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                       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, 1999

                       COMMISSION FILE NUMBER: 000-24149

                          CIB MARINE BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                  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)
</TABLE>

Registrant's Telephone Number, Including Area Code:  (262) 695-6010

Securities Registered Pursuant to Section 12(b) of the Act:  NONE

                    COMMON STOCK, $1.00 PAR VALUE PER SHARE
                                (Title of Class)

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X                No ____

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or other information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K.  [X]

     The aggregate market value of the common stock held by nonaffiliates of the
registrant as of March 15, 2000, based on a price per share of $2,518.73 (the
price per share at which the registrant sold 2,387 shares of its common stock in
its most recent private placement in December 1999) was $243.6 million.

     As of March 15, 2000, there were issued and outstanding 109,901 shares of
the registrant's common stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference in this report:

1. Portions of the registrant's Proxy Statement for the 2000 Annual Meeting of
   Shareholders are incorporated by reference to Part III hereof.

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                                     PART I

ITEM 1. BUSINESS

CIB MARINE

     CIB Marine Bancshares, Inc., formerly known as Central Illinois Bancorp,
Inc., is a midwestern multi-bank holding company with its principal executive
offices in Pewaukee, Wisconsin, a suburb of Milwaukee. CIB Marine currently owns
and operates five separately chartered banking organizations:

     - Central Illinois Bank, with its main office located in Champaign,
       Illinois;

     - CIB Bank , with its main office located in Hillside, Illinois, a suburb
       of Chicago ("CIB-Chicago");

     - Marine Bank, formerly known as Marine Bank and Savings, with its main
       office in Wauwatosa, Wisconsin, a suburb of Milwaukee ("Marine
       Bank -- Milwaukee");

     - CIB Bank, with its main office located in Indianapolis, Indiana
       ("CIB-Indiana"); and

     - Marine Bank, with its main office in Omaha, Nebraska ("Marine
       Bank -- Omaha").

     As of December 31, 1999, CIB Marine had a total of 38 full-service banking
facilities in Illinois, Wisconsin, Indiana and Nebraska. CIB Marine offers a
full array of traditional banking services, through its bank and non-bank
subsidiaries. These services include a broad range of products and services
including: commercial loans, commercial real estate loans, commercial and
residential real estate construction loans, one-to-four family residential real
estate loans, consumer loans and commercial and standby letters of credit;
demand, savings and time deposits; corporate and personal trust services; and
other forms of banking products and services.

     CIB Marine also owns and operates three non-bank subsidiaries. These
include Marine Trust and Investment Company (a trust company), Mortgage
Services, Inc. (a mortgage banking company), and C.I.B. Data Processing
Services, Inc. (a data processing company).

     References in this document to "CIB Marine" include CIB Marine's
subsidiaries unless otherwise specified.

OVERVIEW

     CIB Marine was originally incorporated in the State of Illinois in 1985 as
Sidney Bancorporation, Inc., a one-bank holding company headquartered in Sidney,
Illinois. In September 1987, a group of investors led by J. Michael Straka,
President and Chief Executive Officer of CIB Marine, acquired all of the
outstanding stock of Sidney Bancorporation and subsequently changed its name to
Central Illinois Bancorp, Inc. At the time of the change of ownership, CIB
Marine's sole subsidiary was Sidney Community Bank, with total assets of $9.4
million.

     Upon the change of ownership, CIB Marine changed its strategy to focus on
the development of banking relationships with small to medium-sized businesses
by providing more personalized banking services in a community banking
atmosphere. Typically, these customers have borrowing needs in the range of $1.0
million to $10.0 million. Under certain circumstances, however, the financial
condition of a customer may, and has, warranted the extension of credit to the
customer in excess of $10 million. As part of this strategy, CIB Marine
significantly expanded its banking operations, first in Central Illinois and
more recently in the Chicago, Milwaukee, Indianapolis and Omaha metropolitan
areas.

     On August 27, 1999, the holding company reincorporated as a Wisconsin
corporation. In connection with the reincorporation, the holding company changed
its name to CIB Marine Bancshares, Inc. CIB Marine's principal office is located
in Pewaukee, Wisconsin, a suburb of Milwaukee.

     At December 31, 1999, CIB Marine had consolidated total assets of
approximately $1.8 billion as compared with consolidated total assets of $1.2
billion at December 31, 1998, an increase of 53.8%. Net
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income for the fiscal year ended December 31, 1999 was $13.5 million, as
compared to $8.7 million for the fiscal year ended December 31, 1998, an
increase of 56.4%. CIB Marine has grown substantially in the last five years.
CIB Marine's consolidated total assets at December 31, 1995 were $354.8 million,
and its net income for the fiscal year ended December 31, 1995 was $2.3 million.

GROWTH STRATEGY

     CIB Marine believes that much of its success in growth, from a one-bank
holding company with $9.4 million in assets at September 1987 to a five-bank
holding company with approximately $1.8 billion in assets at December 31, 1999,
has been largely attributable to the implementation of its growth strategy in
the market areas it serves. CIB Marine's growth strategy consists of four
principal components:

     - DEVELOPING COMMERCIAL BANKING RELATIONSHIPS WITH SMALL TO MEDIUM SIZED
       BUSINESSES. Although CIB Marine is a full-service banking organization,
       its niche has been to develop banking relationships with small to
       medium-sized businesses with borrowing needs in the general range of $1.0
       million to $10.0 million. Typically, CIB Marine meets its customers'
       borrowing needs through various types of loans, including commercial real
       estate loans, commercial business loans, agricultural and construction
       loans, often making multiple and different types of loans to the same
       customer. As a result of its emphasis on building ongoing banking
       relationships, CIB Marine has a number of lending relationships in which
       the aggregate amount of loans outstanding to a customer or a group of
       affiliated customers exceed $10.0 million. CIB Marine's subsidiary banks
       have a combined lending limit that allows CIB Marine to meet the credit
       needs of its customers. In addition, CIB Marine believes that
       consolidation occurring within the banking industry has resulted in the
       formation of larger institutions that generally focus on larger
       commercial customers and has enhanced CIB Marine's ability to attract and
       retain commercial banking relationships with small to medium sized
       businesses. CIB Marine expects to continue to focus on and build upon its
       experience in commercial banking.

     - OFFERING MORE PERSONALIZED SERVICE TO COMMERCIAL BANKING CUSTOMERS. CIB
       Marine believes that it is able to offer banking services in a community
       banking atmosphere that are more personalized than the services offered
       by other institutions. CIB Marine's banking culture has enabled it to
       attract and retain customers who value traditional community banking.

     - HIRING EXPERIENCED PERSONNEL. CIB Marine recruits and hires experienced
       commercial banking officers who have established relationships in the
       markets that it serves. J. Michael Straka and each President of CIB
       Marine's subsidiary banks is an experienced commercial lender, further
       enhancing CIB Marine's strong commercial lending culture. In addition to
       its banking culture, consolidation within the banking industry has helped
       CIB Marine to recruit experienced commercial bankers. CIB Marine believes
       that the combined lending limit has also been a factor in attracting
       commercial lenders that require a higher legal lending limit to meet the
       needs of their existing commercial customers. CIB Marine also hires
       experienced professionals in other areas to support and manage future
       growth.

     - EXPANDING IN BOTH NEW AND EXISTING MARKETS. CIB Marine expands through de
       novo banking, branching and acquisitions. CIB Marine expands its banking
       operations into geographic markets where there are a significant number
       of small to medium-sized businesses and where it has either identified
       and retained experienced commercial bankers or other personnel with
       established relationships to serve those markets or by relocating
       experienced bankers to that area. Since the change of ownership in 1987,
       CIB Marine has entered the metropolitan markets of Chicago, Milwaukee,
       Indianapolis and Omaha, as well as smaller metropolitan markets within
       the central Illinois region. CIB Marine expects to further expand banking
       operations in these markets and to enter new markets with populations of
       at least 100,000. When CIB Marine expands through acquisitions, it seeks
       to identify financial institutions or financial institution branches that
       offer lending opportunities and/or the opportunity to strengthen its
       deposit base.

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GROWTH AND DEVELOPMENT OF BANKING OPERATIONS

EXPANSION IN CENTRAL ILLINOIS.

     At the time of the change in ownership in September 1987, CIB Marine had a
single banking subsidiary, Sidney Community Bank, an Illinois state bank. The
bank was originally organized in 1958 and had its sole office in Sidney,
Illinois, a town with a population of approximately 1,000 people, located in
Champaign County, Illinois. In January 1988, the name of the bank was changed to
Central Illinois Bank. As a result of the decision to focus on developing
banking relationships with small to medium-sized businesses, CIB Marine first
expanded into the Champaign-Urbana market, a community of approximately 100,000
people and home to the University of Illinois. The bank opened its first branch
facility in Champaign in 1988 and opened its second branch facility in Urbana in
1990.

     In October 1991, CIB Marine acquired all of the stock of Arrowsmith State
Bank, an Illinois state bank organized in 1920. This bank had its sole office in
Arrowsmith, Illinois, a town with a population of approximately 350, located in
McLean County, Illinois. At the time of the acquisition, the Arrowsmith bank had
total assets of approximately $10.0 million. The name of the bank was changed to
Central Illinois Bank McLean County in 1992, and to Central Illinois Bank MC in
1995. This acquisition allowed CIB Marine to enter the Bloomington-Normal
market, a community of approximately 100,000 people, and home to Illinois State
University. In July 1998 CIB Marine merged Central Illinois Bank and Central
Illinois Bank MC under the charter of Central Illinois Bank MC and the name of
Central Illinois Bank. The main office of the merged bank is located in
Champaign, Illinois.

     Between November 1992 and December 31, 1999, CIB Marine significantly
expanded the operations of the bank by establishing branch facilities throughout
the central Illinois region, including the five largest cities in this region.
During that period, CIB Marine opened 14 additional branch facilities in central
Illinois, one of which was sold in February 1999 because it did not fit within
CIB Marine's long-term strategic plans. At December 31, 1999, Central Illinois
Bank had total assets of $742.0 million, 165 full-time equivalent employees and
a total of 17 banking facilities in central Illinois: three in Champaign-Urbana,
two in Bloomington-Normal, two in Peoria, and one each in Arrowsmith, Arthur,
Danville, Decatur, East Peoria, Monticello, Morton, Rantoul, Springfield and
Sidney.

EXPANSION INTO THE CHICAGO METROPOLITAN AREA.

     In June 1994, CIB Marine entered the Chicago metropolitan market through
the acquisition of Hillside Investors, Ltd., a one-bank holding company located
in Hillside, Illinois. The sole subsidiary of Hillside Investors was the Bank of
Hillside, an Illinois state bank organized in 1963, with its main office located
in Hillside, a suburb of Chicago. At the time of the acquisition, the Bank of
Hillside had one banking facility and total assets of $34.5 million. In January
1995, the name of the bank was changed to CIB Bank.

     Between June 1994, and December 31, 1999, CIB Marine opened an office in
downtown Chicago and ten additional branch facilities in the Chicago suburbs:
one each in Arlington Heights, Bolingbrook, Elk Grove Village, Elmhurst, Gurnee,
Mount Prospect, Niles, Northbrook, Willow Springs and Zion. The Gurnee, Mount
Prospect, Arlington Heights and Zion facilities were acquired from other banking
organizations and had $13.3 million, $33.0 million, $82.8 million and $28.2
million of deposit liabilities, respectively, at the time of acquisition. At
December 31, 1999, CIB-Chicago had total assets of approximately $829.8 million,
121 full-time equivalent employees and total of 12 banking facilities.

EXPANSION INTO MILWAUKEE METROPOLITAN AREA.

     In September 1997, CIB Marine entered the Milwaukee metropolitan area by
acquiring First Ozaukee Capital Corp., a one-bank holding company located in
Cedarburg, Wisconsin. The sole subsidiary of First Ozaukee Capital Corp. was
First Ozaukee Savings Bank, a Wisconsin Savings Bank with its main office in
Cedarburg and a branch facility in Grafton, both suburbs of Milwaukee. First
Ozaukee was originally chartered in 1923 as Cedarburg Building and Loan
Association. It subsequently converted to a mutual savings bank and then
converted to a stock savings bank in 1994. At the time of acquisition, the
savings bank had total

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assets of $37.6 million. In September 1997, CIB Marine changed the name of the
savings bank to Marine Bank and Savings.

     Following the acquisition, CIB Marine opened a temporary banking facility
in Pewaukee, a suburb of Milwaukee. In August 1998, CIB Marine opened a
permanent branch facility in Pewaukee, which also serves as the executive
offices of CIB Marine. CIB Marine opened two additional facilities: one in
Wauwatosa, another Milwaukee suburb, which opened in May 1998; and one in
downtown Milwaukee, which opened in April 1999. On December 31, 1999, Marine
Bank and Savings filed an application with the Wisconsin Department of Financial
Institutions- Division of Banking and the Federal Deposit Insurance Corporation,
to convert its charter to a Wisconsin commercial bank to be known as Marine Bank
and to move its main office to its Wauwatosa facility. At December 31, 1999,
this bank had total assets of $225.6 million, 44 full-time equivalent employees
and a total of five banking facilities.

EXPANSION INTO INDIANAPOLIS METROPOLITAN AREA

     In March 1998, CIB Marine entered the Indianapolis metropolitan area by
creating a de novo Indiana state bank, also under the name CIB Bank. CIB Marine
initially capitalized CIB-Indiana with $10.0 million. Since its organization,
this bank has opened two additional facilities in the Indianapolis market, one
of which is located on the circle in downtown Indianapolis. At December 31,
1999, CIB-Indiana had total assets of $74.1 million, 20 full-time equivalent
employees and three facilities located in Indianapolis.

EXPANSION INTO THE OMAHA METROPOLITAN AREA

     In November 1999, CIB Marine entered the Omaha metropolitan area by
creating a de novo federal savings bank under the name Marine Bank. CIB Marine
initially capitalized Marine Bank-Omaha with $10.0 million. At December 31,
1999, this bank had total assets of $10.9 million, six full-time equivalent
employees and one facility located in Omaha metropolitan market.

RECENT DEVELOPMENTS

RECENT DEVELOPMENTS IN CENTRAL ILLINOIS

     In January of 2000, CIB Marine received approval to establish a facility in
Lincoln, Illinois. This facility is expected to open during the second quarter
of 2000.

RECENT DEVELOPMENTS IN THE CHICAGO METROPOLITAN AREA

     On January 27, 2000, CIB Marine established a branch facility in Frankfort,
Illinois. On January 4, 2000, CIB-Marine established through CIB-Chicago a
foreign office in the Cayman Islands. This office accepts Eurodollar deposits,
thereby facilitating CIB Marine's money desk operations which were established
in August 1999. In addition to accepting Eurodollar deposits, the money desk
provides commercial paper and repurchase agreements to CIB Marine customers,
focusing primarily on corporations, other financial institutions, municipalities
and high net worth individuals. On January 20, 2000, CIB Marine made an
application to relocate its downtown Chicago facility to a more convenient
location in the downtown area.

RECENT DEVELOPMENTS IN THE MILWAUKEE METROPOLITAN AREA

     On February 3, 2000, CIB Marine completed the conversion of Marine Bank and
Savings to a Wisconsin chartered commercial bank known as Marine Bank, and
changed its main bank location from its Cedarburg facility to its Wauwatosa
facility. In February 2000, CIB Marine made application to establish a branch
facility in Franklin, a southwestern suburb of Milwaukee. This facility is
expected to open during the second or third quarter of 2000.

RECENT DEVELOPMENTS IN THE INDIANAPOLIS METROPOLITAN AREA

     In January 2000, CIB Marine received approval to establish a branch
facility on the west side of Indianapolis. This facility opened in March of
2000.

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OPERATIONS OF NON-BANK SUBSIDIARIES

     In addition to CIB Marine's five subsidiary banks, CIB Marine owns and
operates three wholly-owned non-banking subsidiaries: C.I.B. Data Processing
Services, Inc., Mortgage Services, Inc., and Marine Trust and Investment
Company. Each of these subsidiaries was created or acquired to facilitate or
complement CIB Marine's banking activities.

C.I.B. DATA PROCESSING SERVICES, INC.

     C.I.B. Data Processing Services, Inc., an Illinois corporation, was
incorporated in August 1990. C.I.B. Marine organized this subsidiary to provide
data processing services to CIB Marine and its other subsidiaries. CIB Data
coordinates computer equipment leases and purchases, licenses banking software
and coordinates operation of CIB Marine software. CIB Marine operates C.I.B.
Data to facilitate internal operational needs and does not currently provide
services to third parties. CIB Marine believes that, by performing its data
processing function in-house, it receives more timely and cost-effective service
than would be received if it used a third-party service provider. In addition,
C.I.B. Data facilitates CIB Marine's growth strategy by allowing CIB Marine to
rapidly integrate newly opened or acquired branches.

     As of December 31, 1999, this subsidiary had 24 full-time equivalent
employees. C.I.B. Data does not separately own any facilities, and its principal
office is located in the Rantoul, Illinois facility of Central Illinois Bank.

MORTGAGE SERVICES, INC.

     In September 1995, CIB Marine acquired all of the stock of Mortgage
Services of Illinois, Inc., a mortgage origination and mortgage brokerage
services. In 1998, CIB Marine changed the name of the this subsidiary to
Mortgage Services, Inc. This subsidiary provides mortgage services in the states
of Illinois, Wisconsin, Nebraska, Indiana, Missouri and Colorado. An application
to provide mortgage services in Iowa has been submitted and is expected to be
approved in the second quarter of 2000. Through Mortgage Services, CIB Marine
originates conventional mortgage loans and offers VA, FHA and other fixed-rate
and variable-rate loans. Although CIB Marine sells a majority of the mortgage
loans in the secondary market with servicing rights released, CIB Marine also
retains mortgage loans that meet CIB Marine's underwriting standards but which
do not conform to secondary market underwriting guidelines or where CIB Marine
believes that retaining the loan is important in enhancing a customer
relationship.

     As of December 31, 1999, CIB Marine's mortgage banking subsidiary had 30
full-time equivalent employees. Mortgage Services does not separately own any
facilities, and its principal office is located in the Bloomington facility of
Central Illinois Bank. Mortgage Services' employees also provide mortgage
origination and mortgage brokerage services at many of the other branch
facilities of CIB Marine's subsidiary banks.

MARINE TRUST AND INVESTMENT COMPANY

     Marine Trust and Investment Company obtained authority to begin trust
operations in February 1998. Through this trust company, CIB Marine provides a
wide range of corporate and personal trust products and trust-related services,
including serving as executor of estates, as trustee under testamentary and
inter-vivos trusts, as guardian of the estates of minors and incompetents, and
as escrow agent under various agreements. Central Illinois Bank obtained
authority in August 1991 to operate a trust department and began offering trust
products and services at that time. CIB Marine subsequently moved most of its
trust operations from Central Illinois Bank to Marine Trust in order to
centralize trust operations. When it began operations, Marine Trust was
authorized to provide trust services only through its Illinois trust offices. In
July 1999, Marine Trust obtained authority to market trust services in
Wisconsin.

     As of December 31, 1999, the trust company had six full-time equivalent
employees and $130.2 million of assets under management or custody. The trust
company does not own any separate facilities, and its principal office is
located in the Bolingbrook facility of CIB-Chicago.

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MANAGEMENT SUPPORT SERVICES

     In addition to the support services provided by its non-bank subsidiaries,
CIB Marine, as a holding company, performs a significant portion of its
subsidiaries' back office services, including credit administration, loan
review, accounting, finance, investment, audit, operations, human resources,
legal, marketing and advertising. CIB Marine believes that it is more efficient
to consolidate these services within the holding company in order to assure that
operating policies and procedures are consistent throughout the organization.
This also enables CIB Marine to more efficiently manage the costs of these
services than if the same were performed independently at each subsidiary. The
holding company allocates the cost of its employees among the subsidiaries based
upon the services performed for each subsidiary in accordance with a written
agreement between the companies. At December 31, 1999 the holding company had 87
full-time equivalent employees, a majority of whom provide the services
described above to the subsidiaries.

TOTAL EMPLOYEES

     At December 31, 1999, CIB Marine and all of its bank and non-bank
subsidiaries had a combined total of 503 full-time equivalent employees.

SUPERVISION AND REGULATION

GENERAL

     Financial institutions and their holding companies are extensively
regulated under both federal and state law. Any significant change in the
banking laws and regulations applicable to CIB Marine could materially impact
its operations or change the manner in which it conducts business. Federal and
state regulation of financial institutions is intended primarily for the
protection of the federal deposit insurance funds and depositors, rather than
stockholders, of a financial institution.

     CIB Marine is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHCA") and, as such, is regulated by the
Federal Reserve Board. Marine Bank - Omaha is a federal savings bank, and its
primary regulator is the Office of Thrift Supervision (the "OTS"). CIB Marine's
other bank subsidiaries are regulated by the Federal Deposit Insurance
Corporation (the "FDIC"), as their primary federal regulator, and also by the
state banking regulator for the state in which they are chartered - either the
Illinois Office of Banks and Real Estate, the Wisconsin Department of Financial
Institutions, or the Indiana Department of Financial Institutions. CIB Marine's
trust subsidiary is regulated by the Illinois Office of Banks and Real Estate
and the Wisconsin Department of Financial Institutions. CIB Marine's mortgage
banking subsidiary is regulated by the Illinois Office of and Banks and Real
Estate, the Wisconsin Department of Financial Institutions and the Nebraska
Department of Banking and Finance.

     CIB Marine and its non-bank subsidiaries are subject to examination by the
Federal Reserve Board. The state banking regulators and FDIC periodically
conduct examinations of CIB Marine's state bank subsidiaries and non-bank
subsidiaries that are subject to their regulation. The OTS will periodically
conduct examinations of Marine Bank - Omaha. The FDIC may also conduct special
examinations of Marine Bank - Omaha.

     The following is a summary of certain statutes and regulations affecting
CIB Marine and its subsidiaries. It is not meant to be a complete discussion of
all the federal and state banking statutes and regulations applicable to CIB
Marine and its subsidiaries.

EXPANSIONARY ACTIVITIES

     The BHCA requires every bank holding company to obtain the prior approval
of the Federal Reserve Board before merging with another bank holding company,
acquiring substantially all the assets of any bank, or acquiring directly or
indirectly any ownership or control of more than five percent of the voting
shares of any bank. The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring direct or indirect ownership of more than five
percent of the voting shares of any company which is not a bank or bank holding
company and from engaging in any business other than that of banking, managing
and controlling banks, or furnishing services to banks and their subsidiaries.
Bank holding companies may, however, engage in

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certain businesses and activities determined by the Federal Reserve Board to be
so closely related to banking or managing and controlling banks as to be a
proper incident thereto.

FINANCIAL MODERNIZATION LEGISLATION

     On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act (the "GLBA"). The GLBA significantly changes financial
services regulations by expanding permissible non-banking activities of bank
holding companies and removing barriers to affiliations among banks, insurance
companies, securities firms and other financial services entities. As a result
of the GLBA, a bank holding company may become a "Financial Holding Company" and
engage in a full range of financial activities, including banking, insurance and
securities activities, as well as merchant banking and additional activities
that are determined by the Federal Reserve to be "financial in nature",
"incidental" to such financial activities or complementary activities that do
not pose a substantial risk to the safety and soundness of depository
institutions or the financial system generally. The provisions of the GLBA for
expanded financial opportunities became effective March 11, 2000.

     In order for a bank holding company to qualify as a Financial Holding
Company, a bank holding Company is required to file a declaration with the
Federal Reserve electing to engage in activities permissible for Financial
Holding Companies and to certify that all of its insured depository institutions
are "well-capitalized" and "well-managed". In addition, the Federal Reserve must
also determine that each of the company's insured deposit institutions has
received at least a satisfactory rating in their most recent Community
Reinvestment Act examination.

     CIB Marine currently meets the requirements to make an election to become a
Financial Holding Company. However, management has not determined at this time
whether it will seek such an election. CIB Marine is examining its strategic
growth and acquisition strategy to determine whether or when, based on market
and economic conditions, CIB Marine may desire to elect to use any of the
expanded powers provided in the GLBA.

     The GLBA also streamlines supervision of bank holding companies, expands
passive investments by Financial Holding Companies in any type of financial or
non-financial company through merchant bank and insurance company investments,
provides an enhanced framework for protecting the privacy of consumer
information, modifies the laws governing the implementation of the Community
Reinvestment Act, and broadens the activities which may be conducted by national
banks. Through a financial subsidiary and subject to certain eligibility
requirements and restrictions, a national bank may engage in any activity
authorized for a national bank directly or any financial activity, except
insurance investments or underwriting, real estate investments or development,
or merchant banking, which may be conducted through a Financial Holding Company.
Because Wisconsin, Illinois and Indiana provide for parity with national banks,
the subsidiary banks of CIB Marine may form subsidiaries to engage in the
activities permitted for national bank subsidiaries.

     The GLBA also establishes a system of federal and state regulation based on
functional regulation, meaning that primary regulators' oversight for a
particular activity will generally reside with the federal or state regulator
having the greatest expertise in the area. Banking is to be supervised by
banking regulators, insurance by state insurance regulators and securities
activities by the Securities and Exchange Commission ("SEC") and state
securities regulators.

CAPITAL STANDARDS

     The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies. The minimum ratio of qualifying total capital to
risk-weighted assets, including certain off-balance sheet items ("Total Capital
Ratio") is 8%, and the minimum ratio of that portion of total capital that is
comprised of common stock, related surplus, retained earnings, non-cumulative
perpetual preferred stock, minority interests and, for bank holding companies, a
limited amount of qualifying cumulative perpetual preferred stock, less certain
intangibles including goodwill ("Tier 1 Capital"), to risk-weighted assets is
4%. The balance of total capital may consist of other preferred stock, certain
other instruments, limited amounts of unrealized gains on equity securities and
limited amounts of subordinated debt and the loan and lease loss allowance.
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     These risk-based capital standards contemplate that evaluation of capital
adequacy will take account of a wide range of other factors, including overall
interest rate exposure; liquidity, funding and market risks; the quality and
level of earnings; investment, loan portfolio, and other concentrations of
credit; certain risks arising from nontraditional activities; the quality of
loans and investments; the effectiveness of loan and investment policies; and
management's overall ability to monitor and control financial and operating
risks including the risks.

     In addition, the Federal Reserve Board has established a minimum Leverage
Ratio (Tier 1 Capital to quarterly average total assets) which requires a
minimum Leverage Ratio of 3% for bank holding companies that meet certain
specified criteria, including having the highest regulatory rating. All other
bank holding companies are required to maintain a Leverage Ratio of at least 4%.

     The Federal Reserve Board's guidelines also provide that banking
organizations experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "Tangible Tier 1 Leverage Ratio" in evaluating proposals
for expansion or new activities. The Tangible Tier 1 Leverage Ratio is the ratio
of Tier 1 Capital, less intangibles not deducted from Tier 1 Capital, to
quarterly average total assets.

     At December 31, 1999, CIB Marine was in compliance with these minimum
capital requirements. CIB Marine's banking subsidiaries are subject to similar
minimum regulatory capital requirements. For more information about the
regulatory capital levels of CIB Marine and its bank subsidiaries, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital" and Note 11 -- Stockholders' Equity as contained in the
"Notes to Consolidated Financial Statements."

PROMPT CORRECTIVE ACTION AND REGULATORY RESTRICTIONS

     Among other things, the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") requires the federal banking regulators to take prompt
corrective action in respect to FDIC-insured depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." A depository institution's
capital tier will depend upon how its capital levels compare to various relevant
capital measures and certain other factors, as established by regulation. Under
applicable regulations, an FDIC-insured bank is defined as well capitalized if
it maintains a Leverage Ratio (Tier 1 Capital to quarterly average total assets)
of at least 5%, a Total Capital Ratio (qualifying total capital to risk-
weighted assets, including certain off-balance sheet items) of at least 10% and
a Tier 1 Capital Ratio (Tier 1 capital to risk-weighted assets) of at least 6%
and is not otherwise in a "troubled condition" as specified by its appropriate
federal regulatory agency.

     A bank is generally considered to be adequately capitalized if it is not
defined as well capitalized but meets all of its minimum capital requirements
i.e., if it has a Leverage Ratio of 4% or greater or a (Leverage Ratio of 3% or
greater if the institution is rated composite 1 in its most recent report of
examination, subject to appropriate federal banking agency guidelines), a Total
Capital Ratio of 8% or greater and a Tier 1 Capital Ratio of 4% or greater. A
bank will be considered undercapitalized if it fails to meet any minimum
required measure, significantly undercapitalized if it is significantly below
such measure and critically undercapitalized if it maintains a level of tangible
equity capital equal to or less than 2% of total assets. A bank may be
reclassified to be in a capitalization category that is next below that
indicated by its actual capital position if it receives a less than satisfactory
examination rating by its examiners with respect to its assets, management,
earnings, or liquidity that has not been corrected, or it is determined that the
bank is in an unsafe or unsound condition or engages in an unsafe or unsound
practice.

     FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of dividends) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to growth
limitations and are required to submit a capital restoration plan. If a
depository institution fails to submit an acceptable plan, it is treated as if
it is significantly undercapitalized.
                                        8
<PAGE>   10

     Under FDICIA, a bank that is not well capitalized is generally prohibited
from accepting or renewing brokered deposits and offering interest rates on
deposits significantly higher than the prevailing rate in its normal market area
or nationally (depending upon where the deposits are solicited); in addition,
"pass-through" insurance coverage may not be available for certain employee
benefit accounts.

     Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized depository institutions may be restricted from making payments
of principal and interest on subordinated debt and are subject to appointment of
a receiver or conservator.

DIVIDEND RESTRICTIONS

     The Federal Reserve Board's policy with respect to dividends is that a bank
holding company should not declare or pay a cash dividend which would impose
undue pressure on the capital of its subsidiary banks or would be funded only
through borrowing or other arrangements that might adversely affect a bank
holding company's financial position. The Federal Reserve Board believes that a
bank holding company should not initiate or continue cash dividends on its
common stock unless its net income is sufficient to fully fund each dividend and
its prospective rate of earnings retention appears consistent with its capital
needs, asset quality and overall financial condition.

