
    
    4.00Tier 1 leverage to average assets
    
    
    137,558
    
    
    
    4.23
    
    
    
    130,105
    
    
    
    4.00
 60




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##### Table of Contents



For CapitalActual
    
    Adequacy PurposesAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)December 31, 2002Total capital to risk-weighted assets
    
    $
    330,752
    
    
    
    10.01
    %
    
    $
    264,441
    
    
    
    8.00
    %Tier 1 capital to risk-weighted assets
    
    
    289,127
    
    
    
    8.75
    
    
    
    132,220
    
    
    
    4.00Tier 1 leverage to average assets
    
    
    289,127
    
    
    
    8.30
    
    
    
    139,420
    
    
    
    4.00
 
 (1)
    
    Average assets as calculated in accordance with 12 C.F.R. Part 325 of the
FDIC rules and regulations which requires a quarter to date average and allows
for current period adjustments of goodwill and other intangible assets.    Impact of Inflation and Changing Prices
  61




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##### Table of Contents



SUBSEQUENT EVENTS
 Charter Consolidation
  Sale and Wind Down of Nonbank Subsidiaries
  CIB Marine Capital, LLC.
 CIB Construction/Canron, Inc.
 MICR,
Inc .
 Regulatory Orders and Agreements
  Management Changes
    62




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##### Table of Contents



Liquidity
  Loan Pool Purchase
  Cost Controls and Reduction in Force Program
  Branch Activities
    Goodwill
  63




---



##### Table of Contents



FDIC Deposit Insurance Premiums
   Stock Options
  Late Filing of Tax Returns
  Investment Securities
  Foreclosed properties
  Other Investments
  FHLB Stock Investment Activity
  64




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     December 31, 20040-3 Months
    
    4-6 Months
    
    7-12 Months
    
    2-5 Years
    
    Over 5 Years
    
    Total(Dollars in thousands)Interest-earning assets:Loans
    
    $
    466,093
    
    
    $
    36,085
    
    
    $
    40,491
    
    
    $
    167,273
    
    
    $
    36,673
    
    
    $
    746,615Securities
    
    
    125,476
    
    
    
    36,624
    
    
    
    71,277
    
    
    
    132,418
    
    
    
    13,229
    
    
    
    379,024Federal funds sold
    
    
    192,158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192,158Total interest-earning assets
    
    
    783,727
    
    
    
    72,709
    
    
    
    111,768
    
    
    
    299,691
    
    
    
    49,902
    
    
    
    1,317,797Interest-bearing liabilities:Time deposits
    
    
    145,575
    
    
    
    127,022
    
    
    
    128,572
    
    
    
    308,313
    
    
    
    15,862
    
    
    
    725,344Savings and interest-bearing demand
deposits
    
    
    335,598
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    335,598Short-term borrowings
    
    
    18,809
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,809Long-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,250
    
    
    
    
    
    
    
    7,250Junior subordinated debentures
    
    
    21,857
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,000
    
    
    
    61,857Total interest-bearing liabilities
    
    
    521,839
    
    
    
    127,022
    
    
    
    128,572
    
    
    
    315,563
    
    
    
    55,862
    
    
    
    1,148,858Interest sensitivity gap (by period)
    
    $
    261,888
    
    
    $
    (54,313
    )
    
    $
    (16,804
    )
    
    $
    (15,872
    )
    
    $
    (5,960
    )
    
    $
    168,939Interest sensitivity gap (cumulative)
    
    
    261,888
    
    
    
    207,575
    
    
    
    190,771
    
    
    
    174,899
    
    
    
    168,939
    
    
    
    168,939Adjusted for derivativesDerivatives (notional, by period)
    
    
    (8,970
    )
    
    
    
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    (1,030
    )
    
    
    Derivatives (notional, cumulative)
    
    
    (8,970
    )
    
    
    (8,970
    )
    
    
    (3,970
    )
    
    
    1,030
    
    
    
    
    
    
    
    Interest sensitivity gap (by period)
    
    
    252,918
    
    
    
    (54,313
    )
    
    
    (11,804
    )
    
    
    (10,872
    )
    
    
    (6,990
    )
    
    
    168,939Interest sensitivity gap (cumulative)
    
    
    252,918
    
    
    
    198,605
    
    
    
    186,801
    
    
    
    175,929
    
    
    
    168,939
    
    
    
    168,939Cumulative gap as a % of totalassets
    
    
    18.26
    %
    
    
    14.33
    %
    
    
    13.48
    %
    
    
    12.70
    %
    
    
    12.19
    %
 65




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##### Table of Contents



Basis Point Changes+200
    
    +100
    
    100
    
    200Net interest income change over one yearDecember 31, 2004
    
    
    6.52
    %
    
    
    3.40
    %
    
    
    (9.05
    )%
    
    
    (14.59
    )%December 31, 2003
    
    
    4.83
    %
    
    
    3.58
    %
    
    
    (4.33
    )%
    
    
    (7.69
    )%
      
    
    The balance sheet size was assumed to remain constant;
    
    All maturing assets and liabilities were invested or deposited into similar financial or derivative instruments;
 66




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##### Table of Contents




    
    Spreads to the benchmark interest rates for pricing new volume to replace maturing or
paying older volumes were similar to spreads currently inherent in those financial
instruments, except for marketable securities which reflects current market spreads;
    
    The interest rates of financial instruments with like terms were assumed to change by
the same number of basis points except that the timing, magnitude, and direction of
change of interest rates paid on nonmaturing savings and interest-bearing demand deposits
were assumed to change in a way similar to that experienced in the past, which is less
than perfectly correlated with the other interest rate changes. Current anticipated
pricing strategies for nonmaturing deposits were also utilized.
    67




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Report of Independent Registered Public Accounting Firm
 
    KPMG LLP
 
 68




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##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Balance Sheets
 December 31,2004
    
    
    2003(Dollars in thousands, except share data)AssetsCash and cash equivalents:Cash and due from banks
    
    $
    41,777
    
    
    $
    60,149Federal funds sold
    
    
    192,158
    
    
    
    59,655Total cash and cash equivalents
    
    
    233,935
    
    
    
    119,804Loans held for sale
    
    
    
    
    
    
    16,735Securities available for sale, at fair value
    
    
    379,024
    
    
    
    637,356Loans
    
    
    746,615
    
    
    
    2,360,041Allowance for loan losses
    
    
    (29,551
    )
    
    
    (109,872
    )Net loans
    
    
    717,064
    
    
    
    2,250,169Premises and equipment, net
    
    
    14,099
    
    
    
    29,138Accrued interest receivable
    
    
    5,122
    
    
    
    12,762Goodwill
    
    
    982
    
    
    
    982Other intangible assets
    
    
    
    
    
    
    1,807Foreclosed properties
    
    
    2,938
    
    
    
    40,715Assets of companies held for disposal
    
    
    14,865
    
    
    
    29,056Other assets
    
    
    17,879
    
    
    
    47,713Total assets
    
    $
    1,385,908
    
    
    $
    3,186,237Liabilities and Stockholders EquityDeposits:Noninterest-bearing demand
    
    $
    117,546
    
    
    $
    219,905Interest-bearing demand
    
    
    63,886
    
    
    
    78,641Savings
    
    
    271,712
    
    
    
    687,607Time
    
    
    725,344
    
    
    
    1,835,065Total deposits
    
    
    1,178,488
    
    
    
    2,821,218Short-term borrowings
    
    
    18,809
    
    
    
    92,601Long-term borrowings
    
    
    7,250
    
    
    
    46,276Junior subordinated debentures
    
    
    61,857
    
    
    
    61,857Accrued interest payable
    
    
    10,644
    
    
    
    9,399Liabilities of companies held for disposal
    
    
    10,137
    
    
    
    17,381Other liabilities
    
    
    5,831
    
    
    
    28,982Total liabilities
    
    
    1,293,016
    
    
    
    3,077,714Stockholders EquityPreferred stock, $1 par value; 5,000,000 shares authorized,
none issued
    
    
    
    
    
    
    Common stock, $1 par value; 50,000,000 shares authorized,
18,346,442 issued and outstanding
    
    
    18,346
    
    
    
    18,346Capital surplus
    
    
    158,163
    
    
    
    158,163Accumulated deficit
    
    
    (81,867
    )
    
    
    (62,759
    )Accumulated other comprehensive income (loss), net
    
    
    (642
    )
    
    
    2,184Receivables from sale of stock
    
    
    (946
    )
    
    
    (5,208
    )Treasury stock at cost, 12,663 and 86,611 shares, respectively
    
    
    (162
    )
    
    
    (2,203
    )Total stockholders equity
    
    
    92,892
    
    
    
    108,523Total liabilities and stockholders equity
    
    $
    1,385,908
    
    
    $
    3,186,237
  69




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CIB MARINE BANCSHARES, INC.
 Consolidated Statements of Operations
 Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands, except share and per share data)Interest and Dividend IncomeLoans
    
    $
    58,711
    
    
    $
    87,142
    
    
    $
    89,353Loans held for sale
    
    
    213
    
    
    
    
    
    
    
    Securities:Taxable
    
    
    8,479
    
    
    
    7,593
    
    
    
    10,418Tax-exempt
    
    
    866
    
    
    
    1,208
    
    
    
    1,435Dividends
    
    
    583
    
    
    
    429
    
    
    
    209Federal funds sold
    
    
    1,127
    
    
    
    291
    
    
    
    453Total interest and dividend income
    
    
    69,979
    
    
    
    96,663
    
    
    
    101,868Interest ExpenseDeposits
    
    
    29,735
    
    
    
    39,455
    
    
    
    43,486Short-term borrowings
    
    
    1,325
    
    
    
    1,117
    
    
    
    2,209Long-term borrowings
    
    
    517
    
    
    
    808
    
    
    
    861Junior subordinated debentures/guaranteed trust preferred
securities
    
    
    5,710
    
    
    
    5,198
    
    
    
    4,523Total interest expense
    
    
    37,287
    
    
    
    46,578
    
    
    
    51,079Net interest income
    
    
    32,692
    
    
    
    50,085
    
    
    
    50,789Provision for credit losses
    
    
    17,432
    
    
    
    50,506
    
    
    
    19,074Net interest income after provision for credit losses
    
    
    15,260
    
    
    
    (421
    )
    
    
    31,715Noninterest IncomeLoan fees
    
    
    1,270
    
    
    
    1,328
    
    
    
    1,711Deposit service charges
    
    
    1,648
    
    
    
    1,913
    
    
    
    1,589Other service fees
    
    
    538
    
    
    
    173
    
    
    
    160Other income
    
    
    1,545
    
    
    
    2,821
    
    
    
    1,590Gain on investment securities, net
    
    
    
    
    
    
    
    
    
    
    1,698Total noninterest income
    
    
    5,001
    
    
    
    6,235
    
    
    
    6,748Noninterest ExpenseCompensation and employee benefits
    
    
    28,771
    
    
    
    31,073
    
    
    
    27,190Equipment
    
    
    4,256
    
    
    
    4,268
    
    
    
    3,817Occupancy and premises
    
    
    3,241
    
    
    
    2,975
    
    
    
    2,699Professional services
    
    
    6,047
    
    
    
    2,330
    
    
    
    1,829Litigation settlements
    
    
    
    
    
    
    50
    
    
    
    1,753Goodwill impairment loss
    
    
    1,921
    
    
    
    2,000
    
    
    
    Write down and losses on assets
    
    
    2,021
    
    
    
    3,231
    
    
    
    78Other expense
    
    
    8,393
    
    
    
    7,421
    
    
    
    7,254Total noninterest expense
    
    
    54,650
    
    
    
    53,348
    
    
    
    44,620Loss from continuing operations before income taxes
    
    
    (34,389
    )
    
    
    (47,534
    )
    
    
    (6,157
    )Income tax (benefit)expense
    
    
    (4,840
    )
    
    
    2,299
    
    
    
    (3,760
    )Loss from continuing operations
    
    
    (29,549
    )
    
    
    (49,833
    )
    
    
    (2,397
    )Discontinued operations:Pretax income (loss) from discontinued operations
    
    
    1,090
    
    
    
    (91,269
    )
    
    
    17,712Pretax net gain on sales of discontinued operations
    
    
    15,126
    
    
    
    
    
    
    
    Total pretax income (loss) from discontinued operations
    
    
    16,216
    
    
    
    (91,269
    )
    
    
    17,712Income tax (benefit) expense
    
    
    4,014
    
    
    
    (3,454
    )
    
    
    6,508Income (loss) from discontinued operations
    
    
    12,202
    
    
    
    (87,815
    )
    
    
    11,204Net Income (Loss)
    
    $
    (17,347
    )
    
    $
    (137,648
    )
    
    $
    8,807
 70




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##### Table of Contents



Consolidated Statements of Operations  continued
 Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands, except share and per share data)Earnings (Loss) Per ShareBasic:Loss from continuing operations
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )Discontinued operations
    
    
    0.67
    
    
    
    (4.80
    )
    
    
    0.61Net income (loss)
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.48Diluted:Loss from continuing operations
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )Discontinued operations
    
    
    0.67
    
    
    
    (4.80
    )
    
    
    0.60Net income (loss)
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.47Weighted average shares  basic
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,167,379Weighted average shares  diluted
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,547,515
  71




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##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Statements of Stockholders Equity
 StockAccumulated
    
    
    ReceivablesCommon Stock
    
    
    
    
    
    
    Retained
    
    
    Other
    
    
    andPar
    
    
    Capital
    
    
    Earnings
    
    
    Comprehensive
    
    
    TreasuryShares
    
    
    Value
    
    
    Surplus
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    Stock
    
    
    Total(Dollars in thousands, except share data)Balance, December 31, 2001
    
    
    17,876,752
    
    
    $
    17,877
    
    
    $
    148,972
    
    
    $
    66,082
    
    
    $
    4,331
    
    
    $
    (7,437
    )
    
    $
    229,825Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,807
    
    
    
    
    
    
    
    
    
    
    
    8,807Other comprehensive income:Unrealized securities holding gains
arising during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,475
    
    
    
    
    
    
    
    3,475Reclassification adjustment for gains
included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,127
    )
    
    
    
    
    
    
    (3,127
    )Income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72
    )
    
    
    
    
    
    
    (72
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    (91
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,992Common stock issuance
    
    
    341,772
    
    
    
    342
    
    
    
    7,594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,936Exercise of stock options
    
    
    93,718
    
    
    
    93
    
    
    
    1,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,310Receivables from sale of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500
    )
    
    
    (500
    )Balance, December 31, 2002
    
    
    18,312,242
    
    
    $
    18,312
    
    
    $
    157,783
    
    
    $
    74,889
    
    
    $
    4,516
    
    
    $
    (7,937
    )
    
    $
    247,563Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137,648
    )
    
    
    
    
    
    
    
    
    
    
    (137,648
    )Other comprehensive income (loss):Unrealized securities holding losses
arising during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,272
    )
    
    
    
    
    
    
    (5,272
    )Income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,849
    
    
    
