##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2005
 Commission File Number: 000-24149
 CIB MARINE BANCSHARES, INC.
  Wisconsin
    
    37-1203599(State of incorporation)
    
    (I.R.S. Employer Identification No.)N27 W24025 Paul Court, Pewaukee, Wisconsin
    
    53072(Address of principal executive offices)
    
    (Zip Code)
 (262) 695-6010
 None
  Common Stock, $1.00 Par Value Per Share
  o þ
 o þ
 o þ
 þ
  o o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



EXPLANATORY NOTE
  FORM 10-K TABLE OF CONTENTS
 PagePart IItem 1
    
     Business
    
    
    3Item 1A
    
     Risk Factors
    
    
    19Item 1B
    
     Unresolved Staff Comments
    
    
    23Item 2
    
     Properties
    
    
    24Item 3
    
     Legal Proceedings
    
    
    24Item 4
    
     Submission of Matters to a Vote of Security Holders
    
    
    27Part IIItem 5
    
     Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    28Item 6
    
     Selected Financial Data
    
    
    28Item 7
    
     Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A
    
     Quantitative and Qualitative Disclosures About Market Risk
    
    
    68Item 8
    
     Financial Statements and Supplementary Data
    
    
    71Item 9
    
     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    115Item 9A
    
     Controls and Procedures
    
    
    115Item 9B
    
     Other Information
    
    
    116Part IIIItem 10
    
     Directors and Executive Officers of the Registrant
    
    
    116Item 11
    
     Executive Compensation
    
    
    118Item 12
    
     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    120Item 13
    
     Certain Relationships and Related Transactions
    
    
    121Item 14
    
     Principal Accountant Fees and Services
    
    
    122Part IVItem 15
    
     Exhibits and Financial Statement Schedules
    
    
    122Signatures
    
    
    
    
    124Subsidiaries of CIB MarineConsent of KPMG LLPCertification of Chief Executive OfficerCertification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
  2




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##### Table of Contents



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




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##### Table of Contents



Independent Review and Investigation
  Delays in Filing Periodic SEC Reports
  Announcement of Preliminary 2003 Consolidated Financial Results and Restatement of Previously
Issued Consolidated Financial Statements
   Receivables from Sale of Stock
  4




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##### Table of Contents



Provision for Credit Losses
  Reclassification of Securities
   2002
    
    
    2001As
    
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    
    As
    
    
    Previously
    
    
    
    
    
    
    AsReported in
    
    
    
    
    
    
    Restated
    
    
    Reported in
    
    
    
    
    
    
    Restatedthe 2002
    
    
    
    
    
    
    in the 2003
    
    
    the 2002
    
    
    
    
    
    
    in the 200310K
    
    
    Adjustment
    
    
    10K
    
    
    10K
    
    
    Adjustment
    
    
    10K(Dollars in thousands, except share data)Selected Income Statement
Accounts:Interest income-loans
    
    $
    178,691
    
    
    $
    (191
    )
    
    $
    178,500
    
    
    $
    174,222
    
    
    $
    (125
    )
    
    $
    174,097Provision for credit losses
    
    
    (35,725
    )
    
    
    (10,785
    )
    
    
    (46,510
    )
    
    
    (12,743
    )
    
    
    (1,652
    )
    
    
    (14,395
    )Net interest income after
provision for credit losses
    
    
    71,132
    
    
    
    (10,976
    )
    
    
    60,156
    
    
    
    74,664
    
    
    
    (1,777
    )
    
    
    72,887Income tax (benefit) expense
    
    
    (6,748
    )
    
    
    4,152
    
    
    
    (2,596
    )
    
    
    (13,989
    )
    
    
    589
    
    
    
    (13,400
    )Income from continuing operations
    
    
    16,433
    
    
    
    (6,824
    )
    
    
    9,609
    
    
    
    26,917
    
    
    
    (1,188
    )
    
    
    25,729EPS-Diluted from continuing
operations
    
    $
    0.89
    
    
    $
    (0.37
    )
    
    $
    0.52
    
    
    $
    1.49
    
    
    $
    (0.07
    )
    
    $
    1.42Selected Balance Sheet Accounts:Total securities
    
    $
    514,003
    
    
    $
    2,741
    
    
    $
    516,744
    
    
    $
    418,357
    
    
    $
    2,150
    
    
    $
    420,507Loans, net of deferred loan fees
    
    
    2,711,943
    
    
    
    (7,937
    )
    
    
    2,704,006
    
    
    
    2,389,482
    
    
    
    (7,437
    )
    
    
    2,382,045Allowance for loan losses
    
    
    (52,369
    )
    
    
    (12,753
    )
    
    
    (65,122
    )
    
    
    (34,078
    )
    
    
    (1,777
    )
    
    
    (35,855
    )Net loans
    
    
    2,659,574
    
    
    
    (20,690
    )
    
    
    2,638,884
    
    
    
    2,355,404
    
    
    
    (9,214
    )
    
    
    2,346,190Retained earnings
    
    
    82,901
    
    
    
    (8,012
    )
    
    
    74,889
    
    
    
    67,270
    
    
    
    (1,188
    )
    
    
    66,082Total stockholders equity
    
    $
    261,801
    
    
    $
    (14,238
    )
    
    $
    247,563
    
    
    $
    237,142
    
    
    $
    (7,317
    )
    
    $
    229,8252000
    
    1999As
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    
    
    
    As
    
    Previously
    
    
    
    
    
    AsReported
    
    Adjustment
    
    Restated
    
    Reported
    
    Adjustment
    
    Restated(Dollars in thousands)Selected Balance Sheet Accounts:Total securities
    
    $
    505,871
    
    
    $
    729
    
    
    $
    506,600
    
    
    $
    369,988
    
    
    $
    (1,854
    )
    
    $
    368,134Loans, net of deferred loan fees
    
    
    1,831,231
    
    
    
    (5,096
    )
    
    
    1,826,135
    
    
    
    1,455,581
    
    
    
    (4,710
    )
    
    
    1,450,871Net loans
    
    
    1,807,243
    
    
    
    (5,096
    )
    
    
    1,802,147
    
    
    
    1,439,367
    
    
    
    (4,710
    )
    
    
    1,434,657Total stockholders equity
    
    $
    203,367
    
    
    $
    (4,653
    )
    
    $
    198,714
    
    
    $
    169,703
    
    
    $
    (5,832
    )
    
    $
    163,871
 Regulatory Orders and Agreements
  5




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
    
    Maintenance of minimum capital levels;
    
    Restrictions on dividend payments and redemption of shares without prior regulatory approval;
    
    Limitations on asset and loan growth;
    
    Adoption of a comprehensive plan to improve earnings;
    
    Development of a plan to reduce concentrations of credit and loan relationships classified as substandard or doubtful;
    
    Development of a system to correct loan administration deficiencies; and
    
    Development of a plan to correct and prevent violations of banking laws and
regulations related to affiliate transactions.
   Actions to Improve CIB Marines Financial Condition
  
    
    Senior Management and Board of Directors.CIB Marine made the following changes in senior management and the Board of
Directors:
 o
    
    In December 2003, Michael J. Miller was hired and named Chief Lending Officer of CIB Marine.o
    
    In February 2004, Board member W. Scott Blake was appointed Chairman of the Board of
CIB Marine, succeeding Donald Trilling who remained a member of the Board of Directors.o
    
    In February 2004, CIB Marine named Margaret A. Incandela as its Chief Credit Officer
replacing Stephen C. Bonnell, who resigned from CIB Marine in March 2004. Ms. Incandela
was hired as CIB Marines Loan Review Manager in October 2003.o
    
    In March 2004, CIB  Chicagos President and CEO, and the Senior Loan Officer of
that bank, resigned from their positions.o
    
    In April 2004, Stanley J. Calderon was hired and appointed President and CEO of CIB
Marine. He joined the Board of CIB Marine in November 2004. Mr. Calderon replaced J.
Michael Straka, who retired as CIB Marines President and CEO in February 2004 and
retired from all positions and the Board of CIB Marine in April 2004.o
    
    In September 2004, Steven C. Hillard was appointed to serve on the Board of CIB
Marine.o
    
    In October 2004, Gary L. Longman was appointed to serve on the Board of CIB Marine
and as Chairman of CIB Marines Audit Committee. The Board has determined that Mr.
Longman is an Audit Committee Financial Expert as defined in Item 401 of Regulation S-K.o
    
    In April 2005, Daniel J. Rasmussen was named Senior Vice President and General
Counsel of CIB Marine and succeeded Donald J. Straka who was assigned other duties in
April 2005 and resigned his employment with CIB Marine in June 2005.
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##### Table of Contents



o
    
    Michael L. Paoletta was appointed Chief Credit Officer in January 2006 replacing
Margaret A. Incandela who resigned in December 2005; and
  o
    
    G. Richard Nisbeth as Chairman and CEO of Citrus Bank, in January 2005 and President
in March 2007;o
    
    Joseph T. Henderson as President and CEO of Central Illinois Bank in July 2005, and
Chairman of the Board of Central Illinois Bank in March 2006;o
    
    John P. Hickey, Jr. as President and CEO of Marine  Wisconsin in April 2006, replacing
Michael J. Miller who resigned from all positions with CIB Marine in February 2006. In
March 2007, Mr. Hickey was appointed President and CEO of CIB Marine, replacing Mr.
Calderon who became Chairman of the Board of CIB Marine. In May 2007, Mr. Hickey was also
appointed to CIB Marines Board of Directors.
 
    
    Credit Functions, Policies and Procedures.CIB Marine made the following changes in its credit functions, policies and procedures:
 o
    
    Replaced the senior executives in charge of the companys credit function;o
    
    Formed an Executive Loan Committee of the holding company to review and approve certain new and renewal loans;o
    
    Restructured the Loan Committees of its subsidiary banks;o
    
    Prohibited any new or additional loans secured by or for the purpose of purchasing CIB Marine stock;o
    
    Enhanced underwriting procedures;o
    
    Directed the loan review function to report directly to CIB Marines Board of Directors;o
    
    Established an Early Identification/Warning Process to enhance the prompt
identification, evaluation and monitoring of weak credits;o
    
    Implemented a loan grade certification program; ando
    
    Reinforced procedures with regard to controls over loan collateral in its possession.
 
    
    Further Reductions in Nonperforming Assets. Beginning in 2004 and continuing into 2006, CIB Marine significantly
reduced the level of nonperforming assets as a result of the sale of CIB  Chicago, aggressive workout strategies and
charge-offs. Nonperforming assets were $58.9 million at December 31, 2004 compared to $195.7 million at December 31,
2003. At December 31, 2005, December 31, 2006 and March 31, 2007, nonperforming assets were $33.5 million, $20.6
million and $19.2 million, respectively. The allowance for loan losses was $109.9 million at December 31, 2003, $29.6
million at December 31, 2004, $24.9 million at December 31, 2005, $20.9 million at December 31, 2006 and $21.4 million
at March 31, 2007.
 
    
    Further Reductions in Credit Concentrations. Beginning in 2004 and continuing into 2006, CIB Marine worked with its
largest borrowers to significantly reduce the level of credit concentrations. At December 31, 2003, CIB Marine had
fifteen secured borrowing relationships (loans to one borrower or a related group of borrowers) that exceeded 25% of
stockholders equity as compared to one relationship at December 31, 2004 and December 31, 2005, none at December 31,
2006 and one at March 31, 2007.
 
    
    Liquidity Enhancements. CIB Marine improved its liquidity position by deferring interest payments on its junior
subordinated debentures beginning in February 2004 and increasing investment securities and other liquid assets at the
subsidiary banks. Accrued and unpaid interest on the $61.9 million of junior subordinated debentures was $14.1 million,
$20.8 million and $23.8 million at December 31, 2005 and 2006 and March 31, 2007, respectively.
 
    
    Sale of CIB  Chicago. The Board of Directors evaluated a wide range of alternatives to improve the capital and
liquidity position of the company, including the sale of additional common stock, sale of the company, sale of one or
more of the bank subsidiaries and other asset reduction strategies. An investment banker was hired to assist in
evaluating the financial condition of the company and various strategic alternatives. Upon evaluation, the Board
determined that the sale of CIB  Chicago, its Chicago banking subsidiary, was the most prudent course of action for
the company and its shareholders. On August 12, 2004, CIB Marine signed an agreement to sell CIB  Chicago. The sale of
CIB  Chicago closed on November 30, 2004. The final sale price was $67.4 million in cash. CIB Marine used $23.6
million of the proceeds to repay all indebtedness under its revolving line of credit, injected $15.0 million of new
capital into Central Illinois Bank and repaid a $5.4 million short-term loan from the purchaser. The balance of the
proceeds was utilized to help fund ongoing operations and to meet the liquidity needs of the parent company. The sale
resulted in a pretax gain for financial statement purposes of approximately $15.6 million. At the time of sale, CIB 
Chicago had approximately $1.2 billion in assets and $1.1 billion in deposits. The total consolidated assets of CIB Marine immediately after the sale were approximately $1.4 billion. The sale of
CIB  Chicago significantly
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improved the financial condition of the company. As a result of
the sale of CIB  Chicago, CIB Marine and all of its subsidiary banks currently meet the
capital requirements of the regulatory orders and agreements and are expected to meet their
respective liquidity needs through 2007.
 
    
    Sale and Wind Down of Nonbank Subsidiaries. During 2004, 2005 and 2006 CIB Marine
divested itself of certain nonbank subsidiaries and commenced the wind down of certain
other nonbank subsidiaries in order to more narrowly focus its resources on its core
commercial and retail banking strategies.
 o
    
    CIB Marine Commercial Finance, LLC (Commercial Finance). In June 2004, CIB 
Chicago sold substantially all of the assets and operations of its factoring subsidiary,
Commercial Finance. This company was subsequently dissolved in November 2004.o
    
    Mortgage Services, Inc (MSI). During the third quarter of 2004, CIB Marine sold
substantially all of the assets and operations of Mortgage Services, Inc, its mortgage
banking subsidiary. CIB Marine is in the process of winding down the remaining affairs,
and has incurred certain liabilities with respect to the operations of this company.
These liabilities, totaling $1.8 million, $1.1 million, $0.6 million and $0.3 million as
of December 31, 2004, December 31, 2005, December 31, 2006 and March 31, 2007,
respectively, include repurchase obligations relative to certain mortgage loans as a
result of external fraud and/or documentation issues, and certain reporting penalties.o
    
    CIB Marine Capital, LLC. During 2004, 2005, 2006 and 2007 CIB Marine continued to
wind down CIB Marine Capital, LLC, its mezzanine lending company. There was $3.4
million, $0.7 million, $0.7 million and $0.0 million in loans outstanding at December
31, 2004, December 31, 2005, December 31, 2006 and March 31, 2007, respectively.o
    
    CIB Construction, including Canron. In 2002, CIB Construction LLC, a wholly-owned
subsidiary of CIB  Chicago, acquired 84% of Canron, a steel fabrication company in
foreclosure. During 2003, Canron commenced a voluntary liquidation and wind down of its
affairs. During 2004 and since that date, Canron continued this plan and sold several of
its properties and operations. In August 2005, Canron authorized and began liquidation
distributions to its shareholders. Between August 2005 and March 2007, Canron paid
capital distributions to its shareholders, including $4.0 million to CIB Construction,
and CIB Construction paid dividends totaling $5.1 million to CIB Marine, which CIB
Marine recorded as a reduction of its investment in CIB Construction. At December 31,
2004, December 31, 2005, December 31, 2006 and March 31, 2007, CIB Construction had
assets of approximately $13.7 million, $5.2 million, $3.3 million and $3.2 million,
respectively, and liabilities of $10.2 million, $5.2 million, $4.4 million and $4.4
million, respectively.o
    
    MICR, Inc., n/k/a Everett Tech, Inc. (MICR) In January 2005, CIB Marine retained
the services of an investment banker to assist in the marketing and sale of MICR, a
manufacturer of payment processing systems that was acquired from a borrower in lieu of
foreclosure in 2000. At December 31, 2004, MICR had assets of approximately $2.7 million
and liabilities of approximately $0.9 million. During 2004 and 2003, MICR generated
income before impairment losses and income tax expenses of $1.3 million and $1.1
million, respectively, but impairment write downs of CIB Marines investment in MICR
were $1.9 million and $2.0 million, respectively. In November 2005, CIB Marine sold
substantially all of the assets of MICR. The sale resulted in a pretax gain of $0.2
million.
 
    
    Cost Controls and Reduction in Force Program.In June 2004, CIB
Marine began an overall cost cutting program which included
restrictions on salaries and hiring, tight expense controls, and
some executive management salary reductions. CIB Marine reduced
its workforce by 34 full-time equivalent employees in 2004, 90 in
2005 and 17 during 2006 and one during the first quarter of 2007,
incurred severance expenses of $0.1 million, $0.9 million and $0.2
million in those periods, respectively, and trimmed its annual
base pay by a total of $6.3 million by December 31, 2005 and $7.1
million at both December 31, 2006 and March 31, 2007, under that
program.
 
    
    Branches Planned for Sale.In 2005, each of CIB Marines
subsidiary banks performed an evaluation of the effectiveness of
their respective branch networks. In 2005 one branch was sold and
three were closed. Six additional branches were sold in 2006 and
one was closed. The 2005 branch activities had a minimal immediate
effect on income. Gains on the branch sales during 2006 were $2.7
million. In February and May 2007, two branches were sold at a net
gain of $1.1 million. During the second quarter of 2007, three
branches were closed. The deposits of these closed branches were
transferred to other CIB Marine branches.
 
    
    Charter Consolidation. On March 1, 2006 and August 1, 2006, CIB
Marine merged Marine FSB and CIB  Indiana, respectively, into
Marine  Wisconsin. CIB Marine may also consider the consolidation
of additional charters in the future as part of its strategy to
become more efficient.
 
    
    Intangible Assets. As a result of branch sales during the first
quarter of 2007, CIB Marine does not have any goodwill or
intangible assets on its balance sheet as of March 31, 2007.
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
    
    Foreclosed Properties. At December 31, 2006 and March 31, 2007,
CIB Marine had reduced its foreclosed properties to $0.1 million
from $2.9 million at both December 31, 2004 and 2005.
  Additional Information
  Markets Served
  Operated
    
    BankingBank
    
    Geographic Market/Region
    
    Since
    
    Facilities
    
    Assets
    
    Deposits(Dollars in millions)Central Illinois Bank
    
    Central Illinois
    
    
    1987
    
    
    
    16
    
    
    $
    578.4
    
    
    $
    494.2Marine  Wisconsin (1)
    
    Milwaukee metropolitan area
    
    
    1997
    
    
    
    7
    
    
    $
    223.6
    
    
    $
    183.2Citrus Bank
    
    Floridas southeastern coast
    
    
    2001
    
    
    
    6
    
    
    $
    145.1
    
    
    $
    120.6CIB  Indiana (1)
    
    Indianapolis metropolitan area
    
    
    1998
    
    
    
    4
    
    
    $
    93.0
    
    
    $
    70.0Marine FSB (1)
    
    Omaha, Phoenix and Las Vegas
    
    
    1999
    
    
    
    4
    
    
    $
    83.6
    
    
    $
    67.8metropolitan areas
 
 (1)
    
    Marine FSB was merged into Marine  Wisconsin on March 1, 2006 and CIB  Indiana
was merged into Marine  Wisconsin on August 1, 2006. In addition, in June 2006,
Marine  Wisconsin sold its Omaha facility, thereby exiting this market, and in the
second quarter of 2007 Marine  Wisconsin closed the Henderson Nevada branch which
services the Las Vegas metropolitan area. Development of Banking Operations
  Central Illinois
    9




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Chicago Metropolitan Area
   Milwaukee Metropolitan Area
   Indianapolis Metropolitan Area
  Omaha Metropolitan Area
  Florida
  10




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Phoenix Metropolitan Area
  Las Vegas Metropolitan Area
  Operations of Nonbank Subsidiaries
  Mortgage Services, Inc.
  CIB Marine Capital, LLC
  CIB Marine Information Services, Inc.
  MICR, Inc. (n/k/a Everett Tech, Inc.)
  11




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CIB Construction, LLC
  Management Support Services
  Total Employees
  COMPETITION
   SUPERVISION AND REGULATION
 General
  12




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Expansion Activities
  Capital Standards
  
    
    core capital (commonly referred to as Tier 1 capital), which generally includes common
equity, qualifying noncumulative perpetual preferred stock, and for bank holding
companies, a limited amount of qualifying cumulative perpetual preferred stock, and
minority interests in equity accounts of consolidated subsidiaries (including junior
subordinated debentures net of investment in trust, provided that not more than 25% of
the qualifying Tier 1 capital may consist of junior subordinated debentures, net of
investment in trust), less goodwill and certain other intangible assets; and
 
    
    supplementary capital (commonly referred to as Tier 2 capital), which includes, among
other items, perpetual preferred stock not meeting the Tier 1 definition, mandatory
convertible securities, and limited amounts of subordinated debt and reserves for credit
losses.
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Holding Company Obligations
  14




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Safety and Soundness Guidelines
  Prompt Corrective Action
       15




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Dividend Restrictions
    Federal Deposit Insurance
  16




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Restrictions on Affiliate Transactions
    Qualified Thrift Lender
  
    
    the association may not engage in any new activity or make any new investment,
directly or indirectly, unless such activity or investment is permissible for a
national bank;
    
    the branching powers of the association shall be restricted to those of a national
bank;
    
    the institution shall not be eligible to obtain any advances from its FHLB; and
    
    payment of dividends by the association shall be subject to the rules regarding
payment of dividends by a national bank.
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Community Reinvestment Act and Fair Lending
  Compliance with Consumer Protection Laws
  
    
    require banks to meet the credit needs of their communities;
    
    require banks to disclose credit terms in meaningful and consistent ways;
    
    prohibit discrimination against an applicant in any consumer or business credit
transaction;
    
    prohibit discrimination in housing-related lending activities;
    
    require banks to collect and report applicant and borrower data regarding loans for
home purchases or improvement projects;
    
    require lenders to provide borrowers with information regarding the nature and cost
of real estate settlements;
    
    prohibit certain lending practices and limit escrow account amounts with respect to
real estate transactions; and
    
    prescribe possible penalties for violations of the requirements of consumer
protection statutes and regulations.
 USA Patriot Act of 2001
  Sarbanes  Oxley Act of 2002
  18




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1934 Exchange Act
  Future Legislation
  AVAILABLE INFORMATION
  
 ITEM 1A. RISK FACTORS
 Forward-Looking Statements
   Risk Factors
  CIB Marine has suffered large losses in recent years, and it must execute its strategic plan and
return to profitability.
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CIB Marines results of operations are subject to general and regional economic conditions, which
are beyond its control.
  CIB Marine operates in a highly regulated environment and is subject to supervision and examination
by various federal and state regulatory agencies.
   
    
    Adequate capital and financial condition;
    
    Permissible types, amounts and extensions of credit and investments;
    
    Permissible non-banking activities; and
    
    Restrictions on dividend payments.
   