     CIB Marine's ability to pay any dividends to its shareholders depends in
large part on the ability of CIB Marine's subsidiary banks to pay dividends to
it. The ability of the commercial subsidiary banks to pay dividends is subject
to restrictions primarily under the banking laws of the state under which the
subsidiary bank is organized, in the case of CIB Marine's subsidiaries, the laws
of Illinois, Indiana or Wisconsin. The ability of Marine Bank -- Omaha to pay
dividends is subject to OTS regulations applicable to federal savings banks.

     Under Illinois law, a bank may generally pay dividends without the approval
of the Illinois Office of Banks and Real Estate as long as the amount of the
dividend does not exceed net profits then on hand, after first deducting from
net profits the bank's losses and bad debts, and subject to certain additional
requirements of the Illinois Office of Banks and Real Estate.

     Under Wisconsin law, a Wisconsin-chartered savings bank that meets its
regulatory capital requirement may declare dividends on capital stock based upon
net profits, provided that its paid-in surplus equals its capital stock. If the
paid-in surplus of the savings bank does not equal its capital stock, the board
of directors may not declare a dividend unless at least 10% of the net profits
of the preceding half year, in the case of quarterly or semi-annual dividends,
or at least 10% of the net profits of the preceding year, in the case of annual
dividends, has been transferred to paid-in surplus. In addition, prior approval
of the Wisconsin Department of Financial Institutions is required before
dividends exceeding 50% of profits for any calendar year may be declared. A
Wisconsin chartered bank may pay a dividend from its undivided profits in an
amount considered expedient by the Board of Directors provided that the board
has made provisions for the payment of all expenses, losses, reserves, taxes and
interest prior to declaring the dividend from undivided profits. In the event
the bank has declared and paid dividends in either of the two immediately
preceding years that exceeded net income for either of those two years, the bank
may not declare or pay any dividend in the current year that exceeds
year-to-date net income without the written consent of the Division of Banking.

     Under Indiana law, a bank may pay dividends without the approval of the
Indiana Department of Financial Institutions so long as its capital is
unimpaired. In any event, dividends may not exceed undivided profits on hand,
less losses, bad debts, certain depreciation and other expenses.

     Under regulations of the OTS, the ability of a federal savings association
to pay dividends and make other capital distributions is subject to certain
limitations. Under these regulations, a savings association that, immediately
prior to, and on a pro forma basis after giving effect to, a proposed capital
distribution, has total capital (as defined by OTS regulation) that is equal to
or greater than the amount of its minimum capital requirement (a "Tier 1
Association"), is generally permitted after 30 days advance notice to the OTS,
to

                                        9
<PAGE>   11

make capital distributions during a calendar year in the amount equal to the
greater of: (a) 100.0% of its net income to date during the calendar year plus
an amount that would reduce by one-half its surplus capital ratio at the
beginning of the calendar year; or (b) 75.0% of its net income for the previous
four quarters. A savings association that has capital immediately prior to, and
on a pro-forma basis after giving effect to, a proposed capital distribution
that is equal to or in excess of its minimum capital requirement, but that is
less than the amount of its capital requirement (a "Tier 2 Association"), is
generally permitted after 30 days advance written notice to the OTS, to make
capital distributions without OTS approval of up to 75.0% of its net income for
the previous four quarters if its capital satisfies the risk based capital
standard that would be applicable to it as of January 1, 1993, or 50% of its net
income for the previous four quarters if its capital satisfies the risk based
capital standard that would be applicable to it on January 1, 1991. A savings
institution that fails to meet current minimum capital requirements (a "Tier 3
Association") is prohibited from making any capital distributions without the
prior approval of the OTS. A Tier 1 Association that has been notified by the
OTS that it is in need of more than normal supervision will be treated as either
a Tier 2 or Tier 3 Association unless the OTS determines that such treatment is
not necessary to ensure the association's safe and sound operation. Despite the
above authority, the OTS may prohibit any savings institution from making a
capital distribution that would otherwise be permitted by the regulation if the
OTS were to determine that the distribution constituted an unsafe or unsound
practice. Furthermore, under the OTS's prompt corrective action regulations, a
federal savings association would be prohibited from making any capital
distributions if, after making the distribution, the association would be
undercapitalized. As of December 31, 1999, Marine Bank-Omaha was a Tier I
Association.

     In April and September of 1999 a total of $2.9 million in dividends were
paid to CIB Marine by its bank and non-bank subsidiaries. The proceeds of the
September dividends were used to purchase the limited partnership interest in
the private investment funds described in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial
Conditions -- Other Assets". As of December 31, 1999, $29.1 million of the total
stockholders' equity of the affiliate banks was available for payment of
dividends to CIB Marine without approval by the applicable regulatory
authorities.

FEDERAL DEPOSIT INSURANCE

     As FDIC-insured institutions, each of CIB Marine's subsidiary banks are
required to pay deposit insurance premiums based on the risk each poses to the
FDIC insurance funds. The FDIC has the authority to raise or lower assessment
rates on insured deposits in order to achieve certain designated reserve ratios
in the insurance funds and to impose special additional assessments. The FDIC
has adopted a premium rate schedule which provides for an assessment range of 0%
to 0.27% of deposits, depending on the capital category and supervisory category
to which it is assigned. In addition to its insurance assessment, each insured
institution is subject to quarterly debt service assessments in connection with
bonds issued by the government corporation that financed the federal savings and
loan bailout. The first quarter 2000 debt service assessment was .0212%.

RESTRICTIONS ON AFFILIATE TRANSACTIONS

     Transactions between CIB Marine, its subsidiary banks and its non-bank
subsidiaries are subject to a number of restrictions. Federal Reserve Board
policies forbid the payment by bank subsidiaries of management fees which are
unreasonable in amount or exceed the fair market value of the services rendered
or, if no market exists, actual costs plus a reasonable profit. Bank holding
companies are also restricted in the extent to which they and their subsidiaries
can borrow or otherwise obtain credit from one another or engage in certain
other transactions, such as purchasing securities issued by an affiliate,
purchasing assets from an affiliate, accepting securities issued by an affiliate
as collateral for a loan and the issuance of a guarantee, acceptance or letter
of credit for the benefit of an affiliate.

QUALIFIED THRIFT LENDER

     The Home Owners' Loan Act ("HOLA") requires savings associations such as
Marine Bank -- Omaha to meet a qualified thrift lender ("QTL") test. To meet the
QTL test, an association's "Qualified Thrift
                                       10
<PAGE>   12

Investments" must total at least 65.0% of "portfolio assets." Under OTS
regulations, portfolio assets are defined as total assets less intangibles,
property used by a savings association in its business and liquid investments in
an amount not exceeding 20.0% of assets. Qualified Thrift Investments generally
consist of residential housing, small business, credit card and educational
loans, and loans for personal, family and household purposes. A savings
association that does not meet the QTL test must either convert to a bank
charter or comply with the following restrictions on its operations: (i) 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; (ii) the branching powers of the association shall be restricted
to those of a national bank; (iii) the institution shall not be eligible to
obtain any advances from its FHLB; and (iv) the payment of dividends by the
association shall be subject to the rules regarding payment of dividends by a
national bank. Upon the expiration of three years from the date the association
ceases to be a QTL, it must cease any activity and not retain any investment not
permissible for a national bank and immediately repay any outstanding FHLB
advances (subject to safety and soundness considerations).

COMPETITION

     The banking business is highly competitive. CIB Marine's subsidiary banks
compete with other financial institutions and financial service companies in
their market areas and in surrounding areas in attracting deposits and offering
many types of financial services and products. CIB Marine competes for business
in its market areas with larger banks that have both regional and national
markets.

     CIB Marine's subsidiary banks also compete with savings and loan
associations, credit unions, finance companies, personal loan companies, money
market funds and other non-depository financial intermediaries. Many of these
financial firms have resources many times greater than those of CIB Marine. In
addition, new financial intermediaries such as money-market mutual funds and
other non-banking organizations with which CIB Marine banks compete for deposits
are not subject to the same regulations and laws that govern the operation of
traditional depository institutions.

     Recent changes in federal and state laws have resulted in and are expected
to continue to result in increased competition. The reductions in legal barriers
to the acquisition of banks by out-of-state bank holding companies resulting
from the implementation of interstate banking laws and other recent and proposed
changes, including the GLBA, are expected to continue to further stimulate
competition in the markets in which CIB Marine operates, although it is not
possible to predict the extent or timing of such increased competition.

FORWARD LOOKING STATEMENTS

     CIB Marine has made statements in this Annual Report on Form 10-K and
documents that are incorporated by reference that constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. CIB Marine intends these forward-looking statements to be subject to
the safe harbor created thereby and is including this statement to avail itself
of the safe harbor. Forward-looking statements are identified generally by
statements containing words and phrases such as "may," "project," "are
confident," "should be," "will be," "predict," "believe," "plan," "expect,"
"estimate," "anticipate" and similar expressions. These forward-looking
statements reflect CIB Marine's current views with respect to future events and
financial performance, which are subject to many uncertainties and factors
relating to CIB Marine's operations and the business environment and which could
change at any time.

     There are inherent difficulties in predicting factors that may affect the
accuracy of forward-looking statements. Potential risks and uncertainties that
may affect CIB Marine's operations, performance, development and business
results include the following:

     - adverse changes in business conditions in the banking industry generally
       and in the specific Midwestern markets in which CIB Marine's subsidiary
       banks operate;

     - changes in the legislative and regulatory environment that result in
       increased competition or operating expenses;

                                       11
<PAGE>   13

     - changes in interest rates and changes in monetary and fiscal policies
       which could negatively effect net interest margins, asset valuations and
       expense expectations;

     - increased competition from other financial and non-financial
       institutions;

     - CIB Marine's ability to generate or obtain the funds necessary to achieve
       its future growth objectives;

     - CIB Marine's ability to manage its future growth;

     - CIB Marine's ability to identify attractive acquisition and growth
       opportunities;

     - CIB Marine's ability to attract and retain key personnel;

     - 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;

     - the competitive impact of technological advances in the banking business;
       and

     - other risks set forth from time to time in CIB Marine's filings with the
       SEC.

     These risks and uncertainties should be considered in evaluating
forward-looking statements, and undue reliance should not be placed on such
statements. CIB Marine does not assume any obligation to update or revise any
forward-looking statements subsequent to the date on which they are made,
whether as a result of new information, future events or otherwise.

                                       12
<PAGE>   14

ITEM 2. PROPERTIES

     The following table provides information relating to the material real
properties owned or leased by CIB Marine's subsidiaries as of December 31, 1999.
CIB Marine's subsidiary banks lease or sublease office space to CIB Marine and
to its non-bank subsidiaries. CIB Marine does not separately own or lease any
real property.

<TABLE>
<CAPTION>
LOCATION                                                      OWNED OR LEASED   DATE OPENED
--------                                                      ---------------   -----------
<S>                                                           <C>               <C>
CENTRAL ILLINOIS BANK FACILITIES:
Sidney, Illinois............................................       Owned            9/87
Champaign, Illinois.........................................       Owned            9/88
Urbana, Illinois............................................       Owned            3/90
Arrowsmith, Illinois........................................       Owned           10/91
Normal, Illinois............................................       Owned           11/92
Champaign, Illinois (Midtown)...............................       Owned            4/94
Rantoul, Illinois...........................................      Leased           11/94
Monticello, Illinois........................................      Leased            5/95
Danville, Illinois..........................................       Owned            8/95
Decatur, Illinois...........................................      Leased           10/95
Bloomington, Illinois.......................................       Owned           12/95
Arthur, Illinois............................................       Owned           10/96
Morton, Illinois............................................      Leased           10/96
Peoria, Illinois............................................      Leased            9/97
East Peoria, Illinois.......................................       Owned           10/97
Springfield, Illinois.......................................      Leased            2/99
Peoria, Illinois (Fulton)...................................      Leased           10/99
CIB-CHICAGO FACILITIES:
Hillside, Illinois..........................................      Leased            6/94
Willow Springs, Illinois....................................       Owned            7/96
Niles, Illinois.............................................      Leased            8/96
Elk Grove Village, Illinois.................................       Owned           10/96
Chicago, Illinois (Downtown)................................      Leased           10/96
Bolingbrook, Illinois.......................................      Leased            2/97
Elmhurst, Illinois..........................................      Leased            6/98
Gurnee, Illinois............................................      Leased            7/98
Mount Prospect, Illinois....................................       Owned            3/99
Arlington Heights, Illinois.................................       Owned            3/99
Northbrook, Illinois........................................      Leased            4/99
Zion, Illinois..............................................       Owned            9/99
MARINE BANK-MILWAUKEE FACILITIES:
Cedarburg, Wisconsin........................................       Owned            9/97
Grafton, Wisconsin..........................................       Owned            9/97
Pewaukee, Wisconsin.........................................       Owned            2/98
Wauwatosa, Wisconsin........................................      Leased            5/98
Milwaukee, Wisconsin (Downtown).............................      Leased            4/99
CIB-INDIANA FACILITIES:
Indianapolis, Indiana (Fox Road)............................      Leased            3/98
Indianapolis, Indiana (Emerson Way).........................      Leased            9/98
Indianapolis, Indiana (Monument Circle).....................      Leased            4/99
MARINE BANK-OMAHA FACILITIES:
Omaha, Nebraska.............................................      Leased           11/99
</TABLE>

                                       13
<PAGE>   15

     None of the properties owned by CIB Marine's subsidiaries are subject to
encumbrances material to the operations of CIB Marine and its subsidiaries. CIB
Marine considers the conditions of its properties to be generally good and
adequate for its current needs period.

ITEM 3. LEGAL PROCEEDINGS

     CIB Marine and its subsidiaries are parties to legal actions which arise in
the normal course of their business activities. In the opinion of management,
after consultation with legal counsel, the ultimate disposition of these matters
is not expected to have a materially adverse effect on the consolidated
financial condition, liquidity or results of operations of CIB Marine.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     CIB Marine did not submit any matters to a vote of its shareholders during
the fourth quarter of fiscal year 1999.

SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF CIB MARINE

     The following table sets forth the names, ages and positions of all
executive officers of CIB Marine, the period that each has held his position
with CIB Marine, and a brief account of each officer's business experience
during at least the past five years. Under CIB Marine's by-laws, executive
officers are elected annually by the board of directors, and each executive
officer holds office until his successor has been duly elected and qualified or
until the earlier of his death, resignation or removal.

<TABLE>
<CAPTION>
                NAME AND AGE                                OFFICE AND EXPERIENCE
                ------------                                ---------------------
<S>                                             <C>
J. Michael Straka, 62(1).....................   Mr. Straka is the President and Chief
                                                Executive Officer of CIB Marine and has held
                                                those positions since 1987. Prior to assuming
                                                those positions, Mr. Straka was head of the
                                                international division of a large
                                                Milwaukee-based regional bank, where he was
                                                employed for 26 years.
Donald M. Trilling, 68.......................   Mr. Trilling is Chairman of the Board of
                                                Directors of CIB Marine and has held that
                                                position since 1987. Mr. Trilling is also
                                                Secretary/Treasurer of Illinois Tile
                                                Distributors Inc., an importer and
                                                distributor of ceramic tiles, since 1983 and
                                                President of Tiles of Italy, Ltd., an
                                                importer of ceramic tiles, since 1975.
Michael L. Rechkemmer, 50....................   Mr. Rechkemmer is an Executive Vice President
                                                of CIB Marine and has held that position
                                                since July 1998. He was CIB-Chicago's Vice
                                                Chairman and Chief Operating Officer from
                                                January 1997 to June 1998 and its President
                                                and Chief Executive Officer from July 1994 to
                                                December 1996. 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.
Steven T. Klitzing, 37.......................   Mr. Klitzing is Senior 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.
</TABLE>

                                       14
<PAGE>   16

<TABLE>
<CAPTION>
                NAME AND AGE                                OFFICE AND EXPERIENCE
                ------------                                ---------------------
<S>                                             <C>
Donald J. Straka, 37(1)......................   Mr. Straka is Senior Vice President,
                                                Secretary and General Counsel of CIB Marine
                                                and has held those positions since 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.
Stephen C. Bonnell, 49.......................   Mr. Bonnell has been a Senior Vice President
                                                of CIB Marine since October 1994 and Head of
                                                Credit Administration since January 1996. He
                                                was Chief Operating Officer of Central
                                                Illinois Bank MC from January 1994 to October
                                                1994. Prior to 1994, Mr. Bonnell served in
                                                various capacities with CIB Marine and its
                                                subsidiaries. Mr. Bonnell was the President
                                                of Sidney Community Bank, now known as
                                                Central Illinois Bank, upon the change in
                                                ownership in 1987.
Patrick J. Straka, 33(1).....................   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.
</TABLE>

-------------------------

(1) J. Michael Straka is the father of Donald J. Straka and Patrick J. Straka.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     As of March 15, 2000, there were approximately 961 holders of record of CIB
Marine's common stock. There is no established public trading market for CIB
Marine's common stock. CIB Marine has offered and sold, from time to time,
shares of its common stock in private placement transactions.

     CIB Marine has not paid cash dividends on its common stock during the two
most recent fiscal years. CIB Marine currently reinvests earnings to support
continued growth, but will periodically consider whether to pay cash dividends
in the future. Restrictions on CIB Marine's ability to pay dividends and the
ability of its subsidiaries to transfer funds to it for the payment of dividends
are discussed elsewhere in this Annual Report on Form 10-K. See,
"Business -- Supervision and Regulation -- Dividend Restrictions." See also Note
11 to CIB Marine's December 31, 1999 consolidated financial statements contained
in Item 8 of this Form 10-K.

     In December, 1999, CIB Marine sold in private placement 2,387 shares, which
included 84 shares of common stock held as Treasury Stock, at a purchase price
of $2,518.73 per share. The transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933. In addition, during 1999 CIB Marine
also issued 339 shares of its common stock to directors, officers and employees
in sales which were not registered under the Securities Act of 1933, as amended.
All such sales were made upon the exercise of previously granted stock options.

                                       15
<PAGE>   17

ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth CIB Marine's selected consolidated financial
data. The selected financial data as it relates to the five years in the
five-year period ended December 31, 1999, has been derived from CIB Marine's
audited consolidated financial statements. The following information should be
read in conjunction with the consolidated financial statements, including the
related notes, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" presented herein elsewhere.

                                       16
<PAGE>   18

                          CIB MARINE BANCSHARES, INC.

                      SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                     AT OR FOR THE YEARS ENDED DECEMBER 31,
                                            --------------------------------------------------------
                                               1999         1998        1997       1996       1995
                                               ----         ----        ----       ----       ----
                                                    (DOLLARS IN THOUSAND, EXCEPT SHARE DATA)
<S>                                         <C>          <C>          <C>        <C>        <C>
SELECTED STATEMENT OF INCOME DATA:
Interest and dividend income
  Loans...................................  $   98,759   $   68,070   $ 46,942   $ 31,196   $ 19,637
  Loans held for sale.....................         258          479        124         48        n/a
  Securities
     Taxable..............................      14,539        9,725      7,519      4,589      3,338
     Tax-exempt...........................       1,808        1,359        908        452        292
     Dividends............................         248          194        180        152         53
  Federal funds sold......................         546          701        573        259        392
                                            ----------   ----------   --------   --------   --------
          Total interest and dividend.....     116,158       80,528     56,246     36,696     23,712
                                            ----------   ----------   --------   --------   --------
Interest expense
  Deposits................................      59,508       40,833     29,746     18,384     11,589
  Short-term borrowings...................       1,507          407        180        588        300
  Long-term borrowings....................         793          958        535         --          7
                                            ----------   ----------   --------   --------   --------
          Total interest expense..........      61,808       42,198     30,461     18,972     11,896
                                            ----------   ----------   --------   --------   --------
          Net interest income.............      54,350       38,330     25,785     17,724     11,816
Provision for loan loss...................       6,110        4,733      3,992      2,044        977
                                            ----------   ----------   --------   --------   --------
          Net interest income after
            provision for loan loss.......      48,240       33,597     21,793     15,680     10,839
                                            ----------   ----------   --------   --------   --------
Noninterest income
  Banking and trust service fees..........       4,861        5,493      3,171      2,304      1,003
  Gain on sale of branch..................         805           --         --         --         --
  Other...................................          85          111         90        266        354
  Securities gains, net...................          --          344        136        183        320
                                            ----------   ----------   --------   --------   --------
          Total noninterest income........       5,751        5,948      3,397      2,753      1,677
                                            ----------   ----------   --------   --------   --------
Noninterest expense
  Salaries and employee benefits..........      20,433       17,114     10,193      7,529      5,151
  Equipment...............................       2,071        1,495      1,615      1,161        n/a
  Occupancy and premises..................       3,129        2,247      1,328        893      1,301
  Professional services...................       1,164          632        585        492        n/a
  Advertising/marketing...................         770          682        954        843        n/a
  Amortization of intangibles.............       1,057          345        270        238        n/a
  Other...................................       4,415        3,866      2,433      1,803      2,479
                                            ----------   ----------   --------   --------   --------
          Total noninterest expense.......      33,039       26,381     17,378     12,959      8,931
                                            ----------   ----------   --------   --------   --------
Income before income taxes................      20,952       13,164      7,812      5,474      3,585
Income tax expense........................       7,417        4,510      2,537      1,901      1,261
                                            ----------   ----------   --------   --------   --------
          Net income......................  $   13,535   $    8,654   $  5,275   $  3,573   $  2,324
                                            ==========   ==========   ========   ========   ========
PER SHARE DATA:
Basic earnings............................  $   126.20   $    86.15   $  71.62   $  60.91   $  50.56
Diluted earnings..........................      124.79        85.41      71.08      60.35      50.04
Dividends.................................          --           --         --         --         --
Book value (at end of period).............    1,469.42     1,344.77   1,110.18     863.99     730.87
SELECTED FINANCIAL CONDITION DATA:
Securities................................  $  363,350   $  216,284   $160,936   $112,167   $ 72,263
Loans, including held for sale............   1,389,979      924,611    616,228    408,024    259,834
TOTAL ASSETS..............................   1,824,840    1,186,523    807,323    550,578    354,796
Deposits..................................   1,528,456    1,011,033    682,830    467,942    302,782
Borrowings................................     122,969       23,254     18,320     21,561      6,981
Stockholders' equity......................     161,335      144,096    100,732     58,232     42,677
</TABLE>

                                       17
<PAGE>   19

<TABLE>
<CAPTION>
                                                     AT OR FOR THE YEARS ENDED DECEMBER 31,
                                            --------------------------------------------------------
                                               1999         1998        1997       1996       1995
                                               ----         ----        ----       ----       ----
                                                    (DOLLARS IN THOUSAND, EXCEPT SHARE DATA)
<S>                                         <C>          <C>          <C>        <C>        <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
PERFORMANCE RATIOS:
     Net Interest Margin(1)...............        3.93%        4.19%      4.06%      4.27%      4.46%
     Net Interest Spread(2)...............        3.25         3.29       3.31       3.52       3.78
     Noninterest income to average
       assets.............................        0.39         0.60       0.50       0.62       0.59
     Noninterest expense to average
       assets.............................        2.26         2.68       2.56       2.94       3.15
     Net overhead ratio(3)................        1.87         2.07       2.06       2.31       2.56
     Efficiency ratio(4)..................       54.03        58.11      58.59      63.05      67.06
     Return on average assets(5)..........        0.93         0.88       0.78       0.81       0.82
     Return on average equity(6)..........        9.01         6.86       7.62       8.00       8.62
ASSET QUALITY RATIOS:
     Nonaccrual loans to loans, including
       held for sale......................        0.22%        0.43%      0.30%      0.59%      0.35%
     Allowance for loan loss to loans,
       including held for sale............        1.14         1.15       1.09       0.99       0.95
     Allowance for loan loss to
       nonperforming assets...............      361.85       265.89     315.36     161.74     257.92
     Net charge-offs to average loans
       including held for sale............        0.09         0.10       0.31       0.14       0.03
     Nonperforming assets to total
       assets(7)..........................        0.24         0.34       0.26       0.46       0.27
     Nonaccrual loans and 90+ days past
       due loans to loans, including held
       for sale...........................        0.47         1.04       0.52       0.94       0.89
     Nonaccrual loans and 90+ days past
       due loans to total assets..........        0.36         0.81       0.40       0.69       0.65
     Nonperforming assets and 90+ days
       past due to total assets...........        0.43         0.81       0.43       0.72       0.67
     Allowance as a percent of
       nonperforming and 90+ days past due
       loans..............................      200.57       111.10     192.80     103.05     103.76
BALANCE SHEET RATIOS:
     Average loans to average deposits....       87.68%       90.17%     83.12%     84.78%     79.14%
     Average interest-earning assets to
       average interest-bearing
       liabilities........................      115.71       120.12     115.94     116.39     115.45
CAPITAL RATIOS:
     Total equity to total assets.........        8.84%       12.14%     12.48%     10.58%     12.03%
     Total risk-based capital ratio.......  10.19.....        14.61      15.50      13.71      15.13
     Tier 1 risk-based capital ratio......        9.22        13.58      14.50      12.79      14.26
     Leverage capital ratio...............        8.95        12.57      12.36      10.90      11.90
OTHER DATA
Number of employees (FTE).................         503          421        316        251        177
Number of banking facilities..............          38           30         24         18         12
Trust assets under administration.........  $  130,162   $  109,235   $102,697   $ 70,950   $ 56,578
Shares outstanding at the end of period...     109,795      107,153     90,735     67,399     58,392
Weighted average shares
  outstanding -- basic....................     107,248      100,451     73,658     58,660     45,968
Weighted average shares outstanding --
  diluted.................................     108,462      101,315     74,222     59,201     46,446
</TABLE>

-------------------------

(1) Net interest margin is net interest income divided by average
    interest-earning assets.

(2) Net Interest spread is the yield on average interest-earning assets less
    rate on average interest bearing-liabilities.

(3) The net overhead ratio is noninterest expense minus noninterest income
    divided by average total assets.

(4) The efficiency ratio is noninterest expense divided by the sum of net
    interest income (on a tax equivalent basis: 35% for 1999 and 1998, 34% for
    prior periods) plus noninterest income excluding gains and losses on
    securities.

(5) Return on average assets is net income divided by average total assets.

(6) Return on average equity is net income divided by average common equity.

(7) Nonperforming assets include nonaccrual loans, restructured loans and
    foreclosed property.

                                       18
<PAGE>   20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     Following is a discussion and analysis of CIB Marine's consolidated
financial condition as of December 31, 1999 and 1998, and its results of
operations for the three years ended December 31, 1999, 1998 and 1997.
References in the discussion below to "CIB Marine" include CIB Marine's
subsidiaries unless otherwise specified. This discussion and analysis should be
read in conjunction with the consolidated financial statements and notes
contained in Item 8 of this Form 10-K. All dollar amounts are rounded.

INTRODUCTION AND OVERVIEW

     CIB Marine had net income of $13.5 million in 1999, as compared to $8.7
million in 1998 and $5.3 million in 1997, which represented an increase of 56.4%
from 1998 to 1999 and 64.1% from 1997 to 1998. Total assets at December 31, 1999
were approximately $1.8 billion, which represented a 53.8% increase from total
assets of $1.2 billion at December 31, 1998. Total assets increased 47.0% during
1998, from $807.3 million at December 31, 1997.

     CIB Marine's growth has been largely attributable to the implementation of
its growth strategy, which includes focusing on the development of banking
relationships with small to medium-sized businesses, offering more personalized
service to banking customers, hiring experienced personnel, and expanding in
both new and existing markets. This expansion occurred through the opening of
new banks and branches, internal growth and acquisitions. In 1999, CIB Marine
established Marine Bank-Omaha, opened five new branch facilities, acquired three
existing facilities with a total of $144.0 million in deposits and sold one
facility with $12.2 million in deposits. In 1998, CIB Marine established
CIB-Indiana, commenced operations at Marine Trust, opened four new branch
facilities and acquired one existing branch facility with $13.2 million in
deposits. In 1997, CIB Marine acquired First Ozaukee Savings Bank, now known as
Marine Bank-Milwaukee, with $37.6 million in assets, and opened four new branch
facilities. CIB Marine raised a significant portion of the capital necessary to
facilitate its growth through the sale of its common stock in private placement
offerings in 1999, 1998 and 1997, as well as in prior years.

     The following table provides an overview of CIB Marine's recent growth
indicating the percentage increase in each of the following balance sheet or
income statement items at or for the years ended December 31, 1999, 1998 and
1997, in each case as compared to the prior year.

<TABLE>
<CAPTION>
                                                                       AS OF DECEMBER 31,
                                                          ---------------------------------------------
                                                          1999 VS. 1998   1998 VS. 1997   1997 VS. 1996
                                                          -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>
BALANCE SHEET ITEMS
Commercial real estate, construction, agricultural, and
  commercial loans......................................      59.64%          58.16%          51.56%
Total loans, including held for sale....................      50.33           50.04           51.03
Total assets............................................      53.80           46.97           46.63
Total deposits..........................................      51.18           48.07           45.92
</TABLE>

<TABLE>
<CAPTION>
                                                                 FISCAL YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------------
                                                          1999 VS. 1998   1998 VS. 1997   1997 VS. 1996
                                                          -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>
INCOME STATEMENT ITEMS
Net interest income after provision(TE).................      42.80%          54.02%          40.57%
Noninterest income......................................      (3.31)          75.10           23.39
Noninterest expense.....................................      25.24           51.81           34.10
Net income..............................................      56.40           64.06           47.64
Diluted earnings per share..............................      46.11           20.16           17.78
</TABLE>

                                       19
<PAGE>   21

RESULTS OF OPERATIONS

NET INCOME

     CIB Marine had net income of $13.5 million in 1999, $8.7 million in 1998
and $5.3 million in 1997, an increase of 56.4% from 1998 to 1999 and 64.1% from
1997 to 1998. The increases in net income for these periods were primarily a
result of an increase in average earning assets and the corresponding net
interest income earned on these earning assets, offset in part by increases in
noninterest expenses, the provision for loan loss and income tax expense.

     In addition, net income for 1999 included a $0.8 million pre-tax, or $0.5
million after-tax, gain on the sale of a branch facility. The 1998 period
included a $1.4 million pre-tax, or $0.8 million after-tax, non-cash
compensation expense related to the extension of the expiration date of all
previously issued and outstanding stock options granted under CIB Marine's stock
option plans as of February 25, 1998. The related non-cash compensation expense
for 1999 was $0.1 million pre-tax.