    
    
    
    
    2,849Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    91Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (139,980
    )Exercise of stock options
    
    
    34,200
    
    
    
    34
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414Reduction of receivables from sale of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,729
    
    
    
    2,729Acquisition of treasury stock (86,611 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,203
    )
    
    
    (2,203
    )Balance, December 31, 2003
    
    
    18,346,442
    
    
    $
    18,346
    
    
    $
    158,163
    
    
    $
    (62,759
    )
    
    $
    2,184
    
    
    $
    (7,411
    )
    
    $
    108,523Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,347
    )
    
    
    
    
    
    
    
    
    
    
    (17,347
    )Other comprehensive income (loss):Unrealized securities holding losses
arising during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,826
    )
    
    
    
    
    
    
    (2,826
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,173
    )Reduction of receivables from sale of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,262
    
    
    
    4,262Acquisition of treasury stock (137,002 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (577
    )
    
    
    (577
    )Reduction of treasury stock upon sale of
Chicago (210,950 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,761
    )
    
    
    
    
    
    
    2,618
    
    
    
    857Balance, December 31, 2004
    
    
    18,346,442
    
    
    $
    18,346
    
    
    $
    158,163
    
    
    $
    (81,867
    )
    
    $
    (642
    )
    
    $
    (1,108
    )
    
    $
    92,892
  72




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##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Statements of Cash Flows
 Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Cash Flows from Operating ActivitiesNet loss from continuing operations
    
    $
    (29,549
    )
    
    $
    (49,833
    )
    
    $
    (2,397
    )Net income (loss) from discontinued operations
    
    
    12,202
    
    
    
    (87,815
    )
    
    
    11,204Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Deferred loan fee amortization
    
    
    (1,684
    )
    
    
    (4,995
    )
    
    
    (3,588
    )Depreciation and other amortization
    
    
    5,815
    
    
    
    3,925
    
    
    
    6,319Provision for credit losses
    
    
    17,432
    
    
    
    50,506
    
    
    
    19,074Proceeds from sale of loans held for sale
    
    
    
    
    
    
    
    
    
    
    2,594Deferred tax expense (benefit)
    
    
    911
    
    
    
    11,105
    
    
    
    (5,112
    )Impairment of goodwill
    
    
    1,921
    
    
    
    2,000
    
    
    
    Write down and losses on assets
    
    
    2,021
    
    
    
    3,231
    
    
    
    78Gain on investment securities, net
    
    
    
    
    
    
    
    
    
    
    (1,698
    )(Increase) decrease in interest receivable and other assets
    
    
    (549
    )
    
    
    (9,575
    )
    
    
    (1,997
    )Increase in interest payable and other liabilities
    
    
    7,744
    
    
    
    2,843
    
    
    
    1,076Operating cash flows of discontinued operations
    
    
    1,236
    
    
    
    339,645
    
    
    
    (181,214
    )Net cash provided by (used in) operating activities
    
    
    17,500
    
    
    
    261,037
    
    
    
    (155,661
    )Cash Flows from Investing ActivitiesMaturities of securities available for sale
    
    
    621,440
    
    
    
    173,720
    
    
    
    185,726Purchase of securities available for sale
    
    
    (649,860
    )
    
    
    (255,359
    )
    
    
    (231,664
    )Proceeds from sales of securities available for sale
    
    
    
    
    
    
    999
    
    
    
    49,434Repayments of mortgage-backed securities available for sale
    
    
    53,469
    
    
    
    110,442
    
    
    
    54,981Purchase of mortgage-backed securities available for sale
    
    
    (55,052
    )
    
    
    (120,721
    )
    
    
    (100,893
    )Net decrease (increase) in other investments
    
    
    1,856
    
    
    
    379
    
    
    
    (1,767
    )Net decrease (increase) in loans
    
    
    432,365
    
    
    
    139,792
    
    
    
    (242,206
    )Decrease (increase) in net assets of companies held for
disposal
    
    
    (956
    )
    
    
    9,782
    
    
    
    (6,148
    )Proceeds from sale of foreclosed properties
    
    
    704
    
    
    
    17,777
    
    
    
    2,160Proceeds from sale of subsidiaries
    
    
    68,991
    
    
    
    
    
    
    
    Capital expenditures
    
    
    (762
    )
    
    
    (3,629
    )
    
    
    (2,278
    )Investing cash flows of discontinued operations
    
    
    206,625
    
    
    
    38,201
    
    
    
    (171,615
    )Net cash provided by (used in) investing activities
    
    
    678,820
    
    
    
    111,383
    
    
    
    (464,270
    )Cash Flows from Financing Activities(Decrease) increase in deposits
    
    
    (321,454
    )
    
    
    151,927
    
    
    
    140,530Repayments of long-term borrowings
    
    
    (8,500
    )
    
    
    
    
    
    
    (10,067
    )Proceeds from issuance of guaranteed trust preferred
securities securities
    
    
    
    
    
    
    
    
    
    
    19,550Proceeds from issuance of common stock, net
    
    
    
    
    
    
    
    
    
    
    7,436Proceeds from stock options exercised
    
    
    
    
    
    
    414
    
    
    
    1,310Net decrease (increase) in receivables from sale of stock
    
    
    220
    
    
    
    
    
    
    
    Net (decrease) increase in short-term borrowings
    
    
    (11,937
    )
    
    
    (129,587
    )
    
    
    65,676Financing cash flows of discontinued operations
    
    
    (240,518
    )
    
    
    (369,361
    )
    
    
    430,487Net cash (used in) provided by financing activities
    
    
    (582,189
    )
    
    
    (346,607
    )
    
    
    654,922Net increase in cash and cash equivalents
    
    
    114,131
    
    
    
    25,813
    
    
    
    34,991Cash and cash equivalents, beginning of year
    
    
    119,804
    
    
    
    93,991
    
    
    
    59,000Cash and cash equivalents, end of year
    
    $
    233,935
    
    
    $
    119,804
    
    
    $
    93,991Supplemental Cash Flow InformationCash paid (received) during the year for:Interest expense by continuing operations
    
    $
    33,371
    
    
    $
    49,806
    
    
    $
    53,230Interest expense by discontinued operations
    
    
    31,957
    
    
    
    38,093
    
    
    
    44,327Income taxes by continuing operations
    
    
    (5,907
    )
    
    
    2,442
    
    
    
    3,538Income taxes by discontinued operations
    
    
    (5,860
    )
    
    
    5,290
    
    
    
    12,471
 73




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##### Table of Contents



Years Ended December 31,2004
    
    2003
    
    2002(Dollars in thousands)Supplemental Disclosures of Noncash ActivitiesTransfers of loans to foreclosed
properties-continuing operations
    
    $
    1,132
    
    
    $
    19,166
    
    
    $
    3,503Transfers of loans to foreclosed
properties-discontinued operations
    
    
    100
    
    
    
    13,221
    
    
    
    446Increase in foreclosed properties and short-term
borrowings from first mortgage
assumed-discontinued operations
    
    
    
    
    
    
    26,687
    
    
    
    Decrease in foreclosed properties and short-term
borrowings satisfied by the transfer of real
estate
    
    
    25,120
    
    
    
    
    
    
    
    Increase in investments in unconsolidated
subsidiaries related to deconsolidation of
trusts formed to issue trust preferred
securities
    
    
    
    
    
    
    1,857
    
    
    
    Increase in junior subordinated debentures
related to trust deconsolidation
    
    
    
    
    
    
    1,857
    
    
    
    
  74




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 1  Summary of Significant Accounting Policies
 Nature of Operations
   Consolidation
  Use of Estimates in the Preparation of Financial Statements
  Reclassifications
   Cash Flows
  Other Investments
  75




---



##### Table of Contents



Securities Available for Sale
  Loans Held for Sale
  Loans, Allowance for Loan Losses and Provision for Credit Losses
       76




---



##### Table of Contents



Intangible Assets
  Premises and Equipment
  Foreclosed Properties
  Assets of Companies Held For Disposal
  77




---



##### Table of Contents



Stock-Based Compensation
 Accounting for Stock
Issued to Employees (
 Accounting for Stock-Based Compensation (
  December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands, except share data)Net income (loss)
    
    As reported
    
    $
    (17,347
    )
    
    $
    (137,648
    )
    
    $
    8,807Assumed compensation cost     (1)
    
    
    (812
    )
    
    
    (1,247
    )
    
    
    (1,291
    )Pro forma
    
    $
    (18,159
    )
    
    $
    (138,895
    )
    
    $
    7,516Basic earnings per share
    
    As reported
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.48Pro forma
    
    
    (1.00
    )
    
    
    (7.60
    )
    
    
    0.41Diluted earnings (loss)
per share
    
    As reported
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.47Pro forma
    
    
    (1.00
    )
    
    
    (7.60
    )
    
    
    0.41
 
 (1)
    
    Assumed compensation costs are net of tax for 2003 and 2002, but not for 2004. Due to the
substantial losses incurred in 2004, tax benefits for 2004 and later years may not be
realized. As of December 31, 2004, no U.S. federal or state loss carryback potential remains.    Share-Based Payment . .
 Advertising Expense
  Receivables from Sale of Stock
  78




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##### Table of Contents



Income Taxes
    Business Segments
   Earnings Per Common Share
  Foreign Currency Translation
    79




---



##### Table of Contents



Derivative and Hedging Activities
        80




---



##### Table of Contents



Accounting Pronouncements
 Loan Commitments
 Application of Accounting
Principles to Loan Commitments (
 Changes in Accounting Principle
 Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3
 Investments
  Income Taxes
  81




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##### Table of Contents



Fair Value Measurements
 Fair Value Measurements
 Consideration of the Effects of Prior Year Misstatements on Current Year Financial Statements.
  Note 2  Cash and Due from Banks
  Note 3  Securities Available for Sale
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Dollars in thousands)December 31, 2004U.S. government agencies
    
    $
    194,164
    
    
    $
    36
    
    
    $
    560
    
    
    $
    193,640Obligations of states and political subdivisions
    
    
    15,738
    
    
    
    793
    
    
    
    1
    
    
    
    16,530Other notes and bonds
    
    
    350
    
    
    
    
    
    
    
    
    
    
    
    350Commercial paper
    
    
    12,658
    
    
    
    15
    
    
    
    
    
    
    
    12,673Mortgage-backed securities
    
    
    143,005
    
    
    
    464
    
    
    
    1,389
    
    
    
    142,080Federal Home Loan Bank and Federal Reserve Bank
stock
    
    
    13,751
    
    
    
    
    
    
    
    
    
    
    
    13,751$
    379,666
    
    
    $
    1,308
    
    
    $
    1,950
    
    
    $
    379,024December 31, 2003U.S. Treasuries
    
    $
    20,070
    
    
    $
    17
    
    
    $
    
    
    
    $
    20,087U.S. government agencies
    
    
    291,000
    
    
    
    1,122
    
    
    
    122
    
    
    
    292,000Obligations of states and political subdivisions
    
    
    56,816
    
    
    
    2,256
    
    
    
    81
    
    
    
    58,991Other notes and bonds
    
    
    1,050
    
    
    
    
    
    
    
    1
    
    
    
    1,049Commercial paper
    
    
    7,369
    
    
    
    4
    
    
    
    
    
    
    
    7,373Mortgage-backed securities
    
    
    247,736
    
    
    
    1,332
    
    
    
    2,343
    
    
    
    246,725Federal Home Loan Bank and Federal Reserve Bank
stock
    
    
    11,131
    
    
    
    
    
    
    
    
    
    
    
    11,131$
    635,172
    
    
    $
    4,731
    
    
    $
    2,547
    
    
    $
    637,356
   82




---



##### Table of Contents



Amortized
    
    
    FairCost
    
    
    Value(Dollars in thousands)Due in one year or less
    
    $
    169,748
    
    
    $
    169,495Due after one year through five years
    
    
    48,059
    
    
    
    48,309Due after five years through ten years
    
    
    4,563
    
    
    
    4,810Due after ten years
    
    
    540
    
    
    
    579222,910
    
    
    
    223,193Federal Home Loan Bank and Federal
Reserve Bank stock
    
    
    13,751
    
    
    
    13,751Mortgage-backed securities
    
    
    143,005
    
    
    
    142,080$
    379,666
    
    
    $
    379,024
  At December 31, 2004Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Dollars in thousands)U.S. government agencies
    
    $
    129,945
    
    
    $
    488
    
    
    $
    14,960
    
    
    $
    72
    
    
    $
    144,905
    
    
    $
    560Obligations of states and political subdivisions
    
    
    125
    
    
    
    1
    
    
    
    500
    
    
    
    
    
    
    
    625
    
    
    
    1Mortgage-backed securities
    
    
    64,336
    
    
    
    549
    
    
    
    54,017
    
    
    
    840
    
    
    
    118,353
    
    
    
    1,389Total securities with unrealized losses
    
    $
    194,406
    
    
    $
    1,038
    
    
    $
    69,477
    
    
    $
    912
    
    
    $
    263,883
    
    
    $
    1,950Securities without unrealized losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,141Total securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    379,024
   Note 4  Loans and Allowance for Loan Losses
 Loans
  December 31,2004
    
    
    2003% of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total(Dollars in thousands)Commercial
    
    $
    193,574
    
    
    
    25.9
    %
    
    $
    708,252
    
    
    
    29.9
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    11,447
    
    
    
    0.5Commercial real estate
    
    
    404,503
    
    
    
    54.1
    
    
    
    1,184,542
    
    
    
    50.1Commercial real estate construction
    
    
    109,676
    
    
    
    14.7
    
    
    
    363,822
    
    
    
    15.4Residential real estate
    
    
    31,027
    
    
    
    4.1
    
    
    
    85,893
    
    
    
    3.6Home equity loans
    
    
    7,701
    
    
    
    1.0
    
    
    
    12,272
    
    
    
    0.5Consumer loans
    
    
    2,124
    
    
    
    0.3
    
    
    
    3,554
    
    
    
    0.2Receivables from sale of stock
    
    
    (946
    )
    
    
    (0.1
    )
    
    
    (5,208
    )
    
    
    (0.2
    )Gross loans
    
    
    747,659
    
    
    
    100.0
    %
    
    
    2,364,574
    
    
    
    100.0
    %Deferred loan fees
    
    
    (1,044
    )
    
    
    
    
    
    
    (4,533
    )Loans
    
    
    746,615
    
    
    
    
    
    
    
    2,360,041Allowance for loan losses
    
    
    (29,551
    )
    
    
    
    
    
    
    (109,872
    )Loans, net
    
    $
    717,064
    
    
    
    
    
    
    $
    2,250,169
 83




---



##### Table of Contents



December 31,2004
    
    2003(Dollars in thousands)Nonaccrual loans
    
    $
    54,327
    
    
    $
    152,064Restructured loans
    
    
    1,536
    
    
    
    2,946Loans 90 days or more past due and still accruing
    
    
    6,911
    
    
    