    
    Maintenance of minimum capital levels;
    
    Restrictions on dividend payments and redemption of shares of CIB Marine without
regulatory approval;
    
    Limitations on asset and loan growth;
    
    Adoption of a comprehensive plan to improve earnings;
    
    Development of a plan to reduce concentrations of credit and loan relationships
classified as substandard or doubtful;
    
    Development of a system to correct loan administration deficiencies; and
    
    Development of a plan to correct and prevent violations of banking laws and regulations
related to affiliate transactions.
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CIB Marine is subject to litigation.
   CIB Marine competes for key personnel.
  CIB Marines future success depends upon its ability to compete effectively in the highly
competitive banking industry.
  CIB Marines loan portfolio often contains concentrations of credit in one borrower, related
borrowers or borrowers in the same industry, which creates special credit risks.
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CIB Marine is subject to certain risks in connection with its use of technology.
   CIB Marines profitability is dependent upon its ability to manage net interest income.
   CIB Marine is subject to credit risk.
    CIB Marine is subject to liquidity risk and has long-term obligations on which it has deferred
interest payments.
  22




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CIB Marine relies on dividends received from its subsidiaries.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  23




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ITEM 2. PROPERTIES
  Owned or
    
    Date OpenedLocation
    
    Leased
    
    or AcquiredSUBSIDIARY BANKS:CENTRAL ILLINOIS BANK FACILITIESSidney, Illinois
    
    Owned
    
    
    09/87Champaign, Illinois
    
    Owned
    
    
    09/88Urbana, Illinois
    
    Owned
    
    
    03/90Arrowsmith, Illinois
    
    Owned
    
    
    10/91Champaign, Illinois (Midtown)
    
    Owned
    
    
    04/94Rantoul, Illinois (1)
    
    Leased
    
    
    11/94Monticello, Illinois
    
    Leased
    
    
    05/95Danville, Illinois
    
    Owned
    
    
    08/95Decatur, Illinois
    
    Leased
    
    
    10/95Arthur, Illinois (1)
    
    Owned
    
    
    10/96Peoria, Illinois
    
    Leased
    
    
    09/97East Peoria, Illinois
    
    Owned
    
    
    10/97Springfield, Illinois (1)
    
    Leased
    
    
    04/99Lincoln, Illinois (1)
    
    Owned
    
    
    04/00Bloomington, Illinois
    
    Owned
    
    
    10/00Peoria, Illinois (Grand Prairie)
    
    Leased
    
    
    04/03MARINE    WISCONSIN FACILITIESCedarburg, Wisconsin (1)
    
    Owned
    
    
    09/97Grafton, Wisconsin (1)
    
    Owned
    
    
    09/97Pewaukee, Wisconsin
    
    Leased
    
    
    02/98Wauwatosa, Wisconsin
    
    Leased
    
    
    05/98Milwaukee, Wisconsin
    
    Leased
    
    
    04/99Franklin, Wisconsin
    
    Leased
    
    
    08/00Brookfield, Wisconsin (1)
    
    Leased
    
    
    09/01CIB    INDIANA FACILITIESIndianapolis, Indiana (Fox Road) (1)
    
    Leased
    
    
    03/98Indianapolis, Indiana (Emerson Way)
    
    Leased
    
    
    09/98Indianapolis, Indiana (Rockville Road) (1)
    
    Owned
    
    
    03/00Carmel, Indiana
    
    Leased
    
    
    08/00MARINE FSB FACILITIESOmaha, Nebraska (1)
    
    Leased
    
    
    11/99Scottsdale, Arizona
    
    Leased
    
    
    10/01Henderson, Nevada (1)
    
    Leased
    
    
    01/02Sun City, Arizona (1)
    
    Leased
    
    
    02/04CITRUS BANK FACILITIESVero Beach, Florida
    
    Owned
    
    
    04/90Sebastian, Florida
    
    Owned
    
    
    02/93Barefoot Bay, Florida
    
    Owned
    
    
    09/96North Miami Beach, Florida
    
    Leased
    
    
    12/01Coral Gables, Florida
    
    Leased
    
    
    04/03Boca Raton, Florida
    
    Leased
    
    
    04/03NONBANK SUBSIDIARIES:CIB MARINE BANCSHARES, INC.Champaign, Illinois
    
    Leased
    
    
    10/99Gurnee, Illinois
    
    Leased
    
    
    04/05Chicago, Illinois
    
    Leased
    
    
    01/05
 
 (1)
    
    Subsequent to December 31, 2005, CIB Marine sold or closed the branch. CIB
Marines subsidiary banks are continuing to evaluate
the effectiveness of their respective branch networks,
which may result in the sale or closure of additional
branches. See Item 7  Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Subsequent Events  Branch Activities.  
 ITEM 3. LEGAL PROCEEDINGS
   24




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Dennis Lewis, et al. v. CIB Marine Bancshares, Inc., et al
   25




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26




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  27




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##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
   
 ITEM 6. SELECTED FINANCIAL DATA
  28




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TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Selected
Consolidated Financial DataAt or for the Year Ended December 31,2005
    
    

2004
    
    

2003
    
    

2002
    
    

2001(Dollars in thousands,
except share and per share data)Selected Statements of Operations DataInterest and dividend income
    
    $
    59,849
    
    
    $
    69,979
    
    
    $
    96,663
    
    
    $
    101,868
    
    
    $
    102,344Interest expense
    
    
    34,795
    
    
    
    37,287
    
    
    
    46,578
    
    
    
    51,079
    
    
    
    60,865Net interest income
    
    
    25,054
    
    
    
    32,692
    
    
    
    50,085
    
    
    
    50,789
    
    
    
    41,479Provision for credit losses
    
    
    (8,669
    )
    
    
    17,432
    
    
    
    50,506
    
    
    
    19,074
    
    
    
    6,768Net interest income after provision for credit losses
    
    
    33,723
    
    
    
    15,260
    
    
    
    (421
    )
    
    
    31,715
    
    
    
    34,711Noninterest income(1)
    
    
    2,895
    
    
    
    3,678
    
    
    
    5,113
    
    
    
    5,500
    
    
    
    4,135Noninterest expense
    
    
    50,970
    
    
    
    52,729
    
    
    
    51,348
    
    
    
    44,620
    
    
    
    35,042Income (loss) from continuing operations before income taxes
    
    
    (14,352
    )
    
    
    (33,791
    )
    
    
    (46,656
    )
    
    
    (7,405
    )
    
    
    3,804Income tax expense (benefit)
    
    
    (1,208
    )
    
    
    (5,240
    )
    
    
    1,906
    
    
    
    (4,199
    )
    
    
    1,030Income (loss) from continuing operations
    
    
    (13,144
    )
    
    
    (28,551
    )
    
    
    (48,562
    )
    
    
    (3,206
    )
    
    
    2,774Discontinued operations:Pretax income (loss) from discontinued operations
    
    
    3,850
    
    
    
    15,618
    
    
    
    (92,147
    )
    
    
    18,960
    
    
    
    35,325Income tax expense (benefit)
    
    
    2,367
    
    
    
    4,414
    
    
    
    (3,061
    )
    
    
    6,947
    
    
    
    12,370Income (loss) from discontinued operations
    
    
    1,483
    
    
    
    11,204
    
    
    
    (89,086
    )
    
    
    12,013
    
    
    
    22,955Net income (loss)
    
    $
    (11,661
    )
    
    $
    (17,347
    )
    
    $
    (137,648
    )
    
    $
    8,807
    
    
    $
    25,729Common Share DataBasic earnings (loss) per share:Income (loss) from continuing operations
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )
    
    $
    (0.18
    )
    
    $
    0.16Discontinued operations
    
    
    0.08
    
    
    
    0.61
    
    
    
    (4.87
    )
    
    
    0.66
    
    
    
    1.29Net income (loss)
    
    $
    (0.64
    )
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.48
    
    
    $
    1.45Diluted earnings (loss) per share:Income (loss) from continuing operations
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )
    
    $
    (0.18
    )
    
    $
    0.15Discontinued operations
    
    
    0.08
    
    
    
    0.61
    
    
    
    (4.87
    )
    
    
    0.65
    
    
    
    1.27Net income (loss)
    
    $
    (0.64
    )
    
    $
    (0.95
    )
    
    $
    (7.53
    )
    
    $
    0.47
    
    
    $
    1.42Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value per share
    
    $
    4.32
    
    
    $
    4.83
    
    
    $
    5.94
    
    
    $
    13.52
    
    
    $
    12.86Weighted average shares outstanding-basic
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,167,379
    
    
    
    17,751,752Weighted average shares outstanding-diluted
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,547,515
    
    
    
    18,083,013Financial Condition DataTotal assets
    
    $
    1,138,428
    
    
    $
    1,385,908
    
    
    $
    3,186,237
    
    
    $
    3,650,705
    
    
    $
    2,942,018Loans
    
    
    515,544
    
    
    
    746,615
    
    
    
    2,360,041
    
    
    
    2,704,006
    
    
    
    2,382,045Allowance for loan losses
    
    
    (24,882
    )
    
    
    (29,551
    )
    
    
    (109,872
    )
    
    
    (65,122
    )
    
    
    (35,855
    )Securities
    
    
    493,409
    
    
    
    379,024
    
    
    
    637,356
    
    
    
    516,744
    
    
    
    420,507Deposits (includes deposits of branches held for sale)
    
    
    934,691
    
    
    
    1,178,488
    
    
    
    2,821,218
    
    
    
    2,848,404
    
    
    
    2,269,710Borrowings, including junior subordinated debentures and
guaranteed trust preferred securities
    
    
    94,108
    
    
    
    87,916
    
    
    
    200,734
    
    
    
    494,086
    
    
    
    421,870Stockholders equity
    
    
    79,182
    
    
    
    92,892
    
    
    
    108,523
    
    
    
    247,563
    
    
    
    229,825Financial Ratios and Other DataPerformance ratios:Net interest margin (2) (9)
    
    
    2.06
    %
    
    
    2.22
    %
    
    
    3.12
    %
    
    
    3.43
    %
    
    
    3.44
    %Net interest spread (3) (9)
    
    
    1.56
    
    
    
    1.96
    
    
    
    2.81
    
    
    
    3.03
    
    
    
    2.84Noninterest income to average assets(4)(9)
    
    
    0.38
    
    
    
    1.23
    
    
    
    0.57
    
    
    
    0.41
    
    
    
    0.51Noninterest expense to average assets (9)
    
    
    4.07
    
    
    
    3.62
    
    
    
    2.06
    
    
    
    1.88
    
    
    
    1.87Efficiency ratio (5) (9)
    
    
    172.03
    
    
    
    106.40
    
    
    
    57.42
    
    
    
    49.97
    
    
    
    48.36Return (loss) on average assets (6)
    
    
    (0.93
    )
    
    
    (0.62
    )
    
    
    (3.94
    )
    
    
    0.27
    
    
    
    0.97Return (loss) on average equity (7)
    
    
    (13.51
    )
    
    
    (20.06
    )
    
    
    (63.02
    )
    
    
    3.57
    
    
    
    11.89Asset quality ratios:Nonaccrual loans, restructured loans and loans 90 days
or more past due and still accruing to total loans
    
    
    8.17
    %
    
    
    8.41
    %
    
    
    6.58
    %
    
    
    1.80
    %
    
    
    1.62
    %Nonperforming assets and loans 90 days or more past due
and still accruing to total assets
    
    
    3.96
    
    
    
    4.75
    
    
    
    6.15
    
    
    
    1.43
    
    
    
    1.42Allowance for loan losses to total loans
    
    
    4.83
    
    
    
    3.96
    
    
    
    4.66
    
    
    
    2.41
    
    
    
    1.51Allowance for loan losses to nonaccrual loans,
restructured loans and loans 90 days or more past due
and still accruing
    
    
    59.06
    
    
    
    47.08
    
    
    
    70.72
    
    
    
    134.09
    
    
    
    93.16Net charge-offs (recoveries) to average loans
    
    
    (0.67
    )
    
    
    3.85
    
    
    
    3.81
    
    
    
    0.64
    
    
    
    0.12Capital ratios:Total equity to total assets
    
    
    6.96
    %
    
    
    6.70
    %
    
    
    3.41
    %
    
    
    6.78
    %
    
    
    7.81
    %Total risk-based capital ratio
    
    
    21.37
    
    
    
    17.47
    
    
    
    7.19
    
    
    
    10.01
    
    
    
    10.37Tier 1 risk-based capital ratio
    
    
    15.33
    
    
    
    13.11
    
    
    
    5.03
    
    
    
    8.75
    
    
    
    9.12Leverage capital ratio
    
    
    9.20
    
    
    
    5.63
    
    
    
    4.23
    
    
    
    8.30
    
    
    
    9.01Other data:Number of employees (full-time equivalent)(8)
    
    
    359
    
    
    
    482
    
    
    
    898
    
    
    
    844
    
    
    
    685Number of banking facilities
    
    
    37
    
    
    
    41
    
    
    
    57
    
    
    
    52
    
    
    
    49
 
 (1)
    
    Noninterest income includes pretax gains on investment securities of $0.4 million,
$1.7 million and $1.2 million for the years ended December 31, 2005, 2002 and 2001,
respectively. There were no pretax gains on investment securities in 2004 and 2003. 29




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(2)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets. For the years 2003, 2002 and 2001 the effective tax rate used
to calculate the tax-equivalent basis was 35%. For 2005 and 2004, CIB Marine does not expect
to realize all the tax benefits associated with tax-exempt assets due to substantial losses
incurred in 2005 and 2004 and as of December 31, 2005, no U.S. federal or state loss carryback
potential remains. Accordingly, the 2005 and 2004 interest income on tax-exempt earning assets
has not been adjusted to reflect the tax-equivalent basis. If 2005 and 2004 had been shown on
a tax-equivalent basis of 35%, the net interest margin would have been 2.13% and 2.28%,
respectively.(3)
    
    Net interest spread is the yield on average interest-earning assets less the rate on average
interest-bearing liabilities.(4)
    
    Noninterest income to average assets excludes gains and losses on securities.(5)
    
    The efficiency ratio is noninterest expense divided by the sum of net interest income, on a
tax-equivalent basis, plus noninterest income, excluding gains and losses on securities.(6)
    
    Return (loss) on average assets is net income
(loss) divided by average total assets.(7)
    
    Return (loss) on average equity is net income (loss) divided by average common equity.(8)
    
    Does not include the employees of Canron and MICR which are manufacturing companies held for
disposal. These companies had full-time equivalent employees of 2 in 2005, 37 in 2004, 49 in
2003, 914 in 2002 and 40 in 2001.(9)
    
    Ratio is calculated based on the total income/expense and average assets/liabilities for
continuing and discontinued operations.  30




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CIB MARINE  CONTINUING OPERATIONS ONLY:
 Selected Consolidated Financial DataAt or for the Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands,
except share and per share data)Selected Statements of Operations DataInterest and dividend income
    
    $
    59,849
    
    
    $
    69,979
    
    
    $
    96,663
    
    
    $
    101,868
    
    
    $
    102,344Interest expense
    
    
    34,795
    
    
    
    37,287
    
    
    
    46,578
    
    
    
    51,079
    
    
    
    60,865Net interest income
    
    
    25,054
    
    
    
    32,692
    
    
    
    50,085
    
    
    
    50,789
    
    
    
    41,479Provision for credit losses
    
    
    (8,669
    )
    
    
    17,432
    
    
    
    50,506
    
    
    
    19,074
    
    
    
    6,768Net interest income after provision for credit losses
    
    
    33,723
    
    
    
    15,260
    
    
    
    (421
    )
    
    
    31,715
    
    
    
    34,711Noninterest income(1)
    
    
    2,895
    
    
    
    3,678
    
    
    
    5,113
    
    
    
    5,500
    
    
    
    4,135Noninterest expense
    
    
    50,970
    
    
    
    52,729
    
    
    
    51,348
    
    
    
    44,620
    
    
    
    35,042Income (loss) from continuing operations before income taxes
    
    
    (14,352
    )
    
    
    (33,791
    )
    
    
    (46,656
    )
    
    
    (7,405
    )
    
    
    3,804Income tax expense (benefit)
    
    
    (1,208
    )
    
    
    (5,240
    )
    
    
    1,906
    
    
    
    (4,199
    )
    
    
    1,030Net (loss) income from continuing operations
    
    $
    (13,144
    )
    
    $
    (28,551
    )
    
    $
    (48,562
    )
    
    $
    (3,206
    )
    
    $
    2,774Common Share DataEarnings (loss) per shareBasic-Income (loss) from continuing operations
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )
    
    $
    (0.18
    )
    
    $
    0.16Diluted-income (loss) from continuing operations
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )
    
    $
    (0.18
    )
    
    $
    0.15Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value per share
    
    $
    4.32
    
    
    $
    4.83
    
    
    $
    5.94
    
    
    $
    13.52
    
    
    $
    12.86Weighted average shares outstanding-basic
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,167,379
    
    
    
    17,751,752Weighted average shares outstanding-diluted
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550
    
    
    
    18,547,515
    
    
    
    18,083,013Financial Condition DataTotal assets
    
    $
    1,132,515
    
    
    $
    1,371,043
    
    
    $
    1,704,149
    
    
    $
    1,749,064
    
    
    $
    1,479,700Loans
    
    
    515,544
    
    
    
    746,615
    
    
    
    1,231,412
    
    
    
    1,400,964
    
    
    
    1,173,075Allowance for loan losses
    
    
    (24,882
    )
    
    
    (29,551
    )
    
    
    (54,382
    )
    
    
    (31,756
    )
    
    
    (18,109
    )Securities
    
    
    493,409
    
    
    
    379,024
    
    
    
    353,754
    
    
    
    268,523
    
    
    
    227,828Deposits
    
    
    867,700
    
    
    
    1,178,488
    
    
    
    1,515,574
    
    
    
    1,596,253
    
    
    
    1,238,929Deposits held for sale
    
    
    66,991
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Borrowings, including junior subordinated debentures and
guaranteed trust preferred securities
    
    
    94,108
    
    
    
    87,916
    
    
    
    123,074
    
    
    
    242,403
    
    
    
    162,218Stockholders equity
    
    
    79,182
    
    
    
    92,892
    
    
    
    108,523
    
    
    
    247,563
    
    
    
    229,825Financial Ratios and Other DataPerformance Ratios:Net interest margin (2)
    
    
    2.06
    %
    
    
    2.21
    %
    
    
    3.02
    %
    
    
    3.33
    %
    
    
    3.22
    %Net interest spread (3)
    
    
    1.57
    
    
    
    1.91
    
    
    
    2.70
    
    
    
    2.93
    
    
    
    2.15Noninterest income to average assets (4)
    
    
    0.20
    
    
    
    0.24
    
    
    
    0.29
    
    
    
    0.24
    
    
    
    0.22Noninterest expense to average assets
    
    
    4.04
    
    
    
    3.49
    
    
    
    2.87
    
    
    
    2.78
    
    
    
    2.60Efficiency ratio (5)
    
    
    184.71
    
    
    
    144.98
    
    
    
    90.85
    
    
    
    79.81
    
    
    
    76.96Return (loss) on average assets (6)
    
    
    (0.93
    )
    
    
    (1.15
    )
    
    
    (7.70
    )
    
    
    0.55
    
    
    
    1.91Return (loss) on average equity (7)
    
    
    (13.51
    )
    
    
    (20.06
    )
    
    
    (63.02
    )
    
    
    3.57
    
    
    
    11.89Asset Quality Ratios:Nonaccrual, restructured and 90 days or more past due
and still accruing loans to total loans
    
    
    8.17
    %
    
    
    8.41
    %
    
    
    4.56
    %
    
    
    1.67
    %
    
    
    1.39
    %Nonperforming assets and 90 days or more past due and
still accruing loans to total assets
    
    
    3.98
    
    
    
    4.79
    
    
    
    3.47
    
    
    
    1.50
    
    
    
    1.22Allowance for loan losses to total loans
    
    
    4.83
    
    
    
    3.96
    
    
    
    4.42
    
    
    
    2.27
    
    
    
    1.54Allowance for loan losses to nonaccrual, restructured
and 90 days or more past due and still accruing loans
    
    
    59.06
    
    
    
    47.08
    
    
    
    96.85
    
    
    
    136.12
    
    
    
    110.02Net charge-offs (recoveries) to average loans
    
    
    (0.67
    )
    
    
    4.06
    
    
    
    2.04
    
    
    
    0.42
    
    
    
    0.13Capital Ratios:Total equity to total assets
    
    
    6.99
    %
    
    
    6.78
    %
    
    
    6.37
    %
    
    
    14.15
    %
    
    
    15.53
    %Total risk-based capital ratio
    
    
    21.54
    
    
    
    17.53
    
    
    
    13.38
    
    
    
    19.11
    
    
    
    20.55Tier 1 risk-based capital ratio
    
    
    15.45
    
    
    
    13.16
    
    
    
    10.33
    
    
    
    17.85
    
    
    
    19.30Leverage capital ratio
    
    
    9.20
    
    
    
    9.08
    
    
    
    8.10
    
    
    
    16.20
    
    
    
    18.38Other Data:Number of employees (full-time equivalent)
    
    
    359
    
    
    
    482
    
    
    
    590
    
    
    
    544
    
    
    
    475Number of banking facilities
    
    
    37
    
    
    
    41
    
    
    
    41
    
    
    
    38
    
    
    
    36
 
 (1)
    
    Noninterest income from continuing operations includes pretax gains on investment securities
of $0.4 million, $1.7 million and $1.2 million for the years ended December 31, 2005, 2002 and
2001, respectively. There were no pretax gains on investment securities in 2004 and 2003.(2)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets. For the years 2003, 2002 and 2001 the effective tax rate used
to calculate the tax-equivalent basis was 35%. For 2005 and 2004, CIB Marine does not expect
to realize all the tax benefits associated with tax-exempt assets due to substantial losses
incurred in 2005 and 2004 and as of December 31, 2005 no U.S. federal or state loss carryback potential remains.
Accordingly, the 2005 and 2004 interest income on tax-exempt earning assets has not been
adjusted to reflect the tax-equivalent basis. If 2005 and 2004 had been shown on a
tax-equivalent basis of 35%, the net interest margin would have been 2.13% and 2.29%,
respectively.(3)
    
    Net interest spread is the yield on average interest-earning assets less the rate on average
interest-bearing liabilities.(4)
    
    Noninterest income to average assets excludes gains and losses on securities.(5)
    
    The efficiency ratio is noninterest expense divided by the sum of net interest income, on a
tax-equivalent basis, plus noninterest income, excluding gains and losses on securities.(6)
    
    Return (loss) on average assets is net income (loss) divided by average total assets.(7)
    
    Return (loss) on average equity is net income (loss) divided by average common equity. 31




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES
   Allowance for Loan Losses
  Accounting by Creditors for Impairment
of a Loan, Accounting by Creditors for Impairment of a Loan Income Recognition
and Disclosures. Accounting for Contingencies
   Other Investments
  32




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##### Table of Contents



Assets of Companies Held for Sale or Disposal
  Income Taxes
    INTRODUCTION
  33




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##### Table of Contents



OVERVIEW
   RESULTS OF OPERATIONS
  Net Income
   Net Interest Income
  34




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##### Table of Contents



35




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##### Table of Contents



TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)AssetsInterest-earning assets (TE):Securities:Taxable
    
    $
    476,249
    
    
    $
    16,545
    
    
    
    3.47
    %
    
    $
    673,100
    
    
    $
    15,535
    
    
    
    2.31
    %
    
    $
    509,944
    
    
    $
    13,622
    
    
    
    2.67
    %Tax-exempt (1)
    
    
    10,551
    
    
    
    509
    
    
    
    4.82
    
    
    
    43,022
    
    
    
    1,660
    
    
    
    3.86
    
    
    
    61,646
    
    
    
    3,411
    
    
    
    5.53Total securities
    
    
    486,800
    
    
    
    17,054
    
    
    
    3.50
    
    
    
    716,122
    
    
    
    17,195
    
    
    
    2.40
    
    
    
    571,590
    
    
    
    17,033
    
    
    
    2.98Loans (2)(3):Commercial
    
    
    114,331
    
    
    
    6,771
    
    
    
    5.92
    
    
    
    528,242
    
    
    
    27,251
    
    
    
    5.16
    
    
    
    764,251
    
    
    
    46,076
    
    
    
    6.03Commercial real estate
    
    
    457,125
    
    
    
    30,146
    
    
    
    6.59
    
    
    
    1,289,930
    
    
    
    77,033
    
    
    
    5.97
    
    
    
    1,834,966
    
    
    
    118,272
    
    
    
    6.45Consumer
    
    
    23,258
    
    
    
    1,500
    
    
    
    6.45
    
    
    
    37,409
    
    
    
    2,240
    
    
    
    5.99
    
    
    
    52,463
    
    
    
    3,295
    
    
    
    6.28Total loans
    
    
    594,714
    
    
    
    38,417
    
    
    
    6.46
    
    
    
    1,855,581
    
    
    
    106,524
    
    
    
    5.74
    
    
    
    2,651,680
    
    
    
    167,643
    
    
    
    6.32Federal funds sold
    
    
    133,585
    
    
    
    4,296
    
    
    
    3.22
    
    
    
    126,717
    
    
    
    1,891
    
    
    
    1.49
    
    
    
    35,775
    
    
    
    466
    
    
    
    1.30Loans held for sale
    
    
    1,776
    
    
    
    111
    
    
    
    6.25
    
    
    
    24,259
    
    
    
    1,484
    
    
    
    6.12
    
    
    
    117,962
    
    
    
    6,281
    
    
    
    5.32Total interest-earning assets (1)
    
    
    1,216,875
    
    
    
    59,878
    
    
    
    4.92
    
    
    
    2,722,679
    
    
    
    127,094
    
    
    
    4.67
    
    
    
    3,377,007
    
    
    
    191,423
    
    
    
    5.67Noninterest-earning assets:Cash and due from banks
    
    
    28,255
    
    
    
    
    
    
    
    
    
    
    
    48,120
    
    
    
    
    
    
    
    
    
    
    
    51,078Premises and equipment
    
    
    14,910
    
    
    
    
    
    
    
    
    
    
    
    26,993
    
    
    
    
    
    
    
    
    
    
    
    29,343Allowance for loan losses
    
    
    (25,537
    )
    
    
    
    
    
    
    
    
    
    
    (100,286
    )
    
    
    
    
    
    
    
    
    
    
    (94,243
    )Receivables from sale of stock
    
    
    (739
    )
    
    
    
    
    
    
    
    
    
    
    (3,775
    )
    
    
    
    
    
    
    
    
    
    
    (7,242
    )Accrued interest receivable and other
assets
    
    
    26,741
    
    
    
    
    
    
    
    
    
    
    
    89,312
    
    
    
    
    
    
    
    
    
    
    
    137,012Total noninterest-earning assets
    
    
    43,630
    
    
    
    
    
    
    
    
    
    
    
    60,364
    
    
    
    
    
    
    
    
    
    
    
    115,948Total assets
    
    $
    1,260,505
    
    
    
    
    
    
    
    
    
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955Liabilities and Stockholders EquityInterest-bearing liabilities:Deposits:Interest-bearing demand deposits
    
    $
    55,764
    
    
    $
    628
    
    
    
    1.13
    %
    
    $
    85,979
    
    
    $
    994
    
    
    
    1.16
    %
    
    $
    70,731
    
    
    $
    742
    
    
    
    1.05
    %Money market
    
    
    210,366
    
    
    
    5,187
    
    
    
    2.47
    
    
    
    343,764
    
    
    
    4,981
    
    
    
    1.45
    
    
    
    427,919
    
    
    
    6,993
    
    
    
    1.63Other savings deposits
    
    
    35,382
    
    
    
    409
    
    
    
    1.16
    
    
    
    192,847
    
    
    
    2,672
    
    
    
    1.39
    
    
    
    245,781
    
    
    
    4,326
    
    
    
    1.76Time deposits (4)
    
    
    641,274
    
    
    
    20,773
    
    
    
    3.24
    
    
    
    1,674,168
    
    
    
    48,973
    
    
    
    2.93
    
    
    
    1,953,816
    
    
    
    64,316
    
    
    
    3.29Total interest-bearing deposits
    
    
    942,786
    
    
    
    26,997
    
    
    
    2.86
    
    
    
    2,296,758
    
    
    
    57,620
    
    
    
    2.51
    
    
    
    2,698,247
    
    
    
    76,377
    
    
    
    2.83Borrowings-short-term
    
    
    25,939
    
    
    
    823
    
    
    
    3.17
    
    
    
    61,317
    
    
    
    2,364
    
    
    
    3.86
    
    
    
    212,363
    
    
    
    3,449
    
    
    
    1.62Borrowings-long-term (4)
    
    
    7,250
    
    
    
    367
    
    
    
    5.06
    
    
    
    37,447
    
    
    
    882
    
    
    
    2.36
    
    
    
    46,771
    
    
    
    1,161
    
    
    
    2.48Junior subordinated debentures and
guaranteed trust preferred securities
    
    
    61,857
    
    
    
    6,636
    
    
    
    10.73
    
    
    
    61,857
    
    
    
    5,710
    
    
    
    9.23
    
    
    
    60,005
    
    
    
    5,198
    
    
    
    8.66Total borrowed funds
    
    
    95,046
    
    
    
    7,826
    
    
    
    8.23
    
    
    
    160,621
    
    
    
    8,956
    
    
    
    5.58
    
    
    
    319,139
    
    
    
    9,808
    
    
    
    3.07Total interest-bearing liabilities
    
    
    1,037,832
    
    
    
    34,823
    
    
    
    3.36
    
    
    
    2,457,379
    
    
    
    66,576
    
    
    
    2.71
    
    
    
    3,017,386
    
    
    
    86,185
    
    
    
    2.86Noninterest-bearing Liabilities:Noninterest-bearing demand deposits
    
    
    112,470
    
    
    
    
    
    
    
    
    
    
    
    185,606
    
    
    
    
    
    
    
    
    
    
    
    206,815Accrued interest and other liabilities
    
    
    23,872
    
    
    
    
    
    
    
    
    
    
    
    53,588
    
    
    
    
    
    
    
    
    
    
    
    50,329Total noninterest-bearing liabilities
    
    
    136,342
    
    
    
    
    
    
    
    
    
    
    
    239,194
    
    
    
    
    
    
    
    
    
    
    
    257,144Stockholders equity
    
    
    86,331
    
    
    
    
    
    
    
    
    
    
    
    86,470
    
    
    
    
    
    
    
    
    
    
    