     Diluted earnings per share was $124.79 in 1999, $85.41 in 1998 and $71.08
in 1997, representing an increase of 46.1% from 1998 to 1999 and 20.2% from 1997
to 1998. Growth in earnings per share has been less than the growth in net
income primarily due to an increase in the number of shares outstanding as a
result of CIB Marine's issuance of additional shares of common stock in private
placement offerings during each of these periods.

NET INTEREST INCOME

     Net interest income is the most significant component of CIB Marine's
earnings. Net interest income is the difference between interest earned on CIB
Marine's income-producing assets and interest paid on deposits and other
borrowed funds. Net interest margin is this difference expressed as a percentage
of average earning assets. The amount of CIB Marine's net interest income is
affected by several factors, including interest rates and the volume and
relative mix of interest-earning assets and interest-bearing liabilities.
Although CIB Marine can control certain of these factors, others, such as the
general level of credit demand, fiscal policy and Federal Reserve Board monetary
policy, are beyond CIB Marine's control.

     The following table sets forth information regarding average balances,
interest income and interest expense and the average rates earned or paid for
each of CIB Marine's major asset, liability and stockholders' equity categories.
The following table expresses interest income on a tax equivalent (TE) basis in
order to compare the effective yield on earning assets. This means that the
interest income on tax-exempt loans and tax-exempt investment securities has
been adjusted to reflect the income tax savings provided by these tax-exempt
assets. The tax equivalent adjustment was based on CIB Marine's effective
federal income tax rate of 35% for 1999 and 1998, and 34% for 1997.

                                       20
<PAGE>   22
<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                             ---------------------------------------------------------------------------
                                             1999                                   1998
                             -------------------------------------   -----------------------------------
                              AVERAGE      INTEREST      AVERAGE     AVERAGE     INTEREST      AVERAGE
                              BALANCE     EARNED/PAID   YIELD/COST   BALANCE    EARNED/PAID   YIELD/COST
                              -------     -----------   ----------   -------    -----------   ----------
                                                       (DOLLARS IN THOUSANDS)
<S>                          <C>          <C>           <C>          <C>        <C>           <C>
ASSETS
INTEREST-EARNING ASSETS(TE)
Securities
 Taxable...................  $  255,730    $ 14,787        5.78%     $163,285     $ 9,930        6.08%
 Tax-exempt................      36,311       2,782        7.66        26,093       2,091        8.01
                             ----------    --------        ----      --------     -------        ----
 Total Securities..........     292,041      17,569        6.02       189,378      12,021        6.35
Loans(1)
 Commercial and
   agricultural............   1,044,298      93,917        8.99       676,153      63,237        9.35
 Real estate...............      40,419       3,349        8.29        40,404       3,555        8.80
 Installment and other
   consumer................      18,610       1,568        8.43        23,094       1,990        8.62
                             ----------    --------        ----      --------     -------        ----
   Total loans.............   1,103,327      98,834        8.96       739,651      68,782        9.30
Federal funds sold.........      10,148         546        5.38        14,647         701        4.79
Loans -- held for sale.....       3,415         258        7.55         6,668         479        7.18
                             ----------    --------        ----      --------     -------        ----
   Total earning
     assets(TE)............   1,408,931     117,207        8.32       950,344      81,983        8.63
                                           --------        ----                   -------        ----
NONINTEREST-EARNING ASSETS
CASH AND DUE FROM BANKS....      15,407                                13,235
Premises and equipment.....      19,570                                14,250
Allowance for loan loss....     (13,126)                               (8,699)
Accrued Interest and other
 assets....................      31,764                                17,053
                             ----------                              --------
 Total noninterest-earning
   assets..................      53,615                                35,839
                             ----------                              --------
   Total assets............  $1,462,546                              $986,183
                             ==========                              ========
LIABILITIES AND
 STOCKHOLDERS' EQUITY
INTEREST-BEARING
 LIABILITIES
Deposits
 Interest-bearing demand
   deposits................  $   39,820    $  1,003        2.52      $ 31,550     $   859        2.72
 Money market..............     132,596       6,222        4.69        62,746       2,871        4.58
 Other savings deposits....  33,751....       1,079        3.20        27,865         784        2.81
 Time Deposits of $100,000
   or more.................     310,302      16,377        5.28       169,216       9,442        5.58
 Time Deposits.............     660,254      34,827        5.27       473,684      26,866        5.67
                             ----------    --------        ----      --------     -------        ----
   Total interest-bearing
     deposits..............   1,176,723      59,508        5.06       765,061      40,822        5.34
Borrowings -- short-term...      25,262       1,507        5.97         8,650         477        5.51
Borrowings -- long-term....      15,608         793        5.08        17,451         886        5.08
                             ----------    --------        ----      --------     -------        ----
   Total borrowed funds....      40,870       2,300        5.63        26,101       1,363        5.22
   Total Interest Bearing
     Liabilities...........   1,217,593      61,808        5.07       791,162      42,185        5.33
                                           --------        ----                   -------        ----
NONINTEREST-BEARING
 LIABILITIES
Noninterest-bearing demand
 deposits..................      85,468                                62,644
Accrued Interest and other
 liabilities...............       9,300                                 6,295
STOCKHOLDERS' EQUITY.......     150,185                               126,082
                             ----------                              --------
   Total liabilities and
     stockholders'
     equity................  $1,462,546                              $986,183
                             ==========                              ========
NET INTEREST INCOME(TE) AND
 INTEREST RATE SPREAD(2)...                $ 55,399        3.25                   $39,798        3.29
                                           ========        ====                   =======        ====
NET INTEREST
 MARGIN(TE)(3).............                                3.93%                                 4.19%
                                                           ====                                  ====

<CAPTION>
                                  YEARS ENDED DECEMBER 31,
                             -----------------------------------
                                            1997
                             -----------------------------------
                             AVERAGE     INTEREST      AVERAGE
                             BALANCE    EARNED/PAID   YIELD/COST
                             -------    -----------   ----------
                                   (DOLLARS IN THOUSANDS)
<S>                          <C>        <C>           <C>
ASSETS
INTEREST-EARNING ASSETS(TE)
Securities
 Taxable...................  $128,210     $ 7,699        6.00%
 Tax-exempt................    19,012       1,376        7.24
                             --------     -------        ----
 Total Securities..........   147,222       9,075        6.16
Loans(1)
 Commercial and
   agricultural............   439,478      42,331        9.63
 Real estate...............    31,940       2,948        9.23
 Installment and other
   consumer................    19,856       1,811        9.12
                             --------     -------        ----
   Total loans.............   491,274      47,090        9.59
Federal funds sold.........    10,307         573        5.56
Loans -- held for sale.....     1,573         124        7.88
                             --------     -------        ----
   Total earning
     assets(TE)............   650,376      56,862        8.74
                                          -------        ----
NONINTEREST-EARNING ASSETS
CASH AND DUE FROM BANKS....    10,701
Premises and equipment.....    10,626
Allowance for loan loss....    (5,543)
Accrued Interest and other
 assets....................    11,768
                             --------
 Total noninterest-earning
   assets..................    27,552
                             --------
   Total assets............  $677,928
                             ========
LIABILITIES AND
 STOCKHOLDERS' EQUITY
INTEREST-BEARING
 LIABILITIES
Deposits
 Interest-bearing demand
   deposits................  $ 27,503     $   638        2.32
 Money market..............    38,091       1,588        4.17
 Other savings deposits....    16,914         642        3.80
 Time Deposits of $100,000
   or more.................   106,214       5,728        5.39
 Time Deposits.............   361,329      21,150        5.85
                             --------     -------        ----
   Total interest-bearing
     deposits..............   550,051      29,746        5.41
Borrowings -- short-term...     8,842         592        6.70
Borrowings -- long-term....     2,062         123        5.97
                             --------     -------        ----
   Total borrowed funds....    10,904         715        6.56
   Total Interest Bearing
     Liabilities...........   560,955      30,461        5.43
                                          -------        ----
NONINTEREST-BEARING
 LIABILITIES
Noninterest-bearing demand
 deposits..................    42,901
Accrued Interest and other
 liabilities...............     4,887
STOCKHOLDERS' EQUITY.......    69,185
                             --------
   Total liabilities and
     stockholders'
     equity................  $677,928
                             ========
NET INTEREST INCOME(TE) AND
 INTEREST RATE SPREAD(2)...               $26,401        3.31
                                          =======        ====
NET INTEREST
 MARGIN(TE)(3).............                              4.06%
                                                         ====
</TABLE>

-------------------------

(TE) -- Tax Equivalent Basis

(1)  Loan balance totals include non-accruals.

(2)  Interest rate spread is the net of the average rate on interest-earning
     assets and interest-bearing liabilities.

(3)  Net interest margin is the ratio of net interest income (TE) to average
     earning assets.

                                       21
<PAGE>   23

     Net interest income on a fully tax equivalent basis was $55.4 million in
1999, $39.8 million in 1998 and $26.4 million in 1997, representing a 39.2%
increase from 1998 to 1999 and a 50.7% increase from 1997 to 1998. The increases
in the volume of earning assets, and the liabilities to fund these assets,
accounted for substantially all of the increase in net interest income for both
1999 and 1998, and was partially offset by four and two basis point decreases in
the net interest spread from the previous year.

     The following table presents an analysis of changes, on a tax-equivalent
basis, in net interest income resulting from changes in average volumes of
interest-earning assets and interest-bearing liabilities and average rates
earned and paid.

<TABLE>
<CAPTION>
                                        YEAR ENDED DECEMBER 31, 1999             YEAR ENDED DECEMBER 31, 1998
                                                COMPARED TO                              COMPARED TO
                                      YEAR ENDED DECEMBER 31, 1998(1)          YEAR ENDED DECEMBER 31, 1997(1)
                                   --------------------------------------   --------------------------------------
                                   VOLUME     RATE      TOTAL    % CHANGE   VOLUME     RATE      TOTAL    % CHANGE
                                   ------     ----      -----    --------   ------     ----      -----    --------
                                                               (DOLLARS IN THOUSANDS)
<S>                                <C>       <C>       <C>       <C>        <C>       <C>       <C>       <C>
INTEREST INCOME(TE)
Securities -- taxable............  $ 5,367   $  (510)  $ 4,857     48.91%   $ 2,132   $    99   $ 2,231     28.98%
Securities -- tax-exempt.........      787       (96)      691     33.05        555       160       715     51.96
                                   -------   -------   -------    ------    -------   -------   -------    ------
  Total Securities...............    6,154      (606)    5,548     46.15      2,687       259     2,946     32.46
Loans (including fees)...........   32,663    (2,611)   30,052     43.69     23,137    (1,445)   21,692     46.06
Federal funds sold...............     (234)       79      (155)   (22.11)       216       (88)      128     22.34
Loans -- held for sale...........     (245)       24      (221)   (46.14)       367       (12)      355    286.29
                                   -------   -------   -------    ------    -------   -------   -------    ------
TOTAL INTEREST INCOME(TE)........   38,338    (3,114)   35,224     42.97     26,407    (1,286)   25,121     44.18
                                   -------   -------   -------    ------    -------   -------   -------    ------
INTEREST EXPENSE
Interest-bearing demand
  deposits.......................      212       (68)      144     16.76        101       120       221     34.64
Money market.....................    3,276        75     3,351    116.72      1,115       168     1,283     80.79
Other savings deposits...........      179       116       295     37.63        339      (197)      142     22.12
Time deposits of 100,000 or
  more...........................    7,472      (537)    6,935     73.45      3,509       205     3,714     64.84
Other time deposits..............    9,953    (1,992)    7,961     29.63      6,391      (675)    5,716     27.03
                                   -------   -------   -------    ------    -------   -------   -------    ------
  Total Deposits.................   21,092    (2,406)   18,686     45.77     11,455      (379)   11,076     37.24
Borrowings -- short term.........      988        42     1,030    215.93        (13)     (102)     (115)   (19.43)
Borrowings -- long term..........      (94)        1       (93)   (10.50)       784       (21)      763    620.33
                                   -------   -------   -------    ------    -------   -------   -------    ------
  Total Borrowings...............      894        43       937     68.75        771      (123)      648     90.63
                                   -------   -------   -------    ------    -------   -------   -------    ------
TOTAL INTEREST EXPENSE...........   21,986    (2,363)   19,623     46.52     12,226      (502)   11,724     38.49
                                   -------   -------   -------    ------    -------   -------   -------    ------
NET INTEREST INCOME(TE)..........  $16,352   $  (751)  $15,601     39.20%   $14,181   $  (784)  $13,397     50.74%
                                   =======   =======   =======    ======    =======   =======   =======    ======
</TABLE>

-------------------------

(TE) -- Tax Equivalent Basis

(1)  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

     Total interest income for 1999 was $116.2 million, 44.2% higher than
interest income of $80.5 million in 1998. Interest income in 1998 increased
43.2% from $56.2 million in 1997. The primary reason for the increase in
interest income is the increase in the volume of CIB Marine's average earning
assets. Average earning assets increased 48.3% to $1.4 billion during 1999 from
$950.3 million in 1998. Average earning assets in 1998 represented a 46.1%
increase over $650.4 million of average earning assets in 1997. The increase in
interest income due to increased volume was partially offset by a 31 basis point
decrease in the average interest rate earned on interest-earning assets from
1998 to 1999 and an 11 basis point decrease in the average interest rate earned
on interest-earning assets from 1997 to 1998. The decrease in the average
interest rate earned is primarily the result of an overall decline in market
interest rates during this period which resulted in a large portion of CIB
Marine's assets being repriced at a lower rate during this period.

                                       22
<PAGE>   24

     Interest earned on loans is the largest component of total interest earned
and represented 85.2%, 85.1% and 83.7% of total interest earned in 1999, 1998,
and 1997, respectively. Interest earned on securities in CIB Marine's portfolio
accounted for the majority of the remaining balance in total interest earned.

INTEREST EXPENSE

     Total interest expense increased 46.5% to $61.8 million in 1999 from $42.2
million in 1998. Total interest expense for 1998 represented a 38.5% increase
over $30.5 million of total interest expense for 1997. These increases were
primarily due to an increase in the volume of interest-bearing liabilities.
Increased volume accounted for $22.0 million of the increase in total interest
expense from 1998 to 1999 and $12.1 million of the variance from 1997 to 1998.
The increase in interest expense due to volume was partially offset by a 26
basis point decrease in the average interest rate paid on interest-bearing
liabilities from 1998 to 1999 and a ten basis point decrease in the average
interest rate paid on interest-bearing liabilities from 1997 to 1998.

     Interest expense on time deposits represents the largest component of total
interest expense. The ratio of interest expense on time deposits to total
interest expense was 82.8%, 86.1% and 88.2% in 1999, 1998 and 1997,
respectively. The significant level of interest expense on time deposits is due
to the fact that CIB Marine has used these types of deposits to fund a large
portion of the growth in its loan portfolio.

     The average rate paid on interest-bearing deposits decreased 28 basis
points to 5.06% in 1999 from 5.34% in 1998. The average rate paid in 1998
reflected a seven basis point decrease over the 5.41% paid in 1997. The 28 basis
point decrease in the average rate paid on interest-bearing deposits from 1998
to 1999 was primarily the result of decreases in the rates paid on
interest-bearing deposits and time deposits. From 1998 to 1999, the average rate
paid decreased 20 basis points for interest-bearing demand deposits, 30 basis
points for time deposits and 40 basis points for time deposits of $100,000 or
more. These decreases were partially offset by an increase of 11 basis points
for money market accounts and 39 basis points for other savings deposits.

     The decrease in the average rate paid in 1998 from 1997 was primarily the
result of an 18 basis point decrease in the average rate paid on time deposits
and a 99 basis point decrease in the rate paid on other savings deposits, offset
in part by a 40 basis point increase in the average rate paid on
interest-bearing demand deposits, a 41 basis point increase in the average money
market rate and a 19 basis point increase in time deposits of $100,000 or more.
The 99 basis point decrease in the interest rate paid on other savings deposits
from 1997 to 1998 was primarily the result of the savings deposits acquired in
connection with the purchase of First Ozaukee Savings Bank in September 1997,
which were at a lower rate than CIB Marine's existing savings deposit base, and
the lowering of the interest rate paid on other savings deposits during 1998.
The increase in the average interest rate paid on both interest bearing demand
deposits and money markets was primarily the result of the introduction of a
tiered interest rate schedule within both types of deposits, which provided for
a higher interest rate to be paid to accounts with balances above certain
thresholds. The increase in the rate paid on time deposits of $100,000 or more
was largely the result of reducing the proportion of secured deposits to
unsecured deposits, which generally require a higher interest rate. CIB Marine
decreased the proportion of secured time deposits of $100,000 or more in order
to maintain liquidity through the availability of securities not pledged.

     CIB Marine's interest rate spread, which is the difference between the
average interest rate on interest-earning assets and the average interest rate
on interest-bearing liabilities, was 3.25% in 1999, 3.29% in 1998, and 3.31% in
1997. The net interest margin was 3.93%, 4.19%, and 4.06% in 1999, 1998 and
1997, respectively.

NONINTEREST INCOME

     Noninterest income represented 4.7%, 6.9% and 5.7% of total income on a tax
equivalent basis, in 1999, 1998 and 1997, respectively. The primary source of
noninterest income was loan fees, which includes fees for originating loans for
others, standby letters of credit fees, late charges and service fees on loans
serviced for others. These loan fees represented $2.5 million, or 44.1%, of
total noninterest income in 1999, $3.3 million, or 55.5%, in 1998 and $1.7
million, or 50.0%, in 1997. Noninterest income decreased $0.2 million, from $5.9
million in 1998 to $5.8 million in 1999. The decrease in noninterest income from
1998 to 1999 was primarily the result of a $0.8 million, or 23.1%, decrease in
loan fees and a $0.3 million decrease in the gains
                                       23
<PAGE>   25

on sales of securities partially offset by a $0.8 million gain on a branch sale
in 1999. The decrease in loan fees was due to a $1.1 million or a 39.0% decrease
in fees associated with the origination and subsequent sales of residential
first mortgage loans as a result of a 39.8% reduction in origination volumes due
to higher interest rates, and was partially offset by an increase in fees from
standby letters of credit of $0.3 million. Deposit service charges stayed about
the same in 1999 as 1998 although average deposits grew 52.5% over that period.
Most of the deposit growth was in certificates of deposits or money market
accounts which generally do not produce fee income.

     The amount of noninterest income in 1998 represented a $2.5 million, or
75.1% increase from $3.4 million in 1997. This increase was primarily the result
of a $1.5 million, or 90.2% increase in loan fees, a $0.4 million, or 42.5%
increase in deposit service charges and a $0.2 million, or 88.8% increase in
other service fees.

NONINTEREST EXPENSE

     Total noninterest expense increased $6.7 million, or 25.2%, to $33.0
million in 1999 from $26.4 million in 1998. The 1998 noninterest expense amount
represented an increase of $9.0 million, or 51.8%, over noninterest expenses of
$17.4 million in 1997. These increases in noninterest expense were primarily
attributable to increased salaries and employee benefits expense and, to a
lesser extent, increased equipment and occupancy and premises expenses, as a
result of internal growth and the addition of nine new banking facilities in
1999 and six new banking facilities in 1998. Salary and employee benefits
expense, as a percentage of total noninterest expense, was 61.8% in 1999, 64.9%
in 1998 and 58.7% in 1997.

     Salary and employee benefits expense was $20.4 million in 1999, as compared
to $17.1 million in 1998, an increase of 19.4%. Salary and employee benefits
expense in 1998 also increased from $10.2 million in 1997, an increase of 67.9%.
The increase in salaries and benefits is the result of a number of factors,
including; the hiring of personnel to staff the new facilities, the hiring of
additional management personnel, increases in the salaries of existing
personnel, and increased bonus expense as a result of performance measures being
met in 1999 and 1998. In addition, CIB Marine recognized $0.2 million and $1.5
million in non-cash compensation expense during 1999 and 1998, respectively, as
a result of the extension, in February 1998, of the expiration date of all
previously issued and unexpired stock options granted under its stock option
plans. As a result of CIB Marine's growth, the total number of its full-time
equivalent employees increased to 503 at December 31, 1999 from 421 at December
31, 1998 and 316 at December 31, 1997 representing a 19.5% increase in 1999, a
33.2% increase in 1998 and a 25.9% increase in 1997.

     Equipment expense increased $0.6 million or 38.5% to $2.1 million in 1999
from $1.5 million in 1998. The 1998 equipment expense amount was a decrease of
$0.1 million or 7.4%, from $1.6 million in 1997. Occupancy and premises expenses
increased $0.9 million, or 39.3%, to $3.1 million from $2.2 million in 1998. The
1998 occupancy and premises expense amount was an increase of $0.9 million, or
69.2% from $1.3 million in 1997. The increases in equipment expense, net
occupancy expenses and other noninterest expenses were primarily due to the
initial and ongoing expenses incurred in connection with the opening of the
Marine Bank -- Omaha, the acquisition of three new branch facilities in the
Chicago market, and the opening of additional branch facilities in 1998 and
1999. The amortization of intangibles increased $0.7 million or 206.1% in 1999
due mostly to the $9.4 million increase in intangible assets from branch
purchases in March 1999. All other noninterest expenses, which include
professional services, advertising and marketing, and various other expenses,
increased $1.2 million, or 22.6%, to $6.3 million in 1999 from $5.2 million in
1998. The 1998 other expenses amount represented an increase of $1.2 million, or
30.4%, from 1997 other expenses of $4.0 million.

     CIB Marine's efficiency ratio was 54.0% in 1999, 58.1% in 1998, and 58.6%
in 1997. Total noninterest expense as a percentage of average assets was 2.3% in
1999, 2.7% in 1998, and 2.6% in 1997.

INCOME TAXES

     CIB Marine records a provision for income taxes currently payable, along
with a provision for income taxes payable in the future. Deferred taxes arise
from temporary timing differences between financial statement and income tax
reporting. The increase in the income tax provision was primarily due to
increases in

                                       24
<PAGE>   26

taxable income in each of the corresponding years and the movement of CIB Marine
from the 34% to the 35% federal tax bracket in 1998.

FINANCIAL CONDITION

OVERVIEW

     At December 31, 1999 CIB Marine had total assets of $1.8 billion, an
increase of $638.3 million, or 53.8%, from $1.2 billion at December 31, 1998.
The increase in 1999 was primarily attributable to growth, reflected in the
acquisition of three existing branch facilities and the opening of Marine
Bank-Omaha and five new branch facilities. Asset growth occurred primarily in
loans and securities which increased $460.2 and $147.1 million, respectively,
funded with increases in deposits of $517.4 million, borrowings of $99.7
million, and equity of $17.2 million. CIB Marine's ratio of stockholders' equity
to total assets was 8.8% at December 31, 1999 compared to 12.1% at December 31,
1998. The increase in equity in 1999 was primarily due to net income of $13.5
million and a private placement of common stock in December, 1999 that raised
$6.0 million, partially offset by the decrease in the value of available for
sale securities, net of tax, of $2.8 million.

LOANS HELD FOR SALE

     Loans held for sale decreased 75.9% to 2.1 million at December 31, 1999,
from $8.9 million at December 31, 1998. These are residential first mortgage
loans, and this decrease follows a reduction in originations of this type of
loans as a result of the higher interest rate environment in late 1999.

SECURITIES

     CIB Marine seeks to manage its investment portfolio in a manner that
promotes the achievement of its liquidity goals, optimizes after-tax net income,
provides collateral to secure borrowings, assists CIB Marine in meeting various
regulatory requirements and is consistent with its interest rate risk policies.
CIB Marine manages the maturity structure of the investment portfolio to provide
a stream of cash flows to complement the interest rate risk management of CIB
Marine and to promote the long-term after-tax earnings of CIB Marine.

                                       25
<PAGE>   27

     The carrying value and tax equivalent yield of CIB Marine's securities are
set forth in the following table.

<TABLE>
<CAPTION>
                                                 AT DECEMBER 31, 1999    AT DECEMBER 31, 1998    AT DECEMBER 31, 1997
                                                 ---------------------   ---------------------   ---------------------
                                                             YIELD TO                YIELD TO                YIELD TO
                                                  AMOUNT     MATURITY     AMOUNT     MATURITY     AMOUNT     MATURITY
                                                  ------     --------     ------     --------     ------     --------
                                                                        (DOLLARS IN THOUSANDS)
<S>                                              <C>         <C>         <C>         <C>         <C>         <C>
HELD TO MATURITY
U.S. Government & agencies.....................  $ 73,940       6.10%    $ 62,731       5.85%    $ 72,662      6.14%
Obligations of states and political
  subdivisions.................................    57,679       7.04       26,445       7.37       18,587      7.51
Other notes and bonds..........................       450       7.11          450       7.10          450      8.00
Mortgage backed securities.....................    14,821       6.97       12,113       6.56       14,890      6.71
                                                 --------      -----     --------      -----     --------      ----
    Total Securities Held to Maturity..........   146,890       6.56      101,739       6.34      106,589      6.43
                                                 --------      -----     --------      -----     --------      ----
AVAILABLE FOR SALE
U.S. Government & agencies.....................   190,585       5.83       86,533       5.48       44,143      6.01
Obligations of states and political
  subdivisions.................................     3,735      10.49        3,572      11.17        1,618      8.54
Other notes and bonds..........................     2,107       6.80        2,264       6.07          654      7.22
Mortgage backed securities.....................    18,821       6.04       17,831       5.95        4,978      5.91
Federal Home Loan Bank stock...................     4,482       6.50        3,057       6.63        2,574      6.81
Other equities.................................        37        N/A           37        N/A           23       N/A
                                                 --------      -----     --------      -----     --------      ----
    Securities Available for Sale Before SFAS
      115 Adjustment...........................   219,767       5.95      113,294       5.77       53,990      6.13
                                                 --------      -----     --------      -----     --------      ----
    TOTAL SECURITIES BEFORE SFAS 115
      ADJUSTMENT...............................   366,657       6.20%     215,033       6.04%     160,579      6.33%
                                                               =====                   =====                   ====
SFAS 115 Available For Sale Market Value
  Adjustment...................................    (3,307)                  1,251                     357
                                                 --------                --------                --------
    TOTAL SECURITIES...........................  $363,350                $216,284                $160,936
                                                 ========                ========                ========
</TABLE>

     Total securities outstanding at December 31, 1999 were $363.4 million, an
increase of 68.0%, as compared to $216.3 million at December 31, 1998. Total
securities also increased 34.4% in 1998, from $160.9 million at December 31,
1997. The increases in the securities portfolio were directly related to CIB
Marine's growth during these periods. Because CIB Marine's securities portfolio
is one of its sources of liquidity, CIB Marine has increased the size of its
portfolio as total assets have increased. The ratio of total securities to total
assets was 19.9%, 18.2% and 19.9% at December 31, 1999, 1998 and 1997,
respectively.

     The mix of securities in CIB Marine's portfolio has remained relatively
constant during the past three years. Ignoring SFAS No. 115 market value
adjustments, at December 31, 1999, 72.8% of the portfolio consisted of U.S.
Treasury and Government and Agency securities as compared to 69.0% at December
31, 1998 and 72.6% at December 31, 1997. Mortgage backed securities represented
9.3%, 13.8% and 12.3% for 1999, 1998 and 1997, respectively. Obligations of
states and political subdivisions of states accounted for most of the remaining
balance of the portfolio, and represented 16.9% of the portfolio at December 31,
1999, 13.9% at December 31, 1998, and 12.6% at December 31, 1997, ignoring SFAS
115. Most of those obligations were general obligations of states or political
subdivisions of states in which the CIB Marine's subsidiaries are located.

     CIB Marine has classified certain of its securities as held to maturity and
certain of its securities as available for sale. Securities classified as held
to maturity are those that CIB Marine has both the positive intent and ability
to hold to maturity, and are reported at amortized cost. Securities classified
as available for sale are those CIB Marine has not classified as held to
maturity or as trading securities. CIB Marine has not maintained any securities
for trading purposes. CIB Marine may sell securities classified as available for
sale if it believes the sale is necessary for liquidity, asset/liability
management or other reasons. Securities available for sale are reported at fair
value, with unrealized gains and losses, net of taxes, included as a separate
component of accumulated other comprehensive income in equity.

     At December 31, 1999, $216.5 million, or 59.6%, of the securities portfolio
was classified as available for sale and $146.9 million, or 40.4%, of the
portfolio as held to maturity. These ratios were 53.0% and 47.0% at December 31,
1998 and 33.8% and 66.2% at December 31, 1997, respectively. Securities
available for sale

                                       26
<PAGE>   28

increased $101.9 million, or 89.0%, during 1999, while securities held to
maturity increased $45.2 million, or 44.4%. The classification of securities as
available for sale and held to maturity is based on a number of factors,
including CIB Marine's current and projected liquidity position and current and
projected loan to deposit ratio. The increase in the percentage of securities
classified as available for sale in both 1999 and 1998 reflects CIB Marine's
decision, based on such factors, to make a larger percentage of its securities
portfolio available to meet CIB Marine's liquidity needs, if necessary, and to
allow CIB Marine the opportunity to react to changes in market interest rates
and changes in the yield relationship between alternative investments.

     The following table presents the maturities and weighted average tax
equivalent yields of securities as of December 31, 1999.