    359
  December 31,2004
    
    
    2003(Dollars in thousands)Impaired loans without a specific allowance
    
    $
    16,535
    
    
    $
    59,581Impaired loans with a specific allowance
    
    
    34,431
    
    
    
    143,923Total impaired loans
    
    $
    50,966
    
    
    $
    203,504Specific allowance related to impaired loans
    
    $
    10,282
    
    
    $
    42,768Average balance of impaired loans-total company
    
    
    150,882
    
    
    
    119,395Average balance of impaired loans CIB  Chicago
    
    
    114,116
    
    
    
    82,778Interest income recognized on impaired loans
    
    $
    813
    
    
    $
    7,292
    Credit Concentrations
   % ofOutstanding
    
    % of
    
    StockholdersINDUSTRY
    
    Balance
    
    Loans
    
    Equity(Dollars in millions)Commercial Real Estate Developers
    
    $
    221.8
    
    
    
    30
    %
    
    
    239
    %Residential Real Estate Developers
    
    
    108.8
    
    
    
    15
    
    
    
    117Motel and Hotel
    
    
    77.9
    
    
    
    10
    
    
    
    84Manufacturing
    
    
    57.3
    
    
    
    8
    
    
    
    62
 84




---



##### Table of Contents



% ofOutstanding
    
    % of
    
    StockholdersINDUSTRY
    
    Balance
    
    Loans
    
    Equity(Dollars in millions)Retail Trade
    
    
    37.1
    
    
    
    5
    
    
    
    40Health Care Facilities
    
    
    31.4
    
    
    
    4
    
    
    
    34Nursing/Convalescent Homes
    
    
    29.0
    
    
    
    4
    
    
    
    31
  For the Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Balance at beginning of year
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855Charge-offs
    
    
    (79,979
    )
    
    
    (103,139
    )
    
    
    (17,499
    )Recoveries
    
    
    8,554
    
    
    
    2,043
    
    
    
    1,134Net loan charge-offs
    
    
    (71,425
    )
    
    
    (101,096
    )
    
    
    (16,365
    )Allowance related to loans acquired
    
    
    
    
    
    
    
    
    
    
    122Allowance for loans sold
    
    
    (38,842
    )
    
    
    
    
    
    
    Transfer from accrual for unfunded standby letters
of credit for funded standby letters of credit
    
    
    5,000
    
    
    
    
    
    
    
    Provision for loan losses  discontinued operations
    
    
    8,239
    
    
    
    95,340
    
    
    
    26,436Provision for loan losses  continuing operations
    
    
    16,707
    
    
    
    50,506
    
    
    
    19,074Balance at end of year
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122Allowance for loan losses as a percentage of loans
    
    
    3.96
    %
    
    
    4.66
    %
    
    
    2.41
    %
 Director and Officer Loans
  December 31,2004
    
    
    2003(Dollars in thousands)Balance at beginning of year
    
    $
    60,489
    
    
    $
    63,506Balance adjustments (1)
    
    
    (20,857
    )
    
    
    12,919New loans
    
    
    56,063
    
    
    
    48,772Repayments
    
    
    (85,185
    )
    
    
    (64,708
    )Sale of CIB  Chicago
    
    
    (570
    )
    
    
    Balance at end of year
    
    $
    9,940
    
    
    $
    60,489
 
 (1)
    
    Balance adjustments are primarily due to director and officer status changes in
these reporting periods. Note 5  Premises and Equipment, net
  December 31,2004
    
    
    2003(Dollars in thousands)Land
    
    $
    1,925
    
    
    $
    4,828Buildings and improvements
    
    
    10,523
    
    
    
    18,989Furniture and equipment
    
    
    8,890
    
    
    
    13,089Computer equipment and software
    
    
    12,161
    
    
    
    14,585Construction in progress
    
    
    5
    
    
    
    833,504
    
    
    
    51,499Less: accumulated depreciation
    
    
    (19,405
    )
    
    
    (22,361
    )$
    14,099
    
    
    $
    29,138
  85




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##### Table of Contents



Amount(Dollars in thousands)2005
    
    
    1,3332006
    
    
    1,2242007
    
    
    1,1962008
    
    
    9132009
    
    
    680Thereafter
    
    
    2,436$
    7,782
 Note 6  Goodwill and Other Intangible Assets
  Other Intangible AssetsCustomerCore Deposit
    
    
    BaseGoodwill
    
    
    Intangibles
    
    
    Intangibles
    
    
    Total(Dollars in thousands)Balance, December 31, 2002
    
    $
    13,122
    
    
    $
    1,354
    
    
    $
    346
    
    
    $
    1,700Recorded during the year
    
    
    
    
    
    
    
    
    
    
    831
    
    
    
    831Impairment loss (1)
    
    
    (12,140
    )
    
    
    
    
    
    
    (219
    )
    
    
    (219
    )Amortization expense (1)
    
    
    
    
    
    
    (372
    )
    
    
    (133
    )
    
    
    (505
    )Balance, December 31, 2003
    
    $
    982
    
    
    $
    982
    
    
    $
    825
    
    
    $
    1,807Impairment loss (1)
    
    
    
    
    
    
    
    
    
    
    (756
    )
    
    
    (756
    )Amortization expense (1)
    
    
    
    
    
    
    (227
    )
    
    
    (69
    )
    
    
    (296
    )Reduction of intangible assets due to sale of CIB  Chicago
    
    
    
    
    
    
    (755
    )
    
    
    
    
    
    
    (755
    )Balance, December 31, 2004
    
    $
    982
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Goodwill and Customer Base Intangibles amortization and impairment losses relate to
CIB    Chicago, Commercial Finance and Mortgage Services, Inc. which were
reclassified to Discontinued Operations in 2004 and are included in Discontinued
Operations on the Consolidated Statements of Operations for all periods presented.   December 31,2004
    
    
    2003Gross
    
    
    
    
    
    
    Net
    
    
    GrossCarry
    
    
    Accumulated
    
    
    Carry
    
    
    Carry
    
    
    Accumulated
    
    
    Net CarryAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(Dollars in thousands)Amortizing Intangible Assets:Core deposit intangibles
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,959
    
    
    $
    2,977
    
    
    $
    982Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other identifiable intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,221
    
    
    
    396
    
    
    
    825Mortgage servicing rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    19
    
    
    
    Total amortizing intangible assets
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    5,199
    
    
    $
    3,392
    
    
    
    1,807Non-Amortizing Goodwill
    
    
    
    
    
    
    
    
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    982Total intangible assets, net
    
    
    
    
    
    
    
    
    
    $
    982
    
    
    
    
    
    
    
    
    
    
    $
    2,789
 86




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##### Table of Contents



Note 7  Companies Held For Disposal and Discontinued Operations
    Reconciliation of Assets/Liabilities of companies held for disposal
 December 31,2004
    
    
    2003(Dollars in thousands)Assets of companies held for disposal
MICR
    
    $
    2,706
    
    
    $
    4,555CIB Construction
    
    
    13,697
    
    
    
    28,964MSI
    
    
    1,429
    
    
    
    N/AOther (1)
    
    
    (2,967
    )
    
    
    (4,463
    )Total assets of companies held for disposal
    
    $
    14,865
    
    
    $
    29,056Liabilities of companies held for disposalMICR
    
    $
    864
    
    
    $
    590CIB Construction
    
    
    10,222
    
    
    
    28,459MSI
    
    
    2,360
    
    
    
    N/AOther (1)
    
    
    (3,309
    )
    
    
    (11,668
    )Total liabilities of companies held for disposal
    
    $
    10,137
    
    
    $
    17,381
 
 (1)
    
    Includes mortgage banking assets/liabilities held by affiliates and elimination of
intercompany transactions between subsidiaries and affiliates. 87




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##### Table of Contents



Reconciliation of Net Income from Discontinued Operations:
 Pretaxincome(loss)beforegain/(loss) onsale of assets
    
    
    Gainand other
    
    
    (loss) on
    
    
    Income taxincome
    
    
    sale of
    
    
    expense
    
    
    Other income
    
    
    Net(expense)
    
    
    assets
    
    
    (benefit)
    
    
    (expense)(1)
    
    
    income/(loss)(Dollars in thousands)2004Commercial Finance
    
    $
    (221
    )
    
    $
    237
    
    
    $
    
    
    
    $
    142
    
    
    $
    158MSI
    
    
    (4,775
    )
    
    
    (738
    )
    
    
    (412
    )
    
    
    871
    
    
    
    (4,230
    )CIB  Chicago
    
    
    (4,471
    )
    
    
    15,627
    
    
    
    3,750
    
    
    
    4,941
    
    
    
    12,347CIB Construction
    
    
    3,646
    
    
    
    
    
    
    
    676
    
    
    
    957
    
    
    
    3,927Total
    
    $
    (5,821
    )
    
    $
    15,126
    
    
    $
    4,014
    
    
    $
    6,911
    
    
    $
    12,2022003Commercial Finance
    
    $
    (3,630
    )
    
    $
    
    
    
    $
    165
    
    
    $
    338
    
    
    $
    (3,457
    )MSI
    
    
    1,216
    
    
    
    
    
    
    
    2,656
    
    
    
    5,609
    
    
    
    4,169CIB  Chicago
    
    
    (96,195
    )
    
    
    
    
    
    
    (7,221
    )
    
    
    6,355
    
    
    
    (82,619
    )CIB Construction
    
    
    (2,662
    )
    
    
    
    
    
    
    946
    
    
    
    (2,300
    )
    
    
    (5,908
    )Total
    
    $
    (101,271
    )
    
    $
    
    
    
    $
    (3,454
    )
    
    $
    10,002
    
    
    $
    (87,815
    )2002Commercial Finance
    
    
    (120
    )
    
    
    
    
    
    
    (18
    )
    
    
    72
    
    
    
    (30
    )MSI
    
    
    130
    
    
    
    
    
    
    
    1,243
    
    
    
    2,983
    
    
    
    1,870CIB  Chicago
    
    
    10,511
    
    
    
    
    
    
    
    5,131
    
    
    
    4,786
    
    
    
    10,166CIB Construction
    
    
    (922
    )
    
    
    
    
    
    
    152
    
    
    
    272
    
    
    
    (802
    )Total
    
    $
    9,599
    
    
    $
    
    
    
    $
    6,508
    
    
    $
    8,113
    
    
    $
    11,204
 
 (1)
    
    Includes impairment losses recorded by the parent, mortgage banking income/expense
recognized by affiliates and elimination of intercompany transactions. CIB Construction
     December 31,2004 (1)
    
    
    2003 (1)(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    881
    
    
    $
    2,407Accounts receivable
    
    
    2,194
    
    
    
    12,807Inventories and contracts in progress
    
    
    
    
    
    
    1,438Other current assets
    
    
    3,547
    
    
    
    Current assets
    
    
    6,622
    
    
    
    16,652Property and equipment, net
    
    
    7,075
    
    
    
    12,312Total assets
    
    $
    13,697
    
    
    $
    28,964Liabilities and stockholders equity:Current portion of loans payable to CIB Marine and its affiliates
    
    $
    2,700
    
    
    $
    11,625Income tax payable
    
    
    2,311
    
    
    
    1,074
 88




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##### Table of Contents



December 31,2004 (1)
    
    
    2003 (1)(Dollars in thousands)Other liabilities
    
    
    5,211
    
    
    
    13,623Current liabilities
    
    
    10,222
    
    
    
    26,322Loans payable to nonaffiliated banks
    
    
    
    
    
    
    2,137Total liabilities
    
    
    10,222
    
    
    
    28,459Stockholders equity
    
    
    3,475
    
    
    
    505Total liabilities and stockholders equity
    
    $
    13,697
    
    
    $
    28,964
 
 (1)
    
    Included in assets and liabilities of companies held for disposal in the consolidated
balance sheet.  MICR
  Hillside Investors (includes CIB  Chicago)
   MSI
   December 31,2004 (1)
    
    
    2003(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    341
    
    
    $
    12Loans held for sale
    
    
    53
    
    
    
    148Net Loans
    
    
    
    
    
    
    202Property and equipment, net
    
    
    35
    
    
    
    1,019Other intangibles
    
    
    
    
    
    
    825
 89




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##### Table of Contents



December 31,2004 (1)
    
    
    2003(Dollars in thousands)Income tax receivable
    
    
    621
    
    
    
    512Other assets
    
    
    379
    
    
    
    254Total assets
    
    $
    1,429
    
    
    $
    2,972Liabilities and stockholders equity:Loans payable to unaffiliated banks
    
    $
    303
    
    
    $
    Other liabilities
    
    
    2,057
    
    
    
    1,434Total liabilities
    
    
    2,360
    
    
    
    1,434Stockholders equity
    
    
    (931
    )
    
    
    1,538Total liabilities and stockholders equity
    
    $
    1,429
    
    
    $
    2,972
 
 (1)
    
    Included in assets and liabilities of companies held for disposal in the consolidated
balance sheet.  Commercial Finance
  Note 8  Other Assets
  December 31,2004
    
    
    2003(Dollars in thousands)Prepaid expenses
    
    $
    1,266
    
    
    $
    1,616Accounts receivable
    
    
    1,395
    
    
    
    1,531Fair value of derivatives
    
    
    
    
    
    
    3,945Trust preferred securities underwriting fee,
net of amortization
    
    
    1,445
    
    
    
    1,500Investment in trust common securities
    
    
    2,481
    
    
    
    2,310Other investments
    
    
    3,257
    
    
    
    9,572Deferred taxes
    
    
    
    
    
    
    911Income tax receivable
    
    
    7,945
    
    
    
    25,926Other
    
    
    90
    
    
    
    402$
    17,879
    
    
    $
    47,713
  
    
    Investments in limited partnership interests in various affordable housing
partnerships. The carrying value of these investments was $2.1 million at December 31,
2004 and $5.7 million at December 31, 2003. CIB Marine has engaged in these transactions
to provide additional qualified investments under the Community Reinvestment Act and to
receive related income tax credits. The partnerships provide affordable housing to
low-income residents within CIB Marines markets and other locations.
    
    Interest in two companies operating as small business investment companies under the
Small Business Investment Act of 1958, as amended. CIB Marine committed to a $1.1 million
investment in these companies and as of December 31, 2004 has
invested $0.9 million. The carrying value of these investments was cost less other than
temporary impairment which was estimated to be $0.8 million at both December 31, 2004 and
2003.
    
    Interest in three limited partnerships which had a carrying value of $2.2 million at
December 31, 2003, net of a $0.7 million impairment loss recognized in 2003. These
interests were sold during the first quarter of 2004, and CIB Marine recognized a $0.2
million loss on the sale. The losses are included in write down and losses on assets in
the consolidated statement of operations.
 90




---



##### Table of Contents




    
    Investment in shares of the common stock of a closely held information services
company, which represented less than a 5% interest in the company. During 2004, CIB
Marine deemed this investment was impaired, and a impairment loss for the carrying amount
of $0.5 million was recorded. At December 31, 2003, the carrying value of this
investment, net of a $1.2 million impairment loss recognized in 2003 was $0.5 million.
The impairment losses are included in write down and losses on assets in the consolidated
statement of operations.
    