    218,425Total liabilities and stockholders equity
    
    $
    1,260,505
    
    
    
    
    
    
    
    
    
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955Net interest income and net interest
spread (1)(5)
    
    
    
    
    
    $
    25,055
    
    
    
    1.56
    %
    
    
    
    
    
    $
    60,518
    
    
    
    1.96
    %
    
    
    
    
    
    $
    105,238
    
    
    
    2.81
    %Net interest-earning assets
    
    $
    179,043
    
    
    
    
    
    
    
    
    
    
    $
    265,300
    
    
    
    
    
    
    
    
    
    
    $
    359,621Net interest margin (1)(6)
    
    
    
    
    
    
    
    
    
    
    2.06
    %
    
    
    
    
    
    
    
    
    
    
    2.22
    %
    
    
    
    
    
    
    
    
    
    
    3.12
    %Ratio of average interest-earning assets
to liabilities
    
    
    1.17
    
    
    
    
    
    
    
    
    
    
    
    1.11
    
    
    
    
    
    
    
    
    
    
    
    1.12
 
 (1)
    
    Tax-equivalent basis of 35% for 2003. For 2005 and 2004, CIB Marine may not realize all of
the tax benefits associated with tax-exempt assets due to substantial losses incurred in 2005
and 2004, and as of December 31, 2005, no U.S. federal or state loss carryback potential
remains. Accordingly, 2005 and 2004 are not presented on a tax-equivalent basis. If 2005 and
2004 had been shown on a tax-equivalent basis of 35%, the net interest margin would have been
2.13% and 2.28%, respectively.(2)
    
    Loan balance totals include nonaccrual loans.(3)
    
    Interest earned on loans includes amortized loan fees of $0.9 million, $2.9 million, and
$10.0 million for the years ended December 31, 2005, 2004 and 2003, respectively.(4)
    
    Interest amounts include the effects of derivatives entered into for interest rate risk
management and accounted for as fair value hedges.(5)
    
    Net interest rate spread is the difference between the average rates on interest-earning
assets and interest-bearing liabilities.(6)
    
    Net interest margin is the ratio of net interest income to average interest-earning assets. 36




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##### Table of Contents



Reconciliation of net interest income
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Interest income reported in margin table(1)
    
    $
    59,878
    
    
    $
    127,094
    
    
    $
    191,423Tax-equivalent adjustment-tax-exempt securities
    
    
    N/A
    
    
    
    N/A
    
    
    
    (651
    )Tax-equivalent adjustment-tax-exempt loans
    
    
    N/A
    
    
    
    N/A
    
    
    
    (672
    )Tax-equivalent adjustment-tax-exempt securities-discontinued
    
    
    N/A
    
    
    
    N/A
    
    
    
    (543
    )Interest income included in discontinued operations
    
    
    (29
    )
    
    
    (57,115
    )
    
    
    (92,894
    )Interest income as reported in consolidated statements of operations
    
    
    59,849
    
    
    
    69,979
    
    
    
    96,663Interest expense reported in margin table
    
    
    34,823
    
    
    
    66,576
    
    
    
    86,185Interest expense included in discontinued operations
    
    
    (28
    )
    
    
    (29,289
    )
    
    
    (39,607
    )Interest expense as reported in consolidated statements of operations
    
    
    34,795
    
    
    
    37,287
    
    
    
    46,578Net interest income reported in margin table(1)
    
    
    25,055
    
    
    
    60,518
    
    
    
    105,238Tax-equivalent adjustment
    
    
    N/A
    
    
    
    N/A
    
    
    
    (1,866
    )Net discontinued operations
    
    
    (1
    )
    
    
    (27,826
    )
    
    
    (53,287
    )Net interest income from continuing operations, net of
adjustments as reported in consolidated statement of operations
    
    $
    25,054
    
    
    $
    32,692
    
    
    $
    50,085
 
 (1)
    
    Tax-equivalent basis of 35% for 2003. In the future, CIB Marine may not realize all of the
tax benefits associated with tax-exempt assets due to substantial losses. Accordingly, 2005
and 2004 are not presented on a tax-equivalent basis. 37




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Cost(Dollars in thousands)AssetsInterest-earning assets (TE):Securities:Taxable
    
    $
    476,249
    
    
    $
    16,545
    
    
    
    3.47
    %
    
    $
    361,455
    
    
    $
    9,062
    
    
    
    2.51
    %
    
    $
    276,535
    
    
    $
    8,022
    
    
    
    2.90
    %Tax-exempt (1)
    
    
    10,551
    
    
    
    509
    
    
    
    4.82
    
    
    
    20,060
    
    
    
    866
    
    
    
    4.32
    
    
    
    33,272
    
    
    
    1,859
    
    
    
    5.59Total securities
    
    
    486,800
    
    
    
    17,054
    
    
    
    3.50
    
    
    
    381,515
    
    
    
    9,928
    
    
    
    2.60
    
    
    
    309,807
    
    
    
    9,881
    
    
    
    3.19Loans (2)(3):Commercial
    
    
    114,331
    
    
    
    6,769
    
    
    
    5.92
    
    
    
    295,138
    
    
    
    15,022
    
    
    
    5.09
    
    
    
    444,560
    
    
    
    26,800
    
    
    
    6.03Commercial real estate
    
    
    457,125
    
    
    
    30,147
    
    
    
    6.59
    
    
    
    696,582
    
    
    
    41,829
    
    
    
    6.00
    
    
    
    884,284
    
    
    
    58,619
    
    
    
    6.63Consumer
    
    
    23,258
    
    
    
    1,500
    
    
    
    6.45
    
    
    
    31,372
    
    
    
    1,860
    
    
    
    5.93
    
    
    
    38,058
    
    
    
    2,395
    
    
    
    6.29Total loans
    
    
    594,714
    
    
    
    38,416
    
    
    
    6.46
    
    
    
    1,023,092
    
    
    
    58,711
    
    
    
    5.74
    
    
    
    1,366,902
    
    
    
    87,814
    
    
    
    6.42Federal funds sold
    
    
    133,585
    
    
    
    4,296
    
    
    
    3.22
    
    
    
    70,776
    
    
    
    1,127
    
    
    
    1.59
    
    
    
    23,688
    
    
    
    291
    
    
    
    1.23Loans held for sale
    
    
    1,470
    
    
    
    83
    
    
    
    5.65
    
    
    
    1,612
    
    
    
    213
    
    
    
    13.21
    
    
    
    
    
    
    
    
    
    
    
    Total interest-earning assets (1)
    
    
    1,216,569
    
    
    
    59,849
    
    
    
    4.92
    
    
    
    1,476,995
    
    
    
    69,979
    
    
    
    4.74
    
    
    
    1,700,397
    
    
    
    97,986
    
    
    
    5.76Noninterest-earning assets:Cash and due from banks
    
    
    28,255
    
    
    
    
    
    
    
    
    
    
    
    32,605
    
    
    
    
    
    
    
    
    
    
    
    32,860Premises and equipment (8)
    
    
    14,910
    
    
    
    
    
    
    
    
    
    
    
    15,910
    
    
    
    
    
    
    
    
    
    
    
    17,191Allowance for loan losses
    
    
    (25,537
    )
    
    
    
    
    
    
    
    
    
    
    (52,237
    )
    
    
    
    
    
    
    
    
    
    
    (45,222
    )Receivables from sale of stock
    
    
    (739
    )
    
    
    
    
    
    
    
    
    
    
    (2,157
    )
    
    
    
    
    
    
    
    
    
    
    (2,199
    )Accrued interest receivable and other
assets
    
    
    26,741
    
    
    
    
    
    
    
    
    
    
    
    39,086
    
    
    
    
    
    
    
    
    
    
    
    85,081Total noninterest-earning assets
    
    
    43,630
    
    
    
    
    
    
    
    
    
    
    
    33,207
    
    
    
    
    
    
    
    
    
    
    
    87,711Total assets of continuing operations
    
    
    1,260,199
    
    
    
    
    
    
    
    
    
    
    
    1,510,202
    
    
    
    
    
    
    
    
    
    
    
    1,788,108Assets of companies held for disposal(7)
    
    
    306
    
    
    
    
    
    
    
    
    
    
    
    1,272,841
    
    
    
    
    
    
    
    
    
    
    
    1,704,847Total assets
    
    $
    1,260,505
    
    
    
    
    
    
    
    
    
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955Liabilities and Stockholders EquityInterest-bearing liabilities:Deposits (8):Interest-bearing demand deposits
    
    $
    55,764
    
    
    $
    628
    
    
    
    1.13
    %
    
    $
    63,291
    
    
    $
    754
    
    
    
    1.19
    %
    
    $
    50,984
    
    
    $
    530
    
    
    
    1.04
    %Money market
    
    
    210,366
    
    
    
    5,187
    
    
    
    2.47
    
    
    
    293,044
    
    
    
    4,326
    
    
    
    1.48
    
    
    
    368,219
    
    
    
    6,273
    
    
    
    1.70Other savings deposits
    
    
    35,382
    
    
    
    409
    
    
    
    1.16
    
    
    
    40,611
    
    
    
    501
    
    
    
    1.23
    
    
    
    28,161
    
    
    
    364
    
    
    
    1.29Time deposits (4)
    
    
    641,274
    
    
    
    20,773
    
    
    
    3.24
    
    
    
    814,691
    
    
    
    24,154
    
    
    
    2.96
    
    
    
    952,320
    
    
    
    32,289
    
    
    
    3.39Total interest-bearing deposits
    
    
    942,786
    
    
    
    26,997
    
    
    
    2.86
    
    
    
    1,211,637
    
    
    
    29,735
    
    
    
    2.45
    
    
    
    1,399,684
    
    
    
    39,456
    
    
    
    2.82Borrowings-short-term
    
    
    25,633
    
    
    
    795
    
    
    
    3.10
    
    
    
    32,065
    
    
    
    1,325
    
    
    
    4.13
    
    
    
    45,165
    
    
    
    1,116
    
    
    
    2.47Borrowings-long-term (4)
    
    
    7,250
    
    
    
    367
    
    
    
    5.06
    
    
    
    10,060
    
    
    
    517
    
    
    
    5.14
    
    
    
    15,750
    
    
    
    808
    
    
    
    5.13Junior subordinated debentures and
guaranteed trust preferred securities
    
    
    61,857
    
    
    
    6,636
    
    
    
    10.73
    
    
    
    61,857
    
    
    
    5,710
    
    
    
    9.23
    
    
    
    60,005
    
    
    
    5,198
    
    
    
    8.66Total borrowed funds
    
    
    94,740
    
    
    
    7,798
    
    
    
    8.23
    
    
    
    103,982
    
    
    
    7,552
    
    
    
    7.26
    
    
    
    120,920
    
    
    
    7,122
    
    
    
    5.89Total interest-bearing liabilities
    
    
    1,037,526
    
    
    
    34,795
    
    
    
    3.35
    
    
    
    1,315,619
    
    
    
    37,287
    
    
    
    2.83
    
    
    
    1,520,604
    
    
    
    46,578
    
    
    
    3.06Noninterest-bearing liabilities:Noninterest-bearing demand deposits
    
    
    112,470
    
    
    
    
    
    
    
    
    
    
    
    124,108
    
    
    
    
    
    
    
    
    
    
    
    130,918Accrued interest and other liabilities
    
    
    23,872
    
    
    
    
    
    
    
    
    
    
    
    25,495
    
    
    
    
    
    
    
    
    
    
    
    49,255Total noninterest-bearing liabilities
    
    
    136,342
    
    
    
    
    
    
    
    
    
    
    
    149,603
    
    
    
    
    
    
    
    
    
    
    
    180,173Liabilities of continuing operations
    
    
    1,173,868
    
    
    
    
    
    
    
    
    
    
    
    1,465,222
    
    
    
    
    
    
    
    
    
    
    
    1,700,777Liabilities of companies held for disposal
    
    
    306
    
    
    
    
    
    
    
    
    
    
    
    1,231,351
    
    
    
    
    
    
    
    
    
    
    
    1,573,753Total liabilities
    
    $
    1,174,174
    
    
    
    
    
    
    
    
    
    
    $
    2,696,573
    
    
    
    
    
    
    
    
    
    
    $
    3,274,530Stockholders equity
    
    
    86,331
    
    
    
    
    
    
    
    
    
    
    
    86,470
    
    
    
    
    
    
    
    
    
    
    
    218,425Total liabilities and stockholders equity
    
    $
    1,260,505
    
    
    
    
    
    
    
    
    
    
    $
    2,783,043
    
    
    
    
    
    
    
    
    
    
    $
    3,492,955Net interest income and net interest
spread (1)(5)
    
    
    
    
    
    $
    25,054
    
    
    
    1.57
    %
    
    
    
    
    
    $
    32,692
    
    
    
    1.91
    %
    
    
    
    
    
    $
    51,408
    
    
    
    2.70
    %Net interest-earning assets
    
    $
    179,043
    
    
    
    
    
    
    
    
    
    
    $
    161,376
    
    
    
    
    
    
    
    
    
    
    $
    179,793Net interest margin (1)(6)
    
    
    
    
    
    
    
    
    
    
    2.06
    %
    
    
    
    
    
    
    
    
    
    
    2.21
    %
    
    
    
    
    
    
    
    
    
    
    3.02
    %Ratio of average interest-earning assets
to average interest-bearing liabilities
    
    
    1.17
    
    
    
    
    
    
    
    
    
    
    
    1.12
    
    
    
    
    
    
    
    
    
    
    
    1.12
 
 (1)
    
    Tax-equivalent basis of 35% for 2003. In the future, CIB Marine may not realize all of the
tax benefits associated with tax-exempt assets due to substantial losses, and as of December
31, 2005 no U.S. federal or state loss carryback potential remains. Accordingly, 2005 and 2004
are not presented on a tax-equivalent basis. If 2005 and 2004 had been shown on a
tax-equivalent basis of 35%, the net interest margin would have been 2.13% and 2.29%,
respectively.(2)
    
    Loan balance totals include nonaccrual loans.(3)
    
    Interest earned on loans includes amortized loan fees of $0.9 million, $1.5 million, and $4.7
million for the years ended December 31, 2005, 2004 and 2003, respectively.(4)
    
    Interest amounts include the effects of derivatives entered into for interest rate risk
management and accounted for as fair value hedges.(5)
    
    Net interest rate spread is the difference between the average rates on interest-earning
assets and interest-bearing liabilities.(6)
    
    Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to
average interest-earning assets.(7)
    
    Excludes average loans of $1.6 million and $5.0 million for 2004 and 2003, respectively, held
by CIB  Chicago, which on a consolidated basis are classified as receivables from sale of
stock. See Item 8, Note 14  Stockholders Equity of this form 10-K for information on
receivables from sale of stock.(8)
    
    Includes fixed assets and deposits of branches held for sale or sold during 2006.  38




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##### Table of Contents



TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31, 2005 Compared to
    
    
    Year Ended December 31, 2004 Compared toYear Ended December 31, 2004 (2)
    
    
    Year Ended December 31, 2003 (2)Volume
    
    
    Rate
    
    
    Total
    
    
    % Change
    
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    % Change(Dollars in thousands)Interest Income (1)Securities-taxable
    
    $
    (5,386
    )
    
    $
    6,396
    
    
    $
    1,010
    
    
    
    6.50
    %
    
    $
    3,942
    
    
    $
    (2,029
    )
    
    $
    1,913
    
    
    
    14.04
    %Securities-tax-exempt
    
    
    (1,487
    )
    
    
    336
    
    
    
    (1,151
    )
    
    
    (69.34
    )
    
    
    (875
    )
    
    
    (876
    )
    
    
    (1,751
    )
    
    
    (51.33
    )Total securities
    
    
    (6,873
    )
    
    
    6,732
    
    
    
    (141
    )
    
    
    (0.82
    )
    
    
    3,067
    
    
    
    (2,905
    )
    
    
    162
    
    
    
    0.95Commercial
    
    
    (24,012
    )
    
    
    3,532
    
    
    
    (20,480
    )
    
    
    (75.15
    )
    
    
    (12,831
    )
    
    
    (5,994
    )
    
    
    (18,825
    )
    
    
    (40.86
    )Commercial real estate
    
    
    (54,200
    )
    
    
    7,313
    
    
    
    (46,887
    )
    
    
    (60.87
    )
    
    
    (33,061
    )
    
    
    (8,178
    )
    
    
    (41,239
    )
    
    
    (34.87
    )Consumer
    
    
    (902
    )
    
    
    162
    
    
    
    (740
    )
    
    
    (33.04
    )
    
    
    (907
    )
    
    
    (148
    )
    
    
    (1,055
    )
    
    
    (32.02
    )Total loans (including fees)
    
    
    (79,114
    )
    
    
    11,007
    
    
    
    (68,107
    )
    
    
    (63.94
    )
    
    
    (46,799
    )
    
    
    (14,320
    )
    
    
    (61,119
    )
    
    
    (36.46
    )Federal funds sold
    
    
    108
    
    
    
    2,297
    
    
    
    2,405
    
    
    
    127.18
    
    
    
    1,348
    
    
    
    77
    
    
    
    1,425
    
    
    
    305.79Loans held for sale
    
    
    (1,404
    )
    
    
    31
    
    
    
    (1,373
    )
    
    
    (92.52
    )
    
    
    (5,614
    )
    
    
    817
    
    
    
    (4,797
    )
    
    
    (76.37
    )Total interest income (1)
    
    
    (87,283
    )
    
    
    20,067
    
    
    
    (67,216
    )
    
    
    (52.89
    )
    
    
    (47,998
    )
    
    
    (16,331
    )
    
    
    (64,329
    )
    
    
    (33.61
    )Interest ExpenseInterest-bearing demand deposits
    
    
    (341
    )
    
    
    (25
    )
    
    
    (366
    )
    
    
    (36.82
    )
    
    
    171
    
    
    
    81
    
    
    
    252
    
    
    
    33.96Money market
    
    
    (2,416
    )
    
    
    2,622
    
    
    
    206
    
    
    
    4.14
    
    
    
    (1,276
    )
    
    
    (736
    )
    
    
    (2,012
    )
    
    
    (28.77
    )Other savings deposits
    
    
    (1,882
    )
    
    
    (381
    )
    
    
    (2,263
    )
    
    
    (84.69
    )
    
    
    (832
    )
    
    
    (822
    )
    
    
    (1,654
    )
    
    
    (38.23
    )Time deposits
    
    
    (32,978
    )
    
    
    4,778
    
    
    
    (28,200
    )
    
    
    (57.58
    )
    
    
    (8,628
    )
    
    
    (6,715
    )
    
    
    (15,343
    )
    
    
    (23.86
    )Total deposits
    
    
    (37,617
    )
    
    
    6,994
    
    
    
    (30,623
    )
    
    
    (53.15
    )
    
    
    (10,565
    )
    
    
    (8,192
    )
    
    
    (18,757
    )
    
    
    (24.56
    )Borrowings-short-term
    
    
    (1,178
    )
    
    
    (363
    )
    
    
    (1,541
    )
    
    
    (65.19
    )
    
    
    (3,602
    )
    
    
    2,517
    
    
    
    (1,085
    )
    
    
    (31.46
    )Borrowings-long-term
    
    
    (1,048
    )
    
    
    533
    
    
    
    (515
    )
    
    
    (58.39
    )
    
    
    (222
    )
    
    
    (57
    )
    
    
    (279
    )
    
    
    (24.03
    )Junior subordinated debentures
and guaranteed trust preferred
securities
    
    
    
    
    
    
    926
    
    
    
    926
    
    
    
    16.22
    
    
    
    163
    
    
    
    349
    
    
    
    512
    
    
    
    9.85Total borrowed funds
    
    
    (2,226
    )
    
    
    1,096
    
    
    
    (1,130
    )
    
    
    (12.62
    )
    
    
    (3,661
    )
    
    
    2,809
    
    
    
    (852
    )
    
    
    (8.69
    )Total interest expense
    
    
    (39,843
    )
    
    
    8,090
    
    
    
    (31,753
    )
    
    
    (47.69
    )
    
    
    (14,226
    )
    
    
    (5,383
    )
    
    
    (19,609
    )
    
    
    (22.75
    )Net interest income (1)
    
    $
    (47,440
    )
    
    $
    11,977
    
    
    $
    (35,463
    )
    
    
    (58.60
    )%
    
    $
    (33,772
    )
    
    $
    (10,948
    )
    
    $
    (44,720
    )
    
    
    (42.49
    )%
 
 (1)
    
    Tax-equivalent basis of 35% for 2003. In the future, CIB Marine may not realize all of
the tax benefits associated with tax-exempt assets due to substantial losses, and as of
December 31, 2005, no U.S. federal or state loss carryback potential remains. Accordingly,
2005 and 2004 are not presented on a tax-equivalent basis.(2)
    
    Variances which were not specifically attributable to volume or rate have been
allocated proportionally between volume and rate using absolute values as a basis for the
allocation. Nonaccruing loans were included in the average balances used in determining
yields. CIB MARINE  CONTINUING OPERATIONS ONLY:
 Year Ended December 31, 2005 Compared to
    
    
    Year Ended December 31, 2004 Compared toYear Ended December 31, 2004 (2)
    
    
    Year Ended December 31, 2003 (2)Volume
    
    
    Rate
    
    
    Total
    
    
    % Change
    
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    % Change(Dollars in thousands)Interest Income (1)Securities-taxable
    
    $
    3,379
    
    
    $
    4,104
    
    
    $
    7,483
    
    
    
    82.58
    %
    
    $
    2,231
    
    
    $
    (1,191
    )
    
    $
    1,040
    
    
    
    12.96
    %Securities-tax-exempt
    
    
    (450
    )
    
    
    93
    
    
    
    (357
    )
    
    
    (41.22
    )
    
    
    (631
    )
    
    
    (362
    )
    
    
    (993
    )
    
    
    (53.42
    )Total securities
    
    
    2,929
    
    
    
    4,197
    
    
    
    7,126
    
    
    
    71.78
    
    
    
    1,600
    
    
    
    (1,553
    )
    
    
    47
    
    
    
    0.48Commercial
    
    
    (10,390
    )
    
    
    2,138
    
    
    
    (8,252
    )
    
    
    (54.93
    )
    
    
    (8,049
    )
    
    
    (3,729
    )
    
    
    (11,778
    )
    
    
    (43.95
    )Commercial real estate
    
    
    (15,477
    )
    
    
    3,794
    
    
    
    (11,683
    )
    
    
    (27.93
    )
    
    
    (11,632
    )
    
    
    (5,158
    )
    
    
    (16,790
    )
    
    
    (28.64
    )Consumer
    
    
    (513
    )
    
    
    153
    
    
    
    (360
    )
    
    
    (19.35
    )
    
    
    (402
    )
    
    
    (133
    )
    
    
    (535
    )
    
    
    (22.34
    )Total loans (including fees)
    
    
    (26,380
    )
    
    
    6,085
    
    
    
    (20,295
    )
    
    
    (34.57
    )
    
    
    (20,083
    )
    
    
    (9,020
    )
    
    
    (29,103
    )
    
    
    (33.14
    )Federal funds sold
    
    
    1,475
    
    
    
    1,694
    
    
    
    3,169
    
    
    
    281.19
    
    
    
    728
    
    
    
    108
    
    
    
    836
    
    
    
    287.29Loans held for sale
    
    
    (18
    )
    
    
    (112
    )
    
    
    (130
    )
    
    
    (61.03
    )
    
    
    213
    
    
    
    
    
    
    
    213
    
    
    
    Total interest income (1)
    
    
    (21,994
    )
    
    
    11,864
    
    
    
    (10,130
    )
    
    
    (14.48
    )
    
    
    (17,542
    )
    
    
    (10,465
    )
    
    
    (28,007
    )
    
    
    (28.58
    )Interest ExpenseInterest-bearing demand deposits
    
    
    (87
    )
    
    
    (39
    )
    
    
    (126
    )
    
    
    (16.71
    )
    
    
    140
    
    
    
    84
    
    
    
    224
    
    
    
    42.26Money market
    
    
    (1,463
    )
    
    
    2,324
    
    
    
    861
    
    
    
    19.90
    
    
    
    (1,178
    )
    
    
    (769
    )
    
    
    (1,947
    )
    
    
    (31.04
    )Other savings deposits
    
    
    (61
    )
    
    
    (31
    )
    
    
    (92
    )
    
    
    (18.36
    )
    
    
    154
    
    
    
    (17
    )
    
    
    137
    
    
    
    37.64Time deposits
    
    
    (5,474
    )
    
    
    2,093
    
    
    
    (3,381
    )
    
    
    (14.00
    )
    
    
    (4,352
    )
    
    
    (3,783
    )
    
    
    (8,135
    )
    
    
    (25.19
    )Total deposits
    
    
    (7,085
    )
    
    
    4,347
    
    
    
    (2,738
    )
    
    
    (9.21
    )
    
    
    (5,236
    )
    
    
    (4,485
    )
    
    
    (9,721
    )
    
    
    (24.64
    )Borrowings-short-term
    
    
    (235
    )
    
    
    (295
    )
    
    
    (530
    )
    
    
    (40.00
    )
    
    
    (389
    )
    
    
    598
    
    
    
    209
    
    
    
    18.73Borrowings-long-term
    
    
    (142
    )
    
    
    (8
    )
    
    
    (150
    )
    
    
    (29.01
    )
    
    
    (292
    )
    
    
    1
    
    
    
    (291
    )
    
    
    (36.01
    )Junior subordinated debentures
and guaranteed trust preferred
securities
    
    
    
    
    
    
    926
    
    
    
    926
    
    
    
    16.22
    
    
    
    
    
    
    
    512
    
    
    
    512
    
    
    
    9.85Total borrowed funds
    
    
    (377
    )
    
    
    623
    
    
    
    246
    
    
    
    3.26
    
    
    
    (681
    )
    
    
    1,111
    
    
    
    430
    
    
    
    6.04Total interest expense
    
    
    (7,462
    )
    
    
    4,970
    
    
    
    (2,492
    )
    
    
    (6.68
    )
    
    
    (5,917
    )
    
    
    (3,374
    )
    
    
    (9,291
    )
    
    
    (19.95
    )Net interest income (1)
    
    $
    (14,532
    )
    
    $
    6,894
    
    
    $
    (7,638
    )
    
    
    (23.36
    )%
    
    $
    (11,625
    )
    
    $
    (7,091
    )
    
    $
    (18,716
    )
    
    
    (36.41
    )%
 
 (1)
    
    Tax-equivalent basis of 35% for 2003. In the future, CIB Marine may not realize all of the
tax benefits associated with tax-exempt assets due to substantial losses, and as of December
31, 2005, no U.S. federal or state loss carryback potential remains. Accordingly, 2005 and
2004 are not presented on a tax-equivalent basis.(2)
    
    Variances which were not specifically attributable to volume or rate have been allocated
proportionally between volume and rate using absolute values as a basis for the allocation.
Nonaccruing loans were included in the average balances used in
determining yields. 39




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##### Table of Contents



Interest Income
   Interest Expense
   Net Interest Margin/Net Interest Spread
   Provision for Credit Losses
  40




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##### Table of Contents



Noninterest Income
   Noninterest Expense
  
    
    Compensation and employee benefits expense is the largest component of noninterest
expense and represented 50.4% of total noninterest expense for 2005 compared to 54.6%
for 2004. Compensation and employee benefits expense decreased $3.1 million or 10.7%
from $28.8 million in 2004 to $25.7 million in 2005. The decrease in compensation and
employee benefit expense is primarily due to an overall cost savings program initiated
by CIB Marine in the second half of 2004. Additionally, CIB Marine closed three branches
and sold one branch during 2005. The cost savings program included a reduction in force
program, restrictions on salaries and hiring, tight expense controls and some executive
management salary reductions. The total number of full-time equivalent employees of
companies included in continuing operations, decreased from 482 at December 31, 2004 to
359 at December 31, 2005. These reductions were partially offset by $0.8 million of
severance expense in 2005 as compared to $0.1 million in 2004 and a $0.3 million
increase in CIB Marines total contribution to its employee 401(k) plan. During the
first quarter of 2004, CIB Marine suspended the matching contribution to the 401(k)
plan. In 2005, CIB Marine reinstated and increased the matching contribution to the
401(k) plan.
    