SECURITIES MATURITY SCHEDULE
<TABLE>
<CAPTION>
                                  1 YEAR AND LESS        1 TO 5 YEARS         5 TO 10 YEARS
                                 ------------------   -------------------   ------------------
                                           YIELD TO              YIELD TO             YIELD TO
                                 BALANCE   MATURITY   BALANCE    MATURITY   BALANCE   MATURITY
                                 -------   --------   -------    --------   -------   --------
                                                    (DOLLARS IN THOUSANDS)
<S>                              <C>       <C>        <C>        <C>        <C>       <C>
AVAILABLE FOR SALE
U.S. Government & Agencies.....  $25,023     6.00%    $165,562     5.81%    $    --       --%
Obligations of states and
  political subdivisions.......       --       --           57     8.50       3,678    10.52
Other notes and bonds..........       --       --        1,757     6.81         350     6.73
Mortgage backed securities.....      890     5.85        3,127     5.81       3,784     5.83
Federal Home Loan Bank stock...       --       --           --       --       4,482     6.50
Other equities.................       --       --           --       --          --       --
                                 -------     ----     --------     ----     -------    -----
  Total Available For Sale.....   25,913     5.99      170,503     5.81      12,294     7.50
                                 -------     ----     --------     ----     -------    -----
HELD TO MATURITY
U.S. Government & Agencies.....   13,775     6.18       57,173     6.07       2,992     6.32
Obligations of states and
  political subdivisions.......   18,906     6.45       17,073     7.19      17,478     7.46
Other Notes and Bonds..........       --       --          450     7.11          --       --
Mortgage backed securities.....       --       --          878     6.84       3,001     6.61
                                 -------     ----     --------     ----     -------    -----
  Total Held To Maturity.......   32,681     6.34       75,574     6.34      23,471     7.21
                                 -------     ----     --------     ----     -------    -----
  Total Securities Before SFAS
    115 Adjustment.............  $58,594     6.19%    $246,077     5.98%    $35,765     7.31%
                                 =======     ====     ========     ====     =======    =====
AVAILABLE FOR SALE MARKET VALUE
  ADJUSTMENT (SFAS 115)........
  TOTAL SECURITIES.............

<CAPTION>
                                   OVER 10 YEARS          GRAND TOTAL
                                 ------------------   -------------------
                                           YIELD TO              YIELD TO
                                 BALANCE   MATURITY   BALANCE    MATURITY
                                 -------   --------   -------    --------
                                          (DOLLARS IN THOUSANDS)
<S>                              <C>       <C>        <C>        <C>
AVAILABLE FOR SALE
U.S. Government & Agencies.....  $    --      --%     $190,585     5.83%
Obligations of states and
  political subdivisions.......       --      --         3,735    10.49
Other notes and bonds..........       --      --         2,107     6.80
Mortgage backed securities.....   11,020    6.19        18,821     6.04
Federal Home Loan Bank stock...       --      --         4,482     6.50
Other equities.................       37    N/A             37    N/A
                                 -------     ---      --------    -----
  Total Available For Sale.....   11,057    6.19       219,767     5.95
                                 -------     ---      --------    -----
HELD TO MATURITY
U.S. Government & Agencies.....       --      --        73,940     6.10
Obligations of states and
  political subdivisions.......    4,222    7.35        57,679     7.04
Other Notes and Bonds..........       --      --           450     7.11
Mortgage backed securities.....   10,942    7.08        14,821     6.97
                                 -------     ---      --------    -----
  Total Held To Maturity.......   15,164    7.16       146,890     6.56
                                 -------     ---      --------    -----
  Total Securities Before SFAS
    115 Adjustment.............  $26,221    6.74%      366,657     6.20%
                                 =======     ===                  =====
AVAILABLE FOR SALE MARKET VALUE
  ADJUSTMENT (SFAS 115)........                         (3,307)
                                                      --------
  TOTAL SECURITIES.............                       $363,350
                                                      ========
</TABLE>

LOANS

     GENERAL. CIB Marine offers a broad range of loan products, including
commercial loans, commercial real estate loans, commercial and residential real
estate construction loans, one-to-four family residential real estate loans, and
various types of consumer loans. CIB Marine's underwriting standards, as
contained within CIB Marine's loan policy, are based on the general assumption
that the primary source of repayment should be the regular operating cash flows
and the secondary source should be the liquidation and disposition of
collateral.

     Loans, net of the allowance for loan loss, were $1.4 billion at December
31, 1999, an increase of $467.0 million, or 51.6%, from $905.1 million at
December 31, 1998 and represented 75.2% and 76.3% of CIB Marine's total assets
at December 31, 1999 and December 31, 1998, respectively. All of the increase
was in the areas of commercial real estate loans, commercial loans and
construction loans, which in the aggregate represented 94.6% of gross loans at
December 31, 1999 and 89.3% of gross loans at December 31, 1998. These increases
in loans are consistent with CIB Marine's strategy to focus on establishing
banking relationships with small to medium-sized businesses and has been
achieved by hiring lenders who have experience and expertise in making loans to
these customers.

                                       27
<PAGE>   29

     The following table sets forth a summary of CIB Marine's loan portfolio by
category for each of the periods indicated. The data for each category is
presented in terms of total dollars outstanding and as a percentage of the total
loans outstanding.

<TABLE>
<CAPTION>
                                                                                                   AS OF DECEMBER 31,
                       ----------------------------------------------------------------------------------------------
                                     1999               1998               1997               1996               1995
                       ------------------   ----------------   ----------------   ----------------   ----------------
                                                           (DOLLARS IN THOUSANDS)
<S>                    <C>          <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>
Commercial and
  industrial.........  $  454,438    32.7%  $273,331    29.8%  $197,462    32.1%  $148,433    36.4%  $107,895    41.5%
Agricultural.........       5,973     0.4      8,283     0.9      9,558     1.5      7,499     1.8      5,772     2.2
Real estate 1-4
  family.............      50,292     3.6     52,348     5.7     59,217     9.6     41,826    10.3     32,252    12.4
  Commercial.........     646,484    46.5    428,252    46.7    263,450    42.8    161,363    39.6     78,198    30.1
  Construction.......     214,251    15.4    117,703    12.9     52,791     8.6     27,953     6.9     16,264     6.3
Consumer.............      13,152     0.9     17,652     1.9     17,097     2.8     12,821     3.1     10,972     4.2
Credit card loans....       1,436     0.1      1,454     0.2      1,592     0.3      1,187     0.3        702     0.3
Other................       5,486     0.4     17,929     1.9     13,593     2.3      6,287     1.6      7,779     3.0
                       ----------   -----   --------   -----   --------   -----   --------   -----   --------   -----
Gross Loans..........   1,391,512   100.0%   916,952   100.0%   614,760   100.0%   407,369   100.0%   259,834   100.0%
                                    =====              =====              =====              =====              =====
Deferred Loan
  Fees(1)............      (3,681)            (1,241)              (430)               (18)                --
Allowance for loan
  loss...............     (15,813)           (10,657)            (6,692)            (4,058)            (2,458)
                       ----------           --------           --------           --------           --------
Net loans............  $1,372,018           $905,054           $607,638           $403,293           $257,376
                       ==========           ========           ========           ========           ========
</TABLE>

---------------

(1) The Company did not adopt the provisions of Statement of Financial
    Accounting Standards No. 91 until 1996

     COMMERCIAL REAL ESTATE LOANS. Commercial real estate loans, which
represented 46.5% of CIB Marine's gross loans at December 31, 1999, totaled
$646.5 million at that date, an increase of $218.2 million, or 51.0%, over the
prior year end. Commercial real estate loans also increased $164.8 million, or
62.6%, from 1997 to 1998. Commercial real estate loans are made to finance
commercial properties such as office buildings, multi-family residences, motels,
strip malls, warehouse, and other commercial properties for which CIB Marine
holds real property as collateral. CIB Marine may also require other credit
enhancements, such as personal and corporate guarantees. Commercial real estate
loans are made at both fixed and variable interest rates with terms generally
ranging from one to five years. CIB Marine's underwriting standards generally
require that a commercial real estate loan not exceed 80% of the appraised value
of the property securing the loan.

     COMMERCIAL LOANS. Commercial loans, which represented 32.7% of CIB Marine's
gross loans at December 31, 1999, totaled $454.4 million at that date, an
increase of $181.1 million, or 66.3% over the prior year-end. Commercial loans
also increased $75.9 million, or 38.4%, from 1997 to 1998. CIB Marine's
commercial loans consist of loans to small and medium-sized businesses and
individuals in a wide variety of industries, including wholesalers,
manufacturers and business service companies. CIB Marine provides a broad range
of commercial loans, including lines of credit for working capital purposes,
accounts receivable and inventory financing and term notes for the acquisition
of equipment and for other purposes. In general, commercial loans are
collateralized by inventory, accounts receivable, equipment, real estate and
other commercial assets and may be supported by other credit enhancements, such
as personal and corporate guarantees. When warranted by the overall financial
condition of the borrower, loans may also be made on an unsecured basis. Terms
of commercial loans generally range from one to five years, and the majority of
these loans have floating interest rates.

     REAL ESTATE CONSTRUCTION LOANS. Real estate construction loans, which
represented 15.4% of CIB Marine's gross loans at December 31, 1999, totaled
$214.3 million at that date, an increase of $96.5 million, or 82.0% over the
prior year end. Real estate construction loans also increased $64.9 million, or
123.0%, from 1997 to 1998. Real estate construction loans include loans for the
construction of office buildings, multi-family residences, motels, strip malls,
other commercial real estate projects and one-to-four

                                       28
<PAGE>   30

family residences. Before approving a construction loan, CIB Marine generally
requires that permanent financing for the project be approved by CIB Marine or a
nonaffiliated third party lender. These loans are generally secured by the real
estate on which the project is being constructed, and CIB Marine's underwriting,
standards generally require that the principal amount of the loan be no more
than 80% of the project's appraised value upon completion or 100% of the
estimated construction costs. CIB Marine may also require other credit
enhancements such as personal and corporate guarantees. Generally, site
inspections are required before a draw on the loan. Real estate construction
loans are made at both fixed and variable rates and generally are for a term of
12 to 18 months.

     ONE-TO-FOUR FAMILY RESIDENTIAL MORTGAGE LOANS. One-to-four family
residential mortgage loans, which represented 3.6% of CIB Marine's gross loans
at December 31, 1999, totaled $50.3 million at that date, a decrease of $2.1
million, or 3.9% from December 31, 1998. CIB Marine makes one-to-four family
residential mortgage loans which generally conform to Fannie Mae, FHLMC and
other secondary market underwriting guidelines, primarily for sale in the
secondary market, and, to a lesser extent, for its own portfolio. CIB Marine
retains mortgage loans that meet its underwriting standards but do not conform
to the secondary market underwriting guidelines when it believes that retaining
the loan will enhance a customer relationship. Residential mortgage loans that
are sold into the secondary market are generally sold with servicing rights
released. Residential mortgage loans held in CIB Marine's portfolio are made
with both floating and fixed interest rates and terms of one to 30 years.

     OTHER LOANS. CIB Marine also offers a variety of other types of loans,
including consumer loans, agricultural loans and other types of commercial
loans. Consumer loans include automobile loans, credit cards and other types of
consumer debt.

     LOAN MATURITIES. The following table sets forth the maturity distribution
and interest rate sensitivity of selected loan categories as of December 31,
1999. Maturities are based upon contractual terms of the underlying loans.

<TABLE>
<CAPTION>
                                                      LOAN MATURITIES AT DECEMBER 31, 1999
                                                   -------------------------------------------
                                                    1 YEAR     1 TO 5     OVER 5
                                                   AND LESS    YEARS      YEARS       TOTAL
                                                   --------    ------     ------      -----
                                                             (DOLLARS IN THOUSANDS)
<S>                                                <C>        <C>        <C>        <C>
Commercial and industrial........................  $247,735   $175,834   $ 30,869   $  454,438
Agricultural.....................................     3,589      2,384         --        5,973
Real estate
  1-4 family.....................................     9,600     22,669     18,023       50,292
  Commercial.....................................   170,797    406,828     68,859      646,484
  Construction...................................   125,485     84,741      4,025      214,251
Consumer and Credit Cards........................     4,791      9,009        788       14,588
Other............................................       604      4,032        850        5,486
                                                   --------   --------   --------   ----------
                                                   $562,601   $705,497   $123,414   $1,391,512
                                                   ========   ========   ========   ==========
SENSITIVITY TO CHANGES IN INTEREST RATES
Fixed rates......................................  $102,873   $379,064   $ 55,847   $  537,784
Variable rates...................................   459,728    326,433     67,567      853,728
                                                   --------   --------   --------   ----------
Total Gross loans................................  $562,601   $705,497   $123,414   $1,391,512
                                                   ========   ========   ========   ==========
</TABLE>

CREDIT CONCENTRATION

     Credit risk, the risk that one or more borrowers will not be able to repay
some or all of their obligations to CIB Marine, is inherent in CIB Marine's
business. Concentrations of credit occur when the aggregate amount of direct,
indirect and/or contingent obligations to one borrower, a related group of
borrowers or borrowers within or dependent upon a related industry or group
represent a relatively large percentage of credit extended by CIB Marine.
Although each loan in a concentration may be of sound quality, concentrations of
credit create special risks that are not present when the same loan amount is
extended to a group of unrelated

                                       29
<PAGE>   31

borrowers. Loans concentrated in one borrower are, to a large degree, dependent
upon the financial capability and character of the individual borrower. Loans to
a related group of borrowers are susceptible to a domino effect if financial
problems are experienced by one or a few members of the group. Concentrations
within or dependent upon an industry are subject to the additional risk factors
of external economic conditions and market acceptance, which might equally
affect all borrowers in the industry.

     Pursuant to CIB Marine's loan policy, generally a concentration of credit
is deemed to exist when the total credit relationship exceeds 25% of the capital
of CIB Marine. At December 31, 1999, CIB Marine had four borrowing relationships
with individual borrowers or related groups of borrowers that exceeded 25% of
its capital. The total outstanding lending commitment associated with these four
borrowing relationships, including lines of credit which may not have been fully
drawn as of December 31, 1999, was approximately $156.9 million. The aggregate
principal amount actually drawn and outstanding at December 31, 1999, with
respect to these borrowing relationships was approximately $109.4 million, or
7.9% of CIB Marine's gross loans outstanding, and 67.8% of CIB Marine's
stockholders' equity balance as of that date. CIB Marine's largest commitment at
December 31, 1999 was approximately $56.9 million, of which approximately $49.3
million was outstanding as of that date.

     In July 1999, one of CIB Marine's largest borrowers, who is also a
stockholder of CIB Marine, experienced a substantial decline in net worth as a
result of a similar decline in the market value of a publicly traded common
stock comprising a large part of this borrower's net worth. The decline in the
value of this security has caused liquidity problems for this borrower with
respect to its current obligations to CIB Marine and to other lenders. As of
December 31, 1999, the total outstanding lending commitment associated with this
borrowing relationship, including lines of credit which have not been fully
drawn, was approximately $47.3 million. The aggregate principal amount actually
drawn and outstanding at December 31, 1999, with respect to this borrowing
relationship, was approximately $33.4 million and all such loans were current
with respect to the payment of principal and interest. In addition, this
borrowing relationship was adequately collateralized pursuant to CIB Marine's
loan policy.

     Since July 1999, CIB Marine has closely monitored this borrowing
relationship, including the collateral margins and cash flows. This borrower has
worked with CIB Marine to provide CIB Marine with additional collateral for
these borrowings and updated financial information so that CIB Marine can
continue to evaluate the credit risk of this relationship. In order to assess
this borrower's liquidity needs, CIB Marine also evaluated and continues to
monitor, the borrower's obligations to other lenders and their collateral
positions. In November 1999, two of these lenders filed lawsuits to recover
amounts due to them. On February 10, 2000, one of the lawsuits was dismissed.
This borrower is also engaging in a voluntary and orderly disposition of certain
of its assets to satisfy various obligations to CIB Marine and other lenders and
to strengthen its liquidity position.

     In working with this borrower to address its liquidity problems, management
determined that it was in the best interests of CIB Marine to provide this
borrower with additional cash to help it meet its current obligations both to
CIB Marine and to other lenders. On September 9, 1999, CIB Marine purchased from
this borrower limited partnership interests in three private investment funds.
CIB Marine paid $2.4 million for these limited partnership interests, of which,
$1.0 million was used by the borrower to repay a loan from CIB Marine that was
previously secured by an interest in one of these limited partnerships, $1.3
million was invested in a certificate of deposit at CIB Marine which was pledged
to CIB Marine as additional collateral and $0.1 million was paid to another
lender. The certificate of deposit was reduced by $0.5 million during the fourth
quarter of 1999 to reflect an adjustment to the purchase price. A description of
this investment and the purchase price adjustment is included below under "Other
Assets".

     CIB Marine has neither suffered nor currently anticipates any losses with
respect to its loans to this borrower and has determined that an additional
provision to its allowance for loan loss is not currently required. CIB Marine
cannot provide assurances that an additional provision will not be required in
the future or that there will not be future losses with respect to loans to this
borrower. Management of CIB Marine will continue to closely monitor its loans to
this borrower in order to assess its ongoing exposure to the credit risk posed
by this borrower and will take additional action when deemed appropriate.

                                       30
<PAGE>   32

     At December 31, 1999, CIB Marine also had total borrowings within three
industries or industry groups that exceeded 25% of its capital as of that date.
The total outstanding balance to commercial and residential real estate
developers, investors and contractors was approximately $589.9 million, or 42.4%
of gross loans and 365.6% of stockholders' equity. The total outstanding balance
of loans made in the motel and hotel industry was approximately $128.6 million,
or 9.2% of gross loans and 79.7% of stockholders' equity. The total outstanding
balance of loans made in the nursing/convalescent home industry was
approximately $72.8 million, or 5.2% of gross loans outstanding and 45.1% of
stockholders' equity.

     The loans and lines of credit described in this section are generally
collateralized by commercial or multi-family real estate, other business
collateral and/or personal property. Management has no reason to believe that
each loan within these concentrations represent any greater risk of loss than
CIB Marine's other loans that are similarly collateralized and underwritten.

CREDIT PROCEDURES AND REVIEW

     In order to manage credit risk and the growth of the loan portfolio, CIB
Marine has developed, implemented and periodically updates various policies and
procedures, including a comprehensive loan policy and the appointment of loan
committees. The loan policy establishes underwriting standards, a loan approval
process, loan officer lending limits, loan pricing guidelines, a credit rating
system, delinquency monitoring procedures, credit collection procedures and a
comprehensive loan review system. The loan underwriting approval and review
processes are designed to protect asset quality by assuring that credit requests
are independently reviewed on at least two different levels, and to promote
uniform lending standards among CIB Marine's subsidiary banks.

     LOAN UNDERWRITING. The underwriting standards contained within CIB Marine's
loan policy address aspects of the lending function including an analysis of a
borrower's ability to repay, collateral requirements, loan-to-value ratios,
appraisals and personal guarantees. Those underwriting standards are based on
the assumption that the principal source of repayment should be the regular
operating cash flows of the borrower and the secondary source should be the
liquidation and disposition of collateral. The extent to which collateral is
required for a loan is determined by the loan policy and management's assessment
of the creditworthiness of the borrower. The amount and type of collateral
required varies, but may include real estate, marketable securities, deposits
held in financial institutions, accounts receivable, equipment and inventory.
CIB Marine may also require personal and corporate guarantees when deemed
necessary. Collateral values are monitored on a regular basis to ensure that
they are maintained at an adequate level. CIB Marine obtains and updates
appraisals on collateral when management believes they are necessary and as
required by applicable laws or regulations.

     LOAN APPROVAL. The approval process for a loan depends upon the size of the
prospective borrowing relationship. Depending on size, new loans and
modifications or renewals of existing loans are generally approved by the
individual lending officer, approved or ratified by the bank's applicable small
or large loan committee, or approved by CIB Marine's President and CEO and/or
the Head of the Credit Administration Department, each of whom has the authority
to approve loans under certain circumstances, such as loans requiring expedited
treatment.

     Generally, each bank's small loan committee is comprised of various
officers of that bank and of CIB Marine and each bank's large loan committee is
comprised of various officers and directors of that bank and of CIB Marine.

     LOAN REVIEW. CIB Marine's Credit Administration Department is responsible
for CIB Marine's loan review function, which includes assessing the credit
quality of the loan portfolio, establishing and monitoring adherence to
underwriting standards, promptly identifying loans with potential credit
exposure, handling loan collections and determining the adequacy of the
allowance for loan loss. Loan reviews are conducted on a regular basis, as
determined by the loan policy. In general, all loans of $1.0 million or greater
and 70% of loans between $0.2 million and $1.0 million are reviewed on an annual
basis, or more frequently when management believes additional reviews are
necessary. Loans with identified weaknesses are monitored on an on-going basis
by bank and CIB Marine management, the bank's Board of Directors, and the Senior
Credit Review
                                       31
<PAGE>   33

Committee, which is comprised of the CIB Marine's President and CEO, its head of
the Credit Administration Department, the General Counsel and other credit
administration officers.

     In addition, the Credit Administration Department performs extensive loan
review analysis of both CIB Marine's largest borrowing relationships, as well as
borrowers operating in industries where CIB Marine has a credit concentration.
These analyses are completed annually, or more frequently if warranted. The
analyses include a comprehensive assessment of collateral and debt service
ability including loans of those borrowers at both CIB Marine and other
creditors, as well as an evaluation of geographic, industry or other credit
risks. CIB Marine's management believes that the concentration of credit risks
are being adequately managed on a company-wide basis.

PROVISION FOR LOAN LOSS AND THE ALLOWANCE FOR LOAN LOSS

     The provision for loan loss represents charges made to earnings in order to
maintain an allowance for loan loss. The Company maintains an allowance for loan
loss to absorb an estimate of probable losses inherent in the loan and lease
portfolio. The provision for loan loss was $6.1 million in 1999, $4.7 million in
1998, and $4.0 million in 1997. A significant portion of the increase in the
provision for each year was the result of the growth in the loan portfolio. CIB
Marine increases the allowance by the amount of the provision for loan loss as
well as recoveries of previously charged-off loans, and decreases the allowance
by the amount of loan, charge-offs. The methodology for assessing the adequacy
of the allowance consists of several key elements, which include estimates for
general, specific and unallocated reserves.

     The general reserves are calculated by applying a general loss ratio to
outstanding loans and leases. The general loss ratios vary by loan type and the
internal credit risk grade. Changes in internal credit risk grades and the
general loss ratios affect the amount of the general reserves. General loss
ratios are based on historical loss experience of CIB Marine and the industry.
These ratios may be adjusted for significant factors that, in CIB Marine's
judgment, affect the collectibility of the portfolio as of the evaluation date,
including general changes in the loan and lease portfolio and in economic
conditions.

     Specific reserves are estimated losses in loans that have been identified
as impaired within the meaning of SFAS No. 114 Accounting by Creditors for
Impairment of a Loan and SFAS No. 118 Accounting by Creditors for Impairment of
a Loan -- Income Recognition and Disclosures. The sum of the general and the
specific reserves represent an estimate of the loan and lease losses inherent in
the portfolio at any given point in time.

     The unallocated reserves represent that portion of the reported allowance
that has not been allocated through the general or specific reserves. The
unallocated reserves are a variable component of the allowance. This variability
is based on various factors, including economic and regulatory conditions,
credit underwriting practices, collateral values, and industry and borrower
concentrations. The unallocated reserves are reviewed periodically to determine
whether they are at a level that CIB Marine believes are adequate, yet not
excessive.

                                       32
<PAGE>   34

     The following table presents the allocation of the allowance for loan loss.

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                 ---------------------------------------------
                                                  1999      1998      1997      1996     1995
                                                  ----      ----      ----      ----     ----
                                                            (DOLLARS IN THOUSANDS)
<S>                                              <C>       <C>       <C>       <C>      <C>
BALANCE AT BEGINNING OF PERIOD.................  $10,657   $ 6,692   $ 4,058   $2,458   $1,539
Loans charged-off
Commercial and Agricultural....................     (672)     (149)   (1,661)    (392)     (75)
Real estate
  1-4 family...................................      (48)       (9)       --       --       --
  Commercial...................................     (143)     (398)      (56)     (60)      --
  Construction.................................      (36)      (30)       --       --       --
Consumer.......................................     (162)     (167)      (47)     (13)      --
Credit card....................................       (8)      (18)      (73)      --       --
Other..........................................      (21)     (157)       --       --       --
                                                 -------   -------   -------   ------   ------
TOTAL CHARGED-OFF..............................   (1,090)     (928)   (1,837)    (465)     (75)
                                                 -------   -------   -------   ------   ------
RECOVERIES OF LOANS CHARGED-OFF
Commercial and Agricultural....................       53       134       325       20       13
Real estate
  1-4 family...................................        9        11        --       --       --
  Commercial...................................       --         4         1       --       --
  Construction.................................       46        --        --       --       --
Consumer.......................................       26         8         4        1        4
Credit card....................................        2         1         2       --       --
Other..........................................       --         2        --       --       --
                                                 -------   -------   -------   ------   ------
TOTAL RECOVERIES...............................      136       160       332       21       17
                                                 -------   -------   -------   ------   ------
NET LOANS CHARGED OFF..........................     (954)     (768)   (1,505)    (444)     (58)
Allowance acquired.............................       --        --       147       --       --
Provision for loan loss........................    6,110     4,733     3,992    2,044      977
                                                 -------   -------   -------   ------   ------
BALANCE AT END OF PERIOD.......................  $15,813   $10,657   $ 6,692   $4,058   $2,458
                                                 =======   =======   =======   ======   ======
</TABLE>

     Increases in the provision and the allowance were primarily related to the
increase in average loans outstanding between the periods. Total charge-offs for
1999 were $1.1 million as compared to $0.9 million in 1998 and $1.8 million
1997. Total recoveries for 1999 were $0.1 million, resulting in net charge-offs
of $1.0 million. In 1998 and 1997, total recoveries were $0.1 million and $0.3
million, respectively, resulting in net charge-offs of $0.8 million in 1998 and
$1.5 million in 1997. The majority of net charge-offs occurred in the commercial
real estate and commercial business loan portfolios, and represented 74.8%,
58.9%, and 93.5% of total charge-offs for 1999, 1998, and 1997 respectively.

     Approximately $1.1 million, or 60%, of the charge-offs in 1997 were due to
the lending activities of two lending officers who are no longer with CIB
Marine. Of this amount $0.6 million was attributable to a single borrower. The
remaining charge-offs in 1997 represent the amount of charge-offs CIB Marine
would have reasonably expected, based on its loan volume at that time.

     As a result of CIB Marine's growth and the increased charge-offs in 1997,
CIB Marine modified its lending oversight procedures and implemented a more
comprehensive loan review function during 1997 and 1998. This restructured loan
review policy, which CIB Marine monitors and refines when necessary, currently
involves:

     - a more detailed and comprehensive analysis for calculating the adequacy
       of the allowance;

     - a more aggressive approach regarding the early identification and
       resolution of problem loans;

     - revisions to the loan policy, including a revised credit grading system;

                                       33
<PAGE>   35

     - an increase in the scope of loans reviewed; and

     - the expansion of the Credit Administration Department's level of
       authority and responsibility to include credit analysis, loan
       documentation and loan operations in addition to loan review.

In order to implement these changes effectively, CIB Marine increased the
staffing level of the Credit Administration Department.

     The following table sets forth CIB Marine's allocation of the allowance for
loan loss by types of loans as of the dates indicated.
<TABLE>
<CAPTION>
                                                             AT DECEMBER 31,
                           ------------------------------------------------------------------------------------
                                    1999                     1998                     1997              1996
                           ----------------------   ----------------------   ----------------------   ---------
                                       % OF LOANS               % OF LOANS               % OF LOANS
                           ALLOWANCE    IN EACH     ALLOWANCE    IN EACH     ALLOWANCE    IN EACH     ALLOWANCE
                            AMOUNT      CATEGORY     AMOUNT      CATEGORY     AMOUNT      CATEGORY     AMOUNT
                           ---------   ----------   ---------   ----------   ---------   ----------   ---------
                                                          (DOLLARS IN THOUSANDS)
<S>                        <C>         <C>          <C>         <C>          <C>         <C>          <C>
BALANCE AT END OF PERIOD
 APPLICABLE TO
 Commercial and
   Agricultural..........   $ 5,856       33.0%      $ 4,299       30.7%      $2,836        33.7%      $1,452
 Real Estate:
   1-4 Family............       432        3.6           381        5.7          529         9.6          447
   Commercial real
     estate..............     4,602       46.5         3,513       46.7        2,099        42.9        1,611
   Construction..........     1,186       15.4           603       12.8          494         8.6          228
 Consumer and Credit
   Cards.................       183        1.1           226        2.1          229         3.0          114
 Other...................        15        0.4           119        2.0           79         2.2           51
 Unallocated.............     3,539         --         1,516         --          426          --          155
                            -------      -----       -------      -----       ------       -----       ------
Total Reserves...........   $15,813      100.0%      $10,657      100.0%      $6,692       100.0%      $4,058
                            =======      =====       =======      =====       ======       =====       ======

<CAPTION>
                                     AT DECEMBER 31,
                           -----------------------------------
                              1996               1995
                           ----------   ----------------------
                           % OF LOANS               % OF LOANS
                            IN EACH     ALLOWANCE    IN EACH
                            CATEGORY     AMOUNT      CATEGORY
                           ----------   ---------   ----------
                                 (DOLLARS IN THOUSANDS)
<S>                        <C>          <C>         <C>
BALANCE AT END OF PERIOD
 APPLICABLE TO
 Commercial and
   Agricultural..........     38.3%      $  909        43.7%
 Real Estate:
   1-4 Family............     10.3          258        12.4
   Commercial real
     estate..............     39.6          626        30.1
   Construction..........      6.9          130         6.3
 Consumer and Credit
   Cards.................      3.4           93         4.5
 Other...................      1.5           62         3.0
 Unallocated.............       --          380          --
                             -----       ------       -----
Total Reserves...........    100.0%      $2,458       100.0%
                             =====       ======       =====
</TABLE>

     The Credit Administration Department performs a comprehensive analysis of
the allowance on a quarterly basis. CIB Marine monitors and maintains the
allowance at a level that it considers to be adequate to provide for the
inherent risk of loss in the loan portfolio. Because the allowance is based upon
estimates of probable losses inherent in the loan and lease portfolio, the
amount actually incurred for these losses can vary significantly from the
estimated amount. Although CIB Marine's analysis includes several features that
are intended to reduce the differences between estimated and actual losses,
there can be no assurance that future losses will not exceed estimated amounts
or that additional provisions will not be required in the future. In addition,
CIB Marine's determination as to the adequacy of the allowance is subject to
review by the applicable federal and state banking agencies, as part of their
examination process, which could result in an additional provision to the
allowance upon completion of their periodic examinations.

NONPERFORMING ASSETS AND LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

     The level of nonperforming assets is an important element in assessing CIB
Marine's asset quality and the associated risk in its loan portfolio.
Nonperforming assets include nonaccrual loans, restructured loans and foreclosed
property. Loans are placed on nonaccrual status when CIB Marine determines that
it is probable that principal and interest amounts will not be collected
according to the terms of the loan documentation. A loan is classified as
restructured when the interest rate is reduced or the term is extended beyond
the original maturity date because of the inability of the borrower to service
the loan under the original terms. Foreclosed property represents properties
acquired by CIB Marine as a result of loan defaults by customers.