    Investment in shares of the common stock of a non-publicly traded bank holding
company, which represented less than a 5% interest in the company. In the third quarter
of 2004, CIB Marine sold its investment in this company, and recognized a $0.01 million
gain on the sale. The carrying amount of this investment at December 31, 2003 was $0.1
million.
    
    Investment in shares of the common stock of a non-publicly traded manufacturer, which
represented less than a 5% interest in the company. CIB Marine deemed its entire
investment in this company was impaired, and a impairment loss for the carrying amount of
$0.2 million was recorded during the second quarter of 2004. At December 31, 2003, the
carrying value of this investment, net of a $0.1 million impairment loss recognized in
2003 was $0.2 million. The impairment losses are included in write down and losses on
assets in the consolidated statement of operations.
 Note 9  Deposits
   December 31, 2004(Dollars in thousands)2005
    
    
    392,8602006
    
    
    146,2912007
    
    
    101,2602008
    
    
    38,2662009
    
    
    29,186Thereafter
    
    
    17,481Total
    
    $
    725,344
 Note 10  Short-Term Borrowings
     91




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##### Table of Contents



At Year end
    
    
    For the YearWeighted-
    
    
    Daily
    
    
    Weighted-
    
    
    HighestAverage
    
    
    Average
    
    
    Average
    
    
    Balances atBalance
    
    
    Rate
    
    
    Balances
    
    
    Rate
    
    
    Month End(Dollars in thousands)2004Federal funds purchased and securities sold under repurchase agreements
    
    $
    13,269
    
    
    
    1.67
    %
    
    $
    24,034
    
    
    
    1.40
    %
    
    $
    44,506Federal Home Loan Bank notes
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    1.68
    
    
    
    2,500Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    25,033
    
    
    
    5.19
    
    
    
    31,726Commercial paper
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury, tax and loan note
    
    
    5,540
    
    
    
    2.03
    
    
    
    2,273
    
    
    
    0.97
    
    
    
    7,167Mortgage note payable
    
    
    
    
    
    
    
    
    
    
    9,542
    
    
    
    7.34
    
    
    
    27,134Total short-term borrowings
    
    $
    18,809
    
    
    
    1.78
    %
    
    $
    61,317
    
    
    
    3.86
    %2003Federal funds purchased and securities sold under repurchase agreements
    
    $
    21,967
    
    
    
    1.09
    %
    
    $
    163,228
    
    
    
    1.22
    %
    
    $
    225,663Federal Home Loan Bank notes
    
    
    
    
    
    
    
    
    
    
    9,974
    
    
    
    1.91
    
    
    
    75,000Revolving lines of credit
    
    
    30,848
    
    
    
    3.75
    
    
    
    32,773
    
    
    
    3.59
    
    
    
    36,576Commercial paper
    
    
    
    
    
    
    
    
    
    
    2,985
    
    
    
    1.88
    
    
    
    5,843Treasury, tax and loan note
    
    
    13,099
    
    
    
    0.73
    
    
    
    3,330
    
    
    
    0.69
    
    
    
    14,296Mortgage note payable
    
    
    26,687
    
    
    
    10.00
    
    
    
    73
    
    
    
    10.00
    
    
    
    26,687Total short-term borrowings
    
    $
    92,601
    
    
    
    4.49
    %
    
    $
    212,363
    
    
    
    1.62
    %
   Note 11  Long-Term Borrowings
  FHLB
  92




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##### Table of Contents



CallableQuarterlyScheduled
    
    
    @ ParDecember 31,
    
    
    Maturity
    
    
    After2004
    
    
    2003Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate(Dollars in thousands)$
    
    
    
    
    
    %
    
    $
    3,500
    
    
    
    5.12
    %
    
    
    05/01/04
    
    
    
    N/A
    
    
    
    
    
    
    
    5,000
    
    
    
    5.12
    
    
    
    05/01/04
    
    
    
    N/A3,250
    
    
    
    4.95
    
    
    
    3,250
    
    
    
    4.95
    
    
    
    01/16/08
    
    
    
    01/16/01
    
    
    
    
    
    
    
    2,500
    
    
    
    4.95
    
    
    
    01/16/08
    
    
    
    01/16/012,000
    
    
    
    4.95
    
    
    
    2,000
    
    
    
    4.95
    
    
    
    01/16/08
    
    
    
    01/16/012,000
    
    
    
    5.09
    
    
    
    2,000
    
    
    
    5.09
    
    
    
    02/20/08
    
    
    
    02/20/01
    
    
    
    
    
    
    
    23,997
    
    
    
    7.07
    
    
    
    06/30/08
    
    
    
    N/A$
    7,250
    
    
    
    4.99
    %
    
    $
    42,247
    
    
    
    6.20
    %Fair value hedge basis adjustment:
    
    
    
    
    
    
    
    
    
    
    4,029Total
    
    $
    7,250
    
    
    
    
    
    
    $
    46,276
    Junior Subordinated Debentures
  December 31,
    
    
    
    
    
    Interest
    
    
    
    
    
    Callable2004
    
    2003
    
    Issue Date
    
    Rate
    
    Maturity Date
    
    After(Dollars in thousands)CIB Marine Capital Trust I
    
    $
    10,310
    
    
    $
    10,310
    
    
    
    03/23/00
    
    
    
    10.88
    %
    
    
    03/08/30
    
    
    
    03/08/10CIB Statutory Trust III
    
    
    15,464
    
    
    
    15,464
    
    
    
    09/07/00
    
    
    
    10.60
    
    
    
    09/07/30
    
    
    
    09/07/10CIB Statutory Trust IV
    
    
    15,464
    
    
    
    15,464
    
    
    
    02/22/01
    
    
    
    10.20
    
    
    
    02/22/31
    
    
    
    02/22/11CIB Statutory Trust V
    
    
    20,619
    
    
    
    20,619
    
    
    
    09/27/02
    
    
    Variable (1)
    
    
    09/27/32
    
    
    
    09/30/07Total junior subordinated debentures
    
    $
    61,857
    
    
    $
    61,857
 
 (1)
    
    Three-month LIBOR + 3.40% adjusted quarterly.  93




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##### Table of Contents



Note 12  Other Liabilities
 December 31,2004
    
    
    2003(Dollars in thousands)Accounts payable
    
    $
    344
    
    
    $
    4,328Accrual for unfunded commitments and standby
letters of credit
    
    
    725
    
    
    
    15,747Accrued real estate taxes
    
    
    190
    
    
    
    2,680Accrued compensation and employee benefits
    
    
    1,169
    
    
    
    2,483Accrued professional fees
    
    
    1,546
    
    
    
    1,449Accrued other expenses
    
    
    1,138
    
    
    
    850Fair value of derivatives
    
    
    
    
    
    
    294Other liabilities
    
    
    719
    
    
    
    1,151$
    5,831
    
    
    $
    28,982
  For the Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Balance at beginning of year
    
    $
    15,747
    
    
    $
    1,000
    
    
    $
    Transfer to allowance for loan losses for funded standby letters of credit
    
    
    (5,000
    )
    
    
    
    
    
    
    Charge-offs
    
    
    (6,255
    )
    
    
    
    
    
    
    Provision for losses on unfunded commitments and standby letters of credit:Continuing Operations
    
    
    725
    
    
    
    
    
    
    
    Discontinued Operations
    
    
    (1,900
    )
    
    
    14,747
    
    
    
    1,000Reduction of accrual for unfunded loan commitments and standby letters of
credit losses due to sale of CIB  Chicago
    
    
    (2,592
    )
    
    
    
    
    
    
    Balance at end of year
    
    $
    725
    
    
    $
    15,747
    
    
    $
    1,000
 Note 13  Stockholders Equity
 Receivables from Sale of Stock
  94




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##### Table of Contents



Treasury Stock
  Regulatory Capital
    CIB  Chicago,
   95




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##### Table of Contents



To Be WellCapitalized UnderPromptFor Capital
    
    CorrectiveActual
    
    Adequacy Purposes
    
    ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)December 31, 2004Total capital to risk weighted assets
CIB Marine Bancshares, Inc.
    
    $
    164,532
    
    
    
    17.47
    %
    
    $
    75,363
    
    
    
    8.00
    %
    
    $
    94,204Central Illinois Bank
    
    
    62,536
    
    
    
    13.67
    
    
    
    36,607
    
    
    
    8.00
    
    
    
    45,759
    
    
    
    10.00
    %Marine  Wisconsin
    
    
    25,085
    
    
    
    12.26
    
    
    
    16,374
    
    
    
    8.00
    
    
    
    20,468
    
    
    
    10.00CIB  Indiana
    
    
    12,372
    
    
    
    13.61
    
    
    
    7,274
    
    
    
    8.00
    
    
    
    9,093
    
    
    
    10.00Marine FSB
    
    
    10,215
    
    
    
    17.50
    
    
    
    4,671
    
    
    
    8.00
    
    
    
    5,839
    
    
    
    10.00Citrus Bank
    
    
    20,383
    
    
    
    18.73
    
    
    
    8,706
    
    
    
    8.00
    
    
    
    10,882
    
    
    
    10.00Tier 1 capital to risk weighted assets
CIB Marine Bancshares, Inc.
    
    $
    123,501
    
    
    
    13.11
    %
    
    $
    37,682
    
    
    
    4.00
    %
    
    $
    56,522Central Illinois Bank
    
    
    56,702
    
    
    
    12.39
    
    
    
    18,304
    
    
    
    4.00
    
    
    
    27,455
    
    
    
    6.00
    %Marine  Wisconsin
    
    
    22,455
    
    
    
    10.97
    
    
    
    8,187
    
    
    
    4.00
    
    
    
    12,281
    
    
    
    6.00CIB  Indiana
    
    
    11,220
    
    
    
    12.34
    
    
    
    3,637
    
    
    
    4.00
    
    
    
    5,456
    
    
    
    6.00Marine FSB
    
    
    9,482
    
    
    
    16.24
    
    
    
    2,335
    
    
    
    4.00
    
    
    
    3,503
    
    
    
    6.00Citrus Bank
    
    
    19,007
    
    
    
    17.47
    
    
    
    4,353
    
    
    
    4.00
    
    
    
    6,529
    
    
    
    6.00Tier 1 leverage to average assets
CIB Marine Bancshares, Inc.
    
    $
    123,501
    
    
    
    5.63
    %
    
    $
    87,793
    
    
    
    4.00
    %
    
    $
    109,741Central Illinois Bank
    
    
    56,702
    
    
    
    8.39
    
    
    
    27,018
    
    
    
    4.00
    
    
    
    33,772
    
    
    
    5.00
    %Marine  Wisconsin
    
    
    22,455
    
    
    
    7.78
    
    
    
    11,544
    
    
    
    4.00
    
    
    
    14,430
    
    
    
    5.00CIB  Indiana
    
    
    11,220
    
    
    
    8.85
    
    
    
    5,071
    
    
    
    4.00
    
    
    
    6,338
    
    
    
    5.00Marine FSB
    
    
    9,482
    
    
    
    10.83
    
    
    
    3,502
    
    
    
    4.00
    
    
    
    4,377
    
    
    
    5.00Citrus Bank
    
    
    19,007
    
    
    
    10.42
    
    
    
    7,294
    
    
    
    4.00
    
    
    
    9,118
    
    
    
    5.00December 31, 2003Total capital to risk weighted assets
CIB Marine Bancshares, Inc.
    
    $
    196,814
    
    
    
    7.19
    %
    
    $
    218,964
    
    
    
    8.00
    %
    
    $
    273,705Central Illinois Bank
    
    
    68,880
    
    
    
    9.50
    
    
    
    58,033
    
    
    
    8.00
    
    
    
    72,542
    
    
    
    10.00
    %CIB  Chicago
    
    
    71,551
    
    
    
    5.31
    
    
    
    107,822
    
    
    
    8.00
    
    
    
    134,777
    
    
    
    10.00Marine  Wisconsin
    
    
    28,039
    
    
    
    8.90
    
    
    
    25,212
    
    
    
    8.00
    
    
    
    31,515
    
    
    
    10.00CIB  Indiana
    
    
    15,718
    
    
    
    10.80
    
    
    
    11,647
    
    
    
    8.00
    
    
    
    14,559
    
    
    
    10.00Marine FSB
    
    
    9,896
    
    
    
    12.86
    
    
    
    6,157
    
    
    
    8.00
    
    
    
    7,697
    
    
    
    10.00Citrus Bank (1)
    
    
    20,585
    
    
    
    14.91
    
    
    
    11,047
    
    
    
    8.00
    
    
    
    13,808
    
    
    
    10.00Tier 1 capital to risk weighted assets
CIB Marine Bancshares, Inc.
    
    $
    137,558
    
    
    
    5.03
    %
    
    $
    109,482
    
    
    
    4.00
    %
    
    $
    164,223Central Illinois Bank
    
    
    59,565
    
    
    
    8.21
    
    
    
    29,017
    
    
    
    4.00
    
    
    
    43,525
    
    
    
    6.00
    %CIB  Chicago
    
    
    54,033
    
    
    
    4.01
    
    
    
    53,911
    
    
    
    4.00
    
    
    
    80,866
    
    
    
    6.00Marine  Wisconsin
    
    
    24,022
    
    
    
    7.62
    
    
    
    12,606
    
    
    
    4.00
    
    
    
    18,909
    
    
    
    6.00CIB  Indiana
    
    
    13,854
    
    
    
    9.52
    
    
    
    5,823
    
    
    
    4.00
    
    
    
    8,735
    
    
    
    6.00Marine FSB
    
    
    8,931
    
    
    
    11.60
    
    
    
    3,079
    
    
    
    4.00
    
    
    
    4,618
    
    
    
    6.00Citrus Bank
    
    
    18,839
    
    
    
    13.64
    
    
    
    5,523
    
    
    
    4.00
    
    
    
    8,285
    
    
    
    6.00Tier 1 leverage to average assets
CIB Marine Bancshares, Inc.
    