    Professional services decreased $2.1 million in 2005 as compared to 2004. The
decrease was primarily due to expenses incurred in 2004 related to the special
investigation and strategic planning, partially offset by an increase in expenses during
2005 related to legal actions filed against CIB Marine. See Item 3  Legal Proceedings
of this Form 10-K for further discussion of these legal actions. In October 2003, a
Special Review Committee of the Board of Directors of CIB Marine was established to
evaluate credit and other issues which had come to the attention of the Board of
Directors. The committee engaged the assistance of outside advisors, including
independent legal counsel and an external loan review firm, to conduct an independent
investigation of these developments. The investigation was completed in the fourth
quarter of 2004. Costs associated with this investigation were approximately $2.1
million in 2004. See Item 1 of this Form 10-K for further information on this
investigation. Additionally, in early 2004, the Board of Directors also engaged a
consulting firm to investigate various strategic alternatives to strengthen the capital
position of the company. Professional services costs related to this process during 2004
were approximately $0.9 million.
    
    During 2005, CIB Marine recognized $1.9 million in write down and losses on assets as
compared to $2.0 million in 2004. The $1.9 million loss recognized during 2005 was
mainly due to a $1.7 million loss on the sale of a limited number of commercial real
estate and commercial construction loans, a $0.3 million impairment loss on fixed assets
of closed facilities and a $0.1 million impairment loss on its equity interest in a
small business investment company. These losses were partially offset by a $0.3 million
gain on the sale of the fixed assets and deposits of its Sebring, Florida branch. The
$2.0 million loss in 2004 is primarily comprised of a $0.6 million loss on loans sold by
its mezzanine lending company, a
 41




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##### Table of Contents



$0.6 million loss on foreclosed properties, and a $0.7 million market value loss on its
unconsolidated interests in two closely held businesses.
 
    
    During 2007, CIB Marine decided to sell certain of its available for sale securities.
As a result of this decision, CIB Marine determined it would not be holding these
certain securities for a period of time sufficient to recover the carrying value at
December 31, 2005. Accordingly, CIB Marine realized a $2.0 million other-than-temporary
loss on these certain securities during the first quarter of 2005. See the Securities
discussion for further information.
 
 
    
    Professional services increased $3.7 million in 2004 as compared to 2003. The
increase was driven by $2.1 million of professional fees incurred during 2004 for a
special investigation authorized by the Special Review Committee and $0.9 million of
professional fees also incurred during 2004 for the review of various strategic
alternatives to strengthen the capital position of the company.
    
    FDIC and state assessment expenses increased $1.1 million during 2004 as compared to
the same period in 2003. The increase was the result certain of CIB Marines subsidiary
banks being assigned a higher risk assessment classification by the FDIC in 2004 as
compared to 2003. The change in risk classification was due to credit issues at certain
of these banks as previously noted in the overview discussion.
    
    In 2004, CIB Marine recognized $2.0 million in write down and losses on assets as
compared to $3.2 million in 2003. The $2.0 million loss in 2004 is primarily comprised
of a $0.6 million loss on loans sold by its mezzanine lending company, a $0.6 million
loss on foreclosed properties, and a $0.7 million market value loss on its
unconsolidated interests in two closely held businesses. The $3.2 million loss
recognized in 2003 is mainly due to a $1.2 million loss on foreclosed properties, a $1.2
million market value loss relating to its unconsolidated interest in a closely held
information services business and a $0.7 million impairment loss on interests in limited
partnerships which were subsequently sold in the first quarter of 2004.
    
    Compensation and employee benefits expense is the largest component of noninterest
expense and represented 54.6% of total noninterest expense for 2004 compared to 60.5%
for 2003. Compensation and employee benefits expense decreased $2.3 million or 7.4% from
$31.1 million in 2003 to $28.8 million in 2004. The decrease in compensation and
employee benefit expense is primarily due to an overall cost savings program initiated
by CIB Marine in June 2004. The program included a reduction in force program,
restrictions on salaries and hiring, tight expense controls and some executive
management salary reductions. The total number of full-time equivalent employees of
companies included in continuing operations decreased from 590 at December 31, 2003 to
482 at December 31, 2004. Additionally, CIB Marines total contribution to its employee
401(k) plan and employee stock ownership plan decreased $0.4 million during 2004 as
compared to 2003. In 2003, CIB Marine matched employee contributions to the 401(k) plan
and contributed to the employee stock ownership plan. During 2004, CIB Marine did not
make any contributions to its employee stock ownership plan, and during the first
quarter of 2004, CIB Marine suspended the matching contribution to the 401(k) plan.
 Income Taxes
 
   42




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##### Table of Contents



FINANCIAL CONDITION
 Overview
   Federal Funds Sold
  Securities
   TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31 (1)2005
    
    
    2004
    
    
    2003Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toAmount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity(Dollars in thousands)U.S. Treasuries
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    20,070
    
    
    
    1.35
    %U.S. government agencies
    
    
    155,867
    
    
    
    3.88
    
    
    
    194,164
    
    
    
    2.17
    
    
    
    291,000
    
    
    
    2.03Obligations of states and political subdivisions
    
    
    27,580
    
    
    
    5.07
    
    
    
    15,738
    
    
    
    4.82
    
    
    
    56,816
    
    
    
    5.43Other notes and bonds
    
    
    350
    
    
    
    6.73
    
    
    
    350
    
    
    
    6.73
    
    
    
    1,050
    
    
    
    6.27Asset-backed securities
    
    
    9,568
    
    
    
    3.72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate commercial paper
    
    
    13,033
    
    
    
    4.49
    
    
    
    12,658
    
    
    
    2.48
    
    
    
    7,369
    
    
    
    1.46Mortgage-backed securities
    
    
    263,727
    
    
    
    4.36
    
    
    
    143,005
    
    
    
    3.56
    
    
    
    247,736
    
    
    
    3.26Total securities before market value adjustment
    
    
    470,125
    
    
    
    4.23
    %
    
    
    365,915
    
    
    
    2.84
    %
    
    
    624,041
    
    
    
    2.81
    %Available for sale market value adjustment
    
    
    (3,435
    )
    
    
    
    
    
    
    (642
    )
    
    
    
    
    
    
    2,184Total securities available for sale
    
    
    466,690
    
    
    
    
    
    
    
    365,273
    
    
    
    
    
    
    
    626,225Federal Home Loan Bank and Federal Reserve Bank
stock at cost
    
    
    26,719
    
    
    
    3.07
    
    
    
    13,751
    
    
    
    5.93
    
    
    
    11,131
    
    
    
    6.40Total securities
    
    $
    493,409
    
    
    
    
    
    
    $
    379,024
    
    
    
    
    
    
    $
    637,356
 
 (1)
    
    Yields to maturity are presented on a tax-equivalent basis for 2003. In the future, CIB
Marine may not realize all of the tax benefits associated with tax-exempt assets due to
substantial losses. Accordingly, 2005 and 2004 are not presented on a tax-equivalent basis. 43




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY
 Year Ended December 31 (1)2005
    
    
    2004
    
    
    2003Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toAmount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity
    
    
    Amount
    
    
    Maturity(Dollars in thousands)U.S. government agencies
    
    $
    155,867
    
    
    
    3.88
    %
    
    $
    194,164
    
    
    
    2.17
    %
    
    $
    174,119
    
    
    
    1.99
    %Obligations of states and political subdivisions
    
    
    27,580
    
    
    
    5.07
    
    
    
    15,738
    
    
    
    4.82
    
    
    
    23,507
    
    
    
    6.41Other notes and bonds
    
    
    350
    
    
    
    6.73
    
    
    
    350
    
    
    
    6.73
    
    
    
    550
    
    
    
    7.23Asset-backed securities
    
    
    9,568
    
    
    
    3.72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate commercial paper
    
    
    13,033
    
    
    
    4.49
    
    
    
    12,658
    
    
    
    2.48
    
    
    
    5,286
    
    
    
    1.40Mortgage-backed securities
    
    
    263,727
    
    
    
    4.36
    
    
    
    143,005
    
    
    
    3.56
    
    
    
    141,353
    
    
    
    3.35Total securities before market value adjustment
    
    
    470,125
    
    
    
    4.23
    %
    
    
    365,915
    
    
    
    2.84
    %
    
    
    344,815
    
    
    
    2.85
    %Available for sale market value adjustment
    
    
    (3,435
    )
    
    
    
    
    
    
    (642
    )
    
    
    
    
    
    
    1,708Total securities available for sale
    
    
    466,690
    
    
    
    
    
    
    
    365,273
    
    
    
    
    
    
    
    346,523Federal Home Loan Bank and Federal Reserve Bank
stock at cost
    
    
    26,719
    
    
    
    3.07
    
    
    
    13,751
    
    
    
    5.93
    
    
    
    7,231
    
    
    
    6.34Total securities
    
    $
    493,409
    
    
    
    
    
    
    $
    379,024
    
    
    
    
    
    
    $
    353,754
 
 (1)
    
    Yields to maturity are presented on a tax-equivalent basis for 2003. In the future, CIB
Marine may not realize all of the tax benefits associated with tax-exempt assets due to
substantial losses. Accordingly, 2005 and 2004 are not presented on a tax-equivalent basis.      44




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##### Table of Contents



December 31, 20051 Year and Less
    
    
    1 to 5 Years
    
    
    5 to 10 Years
    
    
    Over 10 Years
    
    
    TotalYield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield to
    
    
    
    
    
    
    Yield toBalance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity
    
    
    Balance
    
    
    Maturity(Dollars in thousands)U.S. government agencies
    
    $
    63,482
    
    
    
    3.40
    %
    
    $
    89,033
    
    
    
    4.17
    %
    
    $
    3,352
    
    
    
    4.95
    %
    
    $
    
    
    
    
    
    %
    
    $
    155,867
    
    
    
    3.88
    %Obligations of states and
political subdivisions
    
    
    1,788
    
    
    
    3.34
    
    
    
    2,138
    
    
    
    5.15
    
    
    
    10,054
    
    
    
    5.10
    
    
    
    13,600
    
    
    
    5.27
    
    
    
    27,580
    
    
    
    5.07Other notes and bonds
    
    
    
    
    
    
    
    
    
    
    350
    
    
    
    6.73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350
    
    
    
    6.73Asset-backed securities
    
    
    5,000
    
    
    
    4.38
    
    
    
    
    
    
    
    
    
    
    
    667
    
    
    
    4.54
    
    
    
    3,901
    
    
    
    2.73
    
    
    
    9,568
    
    
    
    3.72Commercial paper
    
    
    13,033
    
    
    
    4.49
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,033
    
    
    
    4.49Mortgage-backed securities
    
    
    20
    
    
    
    6.03
    
    
    
    12,765
    
    
    
    4.47
    
    
    
    38,235
    
    
    
    3.99
    
    
    
    212,707
    
    
    
    4.42
    
    
    
    263,727
    
    
    
    4.36Total securities before
market value adjustment
    
    $
    83,323
    
    
    
    3.63
    %
    
    $
    104,286
    
    
    
    4.24
    %
    
    $
    52,308
    
    
    
    4.27
    %
    
    $
    230,208
    
    
    
    4.44
    %
    
    $
    470,125
    
    
    
    4.23
    %Available for sale market
value adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,435
    )Total securities
available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    466,690Federal Home Loan Bank
and Federal Reserve Bank
stock at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,719
    
    
    
    3.07
    
    
    
    26,719
    
    
    
    3.07Total securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    493,409
 Loans
 General.
   TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %(Dollars in thousands)Commercial
    
    $
    69,048
    
    
    
    13.4
    %
    
    $
    193,574
    
    
    
    25.9
    %
    
    $
    708,252
    
    
    
    29.9
    %
    
    $
    928,992
    
    
    
    34.3
    %
    
    $
    913,962
    
    
    
    38.2
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,447
    
    
    
    0.5
    
    
    
    6,780
    
    
    
    0.2
    
    
    
    N/A
    
    
    
    N/ACommercial real estate
    
    
    323,384
    
    
    
    62.6
    
    
    
    404,503
    
    
    
    54.1
    
    
    
    1,184,542
    
    
    
    50.1
    
    
    
    1,157,136
    
    
    
    42.7
    
    
    
    975,904
    
    
    
    40.8Commercial real estate
construction
    
    
    89,313
    
    
    
    17.3
    
    
    
    109,676
    
    
    
    14.7
    
    
    
    363,822
    
    
    
    15.4
    
    
    
    513,804
    
    
    
    18.9
    
    
    
    394,081
    
    
    
    16.5Residential real estate
    
    
    19,925
    
    
    
    3.9
    
    
    
    31,027
    
    
    
    4.1
    
    
    
    85,893
    
    
    
    3.6
    
    
    
    91,577
    
    
    
    3.4
    
    
    
    92,022
    
    
    
    3.9Home equity loans
    
    
    12,603
    
    
    
    2.4
    
    
    
    7,701
    
    
    
    1.0
    
    
    
    12,272
    
    
    
    0.5
    
    
    
    15,100
    
    
    
    0.6
    
    
    
    12,728
    
    
    
    0.5Consumer loans
    
    
    2,179
    
    
    
    0.4
    
    
    
    2,124
    
    
    
    0.3
    
    
    
    3,554
    
    
    
    0.2
    
    
    
    6,032
    
    
    
    0.2
    
    
    
    8,469
    
    
    
    0.4Receivables from sale of
stock
    
    
    (202
    )
    
    
    (0.0
    )
    
    
    (946
    )
    
    
    (0.1
    )
    
    
    (5,208
    )
    
    
    (0.2
    )
    
    
    (7,937
    )
    
    
    (0.3
    )
    
    
    (7,437
    )
    
    
    (0.3
    )Gross loans
    
    
    516,250
    
    
    
    100.0
    %
    
    
    747,659
    
    
    
    100.0
    %
    
    
    2,364,574
    
    
    
    100.0
    %
    
    
    2,711,484
    
    
    
    100.0
    %
    
    
    2,389,729
    
    
    
    100.0
    %Deferred loan fees
    
    
    (706
    )
    
    
    
    
    
    
    (1,044
    )
    
    
    
    
    
    
    (4,533
    )
    
    
    
    
    
    
    (7,478
    )
    
    
    
    
    
    
    (7,684
    )Total loans
    
    
    515,544
    
    
    
    
    
    
    
    746,615
    
    
    
    
    
    
    
    2,360,041
    
    
    
    
    
    
    
    2,704,006
    
    
    
    
    
    
    
    2,382,045Allowance for loan losses
    
    
    (24,882
    )
    
    
    
    
    
    
    (29,551
    )
    
    
    
    
    
    
    (109,872
    )
    
    
    
    
    
    
    (65,122
    )
    
    
    
    
    
    
    (35,855
    )Net loans
    
    $
    490,662
    
    
    
    
    
    
    $
    717,064
    
    
    
    
    
    
    $
    2,250,169
    
    
    
    
    
    
    $
    2,638,884
    
    
    
    
    
    
    $
    2,346,190
 45




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %
    
    
    Balance
    
    
    %(Dollars in thousands)Commercial
    
    $
    69,048
    
    
    
    13.4
    %
    
    $
    193,574
    
    
    
    25.9
    %
    
    $
    416,323
    
    
    
    33.8
    %
    
    $
    556,754
    
    
    
    39.6
    %
    
    $
    530,226
    
    
    
    45.0
    %Commercial real estate
    
    
    323,384
    
    
    
    62.6
    
    
    
    404,503
    
    
    
    54.1
    
    
    
    537,791
    
    
    
    43.6
    
    
    
    508,474
    
    
    
    36.2
    
    
    
    396,050
    
    
    
    33.6Commercial real estate
construction
    
    
    89,313
    
    
    
    17.3
    
    
    
    109,676
    
    
    
    14.7
    
    
    
    205,359
    
    
    
    16.6
    
    
    
    263,625
    
    
    
    18.7
    
    
    
    174,856
    
    
    
    14.8Residential real estate
    
    
    19,925
    
    
    
    3.9
    
    
    
    31,027
    
    
    
    4.1
    
    
    
    63,120
    
    
    
    5.1
    
    
    
    60,469
    
    
    
    4.3
    
    
    
    55,607
    
    
    
    4.7Home equity loans
    
    
    12,603
    
    
    
    2.4
    
    
    
    7,701
    
    
    
    1.0
    
    
    
    9,876
    
    
    
    0.8
    
    
    
    10,478
    
    
    
    0.8
    
    
    
    14,103
    
    
    
    1.2Consumer loans
    
    
    2,179
    
    
    
    0.4
    
    
    
    2,124
    
    
    
    0.3
    
    
    
    3,030
    
    
    
    0.2
    
    
    
    5,389
    
    
    
    0.4
    
    
    
    7,824
    
    
    
    0.7Receivables from sale of
stock
    
    
    (202
    )
    
    
    (0.0
    )
    
    
    (946
    )
    
    
    (0.1
    )
    
    
    (1,530
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross loans
    
    
    516,250
    
    
    
    100.0
    %
    
    
    747,659
    
    
    
    100.0
    %
    
    
    1,233,969
    
    
    
    100.0
    %
    
    
    1,405,189
    
    
    
    100.0
    %
    
    
    1,178,666
    
    
    
    100.0
    %Deferred loan fees
    
    
    (706
    )
    
    
    
    
    
    
    (1,044
    )
    
    
    
    
    
    
    (2,557
    )
    
    
    
    
    
    
    (4,225
    )
    
    
    
    
    
    
    (5,591
    )Total loans
    
    
    515,544
    
    
    
    
    
    
    
    746,615
    
    
    
    
    
    
    
    1,231,412
    
    
    
    
    
    
    
    1,400,964
    
    
    
    
    
    
    
    1,173,075Allowance for loan losses
    
    
    (24,882
    )
    
    
    
    
    
    
    (29,551
    )
    
    
    
    
    
    
    (54,382
    )
    
    
    
    
    
    
    (31,756
    )
    
    
    
    
    
    
    (18,109
    )Net loans
    
    $
    490,662
    
    
    
    
    
    
    $
    717,064
    
    
    
    
    
    
    $
    1,177,030
    
    
    
    
    
    
    $
    1,369,208
    
    
    
    
    
    
    $
    1,154,966
 Commercial Loans.
 Commercial Real Estate Loans.
 Commercial Real Estate Construction Loans.
 Residential Real Estate Loans.
 Home Equity and Consumer Loans.
 Leveraged Financing.
 46




---



##### Table of Contents



Receivables from Sale of Stock.
 Loan Maturities.
 1 year
    
    
    1 to 5
    
    
    Overand less
    
    
    years
    
    
    5 years
    
    
    Total(Dollars in thousands)Commercial
    
    $
    45,029
    
    
    $
    22,923
    
    
    $
    1,096
    
    
    $
    69,048Commercial real estate
    
    
    101,435
    
    
    
    132,852
    
    
    
    89,097
    
    
    
    323,384Commercial real estate construction
    
    
    70,582
    
    
    
    18,387
    
    
    
    344
    
    
    
    89,313Residential real estate
    
    
    6,215
    
    
    
    4,226
    
    
    
    9,484
    
    
    
    19,925Home equity loans
    
    
    2,169
    
    
    
    10,354
    
    
    
    80
    
    
    
    12,603Consumer loans
    
    
    1,327
    
    
    
    561
    
    
    
    291
    
    
    
    2,179Loans to Purchase stock
    
    
    (202
    )
    
    
    
    
    
    
    
    
    
    
    (202
    )Total gross loans
    
    $
    226,555
    
    
    $
    189,303
    
    
    $
    100,392
    
    
    $
    516,250Sensitivity to changes in interest ratesFixed rates
    
    
    62,612
    
    
    
    109,735
    
    
    
    50,483
    
    
    
    222,830Variable rates
    
    
    163,943
    
    
    
    79,568
    
    
    
    49,909
    
    
    
    293,420Total gross loans
    
    $
    226,555
    
    
    $
    189,303
    
    
    $
    100,392
    
    
    $
    516,250
 Credit Concentrations
   % ofOutstanding
    
    % of
    
    StockholdersINDUSTRY
    
    Balance
    
    Loans
    
    Equity(Dollars in millions)Commercial Real Estate Developers
    
    $
    181.8
    
    
    
    35
    %
    
    
    230
    %Residential Real Estate Developers
    
    
    73.2
    
    
    
    14
    
    
    
    93Motel and Hotel
    
    
    50.4
    
    
    
    10
    
    
    
    64Nursing/Convalescent Homes
    
    
    35.4
    
    
    
    7
    
    
    
    45Retail Trade
    
    
    25.4
    
    
    
    5
    
    
    
    32Manufacturing
    
    
    24.6
    
    
    
    5
    
    
    
    31Health Care Facilities
    
    
    22.9
    
    
    
    4
    
    
    
    29
 47




---



##### Table of Contents



Credit Procedures and Review
  Loan Underwriting.
 Loan Approval.
 Loan Review.
  Allowance for Loan Losses
  48




---



##### Table of Contents



TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Balance at beginning of year
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855
    
    
    $
    23,988Loans charged-off:Commercial:Commercial
    
    
    (1,380
    )
    
    
    (53,848
    )
    
    
    (31,011
    )
    
    
    (14,443
    )
    
    
    (1,893
    )Factored receivables
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    (1,945
    )
    
    
    (21,432
    )
    
    
    (18,115
    )
    
    
    (2,752
    )
    
    
    (660
    )Commercial real estate construction
    
    
    (524
    )
    
    
    (4,487
    )
    
    
    (53,668
    )
    
    
    
    
    
    
    (100
    )Consumer:Residential real estate
    
    
    (49
    )
    
    
    (95
    )
    
    
    (153
    )
    
    
    (79
    )
    
    
    (74
    )Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    Consumer
    
    
    (13
    )
    
    
    (117
    )
    
    
    (97
    )
    
    
    (155
    )
    
    
    (272
    )Total charged-off
    
    
    (3,911
    )
    
    
    (79,979
    )
    
    
    (103,139
    )
    
    
    (17,499
    )
    
    
    (2,999
    )Recoveries of loans charged-off:Commercial:Commercial
    
    
    6,017
    
    
    
    4,382
    
    
    
    1,830
    
    
    
    757
    
    
    
    357Factored receivables
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    Commercial real estate:Commercial real estate
    
    
    1,769
    
    
    
    3,796
    
    
    
    155
    
    
    
    294
    
    
    
    39Commercial real estate construction
    
    
    89
    
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    Consumer:Residential real estate
    
    
    23
    
    
    
    215
    
    
    
    3
    
    
    
    20
    
    
    
    16Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    Consumer
    
    
    13
    
    
    
    48
    
    
    
    51
    
    
    
    57
    
    
    
    59Total recoveries
    
    
    7,911
    
    
    
    8,554
    
    
    
    2,043
    
    
    
    1,134
    
    
    
    471Net loans recovered (charged-off)
    
    
    4,000
    
    
    
    (71,425
    )
    
    
    (101,096
    )
    
    
    (16,365
    )
    
    
    (2,528
    )Allowance acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    Allowance on loans sold
    
    
    
    
    
    
    (38,842
    )
    
    
    
    
    
    
    
    
    
    
    Transfer from accrual for unfunded
standby letters of credit for funded
standby letters of credit
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    (8,669
    )
    
    
    24,946
    
    
    
    145,846
    
    
    
    45,510
    
    
    
    14,395Balance at end of year
    
    $
    24,882
    
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855RatiosAllowance for loan losses to total loans
    
    
    4.83
    %
    
    
    3.96
    %
    
    
    4.66
    %
    
    
    2.41
    %
    
    
    1.51
    %Allowance for loan losses to nonaccrual
loans, restructured loans and loans 90
days or more past due and still
accruing
    
    
    59.06
    
    
    
    47.08
    
    
    
    70.72
    
    
    
    134.09
    
    
    
    93.16Net charge-offs (recoveries) to average
loan types:Commercial
    
    
    (4.06
    )
    
    
    9.36
    
    
    
    3.83
    
    
    
    1.70
    
    
    
    0.21Commercial real estate
    
    
    0.13
    
    
    
    1.71
    
    
    
    3.90
    
    
    
    0.14
    
    
    
    0.06Consumer
    
    
    0.11
    
    
    
    (0.14
    )
    
    
    0.36
    
    
    
    0.36
    
    
    
    0.39Total loans
    
    
    (0.67
    )
    
    
    3.85
    
    
    
    3.81
    
    
    
    0.64
    
    
    
    0.12Ratio of recoveries to loans charged-off
    
    
    202.28
    
    
    
    10.70
    
    
    
    1.98
    
    
    
    6.48
    
    
    
    15.71Total loans
    
    $
    515,544
    
    
    $
    746,615
    
    
    $
    2,360,041
    
    
    $
    2,704,006
    
    
    $
    2,382,045Average total loans
    
    
    594,714
    
    
    
    1,855,581
    
    
    
    2,651,680
    
    
    
    2,573,894
    
    
    
    2,082,775Provision for credit losses  total
companyProvision for loan loss-continuing
operations
    
    $
    (8,669
    )
    
    $
    16,707
    
    
    $
    50,506
    
    
    $
    19,074
    
    
    $
    6,768Provision for loan loss-discontinued
operations
    
    
    
    
    
    
    8,239
    
    
    
    95,340
    
    
    
    26,436
    
    
    
    7,627Provision for losses on unfunded
commitments and standby letters of
credit-continuing operations
    
    
    
    
    
    
    725
    
    
    