                                       34
<PAGE>   36

     The following table summarizes the composition of CIB Marine's
nonperforming assets, loans 90 days or more past due and still accruing, and
related asset quality ratios as of the dates indicated.

<TABLE>
<CAPTION>
                                                           AS OF DECEMBER 31,
                                         ------------------------------------------------------
                                            1999        1998       1997       1996       1995
                                            ----        ----       ----       ----       ----
                                                         (DOLLARS IN THOUSANDS)
<S>                                      <C>          <C>        <C>        <C>        <C>
NONACCRUAL LOANS
Commercial and Agricultural............  $    1,298   $    718   $  1,264   $  2,027   $     90
REAL ESTATE
  1-4 family...........................         566        110        335        252        808
  Commercial...........................         798      2,213        210        115         --
  Construction.........................         180        281         --         --         --
Consumer...............................         161         75         32          1         --
Credit card............................          --         --         --         --         --
Other..................................          --        611         --         --         --
                                         ----------   --------   --------   --------   --------
          Total nonaccrual loans.......       3,003      4,008      1,841      2,395        898
                                         ----------   --------   --------   --------   --------
Foreclosed property....................       1,099         --        281        114         55
Restructured loans.....................         268         --         --         --         --
                                         ----------   --------   --------   --------   --------
          Total nonperforming assets...  $    4,370   $  4,008   $  2,122   $  2,509   $    953
                                         ==========   ========   ========   ========   ========
LOANS 90 DAYS OR MORE PAST DUE AND
  STILL ACCRUING
Commercial and Agricultural............  $    1,079   $  3,440   $  1,203   $    895   $    650
Real estate
  1-4 family...........................         126        250         19        195         72
  Commercial...........................       1,421        787         34        300        672
  Construction.........................         850        992         --          2         --
Consumer...............................          16         87         93         --         12
Credit card............................           9         25         --          3         10
Other..................................          13          3         --         34         --
                                         ----------   --------   --------   --------   --------
          Total 90 days or more past
            due and still accruing.....  $    3,514   $  5,584   $  1,349   $  1,429   $  1,416
                                         ==========   ========   ========   ========   ========
Allowance for loan loss................  $   15,813   $ 10,657   $  6,692   $  4,058   $  2,458
Loans at end of period, including held
  for sale.............................   1,389,979    924,611    616,228    408,024    259,834
Average loans, including held for
  sale.................................   1,106,742    746,319    492,847    324,600    197,145
RATIOS
Ratio of allowance to loans............        1.14%      1.15%      1.09%      0.99%      0.95%
Ratio of net loans charged-off to
  average loans........................        0.09       0.10       0.31       0.14       0.03
Ratio of recoveries to loans
  charged-off..........................       12.48      17.24      18.07       4.52      22.67
Nonaccrual loans as a percent of
  loans................................        0.22       0.43       0.30       0.59       0.35
Nonperforming assets as a percent of
  total assets.........................        0.24       0.34       0.26       0.46       0.27
Foreclosed properties as a percent of
  loans................................        0.08         --       0.05       0.03       0.02
Allowance as a percent of nonaccrual
  loans................................      526.57     265.89     363.50     169.44     273.72
Allowance as a percent of non
  performing assets....................      361.85     265.89     315.36     161.74     257.92
Nonaccrual loans and 90+ days past due
  loans as a percent of loans..........        0.47       1.04       0.52       0.94       0.89
Nonaccrual loans and 90+ days past due
  loans as a percent of total assets...        0.36       0.81       0.40       0.69       0.65
Nonperforming assets and 90+ days past
  due loans as a percent of total
  assets...............................        0.43       0.81       0.43       0.72       0.67
Allowance as a percent of nonperforming
  assets and 90+ days past due loans...      200.57     111.10     192.80     103.05     103.76
</TABLE>

                                       35
<PAGE>   37

     Total nonaccrual loans at December 31, 1999 decreased $1.0 million, or
25.1%, to $3.0 million from $4.0 million at December 31, 1998. Total nonaccrual
loans of $4.0 million at December 31, 1998 represented an increase of $2.2
million, or 117.7%, from $1.8 million at December 31, 1997. The ratio of
nonaccrual loans to total loans was 0.22%, 0.43% and 0.30% at December 31, 1999,
1998 and 1997, respectively.

     The interest income on the nonaccrual loans that would have been recorded
in 1999 if the loans had been current in accordance with their original terms
and had been outstanding throughout 1999, or since origination if originated
during 1999, was $0.3 million. The amount of interest income on these loans
included in income in 1999 was $0.1 million. The interest income on the
nonaccrual loans that would have been recorded in 1998 if the loans had been
current in accordance with their original terms and had been outstanding
throughout 1998, or since origination if originated during 1998, was $0.7
million. The amount of interest income on these loans included in income in 1998
was $0.3 million.

     The foreclosed property of $1.1 million at December 31, 1999 represents one
property acquired after the default of a $1.6 million commercial real estate
loan. The loan was secured by the property and by the personal guarantee of one
of the principals. The $1.1 million represents the orderly liquidation value of
the property. The loan carrying value was written down by $0.3 million in 1998
and $0.2 million upon foreclosure in 1999. Both of these write-downs were
charged against the allowance for loan loss. CIB Marine did not have any
foreclosed property at December 31, 1998 or 1997.

     Loans 90 days or more past due and still accruing are delinquent loans with
respect to the payment of principal and/or interest from which management still
believes all contractual principal and interest amounts due will be collected.
CIB Marine had $3.5 million in loans that were at least 90 days past due and
still accruing at December 31, 1999 and $5.9 million at December 31, 1998.
Accrued interest on loans 90 days past due or more and still accruing as of
December 31, 1999 was $0.02 million.

     At December 31, 1999, $3.2 million, or 91.7% of loans 90 days or more past
due and still accruing, consisted of the following two lending relationships:

        (1) Commercial real estate and commercial loans to an entity with an
            outstanding balance of $1.9 million and which were six months past
            due as of December 31, 1999. Interest payments were current on the
            commercial real estate loans totaling $1.2 million and interest
            payments were less than 60 days past due on the commercial loan
            totaling $0.7 million at December 31, 1999. In February 2000, the
            borrower filed a bankruptcy petition and the loans were placed on
            nonaccrual. CIB Marine believes it will collect all principal and
            interest on these loans as a result of its collateral position.

        (2) Commercial real estate and commercial loans to a related group of
            borrowers with an aggregate outstanding balance of $1.3 million as
            of December 31, 1999. Interest payments were current with respect to
            these loans as of December 31, 1999. These loans were renewed in
            January 2000 as a result of CIB Marine's belief of an improved
            collateral position.

     The ratio of nonperforming assets and loans 90 days or more past due and
still accruing to total assets was 0.43% at December 31, 1999, as compared to
0.81% and 0.43% at December 31, 1998 and 1997, respectively. See "Subsequent
Events" for further details on recent developments regarding Nonperforming loans
and loans 90 days or more past due and still accruing.

OTHER ASSETS

     Other assets increased 128.6% to $4.3 million at December 31, 1999, from
$1.9 million at December 31, 1998. The majority of the increase was the result
of a $2.3 million investment in three limited partnerships.

     On September 9, 1999, CIB Marine purchased, at the holding company level,
limited partnership interests in three private investment funds from one of its
largest borrowers, who is also a stockholder of CIB Marine. CIB Marine engaged
in this transaction primarily to provide this borrower with cash to meet its
current obligations to CIB Marine. Additional information about this borrower
and its loans from CIB Marine are discussed in Loans -- Credit Concentration."

                                       36
<PAGE>   38

     CIB Marine originally paid $2.4 million for the limited partnership
interests based on the value of the underlying portfolio securities held by the
private investment funds as of June 30, 1999. Pursuant to the terms of the
purchase agreement, the price was to be adjusted to reflect the value of the
investments as of September 30, 1999. During the fourth quarter, CIB Marine
received from the borrower a $0.5 million purchase price adjustment. These funds
are currently invested in both public and private equity securities. Two of the
funds are focused on the environmental and waste-related industries and the
other fund is focused on the health care, pharmaceutical, media and
communication industries. Under the capital call provisions of one of the
limited partnerships, CIB Marine contributed an additional $0.4 million on
September 10, 1999. CIB Marine may also be required to invest up to an
additional $2.4 million over the next 3 1/2 years pursuant to further capital
calls.

     There is currently no public market for the limited partnership interests
in these private investment funds, and it's unlikely that such a market will
develop. Because of its illiquidity and the effect of market volatility on
equity investments such as this, this investment involves a higher risk of loss
than other securities in CIB Marine's portfolio. In order to reduce the risk in
this investment, CIB Marine has negotiated a put option to require the borrower
to repurchase the limited partnership interests at any time for the greater of
the fair market value of the limited partnership interests as of the date that
the put option is exercised or the amount originally paid by CIB Marine to the
borrower (as adjusted for additional investments by CIB Marine in the funds and
distributions by the funds to CIB Marine). The value of this put option,
however, is dependent on the future financial ability of the borrower to perform
as discussed above in "Credit Concentration." CIB Marine believes that this
investment will provide an adequate return, however it cannot provide assurances
that this return will be adequate or there will not be future losses with
respect to the limited partnership interests.

     FUNDING STRATEGY. CIB Marine seeks to meet its short and long-term funding
needs by increasing core deposits, which are the primary funding source of its
subsidiary banks. CIB Marine considers all categories of deposits other than
Eurodollar, brokered and negotiable time deposits as core deposits. Management
seeks to increase core deposits by developing banking relationships with its
commercial borrowers and other persons in the communities where banking offices
are located. In addition, CIB Marine also seeks to increase its core deposits
through other activities such as marketing, hiring personnel experienced in
deposit gathering activities, establishing de novo branches and purchasing
existing branches.

     CIB Marine also makes use of noncore deposit funding sources in a manner
consistent with its liquidity, funding and interest rate risk policies. Noncore
deposit funding sources are used to meet short-term funding needs and/or when
the pricing and continued availability of these sources presents lower funding
cost opportunities. Short-term funding sources utilized by CIB Marine include
federal funds purchased, sales of marketable loans, securities sold under
agreements to repurchase, Eurodollar deposits, short-term borrowings from the
Federal Home Loan Bank of Chicago, and short-term brokered and negotiable time
deposits. CIB Marine has also established borrowing lines with the Federal
Reserve Bank of Chicago and with an unaffiliated bank. Long-term funding
sources, other than core deposits, include long-term brokered and negotiable
time deposits, and long-term borrowings from the Federal Home Loan Bank of
Chicago.

     DEPOSITS. CIB Marine has experienced significant growth in deposits.
Average total deposits increased 52.5% to $1.3 billion in 1999, compared to
$827.7 million in 1998. Average deposits increased 39.6% in 1998 from $593.0
million in 1997. The ratio of average deposits to average earning assets was
89.6% in 1999, 87.1% in 1998, and 91.2% in 1997.

                                       37
<PAGE>   39

     The following table sets forth the average amount of and average rate paid
on deposit categories.
<TABLE>
<CAPTION>
                                          DECEMBER 31, 1999                  DECEMBER 31, 1998
                                  ---------------------------------   --------------------------------
                                   AVERAGE     % OF TOTAL   AVERAGE    AVERAGE    % OF TOTAL   AVERAGE
                                   BALANCE      DEPOSITS     RATE      BALANCE     DEPOSITS     RATE
                                   -------     ----------   -------    -------    ----------   -------
                                                         (DOLLARS IN THOUSANDS)
<S>                               <C>          <C>          <C>       <C>         <C>          <C>
Interest-bearing demand.........  $   39,820       3.15%     2.52%    $ 31,550        3.81%     2.72%
Money market....................     132,596      10.51      4.69       62,746        7.58      4.58
Other savings...................      33,751       2.68      3.20       27,865        3.37      2.81
Time deposits of 100,000 or
  more..........................     310,302      24.58      5.28      169,216       20.44      5.58
Time deposits...................     660,254      52.31      5.27      473,684       57.23      5.67
                                  ----------     ------      ----     --------      ------      ----
Total Interest Bearing
  Deposits......................   1,176,723      93.23      5.06      765,061       92.43      5.34
                                  ----------     ------      ----     --------      ------      ----
Noninterest bearing.............      85,468       6.77        --       62,644        7.57        --
                                  ----------     ------      ----     --------      ------      ----
Total Deposits..................  $1,262,191     100.00%     4.71%    $827,705      100.00%     4.93%
                                  ==========     ======      ====     ========      ======      ====

<CAPTION>
                                         DECEMBER 31, 1997
                                  --------------------------------
                                   AVERAGE    % OF TOTAL   AVERAGE
                                   BALANCE     DEPOSITS     RATE
                                   -------    ----------   -------
                                       (DOLLARS IN THOUSANDS)
<S>                               <C>         <C>          <C>
Interest-bearing demand.........  $ 27,503        4.64%     2.32%
Money market....................    38,091        6.42      4.17
Other savings...................    16,914        2.85      3.80
Time deposits of 100,000 or
  more..........................   106,214       17.91      5.39
Time deposits...................   361,329       60.94      5.85
                                  --------      ------      ----
Total Interest Bearing
  Deposits......................   550,051       92.76      5.41
                                  --------      ------      ----
Noninterest bearing.............    42,901        7.24        --
                                  --------      ------      ----
Total Deposits..................  $592,952      100.00%     5.02%
                                  ========      ======      ====
</TABLE>

     Average interest bearing deposits as a percentage of average total deposits
were 93.2% in 1999, 92.4% in 1998, and 92.8% in 1997. Time deposits represent
the largest component of interest bearing deposit liabilities. The percentage of
average time deposits to average total interest bearing deposits was 82.5% in
1999, 84.0% in 1998, and 85.0% in 1997. These percentages reflect CIB Marine's
significant reliance on time deposits as a source of funding. The level of other
types of deposits also increased in 1999. Average noninterest bearing demand
deposits increased $22.8 million, or 36.4%, in 1999, as compared to 1998, and
average money market accounts increased $69.9 million, or 111.3%, during this
period. In total, average deposits other than time deposits increased $106.8
million or 57.8%, during 1999, as compared to 1998.

     Branch acquisitions net of sales resulted in $131.8 million in net deposit
additions in 1999, including $41.8 million in savings deposits. Total time
deposits of $100,000 or more were $415.9 million, or 35.4% of total time
deposits at December 31, 1999.

     Brokered time deposits, including time deposits of $100,000 or over, were
$80.7 million, or 5.3% of total deposits, at December 31, 1999 and $58.7
million, or 5.8% of total deposits, at December 31, 1998. CIB Marine issues
brokered time deposits periodically to meet short term funding needs and/or when
their related costs are at or below those being offered on other deposits.

     The following table below provides information on the maturity distribution
of time deposits of $100,000 and over at December 31, 1999:

<TABLE>
<CAPTION>
                                                                BALANCES AT
                                                                DECEMBER 31,
                                                                    1999
                                                                ------------
                                                               (IN THOUSANDS)
<S>                                                            <C>
MATURITY
3 months or less............................................      $192,858
Over 3 through 6 months.....................................        83,039
Over 6 through 12 months....................................        78,484
Over 12 months..............................................        61,469
                                                                  --------
                                                                  $415,850
                                                                  ========
</TABLE>

BORROWINGS

     CIB Marine also uses other types of borrowings to meet liquidity needs and
to fund asset growth. These borrowings include:

     - federal funds purchased from correspondent banks;

     - securities sold under agreements to repurchase;

     - Federal Home Loan Bank advances;

                                       38
<PAGE>   40

     - loans from other commercial banks

     - treasury, tax and loan note; and

     - Federal Reserve discount window.

     The following table sets forth information regarding selected categories of
borrowings.

<TABLE>
<CAPTION>
                                                             AS OF DECEMBER 31,
                                        -------------------------------------------------------------
                                               1999                  1998                 1997
                                        -------------------   ------------------   ------------------
                                        BALANCE    AVG RATE   BALANCE   AVG RATE   BALANCE   AVG RATE
                                        -------    --------   -------   --------   -------   --------
                                                           (DOLLARS IN THOUSANDS)
<S>                                     <C>        <C>        <C>       <C>        <C>       <C>
Federal funds purchased...............  $ 29,575     5.21%    $   100     4.50%    $10,350     7.00%
Securities sold under repurchase
  agreements..........................    27,129     5.49       2,872     4.94       2,536     5.98
Treasury, tax and loan note...........       405     4.01         283     4.32         284     3.25
Federal Home Loan Bank -- short
  term................................    26,400     5.16          --       --          --       --
Other borrowings -- short term........    29,710     8.48          --       --       3,000     6.01
                                        --------     ----     -------     ----     -------     ----
     Total short term borrowings......   113,219     6.12       3,255     4.87      16,170     6.59
Federal Home Loan Bank -- long term...     9,750     4.98      20,000     5.01       2,150     5.97
                                        --------     ----     -------     ----     -------     ----
     Total borrowings.................  $122,969     6.03%    $23,255     4.99%    $18,320     6.52%
                                        ========     ====     =======     ====     =======     ====
</TABLE>

     Total borrowings were $123.0 million, $23.3 million and $18.3 million at
December 31, 1999, 1998 and 1997, respectively, representing 7.0%, 2.0% and 2.3%
of earning assets. Fed Funds purchased accounted for $29.5 million, or 24.1% of
total borrowings at December 31, 1999, as compared to $0.1 million, or 0.4% of
total borrowings at December 31, 1998 and $10.4 million, or 56.5% of total
borrowings at December 31, 1997. Repurchase agreements accounted for $27.1
million, or 22.1% of total borrowings at December 31, 1999, as compared to $2.9
million, or 12.3% of total borrowings at December 31, 1998, and $2.5 million, or
13.8% of total borrowings at December 31, 1997. Federal Home Loan Bank advances
accounted for $36.2, or 29.4% of total borrowings at December 31, 1999, as
compared to $20.0 million, or 86.0% of total borrowings at December 31, 1998,
and $5.2 million, or 28.1%, at December 31, 1997. CIB Marine increased its
utilization of these borrowings during 1999 in order to meet its short-term
funding needs or when the terms on these products were more favorable than other
types of funding. See "Subsequent Events" for further details regarding changes
in borrowings since December 31, 1999.

     CIB Marine currently has a $30.0 million revolving line of credit with an
unaffiliated commercial bank. At December 31, 1999, there was an outstanding
balance on this line of credit in the amount of $29.7 million. There were no
outstanding revolving line of credit balances at December 31, 1998 and 1997.
Substantially all of the 1999 borrowings were used to acquire branch facilities
and support loan growth.

LIQUIDITY

     The objective of liquidity management is to ensure that CIB Marine has
adequate funds available to fund various commitments, including loan demand,
deposit withdrawals and other obligations and opportunities, in a timely manner.
CIB Marine's Asset/Liability Management Committee actively manages CIB Marine's
liquidity position by estimating, measuring and monitoring its sources and uses
of funds and its liquidity position. CIB Marine's sources of funding and
liquidity include both asset and liability components. CIB Marine's funding
requirements are primarily met by the inflow of funds from deposits and, to a
lesser extent, from other borrowings as discussed under "Borrowings." Additional
funding is provided by the maturation and repayment of loans and securities.
Additional sources of liquidity include cash and cash equivalents, federal
funds, loans held for sale and the sale of securities.

     The following discussion should be read in conjunction with the statements
of cash flows for 1999, 1998 and 1997 contained in CIB Marine's December 31,
1999 consolidated financial statements contained in Item 8 of this Form 10-K.

                                       39
<PAGE>   41

     Net cash provided by operating activities was $24.1 million, $8.0 million
and $7.3 million for the years ended December 31, 1999, 1998 and 1997,
respectively. The increase in net cash provided by operating activities was
primarily due to higher net income over the three year period.

     Net cash used in investing activities was $514.7 million, $361.5 million
and $233.8 million for the years ended December 31, 1999, 1998, and 1997,
respectively. The increase in cash used for investing activities was primarily
due to the net increase in loans which was $484.9 million in 1999, $302.7
million in 1998 and $186.6 million in 1997, and accounted for 94.2%, 83.7%, and
79.8% of net cash used for investing activities for each of the respective
years. Securities purchases represented the second largest amount of cash used
in investing activities for each period. Securities purchases, net of sales and
maturities, were $151.9 million $54.3 million and $37.4 million, accounting for
29.5%, 15.0% and 16.0%, respectively, of net cash used for investing activities
in the three years ended December 31, 1999, 1998 and 1997. In 1999 the purchase
of branch assets and deposits caused a net reduction in net cash used in
investing activities of $124.4 million.

     Net cash provided by financing activities was $492.7 million, $365.9
million and $219.8 million for the years ended December 31, 1999, 1998 and 1997,
respectively. Deposits, which include demand, money market and savings accounts,
as well as time deposits, represented the largest source of net cash provided by
financing activities and accounted for 78.4%, 89.7% and 84.8% for each of the
respective years. Deposits, ignoring the effects of branch acquisitions and
sales, increased by $386.1 million in 1999, $328.2 million in 1998 and $186.3
million in 1997.

     CIB Marine was able to meet its liquidity needs in 1999 and expects to meet
these needs in 2000.

CAPITAL

     CIB Marine and its subsidiary banks are subject to various regulatory
capital guidelines. In general these guidelines define the various components of
core capital and assign risk weights to various categories of assets. The
risk-based capital guidelines require financial institutions to maintain minimum
levels of capital as a percentage of risk-weighted assets.

     The risk-based capital information of CIB Marine at December 31, 1999, 1998
and 1997 are contained in the following table. The capital levels of CIB Marine
and the subsidiary banks were in excess of the required regulatory minimum at
the dates indicated. CIB Marine intends to maintain its capital level and the
capital levels of its banks at or above levels sufficient to support future
growth and maintain sufficiently high lending limits to permit the banks to meet
the credit needs of medium-sized commercial borrowers. The risk-based capital
ratios of CIB Marine and its subsidiary banks are included in Note 11 to CIB
Marine's December 31, 1999 consolidated financial statements contained in Item 8
of this Form 10-K.

<TABLE>
<CAPTION>
                                                                     AT DECEMBER 31,
                                                            ----------------------------------
                                                               1999         1998        1997
                                                               ----         ----        ----
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                         <C>          <C>          <C>
RISK WEIGHTED ASSETS......................................  $1,618,852   $1,028,322   $669,975
                                                            ==========   ==========   ========
AVERAGE ASSETS(1).........................................  $1,667,517   $1,110,753   $786,470
                                                            ==========   ==========   ========
CAPITAL COMPONENTS
  Stockholders' equity....................................  $  161,335   $  144,096   $100,732
  Less: disallowed intangibles............................     (14,171)      (3,727)    (3,340)
  Add/less: Unrealized loss/(gain) on securities..........       2,034         (775)      (221)
                                                            ----------   ----------   --------
TIER 1 CAPITAL............................................  $  149,198   $  139,594   $ 97,171
  Allowable allowance for loan loss.......................      15,813       10,657      6,692
                                                            ----------   ----------   --------
TOTAL RISK BASED CAPITAL..................................  $  165,011   $  150,251   $103,863
                                                            ==========   ==========   ========
</TABLE>

                                       40
<PAGE>   42

<TABLE>
<CAPTION>
                                                              DECEMBER 31, 1999
                                           --------------------------------------------------------
                                                                FOR CAPITAL       PROMPT CORRECTIVE
                                               ACTUAL        ADEQUACY PURPOSES    ACTION PROVISIONS
                                           ---------------   ------------------   -----------------
                                           AMOUNT    RATIO    AMOUNT     RATIO     AMOUNT    RATIO
                                           ------    -----    ------     -----     ------    -----
<S>                                        <C>       <C>     <C>         <C>      <C>        <C>
Total Capital (to RWA)...................  165,011   10.19%  129,508      8.00%   161,885    10.00%
Tier 1 Capital...........................  149,198    9.22%   64,754      4.00%    97,131     6.00%
Tier 1 Leverage (To avg. assets).........  149,198    8.95%   66,701      4.00%    83,376     5.00%
</TABLE>

-------------------------

(1) Average assets as calculated for risk-based capital (deductions include
    current period balances for goodwill and other intangibles).

     CIB Marine's primary source of capital has been the retention of net income
and the issuance of additional common stock. The issuance of common stock,
through private placement offerings, provided $6.0 million, $32.6 million, and
$36.4 million in additional capital in 1999, 1998, and 1997, respectively.
Retained earnings were the second largest source of additional capital for CIB
Marine, and provided $13.5 million, $8.7 million, and $5.3 million of additional
capital in 1999, 1998, and 1997, respectively. See "Subsequent Events" for
further information regarding capital activity since December 31, 1999.

SUBSEQUENT EVENTS

     CHARTER CONVERSION. On February 3, 2000, Marine Bank and Savings completed
its conversion to a Wisconsin chartered commercial bank known as Marine Bank,
and changed its main bank location from its Cedarburg facility to its Wauwatosa
facility.

     LONG-TERM BORROWINGS AND SWAPS. On February 25, 2000 CIB Marine borrowed
$25.0 million by assuming a Federal Home Loan Bank of Chicago advance due June
20, 2008 with a net cost of 7.05%. CIB Marine also entered into an interest rate
swap with the Federal Home Loan Bank of Chicago with a similar $25.0 million
notional value and maturing on the same date, whereby CIB Marine pays a variable
rate of interest at the 1 month London Interbank Offered Rate ("LIBOR") and
earns a fixed rate of interest at 7.08%. The effect of the swap transaction is
to reduce CIB Marine's interest rate risk by converting the fixed rate to a
variable rate. The borrowings will fund long term variable rate assets (e.g.
LIBOR based loans).

     NONACCRUAL LOANS AND LOANS 90 DAYS OR MORE PAST DUE LOANS. On February 29,
2000 nonaccrual loans and loans 90 days or more past due and still accruing were
$8.1 million and $0.8 million, respectively. This represents a $5.1 million
increase in nonaccrual loans and a $2.7 million decrease in loans 90 days or
more past due and still accruing from December 31, 1999. These changes were
primarily the result of (1) loans with outstanding balances of approximately
$2.0 million which, as of December 31, 1999, were over 90 days and still
accruing and were in nonaccrual status on February 29, 2000, and (2) a $3.7
million borrowing relationship being placed on nonaccrual after December 31,
1999.

     The $3.7 million borrowing relationship classified as nonaccrual included
commercial real estate loans to an entity with outstanding balances of $2.9
million and real estate and equipment loans totaling $0.8 million. All of these
loans were over 60 days past due as of December 31, 1999. The borrowers have not
yet become profitable or generated positive cash flows as anticipated. Prior to
December 31, 1999, the entity's losses were funded by equity contributions by
the principals. As of February 29, 2000 the loans were over 90 days past due and
the principals refused to make further equity contributions. In March of 2000,
CIB Marine increased the loan balance by $0.3 million in order to cure other
borrower defaults relating to the collateral and charged off $0.2 million of
this loan.

     Total nonperforming loans and loans 90 days or more past due and still
accruing were $10.1 million as of February 29, 2000, $7.9 million as of December
31, 1999, and $9.6 million as of December 31, 1998.

     TRUST PREFERRED SECURITIES ISSUED. On March 23, 2000, CIB Marine issued
$10.0 million in trust preferred securities. The securities pay dividends
semi-annually on March 8 and September 8 of each year at a rate of 10.875%. The
securities mature in 2030 and may be called in 2010 through 2020 at a premium,
and thereafter at par. These securities qualify as Tier 1 equity capital for all
regulatory and risk-based capital

                                       41
<PAGE>   43

ratios. CIB Marine used the net proceeds of $9.7 million to reduce its debt at a
non-affiliated commercial bank.

YEAR 2000

     CIB Marine depends upon information technology in substantially all aspects
of its ongoing operations and addressing Year 2000 concerns to protect CIB
Marine from risks associated with it were of the highest importance. Because the
nature of the Year 2000 problem was such that there could be no complete
assurance that it would be successfully resolved, a risk mitigation program was
implemented, including a business resumption plan. The date change from 1999 to
2000 resulted in no known Year 2000 related issues that had a material effect on
the operations, liquidity or financial position of CIB Marine. CIB Marine is not
aware of any significant problems experienced by its customers regarding Year
2000 issues which resulted in financial deficiencies that could result in a
customer's inability to repay their loans. Nevertheless, CIB Marine will
continue to monitor its customers and suppliers, and other critical dates
throughout the year.

     The expense of CIB Marine's Year 2000 project was approximately $0.1
million. These expenses were for system upgrades, testing and validation, and
dedicated personnel costs. The use of outside consultants was limited to a
validation study of CIB Marine's core banking system testing methodology.

IMPACT OF INFLATION AND CHANGING PRICES

     CIB Marine's consolidated financial statements and notes thereto presented
elsewhere herein have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial position and
operating results in terms of historical dollars without considering the changes
in the relative purchasing power of money over time due to inflation. The impact
of inflation is reflected in the increased cost of CIB Marine's operations.
Unlike most industrial companies, nearly all of CIB Marine's assets and
liabilities are monetary in nature. As a result, interest rates, and changes
therein, have a greater impact on CIB Marine's performance than do the effects
of general levels of inflation. Interest rates do not necessarily move in the
same direction or to the same extent as the prices of goods and services.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     CIB Marine's primary market risk exposure is interest rate risk. CIB
Marine's net interest income is vulnerable to changes in U.S. interest rates.
Other market risks, such as commodity price risk, foreign currency exchange rate
risk, and equity price risk do not arise in the normal course of CIB Marine's
business. CIB Marine does not engage in securities trading activities.

     CIB Marine's Board of Directors has overall responsibility for it's
interest rate risk management policies. CIB Marine sets policy limits for
interest rate risk to be assumed in the normal course of business. CIB Marine's
policy is to maximize earnings while maintaining a high quality balance sheet
and controlling interest rate and other market risks. CIB Marine utilizes gap
analysis and simulation of earnings measurement techniques to help manage its
interest rate risk. CIB Marine's Asset/Liability Management Committee monitors
interest rate risk measurements for compliance with policy limits on at least a
quarterly basis.