    $
    137,558
    
    
    
    4.23
    %
    
    $
    130,105
    
    
    
    4.00
    %
    
    $
    162,631Central Illinois Bank
    
    
    59,565
    
    
    
    6.48
    
    
    
    36,741
    
    
    
    4.00
    
    
    
    45,926
    
    
    
    5.00
    %CIB  Chicago
    
    
    54,033
    
    
    
    3.56
    
    
    
    60,713
    
    
    
    4.00
    
    
    
    75,892
    
    
    
    5.00Marine  Wisconsin
    
    
    24,022
    
    
    
    6.31
    
    
    
    15,233
    
    
    
    4.00
    
    
    
    19,041
    
    
    
    5.00CIB  Indiana
    
    
    13,854
    
    
    
    8.45
    
    
    
    6,560
    
    
    
    4.00
    
    
    
    8,200
    
    
    
    5.00Marine FSB
    
    
    8,931
    
    
    
    9.07
    
    
    
    3,938
    
    
    
    4.00
    
    
    
    4,923
    
    
    
    5.00Citrus Bank
    
    
    18,839
    
    
    
    9.25
    
    
    
    8,148
    
    
    
    4.00
    
    
    
    10,185
    
    
    
    5.00
 
 (1)
    
    Subsequent to December 31, 2003, the OCC required Citrus Bank to maintain total
capital of at least 14%. 96




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Federal Deposit Insurance
  Note 14  Other Expense
  Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Payroll and other processing charges
    
    $
    133
    
    
    $
    133
    
    
    $
    93Correspondent bank charges
    
    
    372
    
    
    
    384
    
    
    
    411Advertising/marketing
    
    
    691
    
    
    
    658
    
    
    
    688Amortization of goodwill and other intangibles
    
    
    
    
    
    
    
    
    
    
    9Communications
    
    
    1,182
    
    
    
    1,405
    
    
    
    1,274Supplies and printing
    
    
    421
    
    
    
    444
    
    
    
    442Shipping and handling
    
    
    807
    
    
    
    707
    
    
    
    665Collection expense
    
    
    221
    
    
    
    103
    
    
    
    474FDIC and state assessment
    
    
    1,634
    
    
    
    492
    
    
    
    435Recording and filing fees
    
    
    116
    
    
    
    98
    
    
    
    97Foreclosed property
    
    
    111
    
    
    
    408
    
    
    
    62Other expense
    
    
    2,705
    
    
    
    2,589
    
    
    
    2,604Total other expense
    
    $
    8,393
    
    
    $
    7,421
    
    
    $
    7,254
 97




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Note 15  Earnings (Loss) Per Share
  For the Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands, except share and per share data)Loss from continuing operations
    
    $
    (29,549
    )
    
    $
    (49,833
    )
    
    $
    (2,397
    )Weighted average shares outstanding:Basic
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,167,379Effect of dilutive stock options outstanding
    
    
    
    
    
    
    
    
    
    
    380,136Diluted
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,547,515Per share loss:Basic
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )Effect of dilutive stock options outstanding
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    (1.62
    )
    
    $
    (2.73
    )
    
    $
    (0.13
    )
 Note 16  Financial Instruments with Off-Balance Sheet Risk
  December 31,2004
    
    2003(Dollars in thousands)Commitments to extend credit
    
    $
    192,571
    
    
    $
    469,664Commitments to extend mortgage loans to be held for sale
    
    
    
    
    
    
    67,697Standby letters of credit
    
    
    11,626
    
    
    
    98,733Interest rate swaps
    
    
    20,930
    
    
    
    76,100Forward loan sale agreements
    
    
    
    
    
    
    82,892
  .
  ,
 98




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##### Table of Contents



Note 17  Commitments and Contingencies
   Dennis Lewis, et al. v. CIB Marine Bancshares, Inc., et al
  99




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100




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101




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Note 18  Stock Option Plans
   WeightedNumber of
    
    
    Range of Option
    
    
    AverageShares
    
    
    Prices per Share
    
    
    Exercise PriceShares under option at December 31, 2001
    
    
    1,657,643
    
    
    $
    4.95-22.89
    
    
    $
    15.81Granted
    
    
    21,099
    
    
    
    23.22-25.08
    
    
    
    24.30Lapsed or surrendered
    
    
    (51,773
    )
    
    
    10.87-22.89
    
    
    
    18.93Exercised
    
    
    (93,718
    )
    
    
    4.95-18.40
    
    
    
    8.50Shares under option at December 31, 2002
    
    
    1,533,251
    
    
    $
    4.95-25.08
    
    
    $
    16.27Granted
    
    
    
    
    
    
    
    
    
    
    Lapsed or surrendered
    
    
    (59,201
    )
    
    
    13.07-23.22
    
    
    
    17.78Exercised
    
    
    (34,200
    )
    
    
    4.95-13.07
    
    
    
    5.89Shares under option at December 31, 2003
    
    
    1,439,850
    
    
    $
    8.50-25.08
    
    
    $
    16.45Granted
    
    
    
    
    
    
    
    
    
    
    Lapsed or surrendered
    
    
    (648,519
    )
    
    
    8.50-25.08
    
    
    
    16.58Exercised
    
    
    
    
    
    
    
    
    
    
    Shares under option at December 31, 2004
    
    
    791,331
    
    
    $
    8.50-23.66
    
    
    $
    16.35Share exercisable at December 31, 2004
    
    
    703,005
    
    
    $
    8.50-23.66
    
    
    $
    15.72
  Options Outstanding
    
    Options ExercisableWeightedNumber of
    
    Average
    
    Weighted
    
    Number of
    
    WeightedShares
    
    Remaining
    
    Average
    
    Shares
    
    AverageRange of Option
    
    Outstanding
    
    Contractual
    
    Exercise
    
    Exercisable
    
    ExercisePrices
    
    at 12/31/04
    
    Life (Years)
    
    Price
    
    at 12/31/04
    
    Prices$8.50  10.03
    
    
    
    46,500
    
    
    
    
    
    
    $
    8.50
    
    
    
    46,500
    
    
    $
    8.5010.03  12.54
    
    
    
    40,650
    
    
    
    1.3
    
    
    
    10.87
    
    
    
    40,650
    
    
    
    10.8712.54  15.05
    
    
    
    225,450
    
    
    
    3.1
    
    
    
    13.11
    
    
    
    225,450
    
    
    
    13.1115.05  17.56
    
    
    
    161,400
    
    
    
    4.5
    
    
    
    16.19
    
    
    
    161,400
    
    
    
    16.1917.56  20.06
    
    
    
    164,563
    
    
    
    5.6
    
    
    
    18.43
    
    
    
    134,345
    
    
    
    18.4320.06  22.57
    
    
    
    2,038
    
    
    
    6.7
    
    
    
    22.07
    
    
    
    1,222
    
    
    
    22.0722.57  23.66
    
    
    
    150,730
    
    
    
    6.9
    
    
    
    22.92
    
    
    
    93,438
    
    
    
    22.91$8.50  23.66
    
    
    
    791,331
    
    
    
    4.4
    
    
    $
    16.35
    
    
    
    703,005
    
    
    $
    15.72
 Note 19  Other Benefit Plans
  102




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Note 20  Income Taxes
  For the Years Ended December 31,2004
    
    
    2003
    
    
2002(Dollars in thousands)Current tax provision (benefit):Federal
    
    $
    (5,381
    )
    
    $
    (8,716
    )
    
    $
    928State
    
    
    (370
    )
    
    
    (90
    )
    
    
    424Deferred (benefit)
    
    
    911
    
    
    
    11,105
    
    
    
    (5,112
    )$
    (4,840
    )
    
    $
    2,299
    
    
    $
    (3,760
    )
  For the Year Ended December 31,2004
    
    2003
    
    2002Amount
    
    %
    
    Amount
    
    %
    
    Amount
    
    %(Dollars in thousands)Income tax benefit at statutory tax rate
    
    $
    (12,036
    )
    
    
    (35.0
    )%
    
    $
    (16,637
    )
    
    
    (35.0
    )%
    
    $
    (2,155
    )
    
    
    (35.0
    )%Increase (reduction) in tax rate resulting from:State income taxes, net of federal income tax effect
    
    
    (2,845
    )
    
    
    (8.3
    )
    
    
    (4,061
    )
    
    
    (8.6
    )
    
    
    (999
    )
    
    
    (16.2
    )Tax exempt interest
    
    
    (650
    )
    
    
    (1.9
    )
    
    
    (778
    )
    
    
    (1.6
    )
    
    
    (764
    )
    
    
    (12.4
    )Affordable housing credits
    
    
    (360
    )
    
    
    (1.0
    )
    
    
    (339
    )
    
    
    (0.7
    )
    
    
    (268
    )
    
    
    (4.4
    )Valuation allowance
    
    
    9,328
    
    
    
    27.1
    
    
    
    23,247
    
    
    
    48.9
    
    
    
    394
    
    
    
    6.4Other, net
    
    
    1,723
    
    
    
    5.0
    
    
    
    867
    
    
    
    1.8
    
    
    
    32
    
    
    
    0.5$
    (4,840
    )
    
    
    (14.1
    )%
    
    $
    2,299
    
    
    
    4.8
    %
    
    $
    (3,760
    )
    
    
    (61.1
    )%
  December 31,2004
    
    
    2003
    
    

2002(Dollars in thousands)Deferred tax assets:Loss carryforwards
    
    $
    48,406
    
    
    $
    5,306
    
    
    $
    932Tax credit carryforwards
    
    
    1,457
    
    
    
    1,550
    
    
    
    Allowance for loan losses
    
    
    11,698
    
    
    
    41,042
    
    
    
    24,215Non-cash compensation
    
    
    133
    
    
    
    352
    
    
    
    317Deferred loan fees and other
    
    
    
    
    
    
    
    
    
    
    36Goodwill and intangible assets
    
    
    1,609
    
    
    
    4,285
    
    
    
    Allowance for unfunded loan commitments
    
    
    291
    
    
    
    5,728
    
    
    
    359Net unrealized loss in securities available for sale
    
    
    252
    
    
    
    
    
    
    
    Other securities
    
    
    63
    
    
    
    
    
    
    
    Other real estate owned
    
    
    455
    
    
    
    1,035
    
    
    
    Other
    
    
    939
    
    
    
    569
    
    
    
    194Deferred tax assets before valuation allowance
    
    
    65,303
    
    
    
    59,867
    
    
    
    26,053Valuation allowance
    
    
    (64,074
    )
    
    
    (48,796
    )
    
    
    (921
    )Net deferred tax assets
    
    
    1,229
    
    
    
    11,071
    
    
    
    25,132
 103




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##### Table of Contents



December 31,2004
    
    
    2003
    
    

2002(Dollars in thousands)Deferred tax liabilities:Net unrealized gain in securities available for sale
    
    $
    
    
    
    $
    798
    
    
    $
    2,849Goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    275Deferred loan fees and other
    
    
    102
    
    
    
    19
    
    
    
    Fixed assets
    
    
    613
    
    
    
    1,242
    
    
    
    875REIT Income
    
    
    
    
    
    
    7,511
    
    
    
    11,266Other securities
    
    
    
    
    
    
    393
    
    
    
    166Other
    
    
    514
    
    
    
    197
    
    
    
    296Total deferred tax liabilities
    
    
    1,229
    
    
    
    10,160
    
    
    
    15,727Net deferred tax assets
    
    $
    
    
    
    $
    911
    
    
    $
    9,405
  December 31,2004
    
    
    2003
    
    

2002(Dollars in thousands)Deferred tax benefits (expenses) included in continuing operations provision
    
    $
    (911
    )
    
    $
    (11,105
    )
    
    $
    5,112Purchase accounting deferred tax adjustments
    
    
    
    
    
    
    
    
    
    
    48Change in net deferred tax of discontinued operations (not in held for
sale/disposal in prior years)
    
    
    
    
    
    
    (150
    )
    
    
    5,185Reverse change in net deferred tax of company held for disposal (not in
discontinued operations)
    
    
    
    
    
    
    (88
    )
    
    
    47Deferred tax included in other comprehensive income
    
    
    1,050
    
    
    
    2,051
    
    
    
    (72
    )Valuation allowance against deferred tax in other comprehensive income
    
    
    (1,050
    )
    
    
    798
    
    
    
    Total increase (decrease) in net deferred tax assets
    
    $
    (911
    )
    
    $
    (8,494
    )
    
    $
    10,320
      104




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##### Table of Contents



Note 21  Fair Value of Financial Instruments
 Disclosures about Fair
Value of Financial Instruments
 December 31, 2004Carrying
    
    Estimated FairAmount
    
    Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    233,935
    
    
    $
    233,935Securities available for sale
    
    
    379,024
    
    
    
    379,024Loans, net
    
    
    717,064
    
    
    
    719,981Accrued interest receivable
    
    
    5,122
    
    
    
    5,122Financial liabilities:Deposit liabilities
    
    
    1,178,488
    
    
    
    1,180,687Short-term borrowings
    
    
    18,809
    
    
    
    18,809Long-term borrowings
    
    
    7,250
    
    
    
    7,734Junior subordinated debentures
    
    
    61,857
    
    
    
    66,780Accrued interest payable
    
    
    10,644
    
    
    
    10,644
 December 31, 2004Contractualor Notional
    
    Carrying
    
    EstimatedAmount
    
    Amount
    
    Fair Value(Dollars in thousands)Off-balance sheet items:Commitments to extend credit
    
    $
    192,571
    
    
    $
    
    
    
    $
    Standby letters of credit
    
    
    11,626
    
    
    
    (800
    )
    
    
    (800
    )Interest rate swap agreements
    
    
    20,930
    
    
    
    (13
    )
    
    
    (13
    )
  December 31, 2003Carrying
    
    EstimatedAmount
    
    Fair Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    119,804
    
    
    $
    119,804Loans held for sale
    
    
    16,735
    
    
    
    16,735Securities available for sale
    
    
    637,356
    
    
    
    637,356Loans, net
    
    
    2,250,169
    
    
    
    2,273,718Accrued interest receivable
    
    
    12,762
    
    
    
    12,762Financial liabilities:Deposit liabilities
    
    
    2,821,218
    
    
    
    2,848,210Short-term borrowings
    
    
    92,601
    
    
    
    92,601Long-term borrowings
    
    
    46,276
    
    
    
    47,401Junior subordinated debentures
    
    
    61,857
    
    
    
    67,871Accrued interest payable
    
    
    9,399
    
    
    
    9,399
 105




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##### Table of Contents



December 31, 2003ContractualOr Notional
    
    Carrying
    
    EstimatedAmount
    
    Amount
    
    Fair Value(Dollars in thousands)Off-balance sheet items:Commitments to extend credit
    
    $
    469,664
    
    
    $
    
    
    
    $
    Commitments to extend mortgage loans to be held for sale
    
    
    67,697
    
    
    
    239
    
    
    
    239Standby letters of credit
    
    
    98,733
    
    
    
    (16,009
    )
    
    
    (16,009
    )Interest rate swap agreements
    
    
    76,100
    
    
    
    3,568
    
    
    
    3,568Forward sale agreements
    
    
    82,892
    
    
    
    (156
    )
    
    
    (156
    )
       Cash and Cash Equivalents
  Available for Sale Securities
  Loans Held for Sale
  Loans Receivable
  106




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##### Table of Contents



Accrued Interest Receivable
  Deposit Liabilities
  Short-term Borrowings
  Long-term Borrowings
  Junior Subordinated Debentures
  Accrued Interest Payable
  Off-Balance Sheet Instruments
     107




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##### Table of Contents



Note 22  Parent Company Financial Statements
  Condensed Balance Sheets
 December 31,2004
    
    
    2003(Dollars in thousands)AssetsCash and due from banks
    
    $
    27,533
    
    
    $
    1,341Investments in subsidiaries
    
    
    121,070
    
    
    
    184,203Loans to subsidiaries
    
    
    3,424
    
    
    