    
    
    
    
    
    
    
    
    Provision for losses on unfunded
commitments and standby letters of
credit-discontinued operations
    
    
    
    
    
    
    (1,900
    )
    
    
    14,747
    
    
    
    1,000
    
    
    
    Total provision for credit losses
    
    $
    (8,669
    )
    
    $
    23,771
    
    
    $
    160,593
    
    
    $
    46,510
    
    
    $
    14,395
 49




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Balance at beginning of year
    
    $
    29,551
    
    
    $
    54,382
    
    
    $
    31,756
    
    
    $
    18,109
    
    
    $
    12,768Loans charged-off:Commercial:Commercial
    
    
    (1,380
    )
    
    
    (31,515
    )
    
    
    (11,115
    )
    
    
    (4,061
    )
    
    
    (778
    )Commercial real estate:Commercial real estate
    
    
    (1,945
    )
    
    
    (10,126
    )
    
    
    (4,340
    )
    
    
    (1,679
    )
    
    
    (561
    )Commercial real estate construction
    
    
    (524
    )
    
    
    (3,665
    )
    
    
    (13,676
    )
    
    
    
    
    
    
    (14
    )Consumer:Residential real estate
    
    
    (49
    )
    
    
    
    
    
    
    (6
    )
    
    
    (79
    )
    
    
    (74
    )Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    Consumer
    
    
    (13
    )
    
    
    (73
    )
    
    
    (33
    )
    
    
    (147
    )
    
    
    (266
    )Total charged-off
    
    
    (3,911
    )
    
    
    (45,379
    )
    
    
    (29,170
    )
    
    
    (6,036
    )
    
    
    (1,693
    )Recoveries of loans charged-off:Commercial:Commercial
    
    
    6,017
    
    
    
    1,995
    
    
    
    1,124
    
    
    
    530
    
    
    
    164Commercial real estate:Commercial real estate
    
    
    1,769
    
    
    
    1,806
    
    
    
    116
    
    
    
    
    
    
    
    34Commercial real estate construction
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer:Residential real estate
    
    
    23
    
    
    
    
    
    
    
    (1
    )
    
    
    20
    
    
    
    16Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    Consumer
    
    
    13
    
    
    
    40
    
    
    
    51
    
    
    
    53
    
    
    
    52Total recoveries
    
    
    7,911
    
    
    
    3,841
    
    
    
    1,290
    
    
    
    609
    
    
    
    266Net loans recovered (charged-off)
    
    
    4,000
    
    
    
    (41,538
    )
    
    
    (27,880
    )
    
    
    (5,427
    )
    
    
    (1,427
    )Allowance acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowance on loans sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    (8,669
    )
    
    
    16,707
    
    
    
    50,506
    
    
    
    19,074
    
    
    
    6,768Balance at end of year
    
    $
    24,882
    
    
    $
    29,551
    
    
    $
    54,382
    
    
    $
    31,756
    
    
    $
    18,109RatiosAllowance for loan losses to total loans
    
    
    4.83
    %
    
    
    3.96
    %
    
    
    4.42
    %
    
    
    2.27
    %
    
    
    1.54
    %Allowance for loan losses to nonaccrual
loans, restructured loans and loans 90
days or more past due and still
accruing
    
    
    59.06
    
    
    
    47.08
    
    
    
    96.85
    
    
    
    136.12
    
    
    
    110.02Net charge-offs (recoveries) to average
loans:Commercial
    
    
    (4.06
    )
    
    
    10.00
    
    
    
    2.25
    
    
    
    0.72
    
    
    
    0.15Commercial real estate
    
    
    0.13
    
    
    
    1.72
    
    
    
    2.02
    
    
    
    0.24
    
    
    
    0.09Consumer
    
    
    0.11
    
    
    
    0.10
    
    
    
    (0.03
    )
    
    
    0.27
    
    
    
    0.39Total loans
    
    
    (0.67
    )
    
    
    4.06
    
    
    
    2.04
    
    
    
    0.42
    
    
    
    0.13Ratio of recoveries to loans charged-off
    
    
    202.28
    
    
    
    8.46
    
    
    
    4.42
    
    
    
    10.06
    
    
    
    15.71Total loans
    
    $
    515,544
    
    
    $
    746,615
    
    
    $
    1,231,412
    
    
    $
    1,400,964
    
    
    $
    1,173,075Average total loans
    
    
    594,714
    
    
    
    1,023,092
    
    
    
    1,366,902
    
    
    
    1,287,133
    
    
    
    1,066,812
  TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001% of Loans in
    
    
    
    
    
    
    % of Loans in
    
    
    
    
    
    
    % of Loans in
    
    
    
    
    
    
    % of Loans in
    
    
    
    
    
    
    % of Loans inAllowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    eachAmount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category(Dollars in thousands)Commercial
    
    $
    4,165
    
    
    
    6.03
    %
    
    $
    10,080
    
    
    
    5.22
    %
    
    $
    48,504
    
    
    
    6.85
    %
    
    $
    25,937
    
    
    
    2.79
    %
    
    $
    16,631
    
    
    
    1.82
    %Factored receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    355
    
    
    
    3.10
    
    
    
    237
    
    
    
    3.50
    
    
    
    
    
    
    
    Commercial real estate
    
    
    17,721
    
    
    
    5.48
    
    
    
    16,211
    
    
    
    4.02
    
    
    
    48,813
    
    
    
    4.12
    
    
    
    22,658
    
    
    
    1.96
    
    
    
    11,918
    
    
    
    1.22Commercial real estate
construction
    
    
    2,193
    
    
    
    2.45
    
    
    
    2,258
    
    
    
    2.07
    
    
    
    9,456
    
    
    
    2.60
    
    
    
    11,012
    
    
    
    2.14
    
    
    
    3,981
    
    
    
    1.01Residential real estate
    
    
    433
    
    
    
    2.17
    
    
    
    871
    
    
    
    2.82
    
    
    
    2,027
    
    
    
    2.36
    
    
    
    3,802
    
    
    
    4.15
    
    
    
    1,541
    
    
    
    1.67Home equity loans
    
    
    292
    
    
    
    2.32
    
    
    
    83
    
    
    
    1.10
    
    
    
    104
    
    
    
    0.85
    
    
    
    225
    
    
    
    1.49
    
    
    
    213
    
    
    
    1.67Consumer loans
    
    
    78
    
    
    
    3.58
    
    
    
    48
    
    
    
    2.26
    
    
    
    47
    
    
    
    1.32
    
    
    
    160
    
    
    
    2.65
    
    
    
    232
    
    
    
    2.74Unallocated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    566
    
    
    
    
    
    
    
    1,091
    
    
    
    
    
    
    
    1,339
    
    
    
    Total allowance
    
    $
    24,882
    
    
    
    4.83
    %
    
    $
    29,551
    
    
    
    3.96
    %
    
    $
    109,872
    
    
    
    4.66
    %
    
    $
    65,122
    
    
    
    2.41
    %
    
    $
    35,855
    
    
    
    1.51
    %
 50




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofLoans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans inAllowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    each
    
    
    Allowance
    
    
    eachAmount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category
    
    
    Amount
    
    
    category(Dollars in thousands)Commercial
    
    $
    4,165
    
    
    
    6.03
    %
    
    $
    10,080
    
    
    
    5.22
    %
    
    $
    28,450
    
    
    
    6.83
    %
    
    $
    15,650
    
    
    
    2.81
    %
    
    $
    9,390
    
    
    
    1.77
    %Commercial real estate
    
    
    17,721
    
    
    
    5.48
    
    
    
    16,211
    
    
    
    4.02
    
    
    
    19,858
    
    
    
    3.69
    
    
    
    9,210
    
    
    
    1.81
    
    
    
    4,060
    
    
    
    1.03Commercial real estate
construction


    2,193
    
    
    
    2.45
    
    
    
    2,258
    
    
    
    2.07
    
    
    
    4,098
    
    
    
    2.00
    
    
    
    3,436
    
    
    
    1.30
    
    
    
    1,694
    
    
    
    0.97Residential real estate
    
    
    433
    
    
    
    2.17
    
    
    
    871
    
    
    
    2.82
    
    
    
    1,722
    
    
    
    2.73
    
    
    
    1,366
    
    
    
    2.26
    
    
    
    945
    
    
    
    1.70Home equity loans
    
    
    292
    
    
    
    2.32
    
    
    
    83
    
    
    
    1.10
    
    
    
    88
    
    
    
    0.89
    
    
    
    139
    
    
    
    1.33
    
    
    
    170
    
    
    
    1.21Consumer loans
    
    
    78
    
    
    
    3.58
    
    
    
    48
    
    
    
    2.26
    
    
    
    43
    
    
    
    1.42
    
    
    
    148
    
    
    
    2.75
    
    
    
    224
    
    
    
    2.86Unallocated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    1,806
    
    
    
    
    
    
    
    1,617
    
    
    
    Total allowance
    
    $
    24,882
    
    
    
    4.83
    %
    
    $
    29,551
    
    
    
    3.96
    %
    
    $
    54,382
    
    
    
    4.42
    %
    
    $
    31,755
    
    
    
    2.27
    %
    
    $
    18,100
    
    
    
    1.54
    %
 Nonperforming Assets and Loans 90 Days or More Past Due and Still Accruing
   TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Nonperforming assetsNonaccrual loans:Commercial
    
    $
    6,426
    
    
    $
    25,431
    
    
    $
    58,161
    
    
    $
    17,329
    
    
    $
    20,026Commercial real estate
    
    
    21,148
    
    
    
    23,020
    
    
    
    77,960
    
    
    
    15,507
    
    
    
    15,678Commercial real estate construction
    
    
    1,149
    
    
    
    5,399
    
    
    
    13,310
    
    
    
    5,221
    
    
    
    Residential real estate
    
    
    379
    
    
    
    477
    
    
    
    2,622
    
    
    
    756
    
    
    
    610Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    220Consumer loans
    
    
    3
    
    
    
    
    
    
    
    11
    
    
    
    45
    
    
    
    110Total nonaccrual loans
    
    
    29,105
    
    
    
    54,327
    
    
    
    152,064
    
    
    
    38,958
    
    
    
    36,644Foreclosed property
    
    
    2,931
    
    
    
    3,038
    
    
    
    40,715
    
    
    
    3,678
    
    
    
    3,168Restructured loans
    
    
    1,486
    
    
    
    1,536
    
    
    
    2,946
    
    
    
    3,210
    
    
    
    309Total nonperforming assets
    
    $
    33,522
    
    
    $
    58,901
    
    
    $
    195,725
    
    
    $
    45,846
    
    
    $
    40,121Loans 90 days or more past due and
still accruingCommercial
    
    $
    589
    
    
    $
    1,009
    
    
    $
    
    
    
    $
    3,022
    
    
    $
    758Commercial real estate
    
    
    2,962
    
    
    
    5,902
    
    
    
    352
    
    
    
    2,292
    
    
    
    195Commercial real estate construction
    
    
    7,991
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152Residential real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,076
    
    
    
    408Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    6
    
    
    
    22Total loans 90 days or more past due
and still accruing
    
    $
    11,542
    
    
    $
    6,911
    
    
    $
    359
    
    
    $
    6,396
    
    
    $
    1,535Allowance for loan losses
    
    $
    24,882
    
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122
    
    
    $
    35,855Loans at end of period
    
    $
    515,544
    
    
    $
    746,615
    
    
    $
    2,360,041
    
    
    $
    2,704,006
    
    
    $
    2,382,045RatiosNonaccrual loans to total loans
    
    
    5.65
    %
    
    
    7.28
    %
    
    
    6.44
    %
    
    
    1.44
    %
    
    
    1.54
    %Foreclosed properties to total assets
    
    
    0.26
    
    
    
    0.22
    
    
    
    1.28
    
    
    
    0.10
    
    
    
    0.11Nonperforming assets to total assets
    
    
    2.94
    
    
    
    4.25
    
    
    
    6.14
    
    
    
    1.26
    
    
    
    1.36Nonaccrual loans, restructured loans
and loans 90 days or more past due
and still accruing to total loans
    
    
    8.17
    
    
    
    8.41
    
    
    
    6.58
    
    
    
    1.80
    
    
    
    1.62Nonperforming assets and loans 90
days or more past due and still
accruing to total assets
    
    
    3.96
    
    
    
    4.75
    
    
    
    6.15
    
    
    
    1.43
    
    
    
    1.42
 51




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY (1) :
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Nonperforming assetsNonaccrual loans:Commercial
    
    $
    6,426
    
    
    $
    25,431
    
    
    $
    34,156
    
    
    $
    11,852
    
    
    $
    7,476Commercial real estate
    
    
    21,148
    
    
    
    23,020
    
    
    
    16,099
    
    
    
    3,263
    
    
    
    6,430Commercial real estate construction
    
    
    1,149
    
    
    
    5,399
    
    
    
    189
    
    
    
    
    
    
    
    Residential real estate
    
    
    379
    
    
    
    477
    
    
    
    2,397
    
    
    
    653
    
    
    
    610Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Consumer loans
    
    
    3
    
    
    
    
    
    
    
    10
    
    
    
    45
    
    
    
    110Total nonaccrual loans
    
    
    29,105
    
    
    
    54,327
    
    
    
    52,851
    
    
    
    15,813
    
    
    
    14,631Foreclosed property
    
    
    2,931
    
    
    
    2,938
    
    
    
    3,027
    
    
    
    2,928
    
    
    
    1,810Restructured loans
    
    
    1,486
    
    
    
    1,536
    
    
    
    2,939
    
    
    
    3,200
    
    
    
    294Total nonperforming assets
    
    $
    33,522
    
    
    $
    58,801
    
    
    $
    58,817
    
    
    $
    21,941
    
    
    $
    16,735Loans 90 days or more past due and
still accruingCommercial
    
    $
    589
    
    
    $
    1,009
    
    
    $
    
    
    
    $
    943
    
    
    $
    758Commercial real estate
    
    
    2,962
    
    
    
    5,902
    
    
    
    352
    
    
    
    2,292
    
    
    
    195Commercial real estate construction
    
    
    7,991
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152Residential real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,076
    
    
    
    408Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    6
    
    
    
    22Total loans 90 days or more past due
and still accruing
    
    $
    11,542
    
    
    $
    6,911
    
    
    $
    359
    
    
    $
    4,317
    
    
    $
    1,535Allowance for loan losses
    
    $
    24,882
    
    
    $
    29,551
    
    
    $
    54,382
    
    
    $
    31,756
    
    
    $
    18,109Loans at end of period
    
    $
    515,544
    
    
    $
    746,615
    
    
    $
    1,227,734
    
    
    $
    1,400,964
    
    
    $
    1,173,075RatiosNonaccrual loans to total loans
    
    
    5.65
    %
    
    
    7.28
    %
    
    
    4.29
    %
    
    
    1.13
    %
    
    
    1.23
    %Foreclosed properties to total assets
    
    
    0.26
    
    
    
    0.21
    
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.12Nonperforming assets to total assets
    
    
    2.96
    
    
    
    4.29
    
    
    
    3.45
    
    
    
    1.25
    
    
    
    1.12Nonaccrual loans, restructured loans
and loans 90 days or more past due
and still accruing to total loans
    
    
    8.17
    
    
    
    8.41
    
    
    
    4.56
    
    
    
    1.67
    
    
    
    1.39Nonperforming assets and 90 days or
more past due and still accruing
loans to total assets
    
    
    3.98
    
    
    
    4.79
    
    
    
    3.47
    
    
    
    1.50
    
    
    
    1.22
 
 (1)
    
    For comparative purposes, all periods presented exclude the assets
of all companies held for disposal at December 31, 2005 and companies that
were sold during prior periods.   
    
    Commercial real estate loans to a borrower totaling $10.8 million secured by first
mortgages on two commercial properties. At December 31, 2005, specific reserves of $5.3
million were allocated to this borrowing relationship. In the fourth quarter 2006, $0.2
million was charged-off resulting in a non-accrual balance of $10.6 million at December
31, 2006 with allocated specific reserves of $5.0 million. While CIB Marine believes
that the value of the collateral securing the obligation approximates the net book value
of the loan, CIB Marine cannot provide assurances that the value will be maintained or
that there will be no further losses with respect to this relationship.
    
    Commercial real estate loans to related borrowers in the total amount of $4.2 million
and secured by first mortgages on two commercial properties and two developments. As of
December 31, 2005, specific reserves of $0.4 million were allocated to this relationship
and $0.4 million was charged-off. In 2006, this borrowing relationship was paid-down by
$3.3 million, and at December 31, 2006, $0.9 million remained on nonaccrual. While CIB
Marine believes that the value of the collateral securing the obligation approximates
the net book value of the loan, CIB Marine cannot provide assurances that the value will
be maintained or that there will be no further losses with respect to
this relationship.
 52




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##### Table of Contents




    
    Commercial real estate loans to related borrowers totaling $2.7 million and secured
by business assets and second mortgages on two office buildings. CIB Marine charged-off
$0.8 million of loans related to this relationship. During 2006, a settlement was
reached and the remaining balance was paid in full.
    
    Commercial real estate loans totaling $2.3 million to a borrower secured by first
mortgages on three commercial warehouse properties. During 2006, these loans were paid
down by $0.3 million and as of December 31, 2006, loans totaling $2.0 million to this
borrower were classified as nonaccrual. While CIB Marine believes that the value of the
collateral securing the obligation approximates the net book value, CIB Marine cannot
provide assurances that the value will be maintained or that there will be no further
losses with respect to this relationship.
    
    Commercial and commercial real estate loans totaling $2.0 million to related
borrowers secured by business assets and first mortgages on three commercial properties.
At December 31, 2005, specific reserves of $0.9 million were allocated to this
relationship. As of December 31, 2006, $2.0 million remained on nonaccrual, with
allocated specific reserves of $0.9 million. While CIB Marine believes that the value of
the collateral securing the obligation approximates the net book value of the loan, CIB
Marine cannot provide assurances that the value will be maintained or that there will be
no further losses with respect to this relationship.
    
    Commercial and commercial real estate loans totaling $1.3 million to a borrower
secured by all business assets and a first mortgage on two commercial real estate
properties. CIB Marine charged-off a total of $4.4 million with respect to this
borrowing relationship. During 2006, these loans were paid down by $0.3 million and as
of December 31, 2006, $1.1 million remained classified as nonaccrual. While CIB Marine
believes the collateral securing the obligations approximates the net book value of the
loan, CIB Marine cannot provide assurances that the value will be maintained or that
there will be no further losses with respect to this relationship.
   
    
    A vacant commercial parcel located in Illinois which had a carrying value of $0.9
million at December 31, 2005. The property was acquired through a deed in lieu of
foreclosure in 2002. In March 2006, this property was sold and a $0.3 million loss was
recognized on the sale.
    
    An industrial building located in Wisconsin which had a balance of $0.8 million at
December 31, 2004. The property was acquired through foreclosure proceedings in 2003.
During the second quarter of 2006, CIB Marine sold this property at no gain or loss.
    
    A commercial property located in Illinois which was acquired during the second
quarter of 2005 and had a carrying value of $1.0 million at December 31, 2005. During
2005, CIB Marine recognized impairment losses of $0.1 million related to this property,
and during the first quarter of 2006, CIB Marine sold this property. An additional $0.1
million loss was recognized on the sale.
   53




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##### Table of Contents



Regulatory Matters
  §
    
    Maintenance of minimum capital levels;§
    
    Restrictions on dividend payments and redemption of shares of CIB Marine without regulatory approval;§
    
    Limitations on asset and loan growth;§
    
    Adoption of a comprehensive plan to improve earnings;§
    
    Development of a plan to reduce concentrations of credit and loan relationships
classified as substandard or doubtful;§
    
    Development of a system to correct loan administration deficiencies; and§
    
    Development of a plan to correct and prevent violations of banking laws and
regulations related to affiliate transactions.
   Companies Held For Disposal
 CIB Construction (includes Canron)
  54




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##### Table of Contents



December 31,2005
    
    
    2004(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    626
    
    
    $
    881Accounts receivable
    
    
    1,572
    
    
    
    2,194Other current assets
    
    
    2,967
    
    
    
    3,547Current assets
    
    
    5,165
    
    
    
    6,622Property and equipment, net
    
    
    
    
    
    
    7,075Total assets
    
    $
    5,165
    
    
    $
    13,697Liabilities and Stockholders Equity:Current portion of loans payable to CIB Marine and its affiliates
    
    $
    
    
    
    $
    2,700Income tax payable
    
    
    3,106
    
    
    
    2,311Other liabilities
    
    
    2,055
    
    
    
    5,211Current liabilities
    
    
    5,161
    
    
    
    10,222Stockholders equity
    
    
    4
    
    
    
    3,475Total liabilities and stockholders equity
    
    $
    5,165
    
    
    $
    13,697
  MICR
   December 31, 2005
    
    
    December 31, 2004(Dollars in thousands)Assets:Cash on deposit at non-affiliates
    
    $
    273
    
    
    $
    288Accounts receivable
    
    
    
    
    
    
    765Inventory
    
    
    
    
    
    
    1,121Other current assets
    
    
    200
    
    
    
    28Accrued income tax receivable
    
    
    122
    
    
    
    Property and equipment, net
    
    
    
    
    
    
    269Goodwill, net
    
    
    
    
    
    
    235Total assets
    
    $
    595
    
    
    $
    2,706Liabilities and stockholders equity:Accrued income tax payable
    
    $
    
    
    
    $
    404Other liabilities
    
    
    491
    
    
    
    460Stockholders equity
    
    
    104
    
    
    
    1,842Total liabilities and stockholders equity
    
    $
    595
    
    
    $
    2,706
 55




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##### Table of Contents



MSI
   December 31,2005
    
    
    2004(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    24
    
    
    $
    341Loans held for sale
    
    
    
    
    
    
    53Net loans
    
    
    105
    
    
    
    Property and equipment, net
    
    
    
    
    
    
    35Accrued income tax receivable
    
    
    633
    
    
    
    621Other assets
    
    
    44
    
    
    
    379Total assets
    
    $
    806
    
    
    $
    1,429Liabilities and stockholders equity:Loans payable to CIB Marine
    
    $
    829
    
    
    $
    303Other liabilities
    
    
    1,072
    
    
    
    2,057Total liabilities
    
    
    1,901
    
    
    
    2,360Stockholders equity
    
    
    (1,095
    )
    
    
    (931
    )Total liabilities and stockholders equity
    
    $
    806
    
    
    $
    1,429
  Other Assets
  December 31,2005
    
    
    2004(Dollars in thousands)Prepaid expenses
    
    $
    1,113
    
    
    $
    1,266Accounts receivable
    
    
    638
    
    
    
    1,395Trust preferred securities underwriting fee, net of amortization
    
    
    1,390
    
    
    
    1,445Investment in trust common securities
    
    
    2,654
    
    
    
    2,481Other investments
    
    
    3,562
    
    
    
    3,257Income tax receivable
    
    
    3,391
    
    
    
    7,945Other
    
    
    101
    
    
    
    90$
    12,849
    
    
    $
    17,879
  56




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##### Table of Contents




    
    Investments in limited partnership interests in various affordable housing
partnerships. The carrying value of these investments was $1.8 million at December
31, 2005 and $2.1 million at December 31, 2004. CIB Marine has engaged in these
transactions to provide additional qualified investments under the Community
Reinvestment Act and to receive related income tax credits. The partnerships provide
affordable housing to low-income residents within CIB Marines markets and other
locations.
    
    Interest in two companies operating as small business investment companies under
the Small Business Investment Act of 1958, as amended. CIB Marine committed to a $1.1
million investment in these companies and as of December 31, 2005 has invested $0.9
million. The carrying value of these investments was cost less other-than-temporary
impairment, which was estimated to be $0.7 million at December 31, 2005 and $0.8
million at December 31, 2004. During 2005, CIB Marine recognized an impairment loss
of $0.1 million on these investments due to a reduction in CIB Marines interest in
the equity value in one of the two investments. The impairment loss is included
within write down and losses on assets.
    