     If the derived interest rate risk measurements fall outside of the policy
limits, then management may implement various strategies which CIB Marine
believes would reduce the interest rate risk. CIB Marine strives to use the most
effective instrument for implementing its interest rate risk management policy,
considering the costs, liquidity and capital requirements of the various
alternatives. Implementation instruments include:

     - purchases and sales of loans;

     - purchases and sales of investment securities;

     - purchases and sales of federal funds;

     - marketing of deposit accounts;

                                       42
<PAGE>   44

     - purchases or sales of securities under an agreement to resell or
       repurchase;

     - borrowing funds; and

     - altering the terms and pricing of the products and services offered.

     CIB Marine's gap analysis as of December 31, 1999 is set forth in the
following table. The table illustrates CIB Marine's interest rate sensitive
assets and liabilities and fluctuations in these assets and liabilities within
selected time intervals. In this analysis the repricing interest rate
sensitivity position is balanced when an equal amount of interest earning assets
and interest bearing liabilities reprice during a given time interval. When the
interest-earning assets and interest-bearing liabilities in a given time period
do not equally reprice an interest sensitivity gap occurs. A positive, or
asset-sensitive, gap indicates that more interest-earning assets than
interest-bearing liabilities will reprice in a given time period, while a
negative, or liability-sensitive, gap indicates that more interest-bearing
liabilities than interest-earning assets will reprice in a given time period.

<TABLE>
<CAPTION>
                               0-3         4-6        7-12        2-5      OVER 5
                              MONTHS     MONTHS      MONTHS      YEARS      YEARS      TOTAL
                              ------     ------      ------      -----     ------      -----
                                                   (DOLLARS IN THOUSANDS)
<S>                          <C>        <C>         <C>         <C>        <C>       <C>
DECEMBER 31, 1999
Interest-earning assets:
  Loans....................  $784,003   $  44,490   $  92,871   $423,430   $45,185   $1,389,979
  Securities...............    12,860      18,863      36,531    245,747    49,349      363,350
  Federal funds sold.......     2,157          --          --         --        --        2,157
                             --------   ---------   ---------   --------   -------   ----------
TOTAL INTEREST-EARNING
  ASSETS...................   799,020      63,353     129,402    669,177    94,534    1,755,486
                             --------   ---------   ---------   --------   -------   ----------
Interest-bearing
  liabilities:
  Time deposits............   469,152     216,775     285,419    203,906       122    1,175,374
  Savings and
     interest-bearing
     demand deposits.......   254,440          --          --         --        --      254,440
  Short-term borrowings....   101,164      10,000       2,055         --        --      113,219
  Long-term borrowings.....        --          --          --         --     9,750        9,750
                             --------   ---------   ---------   --------   -------   ----------
TOTAL INTEREST-BEARING
  LIABILITIES..............  $824,756   $ 226,775   $ 287,474   $203,906   $ 9,872   $1,552,783
                             --------   ---------   ---------   --------   -------   ----------
Interest sensitivity GAP
  (by period)..............   (25,736)   (163,422)   (158,072)   465,271    84,662      202,703
Interest sensitivity GAP
  (cumulative).............   (25,736)   (189,158)   (347,230)   118,041   202,703      202,703
Cumulative Gap as a % of
  Total Assets.............     -1.41%     -10.37%     -19.03%      6.47%    11.11%
</TABLE>

     Financial instruments are shown to reprice at the earlier of their maturity
date or their next contractual reprice date (e.g., a variable rate loan's next
rate reset date). In the gap analysis, nonmaturing interest-earning assets and
interest-bearing liabilities are shown to reprice immediately, and the
collateralized mortgage obligations and the real estate mortgage investment
conduits included in the investment securities are shown to reprice in those
periods in which they are expected to be repaid.

     The preceding table indicates that CIB Marine has a liability sensitive gap
at one year and an asset-sensitive gap in time periods exceeding one year. With
a liability sensitive gap, a decrease in interest rates will generally have a
positive effect on net interest income, and an increase in interest rates will
generally have a negative affect on net interest income. With an asset sensitive
gap, an increase in interest rates will generally have a positive effect on the
net interest income, and a decrease in interest rates will generally have a
negative affect on net interest income.

     While this gap analysis is a widely used measure of interest rate risk and
may be used as an indication of interest margin direction, it does not fully
reflect the effects of interest rate risks other than repricing risk, such

                                       43
<PAGE>   45

as option, basis and yield curve risks. For these reasons, CIB Marine also
performs interest rate sensitivity analyses using pretax earnings simulation
measurement techniques that express the potential gain or loss of net interest
income from the financial instruments of CIB Marine as a percentage of the
potential net interest income from those financial instruments. CIB Marine
derives results for one or more selected hypothetical changes in interest rates
over a selected period of time, usually one year.

     The following illustrates the expected percentage change in net interest
income over a one year period due to an immediate change in short term U.S.
prime rates of interest as of December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                   BASIS POINT CHANGES
                                                           -----------------------------------
                                                           +200      +100      -100      -200
                                                           ----      ----      ----      ----
<S>                                                        <C>       <C>       <C>       <C>
DECEMBER 31, 1999:
Net interest income change over one year.................  (3.53)%   (1.77)%    1.54%     2.01%
DECEMBER 31, 1998:
Net interest income change over one year.................   1.48%     0.88%    (1.95)%   (4.03)%
</TABLE>

     The preceding table illustrates, based upon the assumptions used in the
model, that net interest income of CIB Marine could change by approximately
(3.53)%, (1.77)%, 1.54% and 2.01% if interest rates were to change by +200,
+100, -100 and -200 basis points, respectively. This reveals a liability
sensitive rate risk position for the one year horizon. A year ago this position
was asset sensitive. This change is primarily the result of an increase in
liabilities which reprice within one year in order to match the interest rate
risk characteristics in CIB Marine's growing variable rate loan portfolio and an
increase in fixed rate loans repricing in more than one year. CIB Marine
monitors the model on an ongoing basis to ensure that the assumptions most
accurately reflect the current conditions. During 1999 the assumptions regarding
the basis risk of nonmaturing deposits, and in particular for money market
accounts, were updated to more accurately reflect the repricing relationship
between these accounts and changes in short term U.S. prime interest rates.
Without this update, the results for December 31, 1999, would have been (1.14)%,
(0.57)%, 0.24% and (0.38)% with +200, +100, -100, and -200 basis point changes.

     The on-balance sheet financial instruments included in the gap and
simulation models include loans, investment securities, federal funds sold, time
deposits, saving deposits, interest-bearing demand deposits, federal funds
purchased, securities sold under agreements to repurchase, and other borrowings.
Some of the options accounted for in the simulation analysis include call
options in U.S. Government Sponsored Enterprise issued investment securities and
embedded call options in U.S. Government Sponsored Enterprise issued
Collateralized Mortgage Obligations and Real Estate Mortgage Investment
Conduits.

     Some of the features of the financial instruments included in the model
that are not reflected fully in the quantitative market risk disclosure
information include: 1) repayment plans and embedded call options in loans; 2)
call options in municipal bonds and U.S. Government Sponsored Enterprise issued
structured notes; 3) early redemption and put options in time deposits and other
borrowings; and 4) interest rate caps, ceilings and floors in certain variable
rate loans and investment securities.

     The following assumptions were used in the simulation measurement
technique:

     - the balance sheet size was assumed to remain constant over the one-year
       simulation horizon;

     - all maturing assets and liabilities were invested or deposited into
       identical items with the same maturity; and

     - the interest rates were assumed to change by the same number of basis
       points regardless of term or type of interest rate, except that the
       timing, magnitude and direction of the change of interest rates paid on
       non-maturing 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.

The simulations of earnings do not incorporate any management actions that might
moderate the negative consequences of certain interest rate changes. Therefore,
they may not reflect actual results but provide conservative estimates of
interest rate risk.

                                       44
<PAGE>   46

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
CIB Marine Bancshares, Inc.:

     We have audited the accompanying consolidated balance sheets of CIB Marine
Bancshares, Inc. and subsidiaries (the "Company") as of December 31, 1999 and
1998, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the years in the two-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CIB Marine
Bancshares, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
two-year period ended December 31, 1999 in conformity with generally accepted
accounting principles.

                                            KPMG LLP

Chicago, Illinois
February 11, 2000, except as to note 18, which is as of March 23, 2000

                                       45
<PAGE>   47

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
CIB Marine Bancshares, Inc.

     We have audited the accompanying consolidated statements of income,
stockholders' equity and cash flows of CIB Marine Bancshares, Inc. and
subsidiaries (the "Company") for the year ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of CIB Marine
Bancshares, Inc. and subsidiaries for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.

     We have also audited, in accordance with generally accepted auditing
standards, the Company's consolidated balance sheet as of December 31, 1997, and
we expressed an unqualified opinion on that financial statement.

                                            STRIEGEL KNOBLOCH & COMPANY LLC

Bloomington, Illinois
February 23, 1998

                                       46
<PAGE>   48

                          CIB MARINE BANCSHARES, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 1999         1998
                                                                 ----         ----
                                                                  (IN THOUSANDS,
                                                                EXCEPT SHARE DATA)
<S>                                                           <C>          <C>
ASSETS
Cash and Cash Equivalents:
  Cash and Due from Banks...................................  $   21,941   $   14,980
  Federal Funds Sold........................................       2,157        7,100
                                                              ----------   ----------
          Total Cash and Cash Equivalents...................      24,098       22,080
                                                              ----------   ----------
Loans Held for Sale.........................................       2,148        8,900
Securities:
  Available for Sale, at fair value.........................     216,460      114,545
  Held to Maturity (approximate fair value of $145,122 and
     $103,540, respectively)................................     146,890      101,739
                                                              ----------   ----------
          Total Securities..................................     363,350      216,284
                                                              ----------   ----------
Loans.......................................................   1,387,831      915,711
  Less: Allowance for Loan Loss.............................     (15,813)     (10,657)
                                                              ----------   ----------
Net Loans...................................................   1,372,018      905,054
                                                              ----------   ----------
Premises and Equipment, net.................................      21,499       15,561
Accrued Interest Receivable.................................      13,141        8,839
Deferred Income Taxes.......................................       9,018        4,198
Goodwill and Core Deposit Intangibles, net..................      14,171        3,727
Foreclosed Properties.......................................       1,099           --
Other Assets................................................       4,298        1,880
                                                              ----------   ----------
          Total Assets......................................  $1,824,840   $1,186,523
                                                              ==========   ==========
LIABILITIES
Deposits:
  Noninterest-bearing Demand................................  $   98,642   $   80,280
  Interest-bearing Demand...................................      45,107       40,036
  Savings...................................................     209,333      110,055
  Time......................................................   1,175,374      780,662
                                                              ----------   ----------
          Total Deposits....................................   1,528,456    1,011,033
                                                              ----------   ----------
Short-term Borrowings.......................................     113,219        3,254
Accrued Interest Payable....................................       8,228        4,925
Accrued Income Taxes........................................         824          921
Other Liabilities...........................................       3,028        2,294
Long-term Borrowings........................................       9,750       20,000
                                                              ----------   ----------
          Total Liabilities.................................   1,663,505    1,042,427
                                                              ----------   ----------
STOCKHOLDERS' EQUITY
Common Stock, $1 par value; 50,000,000 Shares Authorized,
  109,795 and 107,153 Issued and Outstanding,
  respectively..............................................         110          107
Capital Surplus.............................................     126,891      120,381
Retained Earnings...........................................      36,368       22,833
Accumulated Other Comprehensive (Loss) Income...............      (2,034)         775
                                                              ----------   ----------
          Total Stockholders' Equity........................     161,335      144,096
                                                              ----------   ----------
          Total Liabilities and Stockholders' Equity........  $1,824,840   $1,186,523
                                                              ==========   ==========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements

                                       47
<PAGE>   49

                          CIB MARINE BANCSHARES, INC.

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                1999        1998        1997
                                                                ----        ----        ----
                                                              (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                           <C>         <C>         <C>
INTEREST AND DIVIDEND INCOME
Loans.......................................................  $ 98,759    $ 68,070    $ 46,942
Loans Held For Sale.........................................       258         479         124
Securities:
  Taxable...................................................    14,539       9,725       7,519
  Tax-exempt................................................     1,808       1,359         908
  Dividends.................................................       248         194         180
Federal Funds Sold..........................................       546         701         573
                                                              --------    --------    --------
          Total Interest and Dividend Income................   116,158      80,528      56,246
                                                              --------    --------    --------
INTEREST EXPENSE
Deposits....................................................    59,508      40,833      29,746
Short-term Borrowings.......................................     1,507         407         180
Long-term Borrowings........................................       793         958         535
                                                              --------    --------    --------
          Total Interest Expense............................    61,808      42,198      30,461
                                                              --------    --------    --------
Net Interest Income.........................................    54,350      38,330      25,785
Provision for Loan Loss.....................................     6,110       4,733       3,992
                                                              --------    --------    --------
          Net Interest Income After Provision for Loan
            Loss............................................    48,240      33,597      21,793
                                                              --------    --------    --------
NONINTEREST INCOME
Loan Fees...................................................     2,538       3,302       1,700
Deposit Service Charges.....................................     1,373       1,385         983
Other Service Fees..........................................       400         430         240
Trust.......................................................       550         376         248
Gain on Sale of Branch......................................       805          --          --
Other.......................................................        85         111          90
Securities Gains, net.......................................        --         344         136
                                                              --------    --------    --------
          Total Noninterest Income..........................     5,751       5,948       3,397
                                                              --------    --------    --------
NONINTEREST EXPENSE
Salaries and Employee Benefits..............................    20,433      17,114      10,193
Equipment...................................................     2,071       1,495       1,615
Occupancy and Premises......................................     3,129       2,247       1,328
Professional Services.......................................     1,164         632         585
Advertising/Marketing.......................................       770         682         954
Amortization of Intangibles.................................     1,057         345         270
Other.......................................................     4,415       3,866       2,433
                                                              --------    --------    --------
          Total Noninterest Expense.........................    33,039      26,381      17,378
                                                              --------    --------    --------
Income Before Income Taxes..................................    20,952      13,164       7,812
Income Tax Expense..........................................     7,417       4,510       2,537
                                                              --------    --------    --------
          Net Income........................................  $ 13,535    $  8,654    $  5,275
                                                              ========    ========    ========
EARNINGS PER SHARE
Basic.......................................................  $ 126.20    $  86.15    $  71.62
Diluted.....................................................    124.79       85.41       71.08
Weighted Average Shares -- Basic............................   107,248     100,451      73,658
Weighted Average Shares -- Diluted..........................   108,462     101,315      74,222
</TABLE>

          See accompanying Notes to Consolidated Financial Statements

                                       48
<PAGE>   50

                          CIB MARINE BANCSHARES, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                              COMMON STOCK                            ACCUMULATED
                             ---------------                             OTHER
                                        PAR    CAPITAL    RETAINED   COMPREHENSIVE   TREASURY
                             SHARES    VALUE   SURPLUS    EARNINGS   INCOME (LOSS)    STOCK      TOTAL
                             ------    -----   -------    --------   -------------   --------    -----
                                                  (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                          <C>       <C>     <C>        <C>        <C>             <C>        <C>
BALANCE, DECEMBER 31,
  1996.....................   67,399   $ 67    $ 49,332   $ 8,904       $   (71)      $  --     $ 58,232
Comprehensive Income:
Net Income.................                                 5,275                                  5,275
Other Comprehensive Income:
  Unrealized Securities
    Holding Gains Arising
    During the Year........                                                 598                      598
  Reclassification
    Adjustment for Gains
    Included in Net
    Income.................                                                (136)                    (136)
  Income Tax Effect........                                                (170)                    (170)
                                                          -------       -------                 --------
                                                            5,275           292                    5,567
                                                          -------       -------                 --------
Common Stock Issuance......   22,813     23      36,379                                           36,402
Exercise of Stock
  Options..................      523      1         530                                              531
                             -------   ----    --------   -------       -------       -----     --------
BALANCE, DECEMBER 31,
  1997.....................   90,735   $ 91    $ 86,241   $14,179       $   221       $  --     $100,732
                             =======   ====    ========   =======       =======       =====     ========
Comprehensive Income:
Net Income.................                                 8,654                                  8,654
Other Comprehensive Income:
  Unrealized Securities
    Holding Gains Arising
    During the Year........                                               1,239                    1,239
  Reclassification
    Adjustment for Gains
    Included in Net
    Income.................                                                (344)                    (344)
  Income Tax Effect........                                                (341)                    (341)
                                                          -------       -------                 --------
                                                            8,654           554                    9,208
                                                          -------       -------                 --------
Common Stock Issuance......   16,320     16      32,583                                           32,599
Non-Cash Compensation......                       1,459                                            1,459
Exercise of Stock
  Options..................       98                 98                                               98
                             -------   ----    --------   -------       -------       -----     --------
BALANCE, DECEMBER 31,
  1998.....................  107,153   $107    $120,381   $22,833       $   775       $  --     $144,096
                             =======   ====    ========   =======       =======       =====     ========
Comprehensive Income:
Net Income.................                                13,535                                 13,535
Other Comprehensive Income:
  Unrealized Securities
    Holding Losses Arising
    During the Year........                                              (4,558)                  (4,558)
  Income Tax Effect........                                               1,749                    1,749
                                                          -------       -------                 --------
                                                           13,535        (2,809)                  10,726
                                                          -------       -------                 --------
Exercise of Stock
  Options..................      339                522                                              522
Purchase of Treasury
  Stock....................      (84)                                                  (206)        (206)
Sale of Treasury Stock.....       84                  6                                 206          212
Common Stock Issuance......    2,303      3       5,797                                            5,800
Non-Cash Compensation......                         185                                              185
                             -------   ----    --------   -------       -------       -----     --------
BALANCE, DECEMBER 31,
  1999.....................  109,795   $110    $126,891   $36,368       $(2,034)      $  --     $161,335
                             =======   ====    ========   =======       =======       =====     ========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements

                                       49
<PAGE>   51

                          CIB MARINE BANCSHARES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                1999        1998        1997
                                                                ----        ----        ----
                                                                       (IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income..................................................  $  13,535   $   8,654   $   5,275
Adjustments to Reconcile Net Income to Net Cash Provided by
  Operating Activities:
  Depreciation and Amortization.............................      2,641       2,213       1,596
  Non-Cash Compensation.....................................        185       1,459          --
  Provision for Loan loss...................................      6,110       4,733       3,992
  Originations of Loans Held for Sale.......................   (113,426)   (188,397)    (92,247)
  Proceeds from Sale of Loans Held for Sale.................    120,178     181,395      90,349
  Deferred Tax Benefits.....................................     (3,167)     (1,558)     (1,129)
  Gain on Sale of Branch....................................       (805)         --          --
  Gain on Sale of Other Assets..............................         (4)        (25)         --
  Gain on Sale of Securities................................         --        (344)       (136)
  Increase in Interest Receivable and Other Assets..........     (4,433)     (2,159)     (2,905)
  Increase in Interest Payable and Other Liabilities........      3,243       2,011       2,548
                                                              ---------   ---------   ---------
         Net Cash Provided by Operating Activities..........     24,057       7,982       7,343
                                                              ---------   ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Maturities of Securities Available for Sale...............    129,958      26,677      12,748
  Maturities of Securities Held to Maturity.................     54,235      37,422      17,686
  Purchase of Securities Available for Sale.................   (234,328)    (87,545)    (39,405)
  Purchase of Securities Held to Maturity...................    (96,660)    (35,452)    (44,464)
  Proceeds from Sales of Securities Available for Sale......         --      16,236      12,033
  Repayments of Mortgage-Backed Securities Held to
    Maturity................................................      5,289       5,768       4,239
  Repayments of Mortgage-Backed Securities Available for
    Sale....................................................      5,551       2,899         731
  Purchase of Other Equity Securities.......................     (1,426)     (1,632)         --
  Purchase of Mortgage-Backed Securities Available for
    Sale....................................................     (6,488)    (15,835)         --
  Purchase of Mortgage-Backed Securities Held to Maturity...     (8,002)     (2,888)       (983)
  Investment in Limited Partnerships........................     (2,457)         --          --
  Net Increase in Loans.....................................   (484,908)   (302,718)   (186,600)
  Proceeds from Sale of Repossessed Property................         --         874          --
  Proceeds from Sale of Fixed Assets........................          7          24           7
  Proceeds from Sale of Branches............................      3,085          --          --
  Capital Expenditures......................................     (2,982)     (4,545)     (3,799)
  Purchase of Branch Assets and Deposits, net of Goodwill...    124,403        (795)         --
  Bank Acquisition, Net of Cash Acquired....................         --          --      (5,987)
                                                              ---------   ---------   ---------
         Net Cash Used in Investing Activities..............   (514,723)   (361,510)   (233,794)
                                                              ---------   ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in Deposits......................................    386,072     328,203     186,330
  Proceeds from Long-term Borrowings........................         --      20,000      14,000
  Repayments of Long-term Borrowings........................    (10,250)     (2,150)    (16,169)
  Proceeds from Issuance of Common Stock....................      5,800      32,599      36,168
  Proceeds from Stock Options Exercised.....................        522          98         531
  Purchase/Sale of Treasury Stock...........................          6          --          --
  Net Increase (Decrease) in Short-term Borrowings..........    110,534     (12,916)     (1,072)
                                                              ---------   ---------   ---------
         Net Cash Provided by Financing Activities..........    492,684     365,834     219,788
                                                              ---------   ---------   ---------
Net Increase in Cash and Cash Equivalents...................      2,018      12,306      (6,663)
Cash and Cash Equivalents, Beginning of Period..............     22,080       9,774      16,437
                                                              ---------   ---------   ---------
Cash and Cash Equivalents, End of Period....................  $  24,098   $  22,080   $   9,774
                                                              =========   =========   =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
  Interest..................................................  $  58,505   $  40,543   $  29,598
  Income Taxes..............................................     10,040       6,278       3,315
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
  Transfers of Loans to Other Real Estate Owned.............      1,099         579         444
</TABLE>

          See accompanying Notes to Consolidated Financial Statements

                                       50
<PAGE>   52

                          CIB MARINE BANCSHARES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

     CIB Marine Bancshares, Inc. is a bank holding company owning 100% of the
common stock of its subsidiaries. References to "CIB Marine" includes CIB
Marine's subsidiaries unless otherwise specified. The primary sources of revenue
are providing loans to customers who are small and middle-market businesses and
the investment in securities. Offices and, generally, customers are located in
the Central Illinois, Chicago, Milwaukee, Indianapolis and Omaha markets.

     The accounting and reporting policies of CIB Marine conform to generally
accepted accounting principles and prevailing practices within the banking
industry.

CONSOLIDATION

     The consolidated financial statements include the accounts of CIB Marine
and its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated. CIB Marine and its subsidiaries utilize the
accrual basis of accounting.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Estimates used in the
preparation of the financial statements are based on various factors including
the current interest rate environment and the general strength of the local
economy. Changes in these factors can significantly affect CIB Marine's net
interest income and the value of its recorded assets and liabilities.

RECLASSIFICATIONS

     Reclassifications have been made to certain balances as of and for the
years ended December 31, 1998 and 1997, to be consistent with classifications
adopted for 1999.

CASH FLOWS

     For purposes of presentation in the statements of cash flows, cash and cash
equivalents are defined as those amounts included in the statement of financial
condition caption "Cash and Due from Banks" and "Federal Funds Sold."

GOODWILL AND OTHER IDENTIFIED INTANGIBLES

     Intangible assets are amortized over the estimated benefit periods which
approximates 15 years for goodwill and 8 to 11 years for core deposit
intangibles. Goodwill is amortized using the Straight-line method and core
deposit intangibles are amortized on a level-yield method. CIB Marine reviews
goodwill and other intangible assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Adjustments, if any, would be recorded as an expense in the consolidated
statement of income in the period in which the asset is determined to be
impaired.

PREMISES AND EQUIPMENT

     Land is carried at cost. Premises and equipment are carried at cost, less
accumulated depreciation computed primarily using the straight-line method.
Maintenance and repairs are charged to expense as

                                       51
<PAGE>   53
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
incurred, while renewals and betterments are capitalized. Leasehold improvements
included in premises and equipment are amortized over the shorter of the useful
life or the term of the lease.

FORECLOSED PROPERTIES

     Foreclosed properties includes property acquired primarily through
foreclosures. These properties are carried at the lower of cost or current fair
value less estimated selling cost. Losses from the acquisition of property in
full or partial satisfaction of debt are treated as loan losses. Holding costs,
subsequent declines in value and gains or losses on disposition are included in
other expenses.

SECURITIES HELD TO MATURITY

     Bonds, notes and certain debt securities which CIB Marine has the positive
intent and ability to hold to maturity are reported at cost and adjusted for
premiums and discounts that are recognized in interest income using the interest
method over the period to maturity. Impairments in the value of securities held
to maturity which are other than temporary are accounted for as a realized loss.

SECURITIES AVAILABLE FOR SALE

     Available for sale securities consist of equity securities, bonds, notes
and other debt securities not classified as held to maturity securities or
trading securities. Unrealized holding gains and losses, net of tax, on
available for sale securities are reported as a net amount as a separate
component of shareholders' equity until realized. Gains and losses on the sale
of available for sale securities are determined using the specific
identification method. Impairments in the value of available for sale securities
which are other than temporary are accounted for as a realized loss. Premiums
and discounts are recognized in interest income using the interest method over
the period to maturity.

INCOME TAXES

     Deferred income taxes are provided on temporary differences between
financial statement and income tax reporting. Temporary differences are
differences between the amounts of assets and liabilities reported for financial
statement purposes and their tax bases. Deferred tax assets are recognized for
temporary differences that will be deductible in future years' tax returns and
for operating loss and tax credit carryforwards. Deferred tax assets are reduced
by a valuation allowance if it is deemed more likely than not that some or all
of the deferred tax assets will not be realized. Deferred tax liabilities are
recognized for temporary differences that will be taxable in future years' tax
returns.

     Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.

LOANS HELD FOR SALE

     Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated market value in the aggregate. Net
unrealized losses are recognized through a valuation allowance by a charge to
income.

                                       52
<PAGE>   54
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
LOANS AND ALLOWANCE FOR LOAN LOSS

     Loans which are held to maturity or the foreseeable future, are stated at
the amount of unpaid principal, reduced by net deferred fees or costs to
originate and an allowance for loan loss. Interest on loans is calculated by
using the simple interest method on daily balances of the principal amount
outstanding.

     The allowance for loan loss is established through a provision for loan
loss charged to expense. Loans are charged against the allowance when management
believes that the collectibility of the principal amount is unlikely. Recoveries
of amounts previously charged off are credited to the allowance.

     The provision for loan loss is based on management's evaluation of the loan
portfolio, including such factors as the volume and character of loans
outstanding, the relationship of the allowance for loan loss to outstanding
loans, past loan loss experience, the estimated value of any underlying
collateral, and general economic conditions.

     Management believes that the allowance for loan loss is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review CIB Marine's allowance for loan
loss. Such agencies may require CIB Marine to recognize additions to the
allowance based on their judgments about information available to them at the
time of their examination.

     A loan is treated as impaired when, based upon current information and
events, it is probable that CIB Marine will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Impairment is
recognized by creating an allowance for loan loss with a charge to the provision
for loan loss for the difference between its carrying value and its fair value.
Changes in the net carrying amount of the loan from one reporting period to the
next are accounted for as an adjustment to the provision for loan loss. Impaired
loans do not include nonperforming homogeneous loans such as 1-4 family real
estate loans and consumer loans. Loans, including impaired loans, are placed on
nonaccrual status when it is determined that it is probable that principal and
interest amounts will not be collected according to the terms of the loan
agreement. Income on impaired and nonaccrual loans is generally recorded when
cash is received and management considers it unlikely there will be a loss of
principal.

     Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield of the related loan. Fees for loans
sold and other loan fees are included in loan fee income as realized.

STOCK-BASED COMPENSATION

     CIB Marine applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB No. 25) and related interpretations in accounting for its
stock-based compensation plans. Under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", companies may
elect to recognize stock-based compensation expenses based on the fair value of
the awards or continue to account for stock-based compensation under APB No. 25.
CIB Marine has elected to continue to apply the provisions of APB No. 25.

     Under APB No. 25, stock based compensation expense includes the excess, if
any, of the market price of the stock at grant date or other measurement date,
over the exercise price. This expense is recognized over the vesting period of
the options. Certain stock options may have an exercise price less than the
market price at the measurement date; accordingly, compensation expense
associated with those options is included in salaries and employee benefits
expense with a corresponding increase in capital surplus.

                                       53
<PAGE>   55
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
     CIB Marine follows the practice of recording amounts received upon the
exercise of options by crediting common stock and capital surplus. Income tax
benefits from the exercise of stock options result in a decrease in current
income taxes payable and, to the extent not previously recognized as a reduction
in income tax expense, an increase in capital surplus.

BUSINESS SEGMENTS

     On January 1, 1998, CIB Marine adopted SFAS No. 131, Disclosures about
Segments of a Business Enterprise and Related Information (SFAS 131). SFAS 131
establishes standards for the way that public enterprises report information
about operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. SFAS 131 defines an operating segment
as a component of an enterprise that engages in business activities that
generate revenue and incur expense. A segment is further defined as a component
whose operating results are reviewed by the chief operating decision maker in
the determination of resource allocation and performance, and for which discrete
financial information is available.

     CIB Marine, through the bank branch network of its subsidiaries, provides a
broad range of financial services to companies and individuals in Illinois,
Wisconsin, Indiana and Nebraska. These services include commercial and retail
lending, deposits and trust services. While CIB Marine's chief operating
decision maker monitors the revenue streams of the various products and
services, operations are managed and financial performance is evaluated on a
corporate-wide basis. Accordingly, all of CIB Marine's operations are considered
by management to be aggregated in one reportable operating segment.

NEW ACCOUNTING PRONOUNCEMENT

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS 133). The statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges typically allows a derivative's gains and losses to offset
related results in the hedged item in the income statement and requires that a
company must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting treatment.