    8,561Premises and equipment, net
    
    
    1,471
    
    
    
    1,802Investment in subsidiaries held for disposal
    
    
    4,385
    
    
    
    Foreclosed properties
    
    
    888
    
    
    
    1,438Other investments
    
    
    3,269
    
    
    
    6,120Other assets
    
    
    3,602
    
    
    
    2,317Total assets
    
    $
    165,642
    
    
    $
    205,782LiabilitiesShort-term borrowings
    
    $
    
    
    
    $
    23,595Accrued interest payable
    
    
    7,489
    
    
    
    1,850Accrued income taxes
    
    
    292
    
    
    
    2,096Junior subordinated debentures
    
    
    61,857
    
    
    
    61,857Other liabilities
    
    
    3,112
    
    
    
    7,861Total liabilities
    
    
    72,750
    
    
    
    97,259Stockholders EquityPreferred stock, $1 par value; 5,000,000 shares authorized,
none issued
    
    
    
    
    
    
    Common stock, $1 par value; 50,000,000 shares authorized,
18,346,442 issued and outstanding
    
    
    18,346
    
    
    
    18,346Capital surplus
    
    
    158,163
    
    
    
    158,163Retained earnings (deficit)
    
    
    (81,867
    )
    
    
    (62,759
    )Accumulated other comprehensive income, net
    
    
    (642
    )
    
    
    2,184Receivables from sale of stock
    
    
    (946
    )
    
    
    (5,208
    )Treasury stock at cost, 12,663 and 86,611 respectively
    
    
    (162
    )
    
    
    (2,203
    )Total stockholders equity
    
    
    92,892
    
    
    
    108,523Total liabilities and stockholders equity
    
    $
    165,642
    
    
    $
    205,782
 108




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##### Table of Contents



Condensed Statements of Operations
 Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Interest and Dividend IncomeDividends from subsidiaries
    
    $
    7,200
    
    
    $
    22,250
    
    
    $
    1,300Loan interest from subsidiaries
    
    
    320
    
    
    
    298
    
    
    
    258Other
    
    
    
    
    
    
    
    
    
    
    Total interest and dividend income
    
    
    7,520
    
    
    
    22,548
    
    
    
    1,558Interest ExpenseShort-term borrowings
    
    
    1,170
    
    
    
    965
    
    
    
    922Junior subordinated debentures
    
    
    5,710
    
    
    
    5,198
    
    
    
    4,523Total interest expense
    
    
    6,880
    
    
    
    6,163
    
    
    
    5,445Net interest income (loss)
    
    
    640
    
    
    
    16,385
    
    
    
    (3,887
    )Provision for credit losses
    
    
    
    
    
    
    
    
    
    
    800Net interest income (loss) after provision for credit losses
    
    
    640
    
    
    
    16,385
    
    
    
    (4,687
    )Noninterest incomeEquity in undistributed earnings (loss) of subsidiaries
    
    
    (24,597
    )
    
    
    (144,093
    )
    
    
    13,952Fees from subsidiaries
    
    
    11,660
    
    
    
    11,267
    
    
    
    8,915Gain on sale of subsidiaries
    
    
    14,889
    
    
    
    
    
    
    
    Other income
    
    
    120
    
    
    
    2,884
    
    
    
    317Total noninterest income (loss)
    
    
    2,072
    
    
    
    (129,942
    )
    
    
    23,184Noninterest expenseCompensation and employee benefits
    
    
    12,240
    
    
    
    12,570
    
    
    
    10,421Equipment
    
    
    1,079
    
    
    
    678
    
    
    
    443Occupancy and premises
    
    
    815
    
    
    
    827
    
    
    
    1,043Professional services
    
    
    3,817
    
    
    
    769
    
    
    
    454Write down and losses on assets
    
    
    1,075
    
    
    
    2,406
    
    
    
    Other
    
    
    1,964
    
    
    
    2,323
    
    
    
    1,918Total noninterest expense
    
    
    20,990
    
    
    
    19,573
    
    
    
    14,279Income (loss) before income taxes
    
    
    (18,278
    )
    
    
    (133,130
    )
    
    
    4,218Income tax expense (benefit)
    
    
    (931
    )
    
    
    4,518
    
    
    
    (4,589
    )Net income (loss)
    
    $
    (17,347
    )
    
    $
    (137,648
    )
    
    $
    8,807
 109




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##### Table of Contents



Condensed Statement of Cash Flows
 Years Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in thousands)Cash Flows from Operating Activities:Net income (loss)
    
    $
    (17,347
    )
    
    $
    (137,648
    )
    
    $
    8,807Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:Equity in undistributed (earnings) loss of subsidiaries
    
    
    24,597
    
    
    
    144,093
    
    
    
    (13,952
    )Depreciation and amortization
    
    
    623
    
    
    
    454
    
    
    
    260Provision for credit losses
    
    
    
    
    
    
    
    
    
    
    800Deferred tax expense (benefit)
    
    
    (6,244
    )
    
    
    6,570
    
    
    
    (77
    )Write down and losses on assets
    
    
    1,075
    
    
    
    2,406
    
    
    
    Gain on sale of subsidiaries
    
    
    (14,889
    )
    
    
    
    
    
    
    Loss on sale of other assets
    
    
    
    
    
    
    2
    
    
    
    Increase in interest receivable and other assets
    
    
    (1,877
    )
    
    
    (3,107
    )
    
    
    (1,460
    )Increase (decrease) in interest payable and other liabilities
    
    
    5,330
    
    
    
    4,880
    
    
    
    (1,693
    )Net cash provided by (used in) operating activities
    
    
    (8,732
    )
    
    
    17,650
    
    
    
    (7,315
    )Cash Flows from Investing Activities:Decrease (increase) in investment in limited partnerships and other investments
    
    
    3,022
    
    
    
    899
    
    
    
    (301
    )Net (increase) decrease in loans
    
    
    5,137
    
    
    
    (3,008
    )
    
    
    8,537Net increase in investment in subsidiaries
    
    
    (19,350
    )
    
    
    (23,081
    )
    
    
    (37,258
    )Dividends received from subsidiaries
    
    
    7,200
    
    
    
    22,250
    
    
    
    1,300Capital expenditures
    
    
    (236
    )
    
    
    (1,080
    )
    
    
    (646
    )Increase in investment in subsidiaries held for disposal
    
    
    (4,384
    )
    
    
    
    
    
    
    Sale of subsidiaries, net of cash
    
    
    68,891
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    60,280
    
    
    
    (4,020
    )
    
    
    (28,368
    )Cash Flows from Financing Activities:Proceeds from issuance of junior subordinated debt
    
    
    
    
    
    
    
    
    
    
    19,550Proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    7,436Proceeds from stock options exercised
    
    
    
    
    
    
    414
    
    
    
    1,310Sale of treasury stock (1)
    
    
    (1,761
    )
    
    
    
    
    
    
    Net increase (decrease) in short-term borrowings
    
    
    (23,595
    )
    
    
    (13,216
    )
    
    
    7,149Net cash (used in) provided by financing activities
    
    
    (25,356
    )
    
    
    (12,802
    )
    
    
    35,445Net increase (decrease) in cash and cash equivalents
    
    
    26,192
    
    
    
    828
    
    
    
    (238
    )Cash and cash equivalents, beginning of year
    
    
    1,341
    
    
    
    513
    
    
    
    751Cash and cash equivalents, end of year
    
    $
    27,533
    
    
    $
    1,341
    
    
    $
    513
 
 (1)
    
    Treasury stock sold in conjunction with the sale of CIB-Chicago. 110




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##### Table of Contents



Note 23  Quarterly Consolidated Financial Information (Unaudited)
 First
    
    
    
    
    
    
    Third
    
    
    FourthQuarter
    
    
    Second Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TOTAL(Dollars in thousands, except share data)2004Total interest income
    
    $
    19,869
    
    
    $
    17,832
    
    
    $
    16,331
    
    
    $
    15,947
    
    
    $
    69,979Total interest expense
    
    
    10,248
    
    
    
    9,321
    
    
    
    8,933
    
    
    
    8,785
    
    
    
    37,287Net interest income
    
    
    9,621
    
    
    
    8,511
    
    
    
    7,398
    
    
    
    7,162
    
    
    
    32,692Provision for credit losses
    
    
    7,321
    
    
    
    8,670
    
    
    
    (738
    )
    
    
    2,179
    
    
    
    17,432Net interest income after provision for credit losses
    
    
    2,300
    
    
    
    (159
    )
    
    
    8,136
    
    
    
    4,983
    
    
    
    15,260Gain on investment securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other noninterest income
    
    
    1,069
    
    
    
    1,080
    
    
    
    1,159
    
    
    
    1,693
    
    
    
    5,001Impairment of goodwill and other intangible assets
    
    
    1,921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,921Other noninterest expense
    
    
    13,062
    
    
    
    13,598
    
    
    
    13,645
    
    
    
    12,424
    
    
    
    52,729Loss from continuing operations before income taxes
    
    
    (11,614
    )
    
    
    (12,677
    )
    
    
    (4,350
    )
    
    
    (5,748
    )
    
    
    (34,389
    )Income tax expense
    
    
    (1,323
    )
    
    
    (1,035
    )
    
    
    (1,069
    )
    
    
    (1,413
    )
    
    
    (4,840
    )Loss from continuing operations
    
    
    (10,291
    )
    
    
    (11,642
    )
    
    
    (3,281
    )
    
    
    (4,335
    )
    
    
    (29,549
    )Discontinued operationsIncome (loss) from discontinued operations-pretax (1)
    
    
    (521
    )
    
    
    (3,200
    )
    
    
    2,583
    
    
    
    17,354
    
    
    
    16,216Taxes effect for discontinued operations
    
    
    983
    
    
    
    1,023
    
    
    
    1,091
    
    
    
    917
    
    
    
    4,014Net income (loss) from discontinued operations
    
    
    (1,504
    )
    
    
    (4,223
    )
    
    
    1,492
    
    
    
    16,437
    
    
    
    12,202Net loss
    
    $
    (11,795
    )
    
    $
    (15,865
    )
    
    $
    (1,789
    )
    
    $
    12,102
    
    
    $
    (17,347
    )Earnings per share:BasicLoss from continuing operations
    
    $
    (0.57
    )
    
    $
    (0.64
    )
    
    $
    (0.18
    )
    
    $
    (0.23
    )
    
    $
    (1.62
    )Discontinued operations
    
    
    (0.08
    )
    
    
    (0.23
    )
    
    
    0.08
    
    
    
    0.90
    
    
    
    0.67Net income (loss)
    
    $
    (0.65
    )
    
    $
    (0.87
    )
    
    $
    (0.10
    )
    
    $
    0.67
    
    
    $
    (0.95
    )DilutedLoss from continuing operations
    
    $
    (0.57
    )
    
    $
    (0.64
    )
    
    $
    (0.18
    )
    
    $
    (0.23
    )
    
    $
    (1.62
    )Discontinued operations
    
    
    (0.08
    )
    
    
    (0.23
    )
    
    
    0.08
    
    
    
    0.90
    
    
    
    0.67Net income (loss)
    
    $
    (0.65
    )
    
    $
    (0.87
    )
    
    $
    (0.10
    )
    
    $
    0.67
    
    
    $
    (0.95
    )
 
 (1)
    
    In the fourth quarter, CIB Marine sold CIB  Chicago and recognized a $15.6
million gain on the sale. First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TOTAL(Dollars in thousands, except share data)2003Total interest income
    
    $
    25,213
    
    
    $
    25,435
    
    
    $
    23,531
    
    
    $
    22,484
    
    
    $
    96,663Total interest expense
    
    
    12,364
    
    
    
    12,178
    
    
    
    11,118
    
    
    
    10,918
    
    
    
    46,578Net interest income
    
    
    12,849
    
    
    
    13,257
    
    
    
    12,413
    
    
    
    11,566
    
    
    
    50,085Provision for credit losses
    
    
    9,393
    
    
    
    7,407
    
    
    
    25,514
    
    
    
    8,192
    
    
    
    50,506Net interest income after provision for credit losses
    
    
    3,456
    
    
    
    5,850
    
    
    
    (13,101
    )
    
    
    3,374
    
    
    
    (421
    )Gain on investment securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other noninterest income
    
    
    1,130
    
    
    
    1,395
    
    
    
    1,900
    
    
    
    1,810
    
    
    
    6,235Impairment of goodwill and other intangible assets (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    2,000Other noninterest expense
    
    
    11,705
    
    
    
    11,871
    
    
    
    14,259
    
    
    
    13,513
    
    
    
    51,348Loss from continuing operations before income taxes
    
    
    (7,119
    )
    
    
    (4,626
    )
    
    
    (25,460
    )
    
    
    (10,329
    )
    
    
    (47,534
    )Income tax expense (benefit) (2)
    
    
    (2,891
    )
    
    
    (1,639
    )
    
    
    2,272
    
    
    
    4,557
    
    
    
    2,299Loss from continuing operations
    
    
    (4,228
    )
    
    
    (2,987
    )
    
    
    (27,732
    )
    
    
    (14,886
    )
    
    
    (49,833
    )Discontinued operationsLoss from discontinued operations  pretax (3)
    
    
    (2,099
    )
    
    
    (18,951
    )
    
    
    (43,819
    )
    
    
    (26,400
    )
    
    
    (91,269
    )Taxes effect for discontinued operations (2)
    
    
    (766
    )
    
    
    (6,577
    )
    
    
    5,618
    
    
    
    (1,729
    )
    
    
    (3,454
    )Net income (loss) from discontinued operations
    
    
    (1,333
    )
    
    
    (12,374
    )
    
    
    (49,437
    )
    
    
    (24,671
    )
    
    
    (87,815
    )Net loss
    
    $
    (5,561
    )
    
    $
    (15,361
    )
    
    $
    (77,169
    )
    
    $
    (39,557
    )
    
    $
    (137,648
    )Earnings per share:BasicLoss from continuing operations
    
    $
    (0.23
    )
    
    $
    (0.16
    )
    
    $
    (1.52
    )
    
    $
    (0.82
    )
    
    $
    (2.73
    )Discontinued operations
    
    
    (0.07
    )
    
    
    (0.68
    )
    
    
    (2.71
    )
    
    
    (1.34
    )
    
    
    (4.80
    )Net loss
    
    $
    (0.30
    )
    
    $
    (0.84
    )
    
    $
    (4.23
    )
    
    $
    (2.16
    )
    
    $
    (7.53
    )DilutedLoss from continuing operations
    
    $
    (0.23
    )
    
    $
    (0.16
    )
    
    $
    (1.52
    )
    
    $
    (0.82
    )
    
    $
    (2.73
    )Discontinued operations
    
    
    (0.07
    )
    
    
    (0.68
    )
    
    
    (2.71
    )
    
    
    (1.34
    )
    
    
    (4.80
    )Net loss
    
    $
    (0.30
    )
    
    $
    (0.84
    )
    
    $
    (4.23
    )
    
    $
    (2.16
    )
    
    $
    (7.53
    )
 111




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##### Table of Contents



(1)
    
    In the fourth quarter of 2003, CIB Marine wrote off $2.0 million in goodwill related to
MICR. See the intangible assets note for further information.(2)
    
    In the third and fourth quarter of 2003, a valuation allowance was provided by way of a
charge to tax expense to reduce the net deferred tax assets. See the income tax footnote for
further information.(3)
    
    In the fourth quarter of 2003, CIB Marine recognized a net $11.3 million impairment loss on
goodwill and other intangibles. CIB Marine recognized an $8.7 and $3.5 million impairment loss
on goodwill related to the acquisition of CIB  Chicago and Commercial Finance, respectively
and recorded a $1.1 million recovery on impairment losses recognized during prior quarters on
CIB Construction. Additionally, CIB Marine recognized a $0.2 million impairment loss on
customer-based intangibles of Commercial Finance. Note 24  Subsequent Events
 Sale and Wind Down of Nonbank Subsidiaries
  CIB Marine Capital, LLC.
 Canron.
 MICR .
 Regulatory Orders and Agreements
  Liquidity
  FDIC Deposit Insurance Premiums
  112




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##### Table of Contents



Stock Options
  FHLB Stock Investment Activity
   
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 (a) Evaluation of Disclosure Controls and Procedures
   113




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##### Table of Contents



(b) Changes in Internal Control over Financial Reporting
   (i)
    
    CIB Marines control environment did not sufficiently promote effective
internal control over financial reporting, and this material weakness was a
contributing factor in the development of other material weaknesses.
 