    Investment in the common and preferred capital of a limited liability corporation
engaged in the development of owner-occupied housing in qualified low-income
communities. CIB Marine committed to a $1.0 million investment in this company. The
carrying value of this investment as of December 31, 2005 and 2004 was $0.8 million
and $0.1 million, respectively.
 Deposits
   TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 Year Ended December 31,2005
    
    2004
    
    2003Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    AverageBalance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate(Dollars in thousands)Interest-bearing demand
    
    $
    55,764
    
    
    
    5.28
    %
    
    
    1.13
    %
    
    $
    85,979
    
    
    
    3.46
    %
    
    
    1.16
    %
    
    $
    70,731
    
    
    
    2.43
    %
    
    
    1.05
    %Money market
    
    
    210,366
    
    
    
    19.94
    
    
    
    2.47
    
    
    
    343,764
    
    
    
    13.85
    
    
    
    1.45
    
    
    
    427,919
    
    
    
    14.73
    
    
    
    1.63Other savings
    
    
    35,382
    
    
    
    3.35
    
    
    
    1.16
    
    
    
    192,847
    
    
    
    7.77
    
    
    
    1.39
    
    
    
    245,781
    
    
    
    8.46
    
    
    
    1.76Time deposits
    
    
    641,274
    
    
    
    60.77
    
    
    
    3.24
    
    
    
    1,674,168
    
    
    
    67.44
    
    
    
    2.93
    
    
    
    1,953,816
    
    
    
    67.26
    
    
    
    3.29Total interest-bearing deposits
    
    
    942,786
    
    
    
    89.34
    
    
    
    2.86
    
    
    
    2,296,758
    
    
    
    92.52
    
    
    
    2.51
    
    
    
    2,698,247
    
    
    
    92.88
    
    
    
    2.83Noninterest-bearing
    
    
    112,470
    
    
    
    10.66
    
    
    
    
    
    
    
    185,606
    
    
    
    7.48
    
    
    
    
    
    
    
    206,815
    
    
    
    7.12
    
    
    
    Total deposits
    
    $
    1,055,256
    
    
    
    100.00
    %
    
    
    2.56
    %
    
    $
    2,482,364
    
    
    
    100.00
    %
    
    
    2.32
    %
    
    $
    2,905,062
    
    
    
    100.00
    %
    
    
    2.62
    %
 CIB MARINE  CONTINUING OPERATIONS ONLY:
 Year Ended December 31,2005
    
    2004
    
    2003Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    Average
    
    Average
    
    % of Total
    
    AverageBalance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate
    
    Balance
    
    Deposits
    
    Rate(Dollars in thousands)Interest-bearing demand
    
    $
    55,764
    
    
    
    5.28
    %
    
    
    1.13
    %
    
    $
    63,291
    
    
    
    4.74
    %
    
    
    1.19
    %
    
    $
    50,984
    
    
    
    3.33
    %
    
    
    1.04
    %Money market
    
    
    210,366
    
    
    
    19.94
    
    
    
    2.47
    
    
    
    293,044
    
    
    
    21.94
    
    
    
    1.48
    
    
    
    368,219
    
    
    
    24.06
    
    
    
    1.70Other savings
    
    
    35,382
    
    
    
    3.35
    
    
    
    1.16
    
    
    
    40,611
    
    
    
    3.04
    
    
    
    1.23
    
    
    
    28,161
    
    
    
    1.84
    
    
    
    1.29Time deposits
    
    
    641,274
    
    
    
    60.77
    
    
    
    3.24
    
    
    
    814,691
    
    
    
    60.99
    
    
    
    2.96
    
    
    
    952,320
    
    
    
    62.22
    
    
    
    3.39Total interest-bearing deposits
    
    
    942,786
    
    
    
    89.34
    
    
    
    2.86
    
    
    
    1,211,637
    
    
    
    90.71
    
    
    
    2.45
    
    
    
    1,399,684
    
    
    
    91.45
    
    
    
    2.82Noninterest-bearing
    
    
    112,470
    
    
    
    10.66
    
    
    
    
    
    
    
    124,108
    
    
    
    9.29
    
    
    
    
    
    
    
    130,918
    
    
    
    8.55
    
    
    
    Total deposits
    
    $
    1,055,256
    
    
    
    100.00
    %
    
    
    2.56
    %
    
    $
    1,335,745
    
    
    
    100.00
    %
    
    
    2.22
    %
    
    $
    1,530,602
    
    
    
    100.00
    %
    
    
    2.58
    %
  57




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##### Table of Contents



December 31, 2005(Dollars inthousands)Maturity3 months or less
    
    $
    29,135Over 3 through 6 months
    
    
    26,815Over 6 through 12 months
    
    
    21,681Over 12 months
    
    
    54,606132,237Liabilities held for sale
    
    
    9,760$
    122,477
 Borrowings
    TOTAL COMPANY  CONTINUING AND DISCONTINUED OPERATIONS:
 As of December 31,2005
    
    
    2004
    
    
    2003Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of TotalBalance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings(Dollars in thousands)Short-Term BorrowingsFed funds purchased
    
    $
    297
    
    
    
    4.13
    %
    
    
    0.32
    %
    
    $
    
    
    
    
    
    %
    
    
    
    %
    
    $
    9,332
    
    
    
    1.00
    %
    
    
    4.65
    %Securities sold under repurchase agreements
    
    
    20,684
    
    
    
    3.46
    
    
    
    21.98
    
    
    
    13,269
    
    
    
    1.67
    
    
    
    15.09
    
    
    
    12,635
    
    
    
    1.15
    
    
    
    6.29Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,848
    
    
    
    3.75
    
    
    
    15.37Treasury, tax and loan note
    
    
    4,020
    
    
    
    4.06
    
    
    
    4.27
    
    
    
    5,540
    
    
    
    2.03
    
    
    
    6.30
    
    
    
    13,099
    
    
    
    0.73
    
    
    
    6.53Mortgage note payable (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,687
    
    
    
    10.00
    
    
    
    13.29Total short-term borrowings
    
    
    25,001
    
    
    
    3.56
    
    
    
    26.57
    
    
    
    18,809
    
    
    
    1.78
    
    
    
    21.39
    
    
    
    92,601
    
    
    
    4.49
    
    
    
    46.13Long-Term BorrowingsFederal Home Loan Bank-long-term
    
    
    7,250
    
    
    
    4.99
    
    
    
    7.70
    
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    42,247
    
    
    
    6.20
    
    
    
    21.04Fair value adjustment related to hedge
accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,029
    
    
    
    (3.63
    )
    
    
    2.01Total long-term FHLB borrowings
    
    
    7,250
    
    
    
    4.99
    
    
    
    7.70
    
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    46,276
    
    
    
    2.57
    
    
    
    23.05Junior subordinated debentures
    
    
    61,857
    
    
    
    9.49
    
    
    
    65.73
    
    
    
    61,857
    
    
    
    9.00
    
    
    
    70.36
    
    
    
    61,857
    
    
    
    8.58
    
    
    
    30.82Total long-term borrowings
    
    
    69,107
    
    
    
    9.01
    
    
    
    73.43
    
    
    
    69,107
    
    
    
    8.58
    
    
    
    78.61
    
    
    
    108,133
    
    
    
    6.01
    
    
    
    53.87Total borrowings
    
    $
    94,108
    
    
    
    7.57
    %
    
    
    100.00
    %
    
    $
    87,916
    
    
    
    7.12
    %
    
    
    100.00
    %
    
    $
    200,734
    
    
    
    5.31
    %
    
    
    100.00
    %
 
 (1)
    
    Mortgage note assumed on foreclosed property. 58




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##### Table of Contents



CIB MARINE  CONTINUING OPERATIONS ONLY:
 As of December 31,2005
    
    
    2004
    
    
    2003Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of Total
    
    
    
    
    
    
    Average
    
    
    % of TotalBalance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings
    
    
    Balance
    
    
    Rate
    
    
    Borrowings(Dollars in thousands)Short-Term BorrowingsFed funds purchased
    
    $
    297
    
    
    
    4.13
    %
    
    
    0.32
    %
    
    $
    
    
    
    
    
    %
    
    
    
    %
    
    $
    1,867
    
    
    
    1.00
    %
    
    
    1.52
    %Securities sold under repurchase agreements
    
    
    20,684
    
    
    
    3.46
    
    
    
    21.98
    
    
    
    13,269
    
    
    
    1.67
    
    
    
    15.09
    
    
    
    10,502
    
    
    
    0.68
    
    
    
    8.53Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,595
    
    
    
    3.67
    
    
    
    19.17Treasury, tax and loan note
    
    
    4,020
    
    
    
    4.06
    
    
    
    4.27
    
    
    
    5,540
    
    
    
    2.03
    
    
    
    6.30
    
    
    
    9,503
    
    
    
    0.73
    
    
    
    7.72Total short-term borrowings
    
    
    25,001
    
    
    
    3.56
    
    
    
    26.57
    
    
    
    18,809
    
    
    
    1.78
    
    
    
    21.39
    
    
    
    45,467
    
    
    
    2.25
    
    
    
    36.94Long-Term BorrowingsFederal Home Loan Bank-long-term
    
    
    7,250
    
    
    
    4.99
    
    
    
    7.70
    
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    15,750
    
    
    
    5.06
    
    
    
    12.80Total long-term FHLB borrowings
    
    
    7,250
    
    
    
    4.99
    
    
    
    7.70
    
    
    
    7,250
    
    
    
    4.99
    
    
    
    8.25
    
    
    
    15,750
    
    
    
    5.06
    
    
    
    12.80Junior subordinated debentures
    
    
    61,857
    
    
    
    9.49
    
    
    
    65.73
    
    
    
    61,857
    
    
    
    9.00
    
    
    
    70.36
    
    
    
    61,857
    
    
    
    8.58
    
    
    
    50.26Total long-term borrowings
    
    
    69,107
    
    
    
    9.01
    
    
    
    73.43
    
    
    
    69,107
    
    
    
    8.58
    
    
    
    78.67
    
    
    
    77,607
    
    
    
    7.87
    
    
    
    63.06Total borrowings
    
    $
    94,108
    
    
    
    7.57
    %
    
    
    100.00
    %
    
    $
    87,916
    
    
    
    7.12
    %
    
    
    100.00
    %
    
    $
    123,074
    
    
    
    5.79
    %
    
    
    100.00
    %
  Junior Subordinated Debentures and Guaranteed Trust Preferred Securities
    59




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##### Table of Contents



New Accounting Pronouncements
 Stock-Based Compensation
 Share-Based Payment . .
 Changes in Accounting Principle
 Accounting Changes and Error Corrections-a replacement of APB Opinion
No. 20 and FASB Statement No. 3
 Investments
  Derivatives
 Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No 133 and 140
 60




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##### Table of Contents



Servicing of Financial Assets
 Accounting
for Servicing of Financial Assets-an amendment of FASB Statement No 140 (SFAS 156).
 Income Taxes
  Fair Value Measurements
 Fair Value Measurements
 The Fair
Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB
Statement No. 115 (SFAS 159).
 Consideration of the Effects of Prior Year Misstatements on Current Year Financial Statements
  Off-Balance Sheet Arrangements
  61




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##### Table of Contents



Commitments:
  Derivative Financial Instruments :
  Trust Preferred Securities:
  Capital Calls:
  Residential Mortgage Recourse Obligations:
  Contractual obligations
  62




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##### Table of Contents



Included inassets orliabilities held
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    for sale
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsCertificate of deposit
and other time deposit
obligations
    
    $
    498,791
    
    
    $
    (46,805
    )
    
    $
    316,268
    
    
    $
    181,025
    
    
    $
    40,210
    
    
    $
    8,093Long-term debt
    
    
    7,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,250
    
    
    
    Junior subordinated debentures
    
    
    61,857
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,857Operating leases
    
    
    5,473
    
    
    
    (144
    )
    
    
    1,371
    
    
    
    2,463
    
    
    
    1,344
    
    
    
    439Total
    
    $
    573,371
    
    
    $
    (46,949
    )
    
    $
    317,639
    
    
    $
    183,488
    
    
    $
    48,804
    
    
    $
    70,389
 Liquidity
        63




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##### Table of Contents



JuniorLong Term
    
    
    Subordinated
    
    
    OperatingDebt
    
    
    Debentures
    
    
    Leases
    
    
    Total(Dollars in thousands)Maturity1 Year or less
    
    $
    
    
    
    $
    
    
    
    $
    1,371
    
    
    $
    1,3711 to 2 Years
    
    
    
    
    
    
    
    
    
    
    1,376
    
    
    
    1,3762 to 3 Years
    
    
    7,250
    
    
    
    
    
    
    
    1,087
    
    
    
    8,3373 to 4 Years
    
    
    
    
    
    
    
    
    
    
    870
    
    
    
    8704 to 5 Years
    
    
    
    
    
    
    
    
    
    
    474
    
    
    
    474Beyond 5 Years
    
    
    
    
    
    
    61,857
    
    
    
    439
    
    
    
    62,2967,250
    
    
    
    61,857
    
    
    
    5,617
    
    
    
    74,724Asset held for sale
    
    
    
    
    
    
    
    
    
    
    (144
    )
    
    
    (144
    )$
    7,250
    
    
    $
    61,857
    
    
    $
    5,473
    
    
    $
    74,580
 Capital
  December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Risk-weighted assets
    
    $
    704,754
    
    
    $
    942,040
    
    
    $
    2,737,049Average assets(1)
    
    $
    1,174,207
    
    
    $
    2,194,824
    
    
    $
    3,252,625Capital components
Stockholders equity
    
    $
    79,182
    
    
    $
    92,892
    
    
    $
    108,523Restricted core capital:Junior subordinated debentures net of investment in trust
    
    
    60,000
    
    
    
    60,000
    
    
    
    60,000Minority interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    133Total restricted core capital elements
    
    
    60,000
    
    
    
    60,000
    
    
    
    60,133Disallowed amounts
    
    
    (33,606
    )
    
    
    (29,036
    )
    
    
    (23,914
    )Maximum allowable in tier 1 capital
    
    
    26,394
    
    
    
    30,964
    
    
    
    36,219Nonfinancial equity items
    
    
    (14
    )
    
    
    (15
    )
    
    
    (55
    )Less: disallowed intangibles
    
    
    (982
    )
    
    
    (982
    )
    
    
    (4,945
    )Add/less: unrealized loss/(gain) on securities
    
    
    3,435
    
    
    
    642
    
    
    
    (2,184
    )Tier 1 capital
    
    
    108,015
    
    
    
    123,501
    
    
    
    137,558Allowable allowance for loan losses
    
    
    9,008
    
    
    
    11,995
    
    
    
    35,342Allowable subordinated debentures net of investment in trust
    
    
    33,606
    
    
    
    29,036
    
    
    
    23,914Total risk-based capital
    
    $
    150,629
    
    
    $
    164,532
    
    
    $
    196,814
 64




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##### Table of Contents



For CapitalAdequacyActual
    
    PurposesAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)December 31, 2005Total capital to risk-weighted assets
    
    $
    150,629
    
    
    
    21.37
    %
    
    $
    56,380
    
    
    
    8.00
    %Tier 1 capital to risk-weighted assets
    
    
    108,015
    
    
    
    15.33
    
    
    
    28,190
    
    
    
    4.00Tier 1 leverage to average assets
    
    
    108,015
    
    
    
    9.20
    
    
    
    46,968
    
    
    
    4.00December 31, 2004Total capital to risk-weighted assets
    
    $
    164,532
    
    
    
    17.47
    %
    
    $
    75,363
    
    
    
    8.00
    %Tier 1 capital to risk-weighted assets
    
    
    123,501
    
    
    
    13.11
    
    
    
    37,682
    
    
    
    4.00Tier 1 leverage to average assets
    
    
    123,501
    
    
    
    5.63
    
    
    
    87,793
    
    
    
    4.00December 31, 2003Total capital to risk-weighted assets
    
    $
    196,814
    
    
    
    7.19
    %
    
    $
    218,964
    
    
    
    8.00
    %Tier 1 capital to risk-weighted assets
    
    
    137,558
    
    
    
    5.03
    
    
    
    109,482
    
    
    
    4.00Tier 1 leverage to average assets
    
    
    137,558
    
    
    
    4.23
    
    
    
    130,105
    
    
    
    4.00
 
 (1)
    
    Average assets as calculated in accordance with 12
C.F.R. Part 325 of the FDIC rules and regulations which requires a
quarter to date average and allows for current period adjustments of
goodwill and other intangible assets.    Impact of Inflation and Changing Prices
  65




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##### Table of Contents



SUBSEQUENT EVENTS
 Charter Consolidation
  CIB Construction/Canron
  Regulatory Orders and Agreements
  Management Changes
  Liquidity
   Loan Pool Purchase
  66




---



##### Table of Contents



Cost Controls and Reduction in Force Program
  Branch Activities
    Goodwill
  FDIC Deposit Insurance Premiums
   Stock Options
  67




---



##### Table of Contents



Late Filing of Tax Returns
  Foreclosed properties
  FHLB Stock Investment Activity
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     68




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##### Table of Contents



Repricing Interest Rate Sensitivity Analysis
 December 31,2005Held for0-3 Months
    
    4-6 Months
    
    7-12 Months
    
    2-5 Years
    
    Over 5 Years
    
    sale/disposal
    
    Total(Dollars in thousands)Interest-earning assets:Loans
    
    $
    266,654
    
    
    $
    23,468
    
    
    $
    47,633
    
    
    $
    148,497
    
    
    $
    29,397
    
    
    $
    (105
    )
    
    $
    515,544Securities
    
    
    80,817
    
    
    
    41,609
    
    
    
    52,578
    
    
    
    275,596
    
    
    
    42,809
    
    
    
    
    
    
    
    493,409Federal funds sold
    
    
    88,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,358Total interest-earning assets
    
    
    435,829
    
    
    
    65,077
    
    
    
    100,211
    
    
    
    424,093
    
    
    
    72,206
    
    
    
    (105
    )
    
    
    1,097,311Interest-bearing liabilities:Time deposits
    
    
    104,659
    
    
    
    92,664
    
    
    
    127,071
    
    
    
    213,503
    
    
    
    7,698
    
    
    
    (46,804
    )
    
    
    498,791Savings and interest-bearing demand
deposits
    
    
    286,450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,024
    )
    
    
    269,426Short-term borrowings
    
    
    23,201
    
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,001Long-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,250
    
    
    
    
    
    
    
    
    
    
    
    7,250Junior subordinated debentures
    
    
    23,095
    
    
    
    
    
    
    
    
    
    
    
    24,226
    
    
    
    14,536
    
    
    
    
    
    
    
    61,857Total interest-bearing liabilities
    
    
    437,405
    
    
    
    94,464
    
    
    
    127,071
    
    
    
    244,979
    
    
    
    22,234
    
    
    
    (63,828
    )
    
    
    862,325Interest sensitivity gap (by period)
    
    $
    (1,576
    )
    
    $
    (29,387
    )
    
    $
    (26,860
    )
    
    $
    179,114
    
    
    $
    49,972
    
    
    $
    63,723
    
    
    $
    234,986Interest sensitivity gap (cumulative)
    
    
    (1,576
    )
    
    
    (30,963
    )
    
    
    (57,823
    )
    
    
    121,291
    
    
    
    171,263
    
    
    
    234,986
    
    
    
    234,986Adjusted for derivativesDerivatives (notional, by period)
    
    
    (4,093
    )
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    (907
    )
    
    
    
    
    
    
    Derivatives (notional, cumulative)
    
    
    (4,093
    )
    
    
    (4,093
    )
    
    
    (4,093
    )
    
    
    907
    
    
    
    
    
    
    
    
    
    
    
    Interest sensitivity gap (by period)
    
    
    (5,669
    )
    
    
    (29,387
    )
    
    
    (26,860
    )
    
    
    184,114
    
    
    
    49,065
    
    
    
    63,723
    
    
    
    234,986Interest sensitivity gap (cumulative)
    
    
    (5,669
    )
    
    
    (35,056
    )
    
    
    (61,916
    )
    
    
    122,198
    
    
    
    171,263
    
    
    
    234,986
    
    
    
    234,986Cumulative gap as a % of totalassets
    
    
    (0.50
    )%
    
    
    (3.08
    )%
    
    
    (5.44
    )%
    
    
    10.73
    %
    
    
    15.04
    %
    
    
    20.64
    %
     Basis Point Changes+200
    
    +100
    
    100
    
    200Net interest income change over one yearDecember 31, 2005
    
    
    1.48
    %
    
    
    (1.14
    )%
    
    
    (1.32
    )%
    
    
    (5.27
    )%December 31, 2004
    
    
    6.52
    %
    
    
    3.40
    %
    
    
    (9.05
    )%
    
    
    (14.59
    )%
   69




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##### Table of Contents




    
    The balance sheet size was assumed to remain constant;
    
    All maturing assets and liabilities were invested or deposited into similar financial or derivative instruments;
    
    Spreads to the benchmark interest rates for pricing new volume to replace maturing or
paying older volumes were similar to spreads currently inherent in those financial
instruments, except for marketable securities which reflects current market spreads;
    
    The interest rates of financial instruments with like terms were assumed to change by
the same number of basis points except that the timing, magnitude, and direction of
change of interest rates paid on nonmaturing savings and interest  bearing demand
deposits were assumed to change in a way similar to that experienced in the past, which
is less than perfectly correlated with the other interest rate changes. Current
anticipated pricing strategies for nonmaturing deposits were also utilized.
    70




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Report of Independent Registered Public Accounting Firm
 
    KPMG LLP
 
 71




---



##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Balance Sheets
 December 31,2005
    
    
    2004(Dollars in thousands, except share data)AssetsCash and cash equivalents:Cash and due from banks
    
    $
    24,554
    
    
    $
    41,777Federal funds sold
    
    
    88,358
    
    
    
    192,158Total cash and cash equivalents
    
    
    112,912
    
    
    
    233,935Securities
    
    
    493,409
    
    
    
    379,024Loans
    
    
    515,544
    
    
    
    746,615Allowance for loan losses
    
    
    (24,882
    )
    
    
    (29,551
    )Net loans
    
    
    490,662
    
    
    
    717,064Premises and equipment, net
    
    
    12,914
    
    
    
    14,099Accrued interest receivable
    
    
    5,133
    
    
    
    5,122Foreclosed properties
    
    
    2,931
    
    
    
    2,938Assets of branches held for sale
    
    
    723
    
    
    
    Assets of companies held for disposal
    
    
    5,913
    
    
    
    14,865Goodwill
    
    
    982
    
    
    
    982Other assets
    
    
    12,849
    
    
    
    17,879Total assets
    
    $
    1,138,428
    
    
    $
    1,385,908Liabilities and Stockholders EquityDeposits:Noninterest-bearing demand
    
    $
    99,483
    
    
    $
    117,546Interest-bearing demand
    
    
    49,389
    
    
    
    63,886Savings
    
    
    220,037
    
    
    
    271,712Time
    
    
    498,791
    
    
    
    725,344Total deposits
    
    
    867,700
    
    
    
    1,178,488Short-term borrowings
    
    
    25,001
    
    
    
    18,809Long-term borrowings
    
    
    7,250
    
    
    
    7,250Junior subordinated debentures
    
    
    61,857
    
    
    
    61,857Accrued interest payable
    
    
    16,896
    
    
    
    10,644Deposits of branches held for sale
    
    
    66,991
    
    
    
    Liabilities of companies held for disposal
    
    
    8,316
    
    
    
    10,137Other liabilities
    
    
    5,235
    
    
    
    5,831Total liabilities
    
    
    1,059,246
    
    
    
    1,293,016Stockholders EquityPreferred stock, $1 par value; 5,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $1 par value; 50,000,000 shares authorized,
18,346,442 issued and outstanding
    
    
    18,346
    
    
    
    18,346Capital surplus
    
    
    158,163
    
    
    
    158,163Accumulated deficit
    
    
    (93,528
    )
    
    
    (81,867
    )Accumulated other comprehensive loss, net
    
    
    (3,435
    )
    
    
    (642
    )Receivables from sale of stock
    
    
    (202
    )
    
    
    (946
    )Treasury stock at cost, 12,663 shares
    
    
    (162
    )
    
    
    (162
    )Total stockholders equity
    
    
    79,182
    
    
    
    92,892Total liabilities and stockholders equity
    
    $
    1,138,428
    
    
    $
    1,385,908
  72




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##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Statements of Operations
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands, except share and per share data)Interest and Dividend IncomeLoans
    
    $
    38,416
    
    
    $
    58,711
    
    
    $
    87,142Loans held for sale
    
    
    83
    
    
    
    213
    
    
    
    Securities:Taxable
    
    
    15,367
    
    
    
    8,479
    
    
    
    7,593Tax-exempt
    
    
    509
    
    
    
    866
    
    
    
    1,208Dividends
    
    
    1,178
    
    
    
    583
    
    
    
    429Federal funds sold
    
    
    4,296
    
    
    
    1,127
    
    
    
    291Total interest and dividend income
    
    
    59,849
    
    
    
    69,979
    
    
    
    96,663Interest ExpenseDeposits
    
    
    26,997
    
    
    
    29,735
    
    
    
    39,455Short-term borrowings
    
    
    795
    
    
    
    1,325
    
    
    
    1,117Long-term borrowings
    
    
    367
    
    
    
    517
    
    
    
    808Junior subordinated debentures
    
    
    6,636
    
    
    
    5,710
    
    
    
    5,198Total interest expense
    
    
    34,795
    
    
    
    37,287
    
    
    
    46,578Net interest income
    
    
    25,054
    
    
    
    32,692
    
    
    
    50,085Provision for credit losses
    
    
    (8,669
    )
    
    
    17,432
    
    
    
    50,506Net interest income (loss) after provision for
credit losses
    
    
    33,723
    
    
    
    15,260
    
    
    
    (421
    )Noninterest IncomeLoan fees
    
    
    404
    
    
    
    1,270
    
    
    
    1,328Deposit service charges
    
    
    1,142
    
    
    
    1,648
    
    
    
    1,913Other service fees
    
    
    625
    
    
    
    538
    
    
    
    173Other income
    
    
    369
    
    
    
    222
    
    
    
    1,699Gain on sale of investment securities, net
    
    
    355
    
    
    
    
    
    
    
    Total noninterest income
    
    
    2,895
    
    
    
    3,678
    
    
    
    5,113Noninterest ExpenseCompensation and employee benefits
    
    
    25,696
    
    
    
    28,771
    
    
    
    31,073Equipment
    
    
    4,134
    
    
    
    4,256
    
    
    
    4,268Occupancy and premises
    
    
    3,823
    
    
    
    3,241
    
    
    
    2,975Professional services
    
    
    3,990
    
    
    
    6,047
    
    
    
    2,330Impairment loss on investment securities
    
    
    2,024
    
    
    
    
    
    
    
    Write down and losses on assets
    
    
    1,896
    
    
    
    2,021
    
    
    
    3,231Other expense
    
    
    9,407
    
    
    
    8,393
    
    
    
    7,471Total noninterest expense
    
    
    50,970
    
    
    
    52,729
    
    
    
    51,348Loss from continuing operations before income taxes
    
    
    (14,352
    )
    
    
    (33,791
    )
    
    
    (46,656
    )Income tax (benefit) expense
    
    
    (1,208
    )
    
    
    (5,240
    )
    
    
    1,906Loss from continuing operations
    
    
    (13,144
    )
    
    
    (28,551
    )
    
    
    (48,562
    )Discontinued operations:Pretax income (loss) from discontinued operations
    
    
    3,650
    
    
    
    492
    
    
    
    (92,147
    )Pretax net gain on sales of discontinued operations
    
    
    200
    
    
    
    15,126
    
    
    
    Total pretax income (loss) from discontinued operations
    
    
    3,850
    
    
    
    15,618
    
    
    
    (92,147
    )Income tax (benefit) expense
    
    
    2,367
    
    
    
    4,414
    
    
    
    (3,061
    )Income (loss) from discontinued operations
    
    
    1,483
    
    
    
    11,204
    
    
    
    (89,086
    )Net Loss
    
    $
    (11,661
    )
    
    $
    (17,347
    )
    
    $
    (137,648
    )
 73




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##### Table of Contents



Consolidated Statements of Operations  continued
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands, except share and per share data)Earnings (Loss) Per ShareBasic:Loss from continuing operations
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )Discontinued operations
    
    
    0.08
    
    
    
    0.61
    
    
    
    (4.87
    )Net loss
    
    $
    (0.64
    )
    
    $
    (0.95
    )
    
    $
    (7.53
    )Diluted:Loss from continuing operations
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )Discontinued operations
    
    
    0.08
    
    
    
    0.61
    
    
    
    (4.87
    )Net loss
    
    $
    (0.64
    )
    
    $
    (0.95
    )
    
    $
    (7.53
    )Weighted average shares-basic
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550Weighted average shares-diluted
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550
  74




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##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Statements of Stockholders Equity
 StockRetained
    
    
    Accumulated
    
    
    ReceivablesCommon Stock
    
    
    
    
    
    
    Earnings
    
    
    Other
    
    
    andPar
    
    
    Capital
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    TreasuryShares
    
    
    Value
    
    
    Surplus
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    Stock
    
    
    Total(Dollars in thousands, except share data)Balance, December 31, 2002
    
    
    18,312,242
    
    
    $
    18,312
    
    
    $
    157,783
    
    
    $
    74,889
    
    
    $
    4,516
    
    
    $
    (7,937
    )
    
    $
    247,563Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137,648
    )
    
    
    
    
    
    
    
    
    
    
    (137,648
    )Other comprehensive income (loss):Unrealized securities holding losses arising
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,272
    )
    