     In June 1999, the FASB issued SFAS 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of Effective Date of FASB
Statement No. 133, which extended the effective date of SFAS 133 by one year to
apply to fiscal years beginning after June 15, 2000. A company may also
implement the statement as of the beginning of any quarter after issuance. SFAS
133 cannot be applied retroactively. SFAS 133 must be applied to (a) derivative
instruments, and (b) certain derivative instruments embedded in hybrid contracts
that were issued, acquired or substantially modified after December 31, 1997
(and, at the entity's election, before January 1, 1998). The adoption of this
statement is not expected to have a material effect on CIB Marine's financial
position, liquidity or results of operations.

EARNINGS PER COMMON SHARE

     Basic earnings per common share is computed on the basis of the weighted
average number of shares outstanding during the period. Diluted earnings per
common share is computed on the basis of the weighted average number of common
shares adjusted for the dilutive effect of outstanding stock options based upon
the treasury stock method.

                                       54
<PAGE>   56
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 2 -- EARNINGS PER SHARE

     The following provides a reconciliation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                     1999       1998       1997
                                                     ----       ----       ----
<S>                                                <C>        <C>        <C>
Net income.......................................  $ 13,535   $  8,654   $  5,275
                                                   ========   ========   ========
Weighted average shares outstanding:
  Basic..........................................   107,248    100,451     73,658
                                                   ========   ========   ========
  Diluted........................................   108,462    101,315     74,222
                                                   ========   ========   ========
Earnings per share -- Basic......................    126.20   $  86.15   $  71.62
Effect of dilutive stock options outstanding.....     (1.41)     (0.74)      (.54)
                                                   --------   --------   --------
Earning per share -- Diluted.....................  $ 124.79   $  85.41   $  71.08
                                                   ========   ========   ========
</TABLE>

NOTE 3 -- BUSINESS COMBINATIONS

     On September 10, 1997, CIB Marine acquired First Ozaukee Capital Corp. and
its wholly owned subsidiary, First Ozaukee Savings Bank, a savings bank located
in Cedarburg, Wisconsin, now known as Marine Bank, with assets of $37.6 million.
This acquisition was accounted for as a purchase, and the results of operations
since the acquisition have been included in the consolidated financial
statements. The purchase price, including acquisition costs, was $9.6 million.
The excess of the acquisition cost over the fair value of net assets acquired in
the amount of $1.4 million is being amortized over 8 to 15 years using the
straight-line method.

     On July 16, 1998, CIB Marine purchased the equipment of a banking office in
Gurnee, Illinois, and assumed $13.3 million in deposits. The net purchase price
for equipment and deposit premium was $1.1 million. CIB Marine also assumed the
lease for the banking office. The transaction was accounted for as a purchase,
and the results of operations since then have been included in the consolidated
financial statements. The excess of the acquisition cost over the fair value of
net assets acquired and deposit liabilities assumed in the amount of $0.8
million is being amortized over 15 years using the straight-line method.

     On February 26, 1999, CIB Marine sold a banking office, in Charleston,
Illinois along with loans and deposits with net book values of $14.4 million and
$12.2 million, respectively. The transaction was accounted for as a sale. The
net proceeds were $3.1 million and the gain on the transaction was $0.8 million
which is reflected as a component of "noninterest income" in the Consolidated
Statements of Income.

     On March 29, 1999, CIB Marine purchased two banking offices, one each in
Arlington Heights and Mount Prospect, Illinois, and assumed deposits of $115.8
million. The net purchase price for premises and equipment and deposit premium
was $14.5 million. The transaction was accounted for as a purchase. The excess
of the acquisition cost over the fair value of net assets acquired and deposit
liabilities assumed was $9.5 million, of which $1.4 million is a core deposit
intangible being amortized over the 11 year expected lives of the related
deposits based upon a level-yield amortization method. Goodwill of $8.1 million
is being amortized for 15 years using the straight-line method.

     On September 24, 1999, CIB Marine purchased a banking office in Zion,
Illinois, and assumed deposits of $28.2 million. The net purchase price for
premises and equipment and deposit premium was $2.6 million. The transaction was
accounted for as a purchase. The excess of the acquisition cost over the fair
value of net assets acquired and deposit liabilities assumed was $2.0 million,
of which $1.1 million is core deposit intangible being amortized over the 11
year expected lives of the related deposits based upon a level-yield
amortization method. Goodwill of $0.9 million is being amortized for 15 years
using the straight-line method.

                                       55
<PAGE>   57
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- CASH AND DUE FROM BANKS

     CIB Marine is required to maintain average reserve balances with the
Federal Reserve Bank. The required reserve of $4.4 million and $3.0 million at
December 31, 1999 and 1998, respectively, were maintained by CIB Marine.

NOTE 5 -- SECURITIES

     The carrying amount of securities and their approximate fair values at
December 31 are as follows:

Securities Available for Sale:

<TABLE>
<CAPTION>
                                                                      GROSS        GROSS
                                                        AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                          COST        GAINS        LOSSES      VALUE
                                                        ---------   ----------   ----------    -----
<S>                                                     <C>         <C>          <C>          <C>
1999
------------------------------------------------------
U.S. Treasury securities and obligations of U.S.
  Government agencies.................................  $190,585      $   13       $3,073     $187,525
Obligations of states and political subdivisions......     3,735         198            4        3,929
Other notes and bonds.................................     2,107          --           20        2,087
Mortgage backed securities............................    18,821          --          421       18,400
Federal Home Loan Bank Stock..........................     4,482          --           --        4,482
Other Equities........................................        37          --           --           37
                                                        --------      ------       ------     --------
                                                        $219,767      $  211       $3,518     $216,460
                                                        ========      ======       ======     ========
1998
------------------------------------------------------
U.S. Treasury securities and obligations of U.S.
  Government agencies.................................  $ 86,533      $  751       $   79     $ 87,205
Obligations of states and political subdivisions......     3,572         563           --        4,135
Other notes and bonds.................................     2,264          --           --        2,264
Mortgage backed securities............................    17,831          28           12       17,847
Federal Home Loan Bank stock..........................     3,094          --           --        3,094
                                                        --------      ------       ------     --------
                                                        $113,294      $1,342       $   91     $114,545
                                                        ========      ======       ======     ========
</TABLE>

                                       56
<PAGE>   58
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- SECURITIES -- CONTINUED
Securities Held to Maturity:

<TABLE>
<CAPTION>
                                                                      GROSS        GROSS
                                                        AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                          COST        GAINS        LOSSES      VALUE
                                                        ---------   ----------   ----------    -----
<S>                                                     <C>         <C>          <C>          <C>
1999
------------------------------------------------------
U.S. Treasury securities and obligations of U.S.
  Government agencies.................................  $ 73,940      $   30       $  843     $ 73,127
Obligations of states and political subdivisions......    57,679         157          962       56,874
Other notes and bonds.................................       450          --           --          450
Mortgage backed securities............................    14,821          16          166       14,671
                                                        --------      ------       ------     --------
                                                         146,890         203        1,971      145,122
                                                        ========      ======       ======     ========
1998
------------------------------------------------------
U.S. Treasury securities and obligations of U.S.
  Government agencies.................................  $ 62,731      $  864       $   --     $ 63,595
Obligations of states and political subdivisions......    26,445         858           17       27,286
Other notes and bonds.................................       450          --           --          450
Mortgage backed securities............................    12,113          99            3       12,209
                                                        --------      ------       ------     --------
                                                        $101,739      $1,821       $   20     $103,540
                                                        ========      ======       ======     ========
</TABLE>

     Assets, primarily securities, carried at approximately $168.2 million and
$60.1 million at December 31, 1999 and 1998, respectively, were pledged to
secure public deposits and for other purposes as required or permitted by law.
Approximate fair values of these assets were $167.4 million and $60.9 million,
at December 31, 1999 and 1998, respectively.

     The amortized cost and fair value of the securities as of December 31,
1999, by contractual maturity, are shown below. Securities, other than mortgage
backed securities, may be called earlier than their maturity date. Expected
maturities may differ from contractual maturities in mortgage backed securities,
because certain mortgages may be prepaid without penalties. Therefore, mortgaged
backed securities are not included in the maturity categories in the following
maturity schedules.

<TABLE>
<CAPTION>
                                                SECURITIES HELD TO MATURITY     SECURITIES AVAILABLE FOR SALE
                                                ----------------------------    ------------------------------
                                                 AMORTIZED          FAIR          AMORTIZED           FAIR
                                                    COST            VALUE           COST             VALUE
                                                 ---------          -----         ---------          -----
<S>                                             <C>              <C>            <C>               <C>
Due in one year or less.......................    $ 32,681        $ 32,696         $ 25,023         $ 24,967
Due after one year through five years.........      74,696          73,852          167,376          164,351
Due after five years through ten years........      20,470          19,880            4,028            4,223
Due after ten years...........................       4,222           4,023               --               --
                                                  --------        --------         --------         --------
                                                   132,069         130,451          196,427          193,541
FHLB Stock & Other Equities...................          --              --            4,519            4,519
Mortgage backed securities....................      14,821          14,671           18,821           18,400
                                                  --------        --------         --------         --------
                                                  $146,890        $145,122         $219,767         $216,460
                                                  ========        ========         ========         ========
</TABLE>

     Proceeds from the sale of securities available for sale during 1999, 1998
and 1997, were $0, $16.2 million and $12.0 million, respectively. Net realized
gains on sales of securities available for sale were $0, $0.3 million and $0.1
million in 1999, 1998 and 1997, respectively. There were no sales of held to
maturity securities in any of these periods.

                                       57
<PAGE>   59
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6 -- LOANS AND ALLOWANCE FOR LOAN LOSS

Loans

     The components of loans in the consolidated balance sheets were as follows:

<TABLE>
<CAPTION>
                                                               1999        1998
                                                               ----        ----
<S>                                                         <C>          <C>
Commercial and agricultural...............................  $  460,411   $281,614
Real estate:
  1-4 family..............................................      50,292     52,348
  Commercial real estate..................................     646,484    428,252
  Construction............................................     214,251    117,703
                                                            ----------   --------
                                                               911,027    598,303
Consumer..................................................      13,152     17,652
Credit Cards..............................................       1,436      1,454
Other.....................................................       5,486     17,929
                                                            ----------   --------
Gross Loans...............................................   1,391,512    916,952
Deferred fees, net........................................      (3,681)    (1,241)
Allowance for loan loss...................................     (15,813)   (10,657)
                                                            ----------   --------
Loans, net................................................  $1,372,018   $905,054
                                                            ==========   ========
</TABLE>

     Loans on nonaccrual status were $3.0 million and $4.0 million at December
31, 1999 and 1998, respectively. The total recorded investment in impaired loans
was $1.9 million and $3.4 million at December 31, 1999 and 1998, respectively.
The allowance for loan loss related to these impaired loans was $0.6 million and
$0.8 million at December 31, 1999 and 1998, respectively. The average amount of
investment in impaired loans during 1999, 1998 and 1997 was $2.9 million, $3.1
million and $2.5 million respectively. The income recorded on these loans in
1999, 1998 and 1997 was $0.05 million, $0.2 million and $0.7 million.

     Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. The unpaid principal balances of mortgage loans
serviced for others was $15.8 million, $15.8 million and $11.8 million as of
December 31, 1999, 1998 and 1997, respectively.

Credit Concentrations

     Credit risk, the risk that one or more borrowers will not be able to repay
some or all of their obligations to CIB Marine, is inherent in CIB Marine's
business. Concentrations of credit occur when the aggregate amount of direct,
indirect and/or contingent obligations to one borrower, a related group of
borrowers or borrowers within or dependent upon a related industry or group
represent a relatively large percentage of credit extended by CIB Marine.
Although each loan in a concentration may be of sound quality, concentrations of
credit create special risks that are not present when the same loan amount is
extended to a group of unrelated borrowers. Loans concentrated in one borrower
are, to a large degree, dependent upon the financial capability and character of
the individual borrower. Loans to a related group of borrowers are susceptible
to a domino effect if financial problems are experienced by one or a few members
of the group. Concentrations within or dependent upon an industry are subject to
the additional risk factors of external economic conditions and market
acceptance, which might equally affect all borrowers in the industry.

     Pursuant to CIB Marine's loan policy, generally a concentration of credit
is deemed to exist when the total credit relationship exceeds 25% of the capital
of CIB Marine. At December 31, 1999, CIB Marine had four borrowing relationships
with individual borrowers or related groups of borrowers that exceeded 25% of
its capital. The total outstanding lending commitment associated with these four
borrowing relationships, including lines of credit which may not have been fully
drawn as of December 31, 1999, was approximately

                                       58
<PAGE>   60
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6 -- LOANS AND ALLOWANCE FOR LOAN LOSS -- CONTINUED
$156.9 million. The aggregate principal amount actually drawn and outstanding at
December 31, 1999, with respect to these borrowing relationships was
approximately $109.4 million, or 7.9% of CIB Marine's gross loans outstanding,
and 67.8% of CIB Marine's stockholders' equity balance as of that date. CIB
Marine's largest commitment at December 31, 1999, was approximately $56.9
million, of which approximately $49.3 million was outstanding as of that date.

     In July 1999, one of CIB Marine's largest borrowers, who is also a
stockholder of CIB Marine, experienced a substantial decline in net worth as a
result of a similar decline in the market value of a publicly traded common
stock comprising a large part of this borrower's net worth. The decline in the
value of this security has caused liquidity problems for this borrower with
respect to its current obligations to CIB Marine and to other lenders. As of
December 31, 1999, the total outstanding lending commitment associated with this
borrowing relationship, including lines of credit which have not been fully
drawn, was approximately $47.3 million. The aggregate principal amount actually
drawn and outstanding at December 31, 1999, with respect to this borrowing
relationship, was approximately $33.4 million and all such loans were current
with respect to the payment of principal and interest. In addition, this
borrowing relationship was adequately collateralized under CIB Marine's loan
policy.

     In working with this borrower to address its liquidity problems, management
determined that it was in the best interests of CIB Marine to provide this
borrower with additional cash to help it meet its current obligations both to
CIB Marine and to other lenders. On September 9, 1999, CIB Marine purchased from
this borrower limited partnership interests in three private investment funds.
CIB Marine paid $2.4 million for these limited partnership interests, of which
$1.0 million was used by the borrower to repay a loan from CIB Marine that was
previously secured by an interest in one of these limited partnerships, $1.3
million was invested in a certificate of deposit at CIB Marine which was pledged
to CIB Marine as additional collateral and $0.1 million was paid to another
lender. The certificate of deposit was reduced by $0.5 million during the fourth
quarter of 1999 to reflect an adjustment to the purchase price.

     At December 31, 1999, CIB Marine also had total borrowings within three
industries or industry groups that exceeded 25% of its capital as of that date.
The total outstanding balance to commercial and residential real estate
developers, investors and contractors was approximately $589.9 million, or 42.4%
of gross loans and 365.6% of stockholders' equity. The total outstanding balance
of loans made in the motel and hotel industry was approximately $128.6 million,
or 9.2% of gross loans and 79.7% of stockholders' equity. The total outstanding
balance of loans made in the nursing/convalescent home industry was
approximately $72.8 million, or 5.2% of gross loans outstanding and 45.1% of
stockholders' equity.

Allowance

     Changes in the allowance for loan loss for the years ended December 31 are
as follows:

<TABLE>
<CAPTION>
                                                       1999      1998      1997
                                                       ----      ----      ----
<S>                                                   <C>       <C>       <C>
Balance at Beginning of Year........................  $10,657   $ 6,692   $ 4,058
Charge-offs.........................................   (1,090)     (928)   (1,837)
Recoveries..........................................      136       160       332
                                                      -------   -------   -------
  Net...............................................     (954)     (768)   (1,505)
Acquired through purchase...........................       --        --       147
Provision for loan loss.............................    6,110     4,733     3,992
                                                      -------   -------   -------
Balance at End of Year..............................  $15,813   $10,657   $ 6,692
                                                      =======   =======   =======
</TABLE>

                                       59
<PAGE>   61
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6 -- LOANS AND ALLOWANCE FOR LOAN LOSS -- CONTINUED
     Certain directors of CIB Marine and its subsidiary banks, companies with
which they are affiliated, and certain principal officers are customers of, and
have banking transactions with, the subsidiary banks in the ordinary course of
business. This indebtedness has been incurred on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons. The activity in these loans
during 1999 is as follows:

<TABLE>
<S>                                                           <C>
Balance as of December 31, 1998.............................  $ 28,595
New Loans...................................................    34,438
Repayments..................................................   (22,464)
                                                              --------
Balance as of December 31, 1999.............................  $ 40,569
                                                              ========
</TABLE>

NOTE 7 -- PREMISES AND EQUIPMENT, NET

     The major classes of premises and equipment and accumulated depreciation at
December 31, are summarized as follows:

<TABLE>
<CAPTION>
                                                               1999      1998
                                                               ----      ----
<S>                                                           <C>       <C>
Land........................................................  $ 4,614   $ 2,763
Building and improvements...................................   12,469     8,710
Furniture and equipment.....................................   12,189     9,915
Construction in progress....................................      258       126
                                                              -------   -------
                                                               29,530    21,514
Less: Accumulated depreciation..............................   (8,031)   (5,953)
                                                              -------   -------
                                                              $21,499   $15,561
                                                              =======   =======
</TABLE>

     Depreciation expense totaled $2.1 million, $1.6 million and $1.1 million
for 1999, 1998 and 1997, respectively.

     CIB Marine leases certain premises and equipment under noncancellable
operating leases which expire at various dates. Such noncancellable operating
leases also include options to renew. Following is a schedule by years of annual
future minimum rental commitments required under operating leases that have
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1999:

<TABLE>
<S>                                                           <C>
2000........................................................  $  925
2001........................................................     927
2002........................................................     882
2003........................................................     851
2004........................................................     763
Thereafter..................................................   2,728
                                                              ------
Total.......................................................  $7,076
                                                              ======
</TABLE>

     Total rental expense was $0.9 million, $0.6 million, and $0.4 million for
1999, 1998 and 1997, respectively.

NOTE 8 -- DEPOSITS

     The aggregate amount of time deposits of $100,000 or more at December 31,
1999 and 1998, was $415.9 million and $222.9 million, respectively. Brokered
time deposits were $80.7 million or 5.3% of total deposits at December 31, 1999
and $58.7 million or 5.8% of total deposits at December 31, 1998, respectively.

                                       60
<PAGE>   62
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     At December 31, 1999, the scheduled maturities of time deposits are as
follows:

<TABLE>
<S>                                                           <C>
2000........................................................  $  971,451
2001........................................................     180,477
2002........................................................      18,827
2003........................................................       2,249
2004........................................................       2,248
Thereafter..................................................         122
                                                              ----------
Total.......................................................  $1,175,374
                                                              ==========
</TABLE>

NOTE 9 -- SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
                                                                1999      1998
                                                                ----      ----
<S>                                                           <C>        <C>
At December 31..............................................  $113,219   $ 3,254
Average during year.........................................    25,262     8,650
Maximum month-end balance...................................   113,219    13,962
Average rate at year-end....................................      6.12%     4.87%
Average rate during year....................................      5.97%     5.51%
</TABLE>

     Federal funds purchased, which totaled $29.6 million at December 31, 1999,
generally represent one-day borrowings. Securities sold under repurchase
agreements, which totaled $27.1 million at December 31, 1999, represent
borrowings maturing within one year that are secured by U.S. Treasury and
Government Agencies securities. The fair value of securities pledged was
approximately $27.6 million and $4.8 million at December 31, 1999 and 1998,
respectively. At December 31, 1999 short-term borrowings included borrowings
from the Federal Home Loan Bank of $26.4 million.

     CIB Marine had a treasury, tax and loan note option with the Federal
Reserve Bank. The balance in the note option was $0.4 million and $0.3 million
at December 31, 1999 and 1998, respectively.

     CIB Marine has a $30.0 million revolving line of credit from an
unaffiliated commercial bank. The outstanding balance at December 31, 1999 was
$29.7 million and there were no revolving line of credit borrowings outstanding
at December 31, 1998. The line of credit matures April 30, 2000, and bears
interest at the London Interbank Offered Rate (LIBOR) + 2%. During 1999, the
highest month-end balance was $29.7 million and average monthly balance was $8.2
million. The loan is subject to certain restrictive covenants and CIB Marine was
in compliance with all such covenants at December 31, 1999.

                                       61
<PAGE>   63
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10 -- LONG-TERM BORROWINGS

     The following table presents information regarding amounts payable to the
Federal Home Loan Bank of Chicago that are included in the balance sheet at
December 31, 1999 and 1998:

<TABLE>
<CAPTION>
DECEMBER 31, 1999   DECEMBER 31, 1998                CALLABLE
-----------------   -----------------   SCHEDULED   QUARTERLY @   ACTUAL EARLY
BALANCE     RATE    BALANCE     RATE    MATURITY     PAR AFTER     CALL DATE
-------     ----    -------     ----    ---------   -----------   ------------
<S>        <C>      <C>        <C>      <C>         <C>           <C>
 $   --       --    $ 3,000    5.59%     8/02/99           --            --
     --       --      2,000    5.02%     2/20/03      2/20/99       8/20/99
     --       --      3,250    4.70%     1/16/08      1/16/99       7/16/99
  3,250    4.95%      3,250    4.95%     1/16/08      1/16/01            --
  2,500    4.95%      2,500    4.95%     1/16/08      1/16/01            --
  2,000    4.95%      2,000    4.95%     1/16/08      1/16/01            --
     --       --      2,000    4.75%     1/16/08      1/20/99       7/20/99
  2,000    5.09%      2,000    5.09%     2/20/08      2/20/01            --
 ------    -----    -------    -----
 $9,750    4.98%    $20,000    5.01%
 ======    =====    =======    =====
</TABLE>

     CIB Marine is required to maintain qualifying collateral as security for
the notes. The debt to collateral ratio cannot exceed 60.0%. CIB Marine had
eligible collateral of $50.4 million and $46.4 million at December 31, 1999 and
1998, respectively. As of December 31, 1999 this collateral consisted of
securities with a fair market value of $26.0 million and $24.4 million of 1-4
family residential mortgages not more than 90 days delinquent.

NOTE 11 -- STOCKHOLDERS' EQUITY

     The payment of dividends by banking subsidiaries is subject to regulatory
restrictions by various federal and/or state regulatory authorities. At December
31, 1999, approximately $29.1 million of the retained earnings of the banking
subsidiaries was available for the payment of dividends to CIB Marine without
prior regulatory approval.

     CIB Marine and its subsidiary banks are subject to various regulatory
capital requirements administered by the federal banking agencies. Pursuant to
federal holding company and bank regulations, CIB Marine and each bank
subsidiary is assigned to a capital category. The assigned capital category is
largely determined by the three ratios that are calculated in accordance with
specific instructions included in the regulations: total risk adjusted capital,
Tier 1 capital, and Tier 1 leverage ratios. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the bank subsidiaries
must meet specific capital guidelines that involve quantitative measures of the
bank's assets and certain off balance sheet items as calculated under regulatory
accounting practices. The banks' capital amounts and classifications are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors. To be categorized as well-capitalized, the bank
subsidiaries must maintain total risk adjusted capital, Tier 1 capital, and Tier
1 leverage ratios of 10.0%, 6.0% and 5.0%, respectively.

     There are five capital categories defined in the regulations:
well-capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized. Classification of a subsidiary
bank in any of the undercapitalized categories can result in certain mandatory
and possible additional discretionary actions by regulators that could have a
direct material effect on the consolidated financial statements.

     At December 31, 1999, the most recent notification from the banks' primary
regulators categorized all of the bank subsidiaries as well capitalized under
the regulatory framework for prompt corrective action.

                                       62
<PAGE>   64
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- STOCKHOLDERS' EQUITY -- CONTINUED
     The actual and required capital amounts and ratios are presented in the
tables below: ("RWA" stands for Risk Weighted Assets)

<TABLE>
<CAPTION>
                                                                                     TO BE WELL
                                                                                    CAPITALIZED
                                                              FOR CAPITAL           UNDER PROMPT
                                            ACTUAL         ADEQUACY PURPOSES   CORRECTIVE PROVISIONS
                                       -----------------   -----------------   ----------------------
           AS OF 12/31/99              AMOUNT     RATIO     AMOUNT    RATIO      AMOUNT       RATIO
           --------------              ------     -----     ------    -----      ------       -----
<S>                                    <C>       <C>       <C>        <C>      <C>          <C>
Total Capital to (RWA)
  CIB Marine Bancshares, Inc. .......  165,011    10.19%   129,508    8.00%     161,885      10.00%
  Central Illinois Bank..............   61,481    10.31%    47,683    8.00%      59,604      10.00%
  CIB-Chicago........................   78,491    10.36%    60,595    8.00%      75,744      10.00%
  Marine Bank -- Milwaukee...........   20,363    10.08%    16,164    8.00%      20,205      10.00%
  CIB-Indiana........................   13,896    20.21%     5,500    8.00%       6,875      10.00%
  Marine Bank -- Omaha...............   10,003   199.22%       402    8.00%         502      10.00%
Tier 1 Capital (to RWA)
  CIB Marine Bancshares, Inc. .......  149,198     9.22%    64,754    4.00%      97,131       6.00%
  Central Illinois Bank..............   54,440     9.13%    23,841    4.00%      35,762       6.00%
  CIB-Chicago........................   71,868     9.49%    30,298    4.00%      45,446       6.00%
  Marine Bank -- Milwaukee...........   18,968     9.39%     8,082    4.00%      12,123       6.00%
  CIB-Indiana........................   13,202    19.20%     2,750    4.00%       4,125       6.00%
  Marine Bank -- Omaha...............    9,943   198.03%       201    4.00%         301       6.00%
Tier 1 Leverage (to Avg. Assets)
  CIB Marine Bancshares, Inc. .......  149,198     8.95%    66,701    4.00%      83,376       5.00%
  Central Illinois Bank..............   54,440     7.71%    28,248    4.00%      35,310       5.00%
  CIB-Chicago........................   71,868     9.86%    29,168    4.00%      36,460       5.00%
  Marine Bank -- Milwaukee...........   18,968     9.73%     7,795    4.00%       9,743       5.00%
  CIB-Indiana........................   13,202    18.49%     2,856    4.00%       3,570       5.00%
  Marine Bank -- Omaha...............    9,943   174.41%       228    4.00%         285       5.00%
</TABLE>

                                       63
<PAGE>   65
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- STOCKHOLDERS' EQUITY -- CONTINUED

<TABLE>
<CAPTION>
                                                                                     TO BE WELL
                                                                                    CAPITALIZED
                                                              FOR CAPITAL           UNDER PROMPT
                                            ACTUAL         ADEQUACY PURPOSES   CORRECTIVE PROVISIONS
                                       -----------------   -----------------   ----------------------
           AS OF 12/31/98              AMOUNT     RATIO     AMOUNT    RATIO      AMOUNT       RATIO
           --------------              ------     -----     ------    -----      ------       -----
<S>                                    <C>       <C>       <C>        <C>      <C>          <C>
Total Capital to (RWA)
  CIB Marine Bancshares, Inc. .......  150,251    14.61%    82,265    8.00%     102,832      10.00%
  Central Illinois Bank..............   53,179    10.66%    39,901    8.00%      49,876      10.00%
  CIB-Chicago........................   45,855    11.34%    32,349    8.00%      40,436      10.00%
  Marine Bank -- Milwaukee...........   19,045    20.26%     7,519    8.00%       9,398      10.00%
  CIB-Indiana........................   13,234    44.61%     2,374    8.00%       2,967      10.00%
Tier 1 Capital (to RWA)
  CIB Marine Bancshares, Inc. .......  139,594    13.58%    41,133    4.00%      61,699       6.00%
  Central Illinois Bank..............   47,539     9.53%    19,951    4.00%      29,926       6.00%
  CIB Bank...........................   41,878    10.36%    16,174    4.00%      24,262       6.00%
  Marine Bank & Savings..............   18,329    19.50%     3,760    4.00%       5,639       6.00%
  CIB Bank -- Indiana................   12,912    43.52%     1,187    4.00%       1,780       6.00%
CIB Marine Bancshares, Inc.
  Central Illinois Bank..............  139,594    12.57%    44,430    4.00%      55,538       5.00%
  CIB-Chicago........................   47,539     8.20%    23,179    4.00%      28,974       5.00%
  Marine Bank -- Milwaukee...........   41,876    10.41%    16,097    4.00%      20,121       5.00%
  CIB-Indiana........................   18,329    17.86%     4,104    4.00%       5,130       5.00%
  CIB Bank -- Indiana................   12,912    44.38%     1,164    4.00%       1,455       5.00%
</TABLE>

NOTE 12 -- FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK

     CIB Marine is party to financial instruments with off balance sheet risk in
the normal course of business to meet the financing needs of its customers. CIB
Marine has entered into commitments to extend credit which involve, to varying
degrees, elements of credit and interest rate risk in excess of the amounts
recognized in the balance sheets.

     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require a payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. CIB Marine evaluates each
customer's creditworthiness and determines the amount of the collateral
necessary based on management's credit evaluation of the counterparty.
Collateral held varies, but may include accounts receivable, inventories,
property and equipment, residential real estate, and income-producing commercial
properties.

<TABLE>
<CAPTION>
                                                               NOTIONAL AMOUNTS
                                                              -------------------
                                                                1999       1998
                                                                ----       ----
<S>                                                           <C>        <C>
Off Balance Sheet Financial Instruments with credit risk:
  Commitments to extend credit..............................  $408,003   $202,161
  Credit card arrangements..................................     6,791      5,606
  Standby letters of credit.................................    40,004     27,493
</TABLE>

     CIB Marine did not engage in the use of interest rate swaps, futures,
forwards or option contracts in 1999, 1998 and 1997.

                                       64
<PAGE>   66
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 13 -- COMMITMENTS AND CONTINGENCIES

     In the ordinary course of business, CIB Marine has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying consolidated financial statements. In addition, CIB Marine and its
subsidiaries are parties to legal actions which arise in the normal course of
their business activities. In the opinion of management, after consultation with
legal counsel, the ultimate disposition of these matters is not expected to have
a material adverse effect on the consolidated financial condition, liquidity or
results of operations of CIB Marine.

NOTE 14 -- STOCK OPTION PLANS

     CIB Marine has nonqualified employee and director plans. At December 31,
1999 options to purchase 4,024 shares were available for future grant. The plans
provide for the options to be exercisable over a ten year period beginning one
year from the date of the grant, provided the participant has remained in the
employ of CIB Marine or its subsidiaries. The option plans stipulate that the
exercise price of the options granted may not be less than 100% of fair market
value on the option grant date.