    
    The senior management and board of the company were significantly
restructured, including the following;
 o
    
    Hiring of a new President and CEO of CIB Marine,o
    
    Hiring of a new Chief Credit Officer,o
    
    Resignation of the President and CEO and the Senior Lender of CIB Chicago,o
    
    Separation of Chief Credit Officer and Chief Lending
Officer duties and the hiring of a new Chief Lending Officer;o
    
    Appointment of a new Chairman; ando
    
    Appointment of a new Director.
 (ii)
    
    CIB Marines polices and procedures over the determination of the allowance for loan losses were not effective.
 
    
    The company completed an assessment of the grading and impairment of its
commercial loan portfolio, which was validated by an independent third party;
    
    The company implemented a quarterly loan grade review process;
    
    The company engaged an independent, outside service provider to perform
loan reviews at its subsidiary banks;
    
    The company implemented stricter loan underwriting standards, including
procedures to analyze borrowers global cash flow and changes to the loan
approval process and limits;
    
    The company reduced the acceptable level of outstanding credit to a
borrower and its related interests and took action to reduce the level of
credit concentrations outstanding; and
    
    The company implemented changes to its loan workout guidelines.
 (iii)
    
    CIB Marines policies and procedures were not effective with regard to
coins, jewelry and precious metals loan collateral held, by failing to adequately
appraise collateral in its possession, control access by the borrower to such
collateral and periodically inspect the collateral using persons with expertise in
such collateral.
 
    
    The company implemented procedures to monitor loan collateral and valuation
of collateral for collateral dependent loans.
 (iv)
    
    CIB Marine did not have sufficient policies and procedures to track loans
secured by the common stock of CIB Marine or used by borrowers to purchase the
common stock of CIB Marine.
 114




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##### Table of Contents




    
    The company developed and implemented procedures to track loans secured by
the common stock of CIB Marine and loans used by borrowers to purchase the
common stock of CIB Marine. The company also amended its loan policy to
prohibit any additional loans secured by CIB Marine common stock.
 (v)
    
    CIB Marine did not have sufficient or adequate policies and procedures
over Information Technology change management.
 
    
    The company revised its Information Security Policy and established
Information Security Standards, including a Change Management Standard, and
established an Information Security Steering Committee and a Change Review
Committee.
  (i)
    
    CIB Marines control environment did not sufficiently promote effective
internal control over financial reporting, and this material weakness was a
contributing factor in the development of other material weaknesses.
 
    
    The company appointed two new directors, one of whom is considered a
financial expert and who was appointed as Audit Committee Chairman; and
    
    The company revised its Code of Ethics.
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Directors
 Serving
    
    Term Scheduled
    
    Position with CIB Marine or Other Principal Occupation andName and Age
    
    Since
    
    to Expire
    
    Other DirectorshipsJosé Araujo (59)
    
    1988
    
    2005
    
    President of Joaraucar Consulting, Inc., an
industrial gas service company, since October
1997; Director of Central Illinois Bank since
1987; and Chairman of the Board of Citrus Bank
from March 2004 to January 2005, International
Business Development Officer of Citrus Bank
since April 2003, and Director of Citrus Bank
since 2001.Norman E. Baker (58)
    
    1988
    
    2004
    
    President and Chief Executive Officer of Estoy
Pronto, Inc., a consulting and investment
company, since July 1994; Chairman of Central
Illinois Bank from February 2004 to March 2006,
Director of Central Illinois Bank since 1988;
Director of CIB  Indiana, since 1998; Chairman
of Marine  FSB from February 2004 to June 2005
and Director of Marine  FSB from October 1999
until its merger into Marine  Wisconsin in
March 2006.W. Scott Blake (44)
    
    1987
    
    2004
    
    President of Blake Capital Corp., a real estate
development, investment and property management
company, since July 1998; Chairman of CIB
Marine since February 2004; Chairman of Marine
 Wisconsin since March 2006; Director of
Marine  Wisconsin since December 2002; Manager
of CIB Marine Capital LLC since 2001; and
Director of MICR, Inc. since 2000.(1).
 115




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##### Table of Contents



Serving
    
    Term Scheduled
    
    Position with CIB Marine or Other Principal Occupation andName and Age
    
    Since
    
    to Expire
    
    Other DirectorshipsStanley J. Calderon (59)
    
    2004
    
    2006
    
    Director of CIB Marine since November 2004,
President and Chief Executive Officer of CIB
Marine since April 2004; Director of the
following bank and nonbank subsidiaries of CIB
Marine: Central Illinois Bank since December
2004, Marine  Wisconsin since February 2005;
Citrus Bank since February 2005, and CIB Marine
Information Services, Inc. since March 2005.
Prior to joining CIB Marine, Mr. Calderon was
Executive Vice President and Manager of Middle
Market Banking for the Midwest Region of Bank
One from 1999 to 2003.Steven C. Hillard (42)
    
    2004
    
    2006
    
    President of HILMUN Holdings, Inc., a
diversified holding company with interests in
manufacturing and financial investments, since
September 1991; Chief Executive Officer and
Chairman of the Board of Pinnacle Door Company,
a distributor and installer of garage doors,
since September 1992; Managing member of HILMUN
Development, LLC, a real estate development
company, since 1993; Chairman, President and
Chief Executive Officer of Strategic Capital
Bancorp, Inc. from November 2002 to September
2004; President of CMI Johnson-Ross
Corporation, a manufacturer of construction
equipment, from July 1997 to 2001; Director of
CIB Marine from 1991 to 2002; and Director of
MICR, Inc. since December 2004.(1)Gary L. Longman (56)
    
    2004
    
    2006
    
    Retired; Partner at KPMG, LLP from 1980 to 2000.Jerry D. Maahs (73)
    
    1987
    
    2005
    
    Chairman and Chief Executive Officer of Alto
Shaam, Inc. since 2001; President and Chief
Executive Officer of Alto Shaam, Inc. from 1968
to 2001; Chief Executive Officer of Enthermics,
Inc., manufacturers of medical equipment
products, since 1980; President and Chief
Executive Officer of AS International, an
international sales company since 1975;
Director of The Howard Company, a provider of
menu systems and retail merchandising displays,
since 1994; and Director of Marine  Wisconsin
since 1997.(2)Donald M. Trilling (74)
    
    1987
    
    2004
    
    Chairman of the Board of CIB Marine from
September 1987 to February 2004; Secretary of
Illini Tile Distributors Inc., an importer and
distributor of ceramic tiles, from 1983 to
2002; Director of Central Illinois Bank from
1987 to April 2004.(3)Howard E. Zimmerman (75)
    
    1987
    
    2005
    
    Retired; Chairman of the Board of Zimmerman
Real Estate Group, a real estate appraisal and
consulting company since 1986.
 
 (1)
    
    In November 2005, CIB Marine sold substantially all of the assets of MICR.(2)
    
    Mr. Maahs died in April 2006.(3)
    
    In September 2003, Illini Tile Distributors, Inc. entered into liquidation through an
assignment for the benefit of creditors under Illinois law. Executive Officers
  Name and Age
    
    Office and ExperienceStanley J. Calderon (59)
    
    Mr. Calderon has served as President and Chief
Executive Officer of CIB Marine since April
2004; Director of CIB Marine since November
2004; and Director of the following bank and
nonbank subsidiaries of CIB Marine: Central
Illinois Bank since December 2004, Marine 
Wisconsin since February 2005, Citrus Bank
since February 2005, and CIB Marine Information
Services, Inc. since March 2005. Prior to
joining CIB Marine, Mr. Calderon was Executive
Vice President and Manager of Middle Market
Banking for the Midwest Region of Bank One
(subsequently acquired by JP Morgan Chase) from
1999 to 2003.
 116




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##### Table of Contents



Serving
    
    Term Scheduled
    
    Position with CIB Marine or Other Principal Occupation andName and Age
    
    Since
    
    to Expire
    
    Other DirectorshipsMichael L. Rechkemmer (55)
    
    
    
    
    
    Mr. Rechkemmer has been Executive Vice
President of CIB Marine since July 1999 and
Chief Operations Officer since April 2000. He
was CIB  Chicagos Vice Chairman and Chief
Operating Officer from January 1997 to June
1998, its President and Chief Executive Officer
from July 1994 to December 1996, and its
interim President and CEO from March 2004 to
November 2004. Prior to joining CIB  Chicago,
Mr. Rechkemmer was President and Chief
Executive Officer of Mid America Bank N.A. from
January 1991 to June 1994.Margaret A. Incandela (40)
    
    
    
    
    
    
    
    
    
    Ms. Incandela has been Executive Vice President
and Chief Credit Officer since February 2004,
and previously served as Loan Review Manager
since October 2003. Prior to joining CIB
Marine, Ms. Incandela was Vice President and
Credit Department Manager of Bridgeview Bank
from July to December 2002; and held various
management positions at Banco Popular from June
1998 to July 2002 (1).Steven T. Klitzing (41)
    
    
    
    
    
    
    
    
    
    Mr. Klitzing is Executive Vice President, Chief
Financial Officer, Treasurer and Assistant
Secretary of CIB Marine and has held those
positions since December 1993. Mr. Klitzing has
been with CIB Marine since 1986 and has held
various positions with CIB Marine and its
subsidiaries since that date.Donald J. Straka (42)
    
    
    
    
    
    
    
    
    
    Mr. Straka was Senior Vice President, Chief
Legal Officer and Secretary of CIB Marine and
held those positions since July 1997. Mr.
Straka has been engaged in the practice of law
since 1987. In 1992, Mr. Straka joined the law
firm of Brashear & Ginn and he was a partner of
that firm from 1995 to 1997 (2).Patrick J. Straka (37)
    
    
    
    
    
    
    
    
    
    Mr. Straka is Senior Vice President and Chief
Investment Officer of CIB Marine and has held
those positions since February 1999. He was a
Vice President, Investment Officer and General
Auditor of CIB Marine from 1995 to February
1999. Mr. Straka served in various positions
with CIB Marine from 1992 to 1995.
 
 (1)
    
    On December 7, 2005, Margaret A. Incandela resigned from all positions with CIB Marine.
On January 26, 2006, Michael L. Paoletta was named Senior Vice President and Chief Credit
Officer. Mr. Paoletta previously served as Senior Vice President and Manager of Commercial
Loan Workouts for the Credit Administration Department. See Item 7, Managements Discussion
and Analysis of Financial Condition and Results of Operations  Subsequent Events  Management
Changes for additional information relative to management and Board of Directors changes.(2)
    
    On April 15, 2005, Daniel J. Rasmussen was named Senior Vice President and General
Counsel of CIB Marine. Mr. Rasmussen previously served as Vice President and Senior Attorney,
and succeeded Donald J. Straka who was assigned other duties in April 2005 and resigned his
employment with CIB Marine in June 2005. See Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations  Subsequent Events  Management Changes for
additional information relative to management and Board of Directors changes. Audit Committee Financial Expert
  Code of Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
   117




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  Annual CompensationOther
    
    AllName and Principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    Annual
    
    OtherPosition
    
    Year
    
    Salary
    
    Bonus
    
    Comp.(1)
    
    Comp.(2)Stanley J. Calderon(3)
    
    
    2004
    
    
    $
    325,673
    
    
    $
    
    
    
    $
    President and
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    377Chief Executive Officer
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    J. Michael Straka(4)
    
    
    2004
    
    
    $
    86,048
    
    
    $
    
    
    
    $
    20,219
    
    
    $
    1,013President and
    
    
    2003
    
    
    
    525,000
    
    
    
    
    
    
    
    106,872
    
    
    
    8,576Chief Executive Officer
    
    
    2002
    
    
    
    500,000
    
    
    
    
    
    
    
    82,346
    
    
    
    8,074Steven T. Klitzing
    
    
    2004
    
    
    $
    190,125
    
    
    $
    
    
    
    $
    3,419
    
    
    $
    573Executive Vice
    
    
    2003
    
    
    
    195,000
    
    
    
    
    
    
    
    1,800
    
    
    
    4,217President, Chief
    
    
    2002
    
    
    
    180,000
    
    
    
    
    
    
    
    2,498
    
    
    
    4,180Financial Officer andTreasurerMargaret A. Incandela(5)
    
    
    2004
    
    
    $
    154,737
    
    
    $
    
    
    
    $
    698
    
    
    $
    Executive Vice
    
    
    2003
    
    
    
    23,193
    
    
    
    
    
    
    
    
    
    
    
    President and Chief
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credit OfficerDonald J. Straka
    
    
    2004
    
    
    $
    190,125
    
    
    $
    
    
    
    $
    19,007
    
    
    $
    500Senior Vice President,
    
    
    2003
    
    
    
    195,000
    
    
    
    
    
    
    
    16,213
    
    
    
    4,117Chief Legal Officer and
    
    
    2002
    
    
    
    180,000
    
    
    
    
    
    
    
    500
    
    
    
    4,111SecretaryMichael L. Rechkemmer
    
    
    2004
    
    
    $
    173,550
    
    
    $
    
    
    
    $
    2,490
    
    
    $
    1,466Executive Vice
    
    
    2003
    
    
    
    178,000
    
    
    
    
    
    
    
    1,766
    
    
    
    4,177President and Chief
    
    
    2002
    
    
    
    165,000
    
    
    
    
    
    
    
    1,801
    
    
    
    4,211Operating Officer
 
 (1)
    
    Includes amounts earned in the fiscal year, whether or not deferred, and consists of
the following: Board ofDirector
    
    
    
    
    