    
    
    
    
    
    (5,272
    )Income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,849
    
    
    
    
    
    
    
    2,849Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    91Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (139,980
    )Exercise of stock options
    
    
    34,200
    
    
    
    34
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414Reduction of receivables from sale of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,729
    
    
    
    2,729Acquisition of treasury stock (86,611 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,203
    )
    
    
    (2,203
    )Balance, December 31, 2003
    
    
    18,346,442
    
    
    $
    18,346
    
    
    $
    158,163
    
    
    $
    (62,759
    )
    
    $
    2,184
    
    
    $
    (7,411
    )
    
    $
    108,523Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,347
    )
    
    
    
    
    
    
    
    
    
    
    (17,347
    )Other comprehensive loss:Unrealized securities holding losses arising
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,826
    )
    
    
    
    
    
    
    (2,826
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,173
    )Reduction of receivables from sale of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,262
    
    
    
    4,262Acquisition of treasury stock (137,002 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (577
    )
    
    
    (577
    )Reduction of treasury stock upon sale of Chicago
(210,950 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,761
    )
    
    
    
    
    
    
    2,618
    
    
    
    857Balance, December 31, 2004
    
    
    18,346,442
    
    
    $
    18,346
    
    
    $
    158,163
    
    
    $
    (81,867
    )
    
    $
    (642
    )
    
    $
    (1,108
    )
    
    $
    92,892Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,661
    )
    
    
    
    
    
    
    
    
    
    
    (11,661
    )Other comprehensive loss:Realized losses on securities available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,024
    )
    
    
    
    
    
    
    (2,024
    )Unrealized securities holding losses arising
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (769
    )
    
    
    
    
    
    
    (769
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,454
    )Reduction of receivables from sale of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    744
    
    
    
    744Balance, December 31, 2005
    
    
    18,346,442
    
    
    $
    18,346
    
    
    $
    158,163
    
    
    $
    (93,528
    )
    
    $
    (3,435
    )
    
    $
    (364
    )
    
    $
    79,182
  75




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##### Table of Contents



CIB MARINE BANCSHARES, INC.
 Consolidated Statements of Cash Flows
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Cash Flows from Operating ActivitiesNet loss from continuing operations
    
    $
    (13,144
    )
    
    $
    (28,551
    )
    
    $
    (48,562
    )Net income (loss) from discontinued operations
    
    
    1,483
    
    
    
    11,204
    
    
    
    (89,086
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Deferred loan fee amortization
    
    
    (982
    )
    
    
    (1,684
    )
    
    
    (4,995
    )Depreciation and other amortization
    
    
    2,637
    
    
    
    5,815
    
    
    
    3,925Provision for credit losses
    
    
    (8,669
    )
    
    
    17,432
    
    
    
    50,506Deferred tax expense
    
    
    
    
    
    
    911
    
    
    
    11,105Write down and losses on assets
    
    
    1,896
    
    
    
    2,021
    
    
    
    3,231Impairment loss on investment securities
    
    
    2,024
    
    
    
    
    
    
    
    Gain on sale of investment securities, net
    
    
    (355
    )
    
    
    
    
    
    
    (Increase) decrease in interest receivable and other assets
    
    
    4,495
    
    
    
    (549
    )
    
    
    (9,575
    )Increase in interest payable junior subordinated debentures
    
    
    6,581
    
    
    
    5,655
    
    
    
    1,505Increase (decrease) in other interest payable and other
liabilities
    
    
    (964
    )
    
    
    2,089
    
    
    
    1,338Operating cash flows of discontinued operations
    
    
    2,176
    
    
    
    3,157
    
    
    
    341,645Net cash provided by operating activities
    
    
    (2,822
    )
    
    
    17,500
    
    
    
    261,037Cash Flows from Investing ActivitiesMaturities of securities available for sale
    
    
    620,224
    
    
    
    621,440
    
    
    
    173,720Purchase of securities available for sale
    
    
    (432,021
    )
    
    
    (643,694
    )
    
    
    (255,359
    )Proceeds from sales of securities available for sale
    
    
    9,639
    
    
    
    
    
    
    
    999Proceeds from sales of mortgage-backed securities available
for sale
    
    
    6,400
    
    
    
    
    
    
    
    Repayments of mortgage-backed securities available for sale
    
    
    71,231
    
    
    
    53,469
    
    
    
    110,442Purchase of mortgage-backed securities available for sale
    
    
    (381,492
    )
    
    
    (55,052
    )
    
    
    (120,721
    )Net increase in Federal Home Loan Bank Stock
    
    
    (11,951
    )
    
    
    (6,166
    )
    
    
    Net decrease (increase) in other investments
    
    
    (677
    )
    
    
    1,856
    
    
    
    379Net decrease in loans
    
    
    208,836
    
    
    
    432,365
    
    
    
    139,792Proceeds from sale of loans held for sale
    
    
    24,113
    
    
    
    
    
    
    
    Proceeds from sale of foreclosed properties
    
    
    1,372
    
    
    
    704
    
    
    
    17,777Proceeds from sale of subsidiaries
    
    
    
    
    
    
    68,991
    
    
    
    Capital expenditures
    
    
    (2,007
    )
    
    
    (762
    )
    
    
    (3,629
    )Investing cash flows of discontinued operations
    
    
    4,955
    
    
    
    205,669
    
    
    
    47,983Net cash provided by investing activities
    
    
    118,622
    
    
    
    678,820
    
    
    
    111,383Cash Flows from Financing Activities(Decrease) increase in deposits
    
    
    (243,515
    )
    
    
    (321,454
    )
    
    
    151,927Repayments of long-term borrowings
    
    
    
    
    
    
    (8,500
    )
    
    
    Proceeds from stock options exercised
    
    
    
    
    
    
    
    
    
    
    414Net decrease in receivables from sale of stock
    
    
    500
    
    
    
    220
    
    
    
    Net increase (decrease) in short-term borrowings
    
    
    6,192
    
    
    
    (11,937
    )
    
    
    (129,587
    )Financing cash flows of discontinued operations
    
    
    
    
    
    
    (240,518
    )
    
    
    (369,361
    )Net cash used in financing activities
    
    
    (236,823
    )
    
    
    (582,189
    )
    
    
    (346,607
    )Net increase (decrease) in cash and cash equivalents
    
    
    (121,023
    )
    
    
    114,131
    
    
    
    25,813Cash and cash equivalents, beginning of year
    
    
    233,935
    
    
    
    119,804
    
    
    
    93,991Cash and cash equivalents, end of year
    
    $
    112,912
    
    
    $
    233,935
    
    
    $
    119,804Supplemental Cash Flow InformationCash paid (received) during the year for:Interest expense-continuing operations
    
    $
    28,543
    
    
    $
    33,371
    
    
    $
    49,806Interest expense-discontinued operations
    
    
    31
    
    
    
    31,957
    
    
    
    38,093Income taxes-continuing operations
    
    
    (5,763
    )
    
    
    (5,907
    )
    
    
    2,442Income taxes-discontinued operations
    
    
    (458
    )
    
    
    (5,860
    )
    
    
    5,290
 76




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##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Supplemental Disclosures of Noncash ActivitiesTransfers of loans to foreclosed properties-continuing
operations
    
    $
    1,400
    
    
    $
    1,132
    
    
    $
    19,166Transfers of loans to foreclosed
properties-discontinued operations
    
    
    
    
    
    
    100
    
    
    
    13,221Increase in foreclosed properties and short-term
borrowings from first mortgage assumed  discontinued
operations
    
    
    
    
    
    
    
    
    
    
    26,687Transfer deposits to deposits of branches held for sale
    
    
    66,991
    
    
    
    
    
    
    
    Transfer assets to assets of branches held for sale
    
    
    723
    
    
    
    
    
    
    
    Transfers of commercial loans to loans held for sale
    
    
    25,847
    
    
    
    3,702
    
    
    
    Decrease in foreclosed properties and short-term
borrowings satisfied by the transfer of real estate
    
    
    
    
    
    
    25,120
    
    
    
    Increase in investments in unconsolidated subsidiaries
related to deconsolidation of trusts formed to issue
trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,857Increase in junior subordinated debentures related to
trust deconsolidation
    
    
    
    
    
    
    
    
    
    
    1,857
  77




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##### Table of Contents



Notes to Consolidated Financial Statements
 Note 1  Summary of Significant Accounting Policies
 Nature of Operations
   Consolidation
  Use of Estimates in the Preparation of Financial Statements
  Reclassifications
   Cash Flows
  Other Investments
  78




---



##### Table of Contents



Loans Held for Sale
  Securities Available for Sale
   Loans, Allowance for Loan Losses and Provision for Credit Losses
      79




---



##### Table of Contents



Intangible Assets
  Premises and Equipment
  Foreclosed Properties
  Assets of Companies Held For Disposal
  80




---



##### Table of Contents



Stock-Based Compensation
 Accounting for Stock
Issued to Employees ( Accounting for Stock-Based Compensation (
  December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands, except share data)Net loss
    
    As reported
    
    $
    (11,661
    )
    
    $
    (17,347
    )
    
    $
    (137,648
    )Assumed compensation cost (1)
    
    
    (625
    )
    
    
    (812
    )
    
    
    (1,247
    )Pro forma
    
    $
    (12,286
    )
    
    $
    (18,159
    )
    
    $
    (138,895
    )Basic loss per share
    
    As reported
    
    $
    (0.64
    )
    
    $
    (0.95
    )
    
    $
    (7.53
    )Pro forma
    
    
    (0.67
    )
    
    
    (1.00
    )
    
    
    (7.60
    )Diluted loss per share
    
    As reported
    
    $
    (0.64
    )
    
    $
    (0.95
    )
    
    $
    (7.53
    )Pro forma
    
    
    (0.67
    )
    
    
    (1.00
    )
    
    
    (7.60
    )
 
 (1)
    
    Assumed compensation costs are net of tax for 2003, but not for 2005 and 2004. Due to
substantial losses incurred in 2005 and 2004, tax benefits for 2004 and later years may not be
realized. As of December 31, 2005, no U.S. federal or state loss carryback potential remains.    Advertising Expense
  Receivables from Sale of Stock
  Income Taxes
  81




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##### Table of Contents



Business Segments
   Earnings Per Common Share
  Foreign Currency Translation
   Derivative and Hedging Activities
   82




---



##### Table of Contents



83




---



##### Table of Contents



Note 2  Cash and Due from Banks
  Note 3  Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)December 31, 2005U.S. government agencies
    
    $
    155,867
    
    
    $
    55
    
    
    $
    974
    
    
    $
    154,948Obligations of states and political subdivisions
    
    
    27,580
    
    
    
    151
    
    
    
    177
    
    
    
    27,554Other notes and bonds
    
    
    350
    
    
    
    
    
    
    
    
    
    
    
    350Asset-backed securities
    
    
    9,568
    
    
    
    10
    
    
    
    
    
    
    
    9,578Commercial paper
    
    
    13,033
    
    
    
    38
    
    
    
    
    
    
    
    13,071Mortgage-backed securities
    
    
    263,727
    
    
    
    183
    
    
    
    2,721
    
    
    
    261,189Total securities available for sale
    
    
    470,125
    
    
    
    437
    
    
    
    3,872
    
    
    
    466,690Federal Home Loan Bank and Federal Reserve Bank
stock at cost
    
    
    26,719
    
    
    
    
    
    
    
    
    
    
    
    26,719Total securities
    
    $
    496,844
    
    
    $
    437
    
    
    $
    3,872
    
    
    $
    493,409December 31, 2004U.S. government agencies
    
    $
    194,164
    
    
    $
    36
    
    
    $
    560
    
    
    $
    193,640Obligations of states and political subdivisions
    
    
    15,738
    
    
    
    793
    
    
    
    1
    
    
    
    16,530Other notes and bonds
    
    
    350
    
    
    
    
    
    
    
    
    
    
    
    350Commercial paper
    
    
    12,658
    
    
    
    15
    
    
    
    
    
    
    
    12,673Mortgage-backed securities
    
    
    143,005
    
    
    
    464
    
    
    
    1,389
    
    
    
    142,080Total securities available for sale
    
    
    365,915
    
    
    
    1,308
    
    
    
    1,950
    
    
    
    365,273Federal Home Loan Bank and Federal Reserve Bank
stock at cost
    
    
    13,751
    
    
    
    
    
    
    
    
    
    
    
    13,751Total securities
    
    $
    379,666
    
    
    $
    1,308
    
    
    $
    1,950
    
    
    $
    379,024
    84




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##### Table of Contents



Amortized
    
    
    FairCost
    
    
    Value(Dollars in thousands)Due in one year or less
    
    $
    78,303
    
    
    $
    78,078Due after one year through five years
    
    
    91,521
    
    
    
    90,878Due after five years through ten years
    
    
    13,406
    
    
    
    13,378Due after ten years
    
    
    13,600
    
    
    
    13,589196,830
    
    
    
    195,923Mortgage-backed securities
    
    
    263,727
    
    
    
    261,189Asset-backed securities
    
    
    9,568
    
    
    
    9,578Total securities available for sale
    
    
    470,125
    
    
    
    466,690Federal Home Loan Bank and Federal
Reserve Bank stock at cost
    
    
    26,719
    
    
    
    26,719$
    496,844
    
    
    $
    493,409
  At December 31, 2005Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Dollars in thousands)U.S. government agencies
    
    $
    100,966
    
    
    $
    289
    
    
    $
    38,649
    
    
    $
    685
    
    
    $
    139,615
    
    
    $
    974Obligations of states and political subdivisions
    
    
    12,671
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    12,671
    
    
    
    177Mortgage-backed securities
    
    
    163,503
    
    
    
    1,798
    
    
    
    75,081
    
    
    
    923
    
    
    
    238,584
    
    
    
    2,721Total securities with unrealized losses
    
    $
    277,140
    
    
    $
    2,264
    
    
    $
    113,730
    
    
    $
    1,608
    
    
    $
    390,870
    
    
    $
    3,872Securities without unrealized losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,539Total securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    493,409
 At December 31, 2004Less than 12 months
    
    
    12 months or longer
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Dollars in thousands)U.S. government agencies
    
    $
    129,945
    
    
    $
    488
    
    
    $
    14,960
    
    
    $
    72
    
    
    $
    144,905
    
    
    $
    560Obligations of states and political subdivisions
    
    
    125
    
    
    
    1
    
    
    
    500
    
    
    
    
    
    
    
    625
    
    
    
    1Mortgage-backed securities
    
    
    64,336
    
    
    
    549
    
    
    
    54,017
    
    
    
    840
    
    
    
    118,353
    
    
    
    1,389Total securities with unrealized losses
    
    $
    194,406
    
    
    $
    1,038
    
    
    $
    69,477
    
    
    $
    912
    
    
    $
    263,883
    
    
    $
    1,950Securities without unrealized losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,141Total securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    379,024
    85




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##### Table of Contents



Note 4  Loans and Allowance for Loan Losses
 Loans
  December 31,2005
    
    
    2004% of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total(Dollars in thousands)Commercial
    
    $
    69,048
    
    
    
    13.4
    %
    
    $
    193,574
    
    
    
    25.9
    %Commercial real estate
    
    
    323,384
    
    
    
    62.6
    
    
    
    404,503
    
    
    
    54.1Commercial real estate construction
    
    
    89,313
    
    
    
    17.3
    
    
    
    109,676
    
    
    
    14.7Residential real estate
    
    
    19,925
    
    
    
    3.9
    
    
    
    31,027
    
    
    
    4.1Home equity loans
    
    
    12,603
    
    
    
    2.4
    
    
    
    7,701
    
    
    
    1.0Consumer loans
    
    
    2,179
    
    
    
    0.4
    
    
    
    2,124
    
    
    
    0.3Receivables from sale of stock
    
    
    (202
    )
    
    
    (0.0
    )
    
    
    (946
    )
    
    
    (0.1
    )Gross loans
    
    
    516,250
    
    
    
    100.0
    %
    
    
    747,659
    
    
    
    100.0
    %Deferred loan fees
    
    
    (706
    )
    
    
    
    
    
    
    (1,044
    )Loans
    
    
    515,544
    
    
    
    
    
    
    
    746,615Allowance for loan losses
    
    
    (24,882
    )
    
    
    
    
    
    
    (29,551
    )Loans, net
    
    $
    490,662
    
    
    
    
    
    
    $
    717,064
   December 31,2005
    
    2004(Dollars in thousands)Nonaccrual loans
    
    $
    29,105
    
    
    $
    54,327Restructured loans
    
    
    1,486
    
    
    
    1,536Loans 90 days or more past due and still
accruing
    
    
    11,542
    
    
    
    6,911
  December 31,2005
    
    
    2004(Dollars in thousands)Impaired loans without a specific allowance
    
    $
    10,511
    
    
    $
    16,535Impaired loans with a specific allowance
    
    
    18,349
    
    
    
    34,431Total impaired loans
    
    $
    28,860
    
    
    $
    50,966Specific allowance related to impaired loans
    
    $
    8,562
    
    
    $
    10,282Average balance of impaired loans-total company
    
    
    31,375
    
    
    
    150,882Average balance of impaired loans-CIB  Chicago
    
    
    
    
    
    
    114,116Interest income recognized on impaired loans
    
    $
    461
    
    
    $
    813
   86




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##### Table of Contents



Credit Concentrations
   % ofOutstanding
    
    % of
    
    StockholdersINDUSTRY
    
    Balance
    
    Loans
    
    Equity(Dollars in millions)Commercial Real Estate Developers
    
    $
    181.8
    
    
    
    35
    %
    
    
    230
    %Residential Real Estate Developers
    
    
    73.2
    
    
    
    14
    
    
    
    93Motel and Hotel
    
    
    50.4
    
    
    
    10
    
    
    
    64Nursing/Convalescent Homes
    
    
    35.4
    
    
    
    7
    
    
    
    45Retail Trade
    
    
    25.4
    
    
    
    5
    
    
    
    32Manufacturing
    
    
    24.6
    
    
    
    5
    
    
    
    31Health Care Facilities
    
    
    22.9
    
    
    
    4
    
    
    
    29
 Allowance for Loan Losses
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Balance at beginning of year
    
    $
    29,551
    
    
    $
    109,872
    
    
    $
    65,122Charge-offs
    
    
    (3,911
    )
    
    
    (79,979
    )
    
    
    (103,139
    )Recoveries
    
    
    7,911
    
    
    
    8,554
    
    
    
    2,043Net loan (charge-offs) recoveries
    
    
    4,000
    
    
    
    (71,425
    )
    
    
    (101,096
    )Allowance for loans sold
    
    
    
    
    
    
    (38,842
    )
    
    
    Transfer from accrual for unfunded standby
letters of credit for funded standby letters of
credit
    
    
    
    
    
    
    5,000
    
    
    
    Provision for loan losses-discontinued operations
    
    
    
    
    
    
    8,239
    
    
    
    95,340Provision for loan losses-continuing operations
    
    
    (8,669
    )
    
    
    16,707
    
    
    
    50,506Balance at end of year
    
    $
    24,882
    
    
    $
    29,551
    
    
    $
    109,872Allowance for loan losses as a percentage of loans
    
    
    4.83
    %
    
    
    3.96
    %
    
    
    4.66
    %
 Director and Officer Loans
  87




---



##### Table of Contents



December 31,2005
    
    
    2004(Dollars in thousands)Balance at beginning of year
    
    $
    9,940
    
    
    $
    60,489Balance adjustments (1)
    
    
    
    
    
    
    (20,857
    )New loans
    
    
    1,834
    
    
    
    56,063Repayments
    
    
    (2,298
    )
    
    
    (85,185
    )Sale of CIB  Chicago
    
    
    
    
    
    
    (570
    )Balance at end of year
    
    $
    9,476
    
    
    $
    9,940
 
 (1)
    
    Balance adjustments are primarily due to director and officer status changes in
these reporting periods.
 Note 5  Premises and Equipment, net
  December 31,2005
    
    
    2004(Dollars in thousands)Land
    
    $
    2,155
    
    
    $
    1,925Buildings
    
    
    7,387
    
    
    
    8,342Leasehold improvements
    
    
    1,881
    
    
    
    2,181Furniture and equipment
    
    
    22,196
    
    
    
    21,05633,619
    
    
    
    33,504Less: accumulated depreciation
    
    
    (20,705
    )
    
    
    (19,405
    )$
    12,914
    
    
    $
    14,099
   Amount(Dollars in thousands)2006
    
    $
    1,3712007
    
    
    1,3762008
    
    
    1,0872009
    
    
    8702010
    
    
    474Thereafter
    
    
    4395,617Held for sale
    
    
    (144
    )$
    5,473
 88




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##### Table of Contents



Note 6  Goodwill and Other Intangible Assets
  Other Intangible AssetsCore
    
    
    CustomerDeposit
    
    
    BaseGoodwill
    
    
    Intangibles
    
    
    Intangibles
    
    
    Total(Dollars in thousands)Balance, December 31, 2003
    
    $
    982
    
    
    $
    982
    
    
    $
    825
    
    
    $
    1,807Impairment loss (1)
    
    
    
    
    
    
    
    
    
    
    (756
    )
    
    
    (756
    )Amortization expense (1)
    
    
    
    
    
    
    (227
    )
    
    
    (69
    )
    
    
    (296
    )Reduction of intangible assets due to
sale of CIB  Chicago
    
    
    
    
    
    
    (755
    )
    
    
    
    
    
    
    (755
    )Balance, December 31, 2004 and 2005 (2)
    
    $
    982
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Core Deposit Intangibles and Customer Base Intangibles amortization and impairment
losses relate to CIB    Chicago, and Mortgage Services, Inc. which were
reclassified to Discontinued Operations in 2004 are included in Discontinued
Operations on the Consolidated Statements of Operations for all periods presented.(2)
    
    There was no activity during 2005.    Note 7  Companies Held For Disposal and Discontinued Operations
    89




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##### Table of Contents



Reconciliation of assets/liabilities of companies held for disposal
 December 31,2005
    
    
    2004(Dollars in thousands)Assets of companies held for disposalCIB Construction
    
    $
    5,165
    
    
    $
    13,697MICR
    
    
    595
    
    
    
    2,706MSI
    
    
    806
    
    
    
    1,429Other (1)
    
    
    (653
    )
    
    
    (2,967
    )Total assets of companies held for disposal
    
    $
    5,913
    
    
    $
    14,865Liabilities of companies held for disposalCIB Construction
    
    $
    5,161
    
    
    $
    10,222MICR
    
    
    491
    
    
    
    864MSI
    
    
    1,901
    
    
    
    2,360Other (1)
    
    
    763
    
    
    
    (3,309
    )Total liabilities of companies held for disposal
    
    $
    8,316
    
    
    $
    10,137
 
 (1)
    
    Includes mortgage banking assets/liabilities held by affiliates and
elimination of intercompany transactions between subsidiaries and affiliates. Reconciliation of net income (loss) from discontinued operations:
 Pretaxincome(loss)beforegain(loss) onsale of assets
    
    
    Gain (loss)
    
    
    Incomeand other
    
    
    on sale of
    
    
    tax
    
    
    Otherincome
    
    
    discontinued
    
    
    expense
    
    
    income
    
    
    Net(expense)
    operations
    (benefit)
    (expense) (1)
    income(loss)(Dollars in thousands)2005CIB Construction
    
    $
    2,716
    
    
    $
    
    
    
    $
    840
    
    
    $
    
    
    
    $
    1,876MICR
    
    
    1,037
    
    
    
    200
    
    
    
    (233
    )
    
    
    
    
    
    
    1,470MSI
    
    
    (304
    )
    
    
    
    
    
    
    (140
    )
    
    
    201
    
    
    
    37Other (2)
    
    
    
    
    
    
    
    
    
    
    1,900
    
    
    
    
    
    
    
    (1,900
    )Total
    
    $
    3,449
    
    
    $
    200
    
    
    $
    2,367
    
    
    $
    201
    
    
    $
    1,4832004CIB Construction
    
    $
    3,646
    
    
    $
    
    
    
    $
    676
    
    
    $
    957
    
    
    $
    3,927MICR
    
    
    (598
    )
    
    
    
    
    
    
    400
    
    
    
    
    
    
    
    (998
    )MSI
    
    
    (4,775
    )
    
    
    (738
    )
    
    
    (412
    )
    
    
    871
    
    
    
    (4,230
    )CIB  Chicago
    
    
    (4,471
    )
    
    
    15,627
    
    
    
    3,750
    
    
    
    4,941
    
    
    
    12,347Commercial Finance
    
    
    (221
    )
    
    
    237
    
    
    
    
    
    
    
    142
    
    
    
    158Total
    
    $
    (6,419
    )
    
    $
    15,126
    
    
    $
    4,414
    
    
    $
    6,911
    
    
    $
    11,2042003CIB Construction
    
    $
    (2,662
    )
    
    $
    
    
    
    $
    946
    
    
    $
    (2,300
    )
    
    $
    (5,908
    )MICR
    
    
    (878
    )
    
    
    
    
    
    
    393
    
    
    
    
    
    
    
    (1,271
    )MSI
    
    
    1,216
    
    
    
    
    
    
    
    2,656
    
    
    
    5,609
    
    
    
    4,169CIB  Chicago
    
    
    (96,195
    )
    
    
    
    
    
    
    (7,221
    )
    
    
    6,355
    
    
    
    (82,619
    )Commercial Finance
    
    
    (3,630
    )
    
    
    
    
    
    
    165
    
    
    
    338
    
    
    
    (3,457
    )Total
    
    $
    (102,149
    )
    
    $
    
    
    
    $
    (3,061
    )
    
    $
    10,002
    
    
    $
    (89,086
    )
 
 (1)
    
    Includes impairment losses recorded by the parent, mortgage banking
income/expense recognized by affiliates and elimination of intercompany
transactions.(2)
    
    Relates to subsidiary sold in 2004. 90




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##### Table of Contents



CIB Construction (includes Canron)
    December 31,2005
    
    
    2004(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    626
    
    
    $
    881Accounts receivable
    
    
    1,572
    
    
    
    2,194Other current assets
    
    
    2,967
    
    
    
    3,547Current assets
    
    
    5,165
    
    
    
    6,622Property and equipment, net
    
    
    
    
    
    
    7,075Total assets
    
    $
    5,165
    
    
    $
    13,697Liabilities and stockholders equity:Current portion of loans payable to CIB Marine and its affiliates
    
    $
    
    
    
    $
    2,700Income tax payable
    
    
    3,106
    
    
    
    2,311Other liabilities
    
    
    2,055
    
    
    
    5,211Current liabilities
    
    
    5,161
    
    
    
    10,222Stockholders equity
    
    
    4
    
    
    
    3,475Total liabilities and stockholders equity
    
    $
    5,165
    
    
    $
    13,697
  MICR
  91




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##### Table of Contents



December 31,
    
    
    December 31,2005
    
    
    2004(Dollars in thousands)Assets:Cash on deposit at non-affiliates
    
    $
    273
    
    
    $
    288Accounts receivable
    
    
    
    
    
    
    765Inventory
    
    
    
    
    
    
    1,121Accrued income tax receivable
    
    
    122
    
    
    
    Other current assets
    
    
    200
    
    
    
    28Property and equipment, net
    
    
    
    
    
    
    269Goodwill, net
    
    
    
    
    
    
    235Total assets
    
    $
    595
    
    
    $
    2,706Liabilities and stockholders equity:Accrued income tax payable
    
    $
    
    
    
    $
    404Other liabilities
    
    
    491
    
    
    
    460Stockholders equity
    
    
    104
    
    
    
    1,842Total liabilities and stockholders equity
    
    $
    595
    
    
    $
    2,706
 MSI
   December 31,2005
    
    
    2004(Dollars in thousands)Assets:Cash on deposit at CIB Marine
    
    $
    24
    
    
    $
    341Loans held for sale
    
    
    
    
    
    
    53Net Loans
    
    
    105
    
    
    
    Property and equipment, net
    
    
    
    
    
    
    35Accrued income tax receivable
    
    
    633
    
    
    
    621Other assets
    
    
    44
    
    
    
    379Total assets
    
    $
    806
    
    
    $
    1,429Liabilities and stockholders equity:Loans payable to CIB Marine
    
    $
    829
    
    
    $
    303Other liabilities
    
    
    1,072
    
    
    
    2,057Total liabilities
    
    
    1,901
    
    
    
    2,360Stockholders equity
    
    
    (1,095
    )
    
    
    (931
    )Total liabilities and stockholders equity
    
    $
    806
    
    
    $
    1,429
  Hillside Investors (includes CIB  Chicago)
  92




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##### Table of Contents



Commercial Finance
  Note 8  Assets and Deposits of Branches Held For Sale
   Note 9  Other Assets
  December 31,2005
    
    
    2004(Dollars in thousands)Prepaid expenses
    
    $
    1,113
    
    
    $
    1,266Accounts receivable
    
    
    638
    
    
    
    1,395Trust preferred securities underwriting fee, net of amortization
    
    
    1,390
    
    
    
    1,445Investment in trust common securities
    
    
    2,654
    
    
    
    2,481Other investments
    
    
    3,562
    
    
    
    3,257Income tax receivable
    
    
    3,391
    
    
    
    7,945Other
    
    
    101
    
    
    
    90$
    12,849
    
    
    $
    17,879
  
    
    Investments in limited partnership interests in various affordable housing
partnerships. The carrying value of these investments was $1.8 million at December 31,
2005 and $2.1 million at December 31, 2004. CIB Marine has engaged in these transactions
to provide additional qualified investments under the Community Reinvestment Act and to
receive related
 93




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##### Table of Contents



income tax credits. The partnerships provide affordable housing to low-income residents
within CIB Marines markets and other locations.
    