     Activity relating to stock options was:

<TABLE>
<CAPTION>
                                                                       RANGE OF           WEIGHTED
                                                        NUMBER          OPTION            AVERAGE
                                                       OF SHARES   PRICES PER SHARE    EXERCISE PRICE
                                                       ---------   ----------------    --------------
<S>                                                    <C>         <C>                <C>
Shares under option at December 31, 1996.............    3,644       $  576-1,631          $1,152
  Granted............................................      275        1,978-2,060           2,016
  Lapsed or surrendered..............................     (418)         576-1,631             934
  Exercised..........................................     (523)         576-1,275             629
                                                         -----       ------------          ------
Shares under option at December 31, 1997.............    2,978       $  743-2,060          $1,354
  Granted............................................    3,193        1,961-2,279           1,971
  Lapsed or surrendered..............................     (202)       1,275-1,961           1,531
  Exercised..........................................      (98)         743-1,275             922
                                                         -----       ------------          ------
Shares under option at December 31, 1998.............    5,871       $  743-2,279          $1,691
  Granted............................................    2,363        2,434-2,519           2,440
  Lapsed or surrendered..............................     (508)       1,275-2,434           2,082
  Exercised..........................................     (339)         743-1,961           1,344
                                                         -----       ------------          ------
Shares under option at December 31, 1999.............    7,387       $  743-2,519          $1,920
                                                         =====       ============          ======
</TABLE>

     The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                       OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
              -------------------------------------   -----------------------
                              WEIGHTED
                              AVERAGE      WEIGHTED                  WEIGHTED
  RANGE OF      NUMBER       REMAINING     AVERAGE       NUMBER      AVERAGE
  EXERCISE    OUTSTANDING   CONTRACTUAL    EXERCISE   EXERCISABLE    EXERCISE
   PRICES     AT 12/31/99   LIFE (YEARS)    PRICE     AT 12/31/99     PRICE
  --------    -----------   ------------   --------   -----------    --------
<S>           <C>           <C>            <C>        <C>            <C>
$ 743              510          3.50        $  743          510       $  743
 1,275             692          5.00         1,275          692        1,275
 1,631             853          6.32         1,631          512        1,631
 1,961-2,060     3,092          8.11         1,966          673        1,970
 2,126-2,279        78          8.63         2,220           16        2,220
 2,434-2,519     2,162          9.61         2,440           --           --
------------     -----          ----        ------       ------       ------
$ 743-2,519      7,387          7.74        $1,920       $2,403       $1,439
============     =====          ====        ======       ======       ======
</TABLE>

                                       65
<PAGE>   67
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 14 -- STOCK OPTION PLANS -- CONTINUED
     CIB Marine applies APB Opinion 25 and related Interpretations in accounting
for its plans. In February 1998 CIB Marine amended all of its previously adopted
stock option plans to extend the exercise period of all then outstanding options
from 5 to 10 years. All options granted under plans adopted since January 1,
1998 have been granted with 10-year expiration periods. The amendment of prior
year plans resulted in a new measurement date for outstanding options granted
under these plans. Compensation expense in 1999 related to these plans that were
amended in 1998 was $0.2 million. Compensation expense related to these plans,
and recognized in 1998, was $1.5 million, of which $1.2 million related to
service for prior years. There was no compensation expense related to these
plans recognized in 1997.

     Had compensation expense for these plans been determined based on the fair
value at the grant dates for awards under those plans consistent with the method
of SFAS No. 123, CIB Marine's net income and earnings per share would have been
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                          1999      1998     1997
                                                          ----      ----     ----
<S>                                        <C>           <C>       <C>      <C>
Net income...............................  As Reported   $13,535   $8,654   $5,275
                                           Pro Forma      13,160    9,250    5,240
Basic Earnings
  Per Share..............................  As Reported    126.20    86.15    71.62
                                           Pro Forma      122.70    92.09    71.14
Diluted Earnings
  Per Share..............................  As Reported    124.79    85.41    71.08
                                           Pro Forma      121.33    91.30    70.60
</TABLE>

     Fair value has been estimated using the minimum value method as defined in
SFAS No. 123. Key assumptions used were zero percent volatility, zero percent
dividend yield, expected lives of ten years for 1999 and 1998, five years for
1997, and risk-free interest rates averaging 6.32% percent, 5.42% and 6.32% for
1999, 1998 and 1997, respectively. Because the options vest over a five-year
period, the pro forma disclosures are not necessarily representative of the
effects on reported net income for future years.

NOTE 15 -- OTHER BENEFIT PLANS

     CIB Marine provides a defined contribution 401(k) deferred compensation
plan to all employees of CIB Marine and its subsidiaries who have attained age
20 and work at least a minimum number of hours. Employees enter the plan on the
first entrance date after their start date. Entrance dates are January 1 and
July 1. The Plan permits participants to make voluntary tax deferred
contributions of up to 15% of annual compensation subject to various
limitations. CIB Marine does not match employee contributions. The
administrative costs to maintain the plan are paid by the plan.

     CIB Marine has an employee stock ownership plan (ESOP) for the benefit of
employees who attain a certain number of hours worked and length of service. At
December 31, 1999, the plan held 1,406 shares of stock allocated and voted, at
the direction of plan participants, by plan trustees. Contributions are
discretionary and are determined annually by the Board of Directors. The
administrative costs to maintain the plan are paid by the plan.

     CIB Marine also has a Directors' Deferred Compensation Plan. Interest
expense accrued for the benefit of plan participants was $0.01 million in 1999.

                                       66
<PAGE>   68
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 16 -- INCOME TAXES

     CIB Marine and its subsidiaries file consolidated federal income tax
returns. The provision for income taxes in the consolidated statements of income
consisted of the following for the years ended December 31:

<TABLE>
<CAPTION>
                                                       1999      1998      1997
                                                       ----      ----      ----
<S>                                                   <C>       <C>       <C>
Current tax provision:
  Federal...........................................  $ 9,186     5,889   $ 3,295
  State.............................................    1,383       908       371
Deferred............................................   (3,152)   (2,287)   (1,129)
                                                      -------   -------   -------
                                                      $ 7,417   $ 4,510   $ 2,537
                                                      =======   =======   =======
</TABLE>

     A reconciliation of the income tax provision and income taxes which would
have been provided at the federal statutory rate is as follows:

<TABLE>
<CAPTION>
                                             1999             1998             1997
                                         -------------    -------------    -------------
                                         AMOUNT    %      AMOUNT    %      AMOUNT    %
                                         ------    -      ------    -      ------   ----
<S>                                      <C>      <C>     <C>      <C>     <C>      <C>
Statutory tax rate.....................  $7,333   35.0%   $4,607   35.0%   $2,656   34.0%
Increase (reduction) in tax rate
  resulting from:
  State income taxes, net of Federal
     income tax benefit................     464    2.2       304    2.3       245    3.1
  Goodwill.............................     112     .5        --     --        --     --
  Tax exempt interest..................    (573)  (2.7)     (497)  (3.7)     (406)  (5.2)
  Other, net...........................      81     .4        96     .7        42     .6
                                         ------   ----    ------   ----    ------   ----
                                         $7,417   35.4%   $4,510   34.3%   $2,537   32.5%
                                         ======   ====    ======   ====    ======   ====
</TABLE>

     The net deferred tax asset in the accompanying consolidated balance sheets
consisted of the following:

<TABLE>
<CAPTION>
                                                               1999     1998
                                                               ----     ----
<S>                                                           <C>      <C>
Deferred tax assets:
  Net operating losses......................................  $  219   $  361
  Allowance for loan loss...................................   6,159    4,004
  Non-cash compensation.....................................     568      542
  Deferred loan fees and other..............................   1,539      583
  Net unrealized loss on securities available for sale......   1,274       --
                                                              ------   ------
Deferred tax assets before valuation allowance..............   9,759    5,490
  Valuation allowance.......................................    (130)    (130)
                                                              ------   ------
Net deferred tax assets.....................................   9,629    5,360
                                                              ------   ------
Deferred tax liabilities:
  Net unrealized gain on securities available for sale......      --      476
  Depreciation..............................................     448      458
  Investments...............................................     134      108
  Other.....................................................      29      120
                                                              ------   ------
          Total deferred tax liabilities....................     611    1,162
                                                              ------   ------
Net deferred tax asset......................................  $9,018   $4,198
                                                              ======   ======
</TABLE>

                                       67
<PAGE>   69
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 16 -- INCOME TAXES -- CONTINUED
     The change in the net deferred tax asset is as follows:

<TABLE>
<CAPTION>
                                                               1999     1998
                                                               ----     ----
<S>                                                           <C>      <C>
Deferred tax benefits included in provision.................  $3,152   $2,287
Deferred tax included in other comprehensive income.........   1,771     (341)
Reclassifications from current..............................    (103)      14
                                                              ------   ------
                                                              $4,820   $1,960
                                                              ======   ======
</TABLE>

     The net change in the valuation allowance for deferred tax assets was $0 in
1999 and a decrease of $0.1 million in 1998. The 1998 changes related to the
utilization of net operating loss carryforwards.

     CIB Marine recorded a deferred tax asset net of valuation allowance in
relation to net operating loss carryforwards of $0.09 million and $0.2 million
in 1999 and 1998, respectively. This reflects the expected realized benefit of
federal net operating loss carryforwards of $0.3 million in 1999 and $0.6
million in 1998 and state net operating loss carryforwards of approximately $2.8
million both in 1999 and 1998, respectively. The net operating loss
carryforwards will expire in varying amounts between 2002 and 2012. Realization
is dependent on generating sufficient taxable income prior to the expiration of
the loss carryforwards. Although realization is not assured, management believes
it is more likely than not that the net deferred tax asset recorded will be
realized.

NOTE 17 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

     The table below summarizes the information required by Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments" (SFAS 107).

<TABLE>
<CAPTION>
                                                                    1999
                                                           -----------------------
                                                            CARRYING    ESTIMATED
                                                             AMOUNT     FAIR VALUE
                                                            --------    ----------
<S>                                                        <C>          <C>
Financial Assets:
  Cash and cash equivalents..............................  $   24,098   $   24,098
  Loans held for sale....................................       2,148        2,148
  Securities available for sale..........................     216,460      216,460
  Securities held to maturity............................     146,890      145,122
  Loans receivable, net..................................   1,372,018    1,360,392
  Accrued interest receivable............................      13,141       13,141
Financial Liabilities:
  Deposit liabilities....................................   1,528,456    1,528,456
  Borrowings.............................................     122,969      122,105
  Accrued interest payable...............................       8,228        8,228
</TABLE>

                                       68
<PAGE>   70
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 17 -- FAIR VALUE OF FINANCIAL INSTRUMENTS -- CONTINUED

<TABLE>
<CAPTION>
                                                                    1998
                                                           -----------------------
                                                            CARRYING    ESTIMATED
                                                             AMOUNT     FAIR VALUE
                                                            --------    ----------
<S>                                                        <C>          <C>
Financial Assets:
  Cash and cash equivalents and federal funds sold.......  $   22,080   $   22,080
  Loans held for sale....................................       8,900        8,900
  Securities available for sale..........................     114,545      114,545
  Securities held to maturity............................     101,739      103,540
  Loans receivable, net..................................     905,054      910,382
  Accrued interest receivable............................       8,839        8,839
Financial Liabilities:
  Deposit liabilities....................................   1,011,033    1,015,669
  Borrowings.............................................      23,254       23,363
  Accrued interest payable...............................       4,925        4,925
</TABLE>

     Fair value amounts represent estimates of value at a point in time.
Significant estimates regarding economic conditions, loss experience, risk
characteristics associated with particular financial instruments and other
factors were used for the purposes of this disclosure. These estimates are
subjective in nature and involve matters of judgment. Therefore, they cannot be
determined with precision. Changes in the assumptions could have a material
impact on the amounts estimated.

     While these estimated fair value amounts are designed to represent
estimates of the amounts at which these instruments could be exchanged in a
current transaction between willing parties, it is CIB Marine's intent to hold
most of its financial instruments to maturity. Therefore, it is not probable
that the fair values shown will be realized in a current transaction.

     The estimated fair values disclosed do not reflect the value of assets and
liabilities that are not considered financial instruments. In addition, the
value of long-term relationships with depositors (core deposit intangibles) are
not reflected. The value of this item is significant.

     Because of the wide range of valuation techniques and the numerous
estimates which must be made, it may be difficult to make reasonable comparisons
of CIB Marine's fair value to that of other financial institutions. It is
important that the many uncertainties discussed above be considered when using
the estimated fair value disclosures and to realize that because of these
uncertainties, the aggregate fair value should in no way be construed as
representative of the underlying value of CIB Marine.

     The following describes the methodology and assumptions used to estimate
fair value of financial instruments required by SFAS 107.

Cash and cash equivalents

     The carrying amount reported in the balance sheet for cash and cash
equivalents approximates their fair value. For purposes of this disclosure only,
cash equivalents include cash and due from banks and Federal Funds sold.

Available for Sale and Held to Maturity Securities

     The estimated fair values of securities by type are provided in Note 5 to
the consolidated financial statements. These are based on quoted market prices,
when available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.

                                       69
<PAGE>   71
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 17 -- FAIR VALUE OF FINANCIAL INSTRUMENTS -- CONTINUED
Loans Receivable and Loans Held for Sale

     For loans which reprice frequently, the carrying value approximates their
value. The fair values of all other loan receivables were estimated by
discounting the expected future cash flows using current interest rates at which
similar loans would be made to borrowers with similar credit ratings and
maturities.

Accrued Interest Receivable

     The carrying amounts of accrued interest approximates their fair values.

Deposit Liabilities

     The carrying value of deposits with no stated maturity approximates their
fair value as they are payable on demand. The estimated fair value of fixed time
deposits are based on discounted cash flow analyses. The discount rates used in
these analyses are based on market rates of alternative funding sources
currently available for similar remaining maturities. The fair value of deposit
liabilities cannot be less than the book value.

Borrowings

     The carrying value of borrowed funds payable within 3 months or less
approximates their fair value. The estimated fair value of borrowed funds with a
maturity greater than 3 months is based on quoted market prices, when available.
Debt for which quoted prices were not available was valued using cash flows
discounted at a current market rate for similar types of debt. For purposes of
this disclosure borrowings includes federal funds purchased, Federal Home Loan
Bank advances, securities sold with the agreement to repurchase and other
borrowings.

Accrued Interest Payable

     The carrying amounts of accrued interest approximates their fair values.

Off Balance-Sheet Instruments

     The fair value of off balance sheet instruments (i.e. deferred income) is
not material and is not presented. The contractual amount of off-balance-sheet
items that have credit risk comprise primarily unfunded loan commitments and
standby letters of credit which are generally priced at market at the time of
funding.

NOTE 18 -- SUBSEQUENT EVENTS

     On March 23, 2000 CIB Marine issued $10.00 million in trust preferred
securities. The securities pay dividends semi-annually, March 8 and September 8
of each year at a rate of 10.875%. The securities mature in 2030, and may be
called in 2010 through 2020 at a premium and thereafter at par. These securities
qualify as Tier 1 equity capital for all regulatory and risk-based capital
ratios. CIB Marine used the net proceeds of $9.7 million to reduce its debt at a
non-affiliated bank.

                                       70
<PAGE>   72
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 19 -- PARENT COMPANY FINANCIAL STATEMENTS

     The condensed financial statements of the parent company only, are
presented as follows:

                 CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY)

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                ---------------------
                                                  1999        1998
                                                  ----        ----
                                                (IN THOUSANDS, EXCEPT
                                                     SHARE DATA)
<S>                                             <C>         <C>         <C>
ASSETS
  Cash and Due from Banks.....................  $    365    $ 11,227
  Investments in Subsidiaries.................   184,702     129,323
  Other Investments...........................     2,471          14
  Loans.......................................     3,182       3,372
  Premises and Equipment, net.................       248         212
  Accounts Receivable.........................       455          43
  Deferred Income Taxes.......................       591         570
  Other Assets................................       310         319
                                                --------    --------
          Total Assets........................  $192,324    $145,080
                                                ========    ========
LIABILITIES
  Short-term Borrowings.......................    29,710          --
  Accrued Interest Payable....................       278          --
  Accrued Income Taxes........................       100         401
  Other Liabilities...........................       901         583
                                                --------    --------
          Total Liabilities...................    30,989         984
                                                --------    --------
STOCKHOLDERS' EQUITY
  Common Stock, $1 per value; 50,000,000
     Shares
  Authorized, 109,795 and 107,153 Issued and
  Outstanding, respectively...................       110         107
  Capital Surplus.............................   126,891     120,381
  Retained Earnings...........................    36,368      22,833
  Accumulated Other Comprehensive (Loss)
     Income...................................    (2,034)        775
                                                --------    --------
          Total Stockholders' Equity..........   161,335     144,096
                                                --------    --------
          Total Liabilities and Stockholders'
            Equity............................  $192,324    $145,080
                                                ========    ========
</TABLE>

                                       71
<PAGE>   73
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 19 -- PARENT COMPANY FINANCIAL STATEMENTS -- CONTINUED
              CONDENSED STATEMENTS OF INCOME (PARENT COMPANY ONLY)

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                              --------------------------
                                                               1999      1998      1997
                                                               ----      ----      ----
                                                                (DOLLARS IN THOUSANDS)
<S>                                                           <C>       <C>       <C>
INTEREST AND DIVIDEND INCOME
Dividends from Subsidiaries.................................  $ 2,975   $    --   $   --
Loans.......................................................      281       412      321
Other.......................................................       --        14       13
                                                              -------   -------   ------
          Total Interest and Dividend Income                    3,256       426      334
Interest Expense -- Short Term Borrowings...................      605        83      190
                                                              -------   -------   ------
NET INTEREST INCOME (LOSS)..................................    2,651       343      144
Noninterest Income
Equity in Undistributed Earnings of Subsidiaries............   12,827    10,532    5,744
Loan Fees...................................................      109        13       --
Other Service Fees..........................................    3,744     3,052    1,461
                                                              -------   -------   ------
          Total Noninterest Income..........................   19,655    13,597    7,205
                                                              -------   -------   ------
NONINTEREST EXPENSE
Salaries and Employee Benefits..............................    5,095     5,314    1,766
Equipment...................................................       37        31       16
Occupancy and Premises......................................      425       239      122
Professional Services.......................................      554       286      135
Advertising/Marketing.......................................       40        17       11
Other.......................................................      576       347      294
                                                              -------   -------   ------
          Total Noninterest Expense.........................    6,727     6,234    2,344
                                                              -------   -------   ------
Income Before Income Taxes..................................   12,604     7,706    5,005
Income Tax Benefit..........................................     (931)     (948)    (270)
                                                              -------   -------   ------
          Net Income........................................  $13,535   $ 8,654   $5,275
                                                              =======   =======   ======
</TABLE>

                                       72
<PAGE>   74
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 19 -- PARENT COMPANY FINANCIAL STATEMENTS -- CONTINUED
            CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                                ----       ----       ----
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income................................................  $ 13,535   $  8,654   $  5,275
  Adjustments to Reconcile Net Income to Net Cash Used by
     Operating Activities:
     Equity in Undistributed Earnings of Subsidiaries.......   (12,827)   (10,532)    (5,744)
     Depreciation and Amortization..........................        54         36         20
     Non-Cash Compensation..................................       185      1,459         --
     Deferred Tax Benefits..................................      (322)      (371)       (11)
     Decrease (Increase) in Interest Receivable and Other
       Assets...............................................      (391)       152       (233)
     Increase in Interest Payable and Other Liabilities.....       596         46        249
                                                              --------   --------   --------
          Net Cash Provided by (used by) Operating
            Activities......................................       830       (556)      (444)
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in Limited Partnerships and Other
     Investments............................................    (2,457)        --         --
  Net (Increase) Decrease in Loans..........................       190      3,062     (6,434)
  Net Increase in Investment in Subsidiaries................   (48,336)   (31,729)   (28,060)
  Dividends Received from Subsidiaries......................     2,975         --         --
  Proceeds from Sale of Fixed Assets........................        --        (20)        --
  Capital Expenditures......................................      (102)      (144)       (48)
                                                              --------   --------   --------
          Net Cash Used in Investing Activities.............   (47,730)   (28,831)   (34,530)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from Issuance of Common Stock....................     5,800     32,599     36,402
  Proceeds from Stock Options Exercised.....................       522         98        531
  Purchase/Sale of Treasury Stock...........................         6         --         --
  Net increase in short-term borrowings.....................    29,710         --         --
                                                              --------   --------   --------
          Net Cash Provided by Financing Activities.........    36,038     32,697     36,933
                                                              --------   --------   --------
Net Increase (Decrease) in Cash and Cash Equivalents........   (10,862)     3,310      1,959
Cash and Cash Equivalents, Beginning of Year................    11,227      7,917      5,958
                                                              --------   --------   --------
Cash and Cash Equivalents, End of Year......................  $    365   $ 11,227   $  7,917
                                                              ========   ========   ========
</TABLE>

                                       73
<PAGE>   75
                          CIB MARINE BANCSHARES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 20 -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  QUARTER ENDED 1999
                                                        ---------------------------------------
                                                        DEC. 31   SEPT. 30   JUNE 30   MARCH 31
                                                        -------   --------   -------   --------
                                                           (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                     <C>       <C>        <C>       <C>
Total Interest Income.................................  $34,134   $30,567    $27,448   $24,009
Total Interest Expense................................   18,582    16,497     14,372    12,357
                                                        -------   -------    -------   -------
Net Interest Income...................................   15,552    14,070     13,076    11,652
Provision for Loan Loss...............................    1,625     1,515      1,484     1,486
                                                        -------   -------    -------   -------
Net Interest Income After Provision for Loan Loss.....   13,927    12,555     11,592    10,166
Securities Gains, net.................................       --        --         --        --
Other Noninterest Income..............................    1,261     1,236      1,323     1,931
Noninterest Expense...................................    9,136     8,551      8,112     7,240
                                                        -------   -------    -------   -------
Income Before Income Taxes............................    6,052     5,240      4,803     4,857
Income Tax Expense....................................    2,192     1,832      1,658     1,735
                                                        -------   -------    -------   -------
Net Income............................................  $ 3,860   $ 3,408    $ 3,145   $ 3,122
                                                        =======   =======    =======   =======
Earnings Per Share:
  Basic...............................................  $ 35.93   $ 31.78    $ 29.35   $ 29.14
  Diluted.............................................    35.54     31.42      29.01     28.82
</TABLE>

<TABLE>
<CAPTION>
                                                                  QUARTER ENDED 1998
                                                        ---------------------------------------
                                                        DEC. 31   SEPT. 30   JUNE 30   MARCH 31
                                                        -------   --------   -------   --------
                                                           (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                     <C>       <C>        <C>       <C>
1998
Total Interest Income.................................  $23,096   $21,459    $19,111   $16,862
Total Interest Expense................................   11,697    11,116     10,070     9,315
                                                        -------   -------    -------   -------
Net Interest Income...................................   11,399    10,343      9,041     7,547
Provision for Loan Loss...............................    1,337     1,383      1,105       908
                                                        -------   -------    -------   -------
Net Interest Income After Provision for loan loss.....   10,062     8,960      7,936     6,639
Securities Gains, net.................................      211       133         --        --
Other Noninterest Income..............................    1,877     1,357      1,170     1,200
Noninterest Expense...................................    7,775     6,644      5,922     6,040
                                                        -------   -------    -------   -------
Income Before Income Taxes............................    4,375     3,806      3,184     1,799
Income Tax Expense....................................    1,562     1,304      1,125       519
                                                        -------   -------    -------   -------
Net Income............................................  $ 2,813   $ 2,502    $ 2,059   $ 1,280
                                                        =======   =======    =======   =======
Earnings Per Share:
  Basic...............................................  $ 26.26   $ 23.36    $ 21.31   $ 14.11
  Diluted.............................................    25.98     23.12      21.14     14.05
</TABLE>

                                       74
<PAGE>   76

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     CIB Marine reported a change in its independent accountants in a Current
Report on Form 8-K dated November 9, 1998. There were no disagreements or
reportable events of the nature required to be disclosed pursuant to Item 304(b)
of Regulation S-K.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information called for by Item 10 with respect to directors and
director nominees is incorporated by reference to CIB Marine's proxy statement
for the annual meeting to be held on April 27, 2000 under the caption "Proposal
1--Election of Directors Information Regarding Nominees and Directors."

     The information called for by Item 10 with respect to executive officers is
incorporated by reference to Part I hereof under the caption "Supplemental Item.
Executive Officers of CIB Marine."

ITEM 11. EXECUTIVE COMPENSATION

     The information called for by Item 11 is incorporated by reference to CIB
Marine's proxy statement for the annual meeting to be held on April 27, 2000
under the captions "Proposal 1--Election of Directors" and "Executive
Compensation."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information called for by Item 12 is incorporated by reference to CIB
Marine's proxy statement for the annual meeting to be held on April 27, 2000
under the captions "Security Ownership of Certain Beneficial Owners" and
"Proposal 1  --  Election of Directors  --  Stock Ownership of Management."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     The information called for by Item 11 is incorporated by reference to CIB
Marine's proxy statement for the annual meeting to be held on April 27, 2000
under the caption "Proposal 1--Election of Directors-Certain Relationships and
Related Transactions."

                                       75
<PAGE>   77

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)(1) FINANCIAL STATEMENTS

     - Independent Auditors' Report of KPMG LLP.

     - Independent Auditors' Report of Striegel Knobloch & Company LLC.

     - Consolidated Balance Sheets as of December 31, 1999 and 1998.

     - Consolidated Statements of Income for the Years Ended December 31, 1999,
       1998 and 1997.

     - Consolidated Statements of Stockholders' Equity for the Years Ended
       December 31, 1999, 1998 and 1997.

     - Consolidated Statements of Cash Flows for the Years Ended December 31,
       1999, 1998 and 1997.

     - Notes to Consolidated Financial Statements.

     - See Item 8 for CIB Marine's Consolidated Financial Statements.

(A)(2) FINANCIAL STATEMENT SCHEDULES

     All schedules have been omitted as the required information is either
inapplicable or included in the Notes to Consolidated Financial Statements
contained in Item 8.

(A)(3) LIST OF EXHIBITS

     The exhibits filed herewith are listed on the Exhibit Index filed as part
of this Annual Report on Form 10-K. Each management contract or compensatory
plan or arrangement of CIB Marine listed on the Exhibit Index is designated by
an asterisk.

(b) REPORTS ON FORM 8-K

     No reports on Form 8-K were filed by CIB Marine during the quarter ended
December 31, 1999.

                                       76
<PAGE>   78

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.

<TABLE>
<S>                                             <C>
                                                CIB MARINE BANCSHARES, INC.
                                                (registrant)

Date: March 30, 2000                            By: /s/ J. MICHAEL STRAKA
                                                -----------------------------------------------------
                                                    J. Michael Straka
                                                    President and Chief Executive Officer
</TABLE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                     DATE
                      ---------                                    -----                     ----
<C>                                                    <S>                              <C>

                /s/ J. MICHAEL STRAKA                  President and Chief Executive    March 30, 2000
-----------------------------------------------------  Officer (Principal Executive
                  J. Michael Straka                    Officer) and Director

               /s/ STEVEN T. KLITZING                  Chief Financial Officer          March 30, 2000
-----------------------------------------------------  (Principal Financial and
                 Steven T. Klitzing                    Accounting Officer)

                   /s/ JOSE ARAUJO                     Director                         March 30, 2000
-----------------------------------------------------
                     Jose Araujo

                 /s/ NORMAN E. BAKER                   Director                         March 30, 2000
-----------------------------------------------------
                    Norman Baker

                  /s/ JOHN T. BEAN                     Director                         March 30, 2000
-----------------------------------------------------
                    John T. Bean

                 /s/ W. SCOTT BLAKE                    Director                         March 30, 2000
-----------------------------------------------------
                   W. Scott Blake

                /s/ STEVEN C. HILLARD                  Director                         March 30, 2000
-----------------------------------------------------
                  Steven C. Hillard

                /s/ DEAN M. KATSAROS                   Director                         March 30, 2000
-----------------------------------------------------
                    Dean Katsaros

                 /s/ JERRY D. MAAHS                    Director                         March 30, 2000
-----------------------------------------------------
                   Jerry D. Maahs

               /s/ DONALD M. TRILLING                  Chairman of the Board of         March 30, 2000
-----------------------------------------------------  Directors and Director
                 Donald M. Trilling

               /s/ HOWARD E. ZIMMERMAN                 Director                         March 30, 2000
-----------------------------------------------------
                 Howard E. Zimmerman
</TABLE>

                                       77
<PAGE>   79

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER          EXHIBIT
        -------          -------
<C>                      <S>
           3.1           Amended and Restated Articles of Incorporation of CIB
                         Marine, Bancshares, Inc. (incorporated by reference to
                         Appendix B to the Proxy Statement of Central Illinois
                         Bancorp, Inc. filed with the Securities and Exchange
                         Commission on May 28, 1999)
           3.2           Bylaws of CIB Marine Bancshares, Inc. (incorporated by
                         reference to Appendix C to the Proxy Statement of Central
                         Illinois Bancorp, Inc. filled with the Securities and
                         Exchange Commission on May 28, 1999)
         *10.1           CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive
                         Plan (incorporated by reference to Appendix A to the Proxy
                         Statement of Central Illinois Bancorp, Inc. filed with the
                         Securities and Exchange Commission on May 28, 1999)
         *10.2           Form of Deferred Compensation Agreement of CIB Marine
                         (incorporated by reference to Exhibit 10.3 to CIB Marine's
                         Form 10 filed on April 30, 1998)
          10.3           Agreement dated December 24, 1996 between Central Illinois
                         Bank and Strategic Capital Management, Inc. and Assignment
                         of Agreement dated March 31, 1998 between Marine Trust and
                         Investment Company and Strategic Trust Company (incorporated
                         by reference to Exhibit 10.6 to CIB Marine's Form 10 filed
                         on April 30, 1998)
          11             Statement of Computation of Earnings Per Share
          21             Subsidiaries of CIB Marine
          23.1           Consent of KPMG LLP
          23.2           Consent of Striegel Knobloch & Company LLC
          27             Financial Data Schedule
</TABLE>

                                       78