    VacationName
    
    Year
    
    Fees (a)
    
    Car Allowance
    
    Payout
    
    TotalStanley J. Calderon
    
    
    2004
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    J. Michael Straka
    
    
    2004
    
    
    $
    15,100
    
    
    $
    1,425
    
    
    $
    3,694
    
    
    $
    20,2192003
    
    
    
    105,450
    
    
    
    1,422
    
    
    
    
    
    
    
    106,8722002
    
    
    
    79,500
    
    
    
    2,846
    
    
    
    
    
    
    
    82,346Steven T. Klitzing
    
    
    2004
    
    
    $
    
    
    
    $
    3,419
    
    
    $
    
    
    
    $
    3,4192003
    
    
    
    
    
    
    
    1,800
    
    
    
    
    
    
    
    1,8002002
    
    
    
    
    
    
    
    2,498
    
    
    
    
    
    
    
    2,498Margaret A. Incandela
    
    
    2004
    
    
    $
    
    
    
    $
    698
    
    
    $
    
    
    
    $
    6982003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Donald J. Straka
    
    
    2004
    
    
    $
    17,000
    
    
    $
    2,007
    
    
    $
    
    
    
    $
    19,0072003
    
    
    
    15,000
    
    
    
    1,213
    
    
    
    
    
    
    
    16,2132002
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    500Michael L. Rechkemmer
    
    
    2004
    
    
    $
    
    
    
    $
    2,490
    
    
    $
    
    
    
    $
    2,4902003
    
    
    
    
    
    
    
    1,766
    
    
    
    
    
    
    
    1,7662002
    
    
    
    
    
    
    
    1,801
    
    
    
    
    
    
    
    1,801
 118




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##### Table of Contents



(a)
    Includes payment for meetings of the Board of Directors of CIB Marine and its
subsidiaries including Canron and for committee meetings of its subsidiaries.(2)
    
    All Other Compensation consists of amounts representing life insurance premiums paid by
CIB Marine for each named executive, allocations by CIB Marine to
each named executive participating in CIB Marines 401(k) plan, and allocations to each named
executive pursuant to CIB Marines employee stock ownership plan. During 2004, CIB Marine did not
make contributions to the employee stock ownership plan.(3)
    
    On April 12, 2004, Stanley J. Calderon was appointed President and CEO of CIB Marine
and replaced J. Michael Straka, who resigned from all officer and board positions with CIB Marine
on March 24, 2004.(4)
    
    Mr. J. Michael Straka resigned from all officer and board positions with CIB Marine on
March 24, 2004.(5)
    
    Margaret A. Incandela was hired in September 2003 as Corporate Loan Review Manager, and
in February 2004 was appointed Chief Credit Officer of CIB Marine. On December 7, 2005, Margaret A.
Incandela resigned from all positions with CIB Marine, including Chief Credit Officer. On January
26, 2006, Michael L. Paoletta was named Senior Vice President and Chief Credit Officer. Options
   Total Number of SecuritiesNumber of
    
    
    
    
    
    Underlying Unexercised
    
    Total Value of Unexercised,Shares
    
    
    
    
    
    Options Held at
    
    In-the-Money Options HeldAcquired on
    
    Value
    
    Fiscal Year End
    
    at Fiscal Year End(1)Name
    
    Exercise
    
    Realized
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableStanley J. Calderon
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    J. Michael Straka
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Steven T. Klitzing
    
    
    
    
    
    
    
    
    
    
    56,170
    
    
    
    7,492
    
    
    
    
    
    
    
    Margaret A. Incandela
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Donald J. Straka
    
    
    
    
    
    
    
    
    
    
    51,422
    
    
    
    7,733
    
    
    
    
    
    
    
    Michael L. Rechkemmer
    
    
    
    
    
    
    
    
    
    
    46,750
    
    
    
    5,970
    
    
    
    
    
    
    
    
 
 (1)
    
    This amount represents the difference between the fair market value of one share of CIB
Marine common stock on December 31, 2004 and the option exercise price times the total number
of shares subject to exercisable or unexercisable options. Because there is no public market
for CIB Marine common stock, the per share fair market value was derived by using CIB Marines
book value at December 31, 2004, which was $4.83. There were no unexercised in the money
options at year-end. Compensation of Directors
 Directors Fees and Compensation
  119




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Compensation Committee Interlocks and Insider Participation
  Employment Contracts and Termination of Employment and Change in Control Arrangements
   
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 Security Ownership by Certain Beneficial Owners
  Number of Shares of
    
    Percent ofCommon Stock
    
    CommonName and Address of Beneficial Owner
    
    Beneficially Owned
    
    StockStrategic Capital Trust Company
    
    
    1,010,904
    (1)
    
    
    5.51
    %1608 Broadmoor DriveChampaign, Illinois 61820John and Mary Lydia Hadley
    
    
    1,116,950
    (2)
    
    
    6.09
    %915 W. Park AvenueChampaign, Illinois 61821
 
 (1)
    
    Based solely on information provided by Strategic Capital Trust Company.(2)
    
    Based solely on information in CIB Marines stock transfer records. Security Ownership of Management
  120




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##### Table of Contents



Common SharesBeneficially
    
    PercentName of Beneficial Owner
    
    Owned
    
    of ClassJosé Araujo
    
    
    115,508
    (1)
    
    
    *Norman E. Baker
    
    
    402,450
    (2)
    
    
    2.19
    %W. Scott Blake
    
    
    169,950
    (3)
    
    
    *Stanley J. Calderon
    
    
    
    
    
    
    *Steven C. Hillard
    
    
    165,030
    
    
    
    *Margaret A. Incandela
    
    
    30
    
    
    
    *Steven T. Klitzing
    
    
    83,692
    (4)
    
    
    *Gary L. Longman
    
    
    
    
    
    
    *Jerry D. Maahs
    
    
    317,550
    (5)
    
    
    1.73
    %Michael L. Rechkemmer
    
    
    57,880
    (6)
    
    
    *Donald J. Straka
    
    
    61,993
    (7)
    
    
    *J. Michael Straka
    
    
    179,247
    (8)
    
    
    *Donald M. Trilling
    
    
    231,832
    (9)
    
    
    1.26
    %Howard E. Zimmerman
    
    
    140,600
    (10)
    
    
    *All directors and executive officers as a group (15 persons)
    
    
    1,968,773
    
    
    
    10.73
    %
 
 *
    
    Less than one percent(1)
    
    Includes 33,000 shares that Mr. Araujo has the right to acquire within 60 days upon the
exercise of stock options.(2)
    
    Includes 33,000 shares Mr. Baker has the right to acquire within 60 days upon the
exercise of stock options.(3)
    
    Includes 33,000 shares that Mr. Blake has the right to acquire within 60 days upon the
exercise of stock options.(4)
    
    Includes 56,170 shares that Mr. Klitzing has the right to acquire within 60 days upon
the exercise of stock options.(5)
    
    Includes 285,000 shares jointly owned by Mr. Maahs and his wife and 32,550 shares that
Mr. Maahs has the right to acquire within 60 days upon the exercise of stock options. Mr
Maahs passed away in April 2006(6)
    
    Includes 46,750 shares that Mr. Rechkemmer has the right to acquire within 60 days upon
the exercise of stock options.(7)
    
    Includes 800 shares jointly owned by Mr. Straka and his wife, 4,800 shares owned by a
partnership with respect to which Mr. Straka shares voting and investment power, and 51,422
shares Mr. Straka has the right to acquire within 60 days upon exercise of stock options.(8)
    
    Includes 110,055 shares jointly owned by Mr. Straka and his wife, 3,000 shares owned by
Mr. Strakas wife, and 6,300 shares owned by partnerships with respect to which Mr. Straka
shares voting and investment power.(9)
    
    Includes 68,705 shares held in a trust for the benefit of Mr. Trillings wife and
34,350 shares that Mr. Trilling has the right to acquire within 60 days upon the exercise of
stock options.(10)
    
    Includes 3,250 shares held in a trust for the benefit of Mr. Zimmermans wife and
33,000 shares Mr. Zimmerman has the right to acquire within 60 days upon the exercise of stock
options. Securities Authorized for Issuance Under Equity Compensation Plans
  Equity Compensation Plan Information(1)Number of securitiesremaining available forfuture issuance underNumber of securities to
    
    Weighted-average
    
    equity compensationbe issued upon exercise
    
    exercise price of
    
    plans (excludingof outstanding options,
    
    outstanding options,
    
    securities reflected inPlan category
    
    warrants and rights
    
    warrants and rights
    
    column (a))(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    791,331
    
    
    $
    16.35
    
    
    
    844,399Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    791,331
    
    
    $
    16.35
    
    
    
    844,399
 
 (1)
    
    See Notes 1, 18 and 19 to the Consolidated Financial Statements in this Form 10-K for
additional information regarding our stock-based compensation plans. 121




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##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2004
    
    
    2003
    
    
    2002(Dollars in thousands)Audit fees (1)
    
    $
    625
    
    
    $
    1,541
    
    
    $
    332Audit related fees (2)
    
    
    6
    
    
    
    34
    
    
    
    233Tax fees (3)
    
    
    80
    
    
    
    537
    
    
    
    163Total fees
    
    $
    711
    
    
    $
    2,112
    
    
    $
    728
 
 (1)
    
    Includes $0.1 million paid during both 2003 and 2002 for audit services related to
Canron, a company in which CIB Marine acquired an 84% interest in October 2002 and which is
held for disposal.(2)
    
    Audit related fees consisted of audits of financial statements of certain employee
benefit plans, audits of mortgage banking compliance and due diligence services, and included
$0.2 million in fees for an audit of Canron during 2002.(3)
    
    Tax fees consisted of fees for tax consultation and tax compliance services, and
included $9 thousand, $0.3 million and $0.1 million paid in relation to Canron during 2004,
2003 and 2002, respectively. Pre-Approval Policy & Procedures
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)(1) Financial Statements
  
    
    Report of Independent Registered Public Accounting Firm.
    
    Consolidated Balance Sheets as of December 31, 2004 and 2003.
    
    Consolidated Statements of Operations for the Years Ended December 31, 2004, 2003, and 2002.
    
    Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2004, 2003, and 2002.
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003, and 2002.
    
    Notes to Consolidated Financial Statements.
 122




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##### Table of Contents



(a)(2) Financial Statement Schedules
  (a)(3) Exhibits
 Exhibit No.
    
    Exhibit3.1
    
    
    Amended and Restated Articles of Incorporation of CIB Marine Bancshares, Inc. (incorporated by reference
to Exhibit 3.1 to CIB Marines Form 10-K filed with the Securities and Exchange Commission on October 31,
2005).3.2
    
    
    Bylaws of CIB Marine Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to CIB Marines Form 10-K
filed with the Securities and Exchange Commission on October 31, 2005).*10.1
    
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan, as amended (incorporated by reference
to Exhibit 10.1 to CIB Marines Form 10-K filed with the Securities and Exchange Commission on March 31,
2003).*10.2
    
    
    First Amendment to the CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan (incorporated by
reference to Exhibit 10.1 to CIB Marines Form 10-K filed with the Securities and Exchange Commission on
October 31, 2005).*10.3
    
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan Key Employee Non-Qualified Stock Option
Agreement (incorporated by reference to Exhibit 99.1 of CIB Marines Form 8-K filed with the Securities
and Exchange Commission on September 23, 2005).*10.4
    
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan Key Employee Non-Qualified Stock Option
Agreement (accelerated vesting upon sale of subsidiary bank) (incorporated by reference to Exhibit 99.2
of CIB Marines Form 8-K filed with the Securities and Exchange Commission on September 23, 2005).*10.5
    
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan Key Employee Non-Qualified Stock Option
Agreement (accelerated vesting upon sale of subsidiary bank) (incorporated by reference to Exhibit 99.1 of CIB Marines Form 8-K filed with the Securities
and Exchange Commission on November 16, 2006).*10.6
    
    
    Employment Agreement between Stanley J. Calderon and CIB Marine Bancshares, Inc. (incorporated by
reference to Exhibit 99 to CIB Marines Form 8-K filed November 22, 2004).*10.7
    
    
    Employment Agreements between Michael J. Miller and CIB Marine Bancshares, Inc. (incorporated by
reference to Exhibit 99.1 to CIB Marines Form 8-K filed December 27, 2004).*10.8
    
    
    Employment Agreements between Margaret A. Incandela and CIB Marine Bancshares, Inc. (incorporated by
reference to Exhibit 99.2 to CIB Marines Form 8-K filed December 27, 2004).10.9
    
    
    Written Agreement between CIB Marine and the Federal Reserve Bank of Chicago (incorporated by reference
to Exhibit 99.5 of CIB Marines Form 8-K filed with the Securities and Exchange Commission on June 1,
2004).10.10
    
    
    Written Agreement between Citrus Bank, N.A., a wholly owned subsidiary of Citrus Financial Services,
Inc., which is wholly owned by CIB Marine, and the Office of the Comptroller of the Currency
(incorporated by reference to Exhibit 99 of CIB Marines Form 8-K filed with the Securities and Exchange
Commission on August 23, 2004).14.1
    
    
    Code of Ethics (incorporated by reference to Exhibit 99 to the Companys Form 8-K filed November 2, 2004).21
    
    
    Subsidiaries of CIB Marine23.1
    
    
    Consent of KPMG LLP31.1
    
    
    Certification of Stanley J. Calderon, Chief Executive Officer, under Rule 13a-14(d)/15d-14(d).31.2
    
    
    Certification of Steven T. Klitzing, Chief Financial Officer, under Rule 13a-14(d)/15d-14(d).32.1
    
    
    Certification of Stanley J. Calderon, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Steven T. Klitzing, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
  
 *
    
    Executive compensation plans 123




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##### Table of Contents



SIGNATURES
  CIB MARINE BANCSHARES, INC.(registrant)By: /s/ STANLEY CALDERONStanley CalderonDate:
December 8, 2006
    
    President and Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ STANLEY CALDERON
    
    President and Chief Executive
    
    December 8, 2006Stanley Calderon
    
    Officer
(Principal ExecutiveOfficer) and Director/s/ STEVEN T. KLITZING
    
    Chief Financial Officer
    
    December 8, 2006Steven T. Klitzing
    
    (Principal
Financial andAccounting Officer)/s/ JOSE ARAUJO
    
    Director
    
    December 8, 2006Jose Araujo/s/ NORMAN E. BAKER
    
    Director
    
    December 8, 2006Norman E. Baker/s/ W. SCOTT BLAKE
    
    Chairman of the Board of
    
    December 8, 2006W. Scott Blake
    
    Directors
and Director/s/ STEVE HILLARD
    
    Director
    
    December 8, 2006Steve Hillard/s/ GARY LONGMAN
    
    Director
    
    December 8, 2006Gary Longman/s/ DONALD M. TRILLING
    
    Director
    
    December 8, 2006Donald M. Trilling/s/ HOWARD E. ZIMMERMAN
    
    Director
    
    December 8, 2006Howard E. Zimmerman
 124