    Interest in two companies operating as small business investment companies under the
Small Business Investment Act of 1958, as amended. CIB Marine committed to a $1.1 million
investment in these companies and as of December 31, 2005 has invested $0.9 million. The
carrying value of these investments was cost less other-than-temporary impairment, which
was estimated to be $0.7 million at December 31, 2005 and $0.8 million at December 31,
2004. During 2005, CIB Marine recognized an impairment loss of $0.1 million on these
investments due to a reduction in CIB Marines interest in the equity value in one of the
two investments. The impairment loss is included within write down and losses on assets.
    
    Investment in the common and preferred capital of a limited liability corporation
engaged in the development of owner-occupied housing in qualified low-income communities.
CIB Marine committed to a $1.0 million investment in this company. The carrying value of
this investment as of December 31, 2005 and 2004 was $0.8 million and $0.1 million,
respectively.
 Note 10  Deposits
   December 31, 2005(Dollars in thousands)2006
    
    $
    316,2682007
    
    
    135,4272008
    
    
    45,5982009
    
    
    28,6032010
    
    
    11,607Thereafter
    
    
    8,093Deposits of
branches held for sale (1)
    
    
    (46,805
    )$
    498,791
 
 (1)
    
    Deposits held by branches classified as held for sale at December
31, 2005. Note 11  Short-Term Borrowings
   At Year end
    
    
    For the YearWeighted-
    
    
    Daily
    
    
    Weighted-
    
    
    HighestAverage
    
    
    Average
    
    
    Average
    
    
    Balances atBalance
    
    
    Rate
    
    
    Balances
    
    
    Rate
    
    
    Month End(Dollars in thousands)2005Federal funds purchased and
securities sold under
repurchase agreements
    
    $
    20,981
    
    
    
    3.50
    %
    
    $
    24,728
    
    
    
    3.00
    %
    
    $
    25,367Treasury, tax and loan note
    
    
    4,020
    
    
    
    4.06
    
    
    
    905
    
    
    
    5.93
    
    
    
    4,028Total short-term borrowings
    
    $
    25,001
    
    
    
    3.56
    %
    
    $
    25,633
    
    
    
    3.10
    %2004Federal funds purchased and
securities sold under
repurchase agreements
    
    $
    13,269
    
    
    
    1.67
    %
    
    $
    24,034
    
    
    
    1.40
    %
    
    $
    44,506Federal Home Loan Bank notes
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    1.68
    
    
    
    2,500Revolving lines of credit
    
    
    
    
    
    
    
    
    
    
    25,033
    
    
    
    5.19
    
    
    
    31,726Treasury, tax and loan note
    
    
    5,540
    
    
    
    2.03
    
    
    
    2,273
    
    
    
    0.97
    
    
    
    7,167Mortgage note payable
    
    
    
    
    
    
    
    
    
    
    9,542
    
    
    
    7.34
    
    
    
    27,134Total short-term borrowings
    
    $
    18,809
    
    
    
    1.78
    %
    
    $
    61,317
    
    
    
    3.86
    %
  94




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##### Table of Contents



Note 12  Long-Term Borrowings
  FHLB
  Scheduled
    
    Callable QuarterlyDecember 31,
    Maturity
    
    @ Par After2005
    
    
    2004Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate(Dollars in thousands)$
    3,250
    
    
    
    4.95
    %
    
    $
    3,250
    
    
    4.95%
    
    01/16/08
    
    01/16/012,000
    
    
    
    4.95
    
    
    
    2,000
    
    
    4.95
    
    01/16/08
    
    01/16/012,000
    
    
    
    5.09
    
    
    
    2,000
    
    
    5.09
    
    02/20/08
    
    02/20/01$
    7,250
    
    
    
    4.99
    %
    
    $
    7,250
    
    
    4.99%
   Junior Subordinated Debentures
  December 31,Issue
    
    Interest
    
    
    
    
    
    Callable2005
    
    2004
    
    Date
    
    Rate
    
    Maturity Date
    
    After(Dollars in thousands)CIB Marine Capital Trust I
    
    $
    10,310
    
    
    $
    10,310
    
    
    
    03/23/00
    
    
    
    10.88
    %
    
    
    03/08/30
    
    
    
    03/08/10CIB Statutory Trust III
    
    
    15,464
    
    
    
    15,464
    
    
    
    09/07/00
    
    
    
    10.60
    
    
    
    09/07/30
    
    
    
    09/07/10CIB Statutory Trust IV
    
    
    15,464
    
    
    
    15,464
    
    
    
    02/22/01
    
    
    
    10.20
    
    
    
    02/22/31
    
    
    
    02/22/11CIB Statutory Trust V
    
    
    20,619
    
    
    
    20,619
    
    
    
    09/27/02
    
    
    Variable (1)
    
    
    09/27/32
    
    
    
    09/30/07Total junior subordinated debentures
    
    $
    61,857
    
    
    $
    61,857
 
 (1)
    
    Three-month LIBOR + 3.40% adjusted quarterly. 95




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##### Table of Contents



Note 13  Other Liabilities
 December 31,2005
    
    
    2004(Dollars in thousands)Accounts payable
    
    $
    459
    
    
    $
    344Accrual for unfunded commitments and standby
letters of credit
    
    
    725
    
    
    
    725Accrued real estate taxes
    
    
    201
    
    
    
    190Accrued compensation and employee benefits
    
    
    913
    
    
    
    1,169Accrued professional fees
    
    
    1,476
    
    
    
    1,546Accrued other expenses
    
    
    997
    
    
    
    1,138Fair value of derivatives
    
    
    37
    
    
    
    Other liabilities
    
    
    427
    
    
    
    719$
    5,235
    
    
    $
    5,831
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Balance at beginning of year
    
    $
    725
    
    
    $
    15,747
    
    
    $
    1,000Transfer to allowance for loan losses for funded standby letters of credit
    
    
    
    
    
    
    (5,000
    )
    
    
    Charge-offs
    
    
    
    
    
    
    (6,255
    )
    
    
    Provision for losses on unfunded commitments and standby letters of
credit:Continuing Operations
    
    
    
    
    
    
    725
    
    
    
    Discontinued Operations
    
    
    
    
    
    
    (1,900
    )
    
    
    14,747Reduction of accrual for unfunded loan commitments and standby letters of
credit losses due to sale of CIB  Chicago
    
    
    
    
    
    
    (2,592
    )
    
    
    Balance at end of year
    
    $
    725
    
    
    $
    725
    
    
    $
    15,747
 96




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##### Table of Contents



Note 14  Stockholders Equity
 Receivables from Sale of Stock
  Treasury Stock
  Regulatory Capital
     97




---



##### Table of Contents



To Be WellCapitalized UnderPromptFor Capital
    
    CorrectiveActual
    Adequacy Purposes
    ProvisionsAmount
    Ratio
    Amount
    Ratio
    Amount
    Ratio(Dollars in thousands)December 31, 2005Total capital to risk weighted assetsCIB Marine Bancshares, Inc.
    
    $
    150,629
    
    
    
    21.37
    %
    
    $
    56,380
    
    
    
    8.00
    %
    
    $
    70,475Central Illinois Bank
    
    
    57,310
    
    
    
    16.69
    
    
    
    27,476
    
    
    
    8.00
    
    
    
    34,345
    
    
    
    10.00
    %Marine  Wisconsin
    
    
    27,643
    
    
    
    19.30
    
    
    
    11,458
    
    
    
    8.00
    
    
    
    14,322
    
    
    
    10.00CIB  Indiana
    
    
    12,849
    
    
    
    18.30
    
    
    
    5,618
    
    
    
    8.00
    
    
    
    7,022
    
    
    
    10.00Marine FSB
    
    
    9,495
    
    
    
    19.02
    
    
    
    3,994
    
    
    
    8.00
    
    
    
    4,992
    
    
    
    10.00Citrus Bank (1)
    
    
    20,429
    
    
    
    23.02
    
    
    
    7,098
    
    
    
    8.00
    
    
    
    8,873
    
    
    
    10.00Tier 1 capital to risk weighted assetsCIB Marine Bancshares, Inc.
    
    $
    108,015
    
    
    
    15.33
    %
    
    $
    28,190
    
    
    
    4.00
    %
    
    $
    42,285Central Illinois Bank
    
    
    52,857
    
    
    
    15.39
    
    
    
    13,738
    
    
    
    4.00
    
    
    
    20,607
    
    
    
    6.00
    %Marine  Wisconsin
    
    
    25,839
    
    
    
    18.04
    
    
    
    5,729
    
    
    
    4.00
    
    
    
    8,593
    
    
    
    6.00CIB  Indiana
    
    
    12,086
    
    
    
    17.21
    
    
    
    2,809
    
    
    
    4.00
    
    
    
    4,213
    
    
    
    6.00Marine FSB
    
    
    8,866
    
    
    
    17.76
    
    
    
    1,997
    
    
    
    4.00
    
    
    
    2,995
    
    
    
    6.00Citrus Bank
    
    
    19,307
    
    
    
    21.76
    
    
    
    3,549
    
    
    
    4.00
    
    
    
    5,324
    
    
    
    6.00Tier 1 leverage to average assetsCIB Marine Bancshares, Inc.
    
    $
    108,015
    
    
    
    9.20
    %
    
    $
    46,968
    
    
    
    4.00
    %
    
    $
    58,710Central Illinois Bank (2)
    
    
    52,857
    
    
    
    8.73
    
    
    
    24,211
    
    
    
    4.00
    
    
    
    30,264
    
    
    
    5.00
    %Marine  Wisconsin (2)
    
    
    25,839
    
    
    
    11.46
    
    
    
    9,015
    
    
    
    4.00
    
    
    
    11,269
    
    
    
    5.00CIB  Indiana (2)
    
    
    12,086
    
    
    
    12.05
    
    
    
    4,013
    
    
    
    4.00
    
    
    
    5,016
    
    
    
    5.00Marine FSB
    
    
    8,866
    
    
    
    10.90
    
    
    
    3,255
    
    
    
    4.00
    
    
    
    4,069
    
    
    
    5.00Citrus Bank (2)
    
    
    19,307
    
    
    
    12.94
    
    
    
    5,969
    
    
    
    4.00
    
    
    
    7,461
    
    
    
    5.00December 31, 2004Total capital to risk weighted assetsCIB Marine Bancshares, Inc.
    
    $
    164,532
    
    
    
    17.47
    %
    
    $
    75,363
    
    
    
    8.00
    %
    
    $
    94,204Central Illinois Bank
    
    
    62,536
    
    
    
    13.67
    
    
    
    36,607
    
    
    
    8.00
    
    
    
    45,759
    
    
    
    10.00
    %Marine  Wisconsin
    
    
    25,085
    
    
    
    12.26
    
    
    
    16,374
    
    
    
    8.00
    
    
    
    20,468
    
    
    
    10.00CIB  Indiana
    
    
    12,372
    
    
    
    13.61
    
    
    
    7,274
    
    
    
    8.00
    
    
    
    9,093
    
    
    
    10.00Marine FSB
    
    
    10,215
    
    
    
    17.50
    
    
    
    4,671
    
    
    
    8.00
    
    
    
    5,839
    
    
    
    10.00Citrus Bank (1)
    
    
    20,383
    
    
    
    18.73
    
    
    
    8,706
    
    
    
    8.00
    
    
    
    10,882
    
    
    
    10.00Tier 1 capital to risk weighted assetsCIB Marine Bancshares, Inc.
    
    $
    123,501
    
    
    
    13.11
    %
    
    $
    37,682
    
    
    
    4.00
    %
    
    $
    56,522Central Illinois Bank
    
    
    56,702
    
    
    
    12.39
    
    
    
    18,304
    
    
    
    4.00
    
    
    
    27,455
    
    
    
    6.00
    %Marine  Wisconsin
    
    
    22,455
    
    
    
    10.97
    
    
    
    8,187
    
    
    
    4.00
    
    
    
    12,281
    
    
    
    6.00CIB  Indiana
    
    
    11,220
    
    
    
    12.34
    
    
    
    3,637
    
    
    
    4.00
    
    
    
    5,456
    
    
    
    6.00Marine FSB
    
    
    9,482
    
    
    
    16.24
    
    
    
    2,335
    
    
    
    4.00
    
    
    
    3,503
    
    
    
    6.00Citrus Bank
    
    
    19,007
    
    
    
    17.47
    
    
    
    4,353
    
    
    
    4.00
    
    
    
    6,529
    
    
    
    6.00Tier 1 leverage to average assetsCIB Marine Bancshares, Inc.
    
    $
    123,501
    
    
    
    5.63
    %
    
    $
    87,793
    
    
    
    4.00
    %
    
    $
    109,741Central Illinois Bank (2)
    
    
    56,702
    
    
    
    8.39
    
    
    
    27,018
    
    
    
    4.00
    
    
    
    33,772
    
    
    
    5.00
    %Marine  Wisconsin (2)
    
    
    22,455
    
    
    
    7.78
    
    
    
    11,544
    
    
    
    4.00
    
    
    
    14,430
    
    
    
    5.00CIB  Indiana (2)
    
    
    11,220
    
    
    
    8.85
    
    
    
    5,071
    
    
    
    4.00
    
    
    
    6,338
    
    
    
    5.00Marine FSB
    
    
    9,482
    
    
    
    10.83
    
    
    
    3,502
    
    
    
    4.00
    
    
    
    4,377
    
    
    
    5.00Citrus Bank (2)
    
    
    19,007
    
    
    
    10.42
    
    
    
    7,294
    
    
    
    4.00
    
    
    
    9,118
    
    
    
    5.00
 
 (1)
    
    The Written Agreement Citrus Bank entered into with the OCC requires Citrus Bank
to maintain total capital of at least 14%.(2)
    
    Pursuant to the respective regulatory Order, Memoranda and
Agreements, the banks are required to maintain a Tier 1
leverage Capital level equal to or exceeding 8% of total assets  98




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Federal Deposit Insurance
  Note 15  Other Expense
  Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Payroll and other processing charges
    
    $
    125
    
    
    $
    133
    
    
    $
    133Correspondent bank charges
    
    
    291
    
    
    
    372
    
    
    
    384Advertising/marketing
    
    
    1,135
    
    
    
    691
    
    
    
    658Communications
    
    
    1,310
    
    
    
    1,182
    
    
    
    1,405Supplies and printing
    
    
    581
    
    
    
    421
    
    
    
    444Shipping and handling
    
    
    703
    
    
    
    807
    
    
    
    707Collection expense
    
    
    248
    
    
    
    221
    
    
    
    103FDIC and state assessment
    
    
    1,768
    
    
    
    1,634
    
    
    
    492Recording and filing fees
    
    
    185
    
    
    
    116
    
    
    
    98Foreclosed property
    
    
    46
    
    
    
    111
    
    
    
    408Litigation settlements
    
    
    
    
    
    
    
    
    
    
    50Other expense
    
    
    3,015
    
    
    
    2,705
    
    
    
    2,589Total other expense
    
    $
    9,407
    
    
    $
    8,393
    
    
    $
    7,471
 Note 16  Loss Per Share
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands, except share and per share data)Loss from continuing operations
    
    $
    (13,144
    )
    
    $
    (28,551
    )
    
    $
    (48,562
    )Weighted average shares outstanding:Basic
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550Effect of dilutive stock options outstanding
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    
    18,333,779
    
    
    
    18,245,884
    
    
    
    18,286,550Per share loss:Basic
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )Effect of dilutive stock options outstanding
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    (0.72
    )
    
    $
    (1.56
    )
    
    $
    (2.66
    )
 99




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##### Table of Contents



Note 17  Financial Instruments with Off-Balance Sheet Risk
  December 31,2005

    2004(Dollars in thousands)Commitments to extend credit
    
    $
    186,187
    
    
    $
    192,571Standby letters of credit
    
    
    7,222
    
    
    
    11,626Interest rate swaps
    
    
    15,807
    
    
    
    20,930
  .
  ,
   100




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##### Table of Contents



Note 18  Commitments and Contingencies
   Dennis Lewis, et
al. v. CIB Marine Bancshares, Inc., et al
   101




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102




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103




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Note 19  Stock Option Plans
   Range of
    
    
    WeightedNumber of
    
    
    Option Prices
    
    
    AverageShares
    
    
    per Share
    
    
    Exercise PriceShares under option at December 31, 2002
    
    
    1,533,251
    
    
    $
    4.95-25.08
    
    
    $
    16.27Granted
    
    
    
    
    
    
    
    
    
    
    Lapsed or surrendered
    
    
    (59,201
    )
    
    
    13.07-23.22
    
    
    
    17.78Exercised
    
    
    (34,200
    )
    
    
    4.95-13.07
    
    
    
    5.89Shares under option at December 31, 2003
    
    
    1,439,850
    
    
    $
    8.50-25.08
    
    
    $
    16.45Granted
    
    
    
    
    
    $
    
    
    
    $
    Lapsed or surrendered
    
    
    (648,519
    )
    
    
    8.50-25.08
    
    
    
    16.58Exercised
    
    
    
    
    
    
    
    
    
    
    Shares under option at December 31, 2004
    
    
    791,331
    
    
    $
    8.50-23.66
    
    
    $
    16.35Granted
    
    
    523,750
    
    
    $
    4.10
    
    
    $
    4.10Lapsed or surrendered
    
    
    (293,594
    )
    
    
    4.10-23.66
    
    
    
    13.63Exercised
    
    
    
    
    
    
    
    
    
    
    Shares under option at December 31, 2005
    
    
    1,021,487
    
    
    $
    4.10-23.66
    
    
    $
    10.85Share exercisable at December 31, 2005
    
    
    528,832
    
    
    $
    10.87-23.66
    
    
    $
    16.40
  Options Outstanding
    
    Options ExercisableWeightedNumber of
    
    Average
    
    Weighted
    
    Number of
    
    WeightedShares
    
    Remaining
    
    Average
    
    Shares
    
    AverageRange of Option
    
    
    Outstanding
    
    Contractual
    
    Exercise
    
    Exercisable
    
    ExercisePrices
    
    
    at 12/31/05
    
    Life (Years)
    
    Price
    
    at 12/31/05
    
    Prices$4.10
    
    
    6.60
    
    
    
    471,750
    
    
    
    9.76
    
    
    $
    4.10
    
    
    
    
    
    
    $
    6.70
    
    
    9.20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.30
    
    
    11.80
    
    
    
    39,750
    
    
    
    0.32
    
    
    
    10.87
    
    
    
    39,750
    
    
    
    10.8711.90
    
    
    14.40
    
    
    
    169,200
    
    
    
    2.12
    
    
    
    13.08
    
    
    
    169,200
    
    
    
    13.0814.50
    
    
    17.00
    
    
    
    115,050
    
    
    
    3.58
    
    
    
    16.24
    
    
    
    115,050
    
    
    
    16.2417.10
    
    
    19.60
    
    
    
    117,966
    
    
    
    4.57
    
    
    
    18.40
    
    
    
    117,966
    
    
    
    18.4019.70
    
    
    22.20
    
    
    
    2,038
    
    
    
    5.66
    
    
    
    22.07
    
    
    
    1,630
    
    
    
    22.0722.30
    
    
    23.66
    
    
    
    105,733
    
    
    
    5.92
    
    
    
    22.91
    
    
    
    85,236
    
    
    
    22.91$4.10
    
    
    23.66
    
    
    
    1,021,487
    
    
    
    6.43
    
    
    $
    10.85
    
    
    
    528,832
    
    
    $
    16.40
 104




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##### Table of Contents



Note 20  Other Benefit Plans
   Note 21  Income Taxes
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Current tax provision
(benefit):Federal
    
    $
    (1,152
    )
    
    $
    (5,781
    )
    
    $
    (9,109
    )State
    
    
    (56
    )
    
    
    (370
    )
    
    
    (90
    )Deferred (benefit)
    
    
    
    
    
    
    911
    
    
    
    11,105$
    (1,208
    )
    
    $
    (5,240
    )
    
    $
    1,906
  For the Year Ended December 31,2005
    
    2004
    
    2003Amount
    
    %
    
    Amount
    
    %
    
    Amount
    
    %(Dollars in thousands)Income tax benefit at statutory tax rate
    
    $
    (5,023
    )
    
    
    (35.0
    )%
    
    $
    (11,827
    )
    
    
    (35.0
    )%
    
    $
    (16,330
    )
    
    
    (35.0
    )%Increase (reduction) in tax rate resulting from:State income taxes, net of federal income tax effect
    
    
    (63
    )
    
    
    (0.4
    )
    
    
    (2,845
    )
    
    
    (8.4
    )
    
    
    (4,061
    )
    
    
    (8.7
    )Tax-exempt interest
    
    
    (548
    )
    
    
    (3.8
    )
    
    
    (650
    )
    
    
    (1.9
    )
    
    
    (778
    )
    
    
    (1.7
    )Affordable housing credits
    
    
    (359
    )
    
    
    (2.5
    )
    
    
    (360
    )
    
    
    (1.1
    )
    
    
    (339
    )
    
    
    (0.7
    )Valuation allowance
    
    
    4,163
    
    
    
    29.0
    
    
    
    9,328
    
    
    
    27.6
    
    
    
    23,247
    
    
    
    49.8Other, net
    
    
    622
    
    
    
    4.3
    
    
    
    1,114
    
    
    
    3.3
    
    
    
    167
    
    
    
    .4$
    (1,208
    )
    
    
    (8.4
    )%
    
    $
    (5,240
    )
    
    
    (15.5
    )%
    
    $
    1,906
    
    
    
    4.1
    %
  105




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##### Table of Contents



December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Deferred tax assets:Loss carryforwards (1)
    
    $
    53,121
    
    
    $
    48,406
    
    
    $
    5,306Tax credit carryforwards
    
    
    1,817
    
    
    
    1,457
    
    
    
    1,550Allowance for loan losses
    
    
    9,759
    
    
    
    11,698
    
    
    
    41,042Goodwill and intangible assets
    
    
    6
    
    
    
    1,609
    
    
    
    4,285Allowance for unfunded loan commitments
    
    
    
    
    
    
    291
    
    
    
    5,728Net unrealized loss in securities available for sale
    
    
    1,322
    
    
    
    252
    
    
    
    Other real estate owned
    
    
    498
    
    
    
    455
    
    
    
    1,035Other
    
    
    2,075
    
    
    
    1,135
    
    
    
    921Deferred tax assets before valuation allowance
    
    
    68,598
    
    
    
    65,303
    
    
    
    59,867Valuation allowance
    
    
    (67,193
    )
    
    
    (64,074
    )
    
    
    (48,796
    )Net deferred tax assets
    
    
    1,405
    
    
    
    1,229
    
    
    
    11,071Deferred tax liabilities:Net unrealized gain in securities available for sale
    
    $
    
    
    
    $
    
    
    
    $
    798Fixed assets
    
    
    429
    
    
    
    613
    
    
    
    1,242REIT Income
    
    
    
    
    
    
    
    
    
    
    7,511FHLB stock
dividends
    
    
    786
    
    
    
    489
    
    
    
    375Other
    
    
    190
    
    
    
    127
    
    
    
    234Total deferred tax liabilities
    
    
    1,405
    
    
    
    1,229
    
    
    
    10,160Net deferred tax assets
    
    $
    
    
    
    $
    
    
    
    $
    911
 
 (1)
    
    Includes U.S. federal net operating, capital loss and charitable contribution
carryforwards  December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Deferred tax benefits (expenses) included in continuing operations
provision
    
    $
    
    
    
    $
    (911
    )
    
    $
    (11,105
    )Change in net deferred tax of discontinued operations (not in held
for sale/disposal in prior years)
    
    
    
    
    
    
    
    
    
    
    (150
    )Reverse change in net deferred tax of company held for disposal (not
in discontinued operations)
    
    
    
    
    
    
    
    
    
    
    (88
    )Deferred tax included in other comprehensive income
    
    
    
    
    
    
    1,050
    
    
    
    2,051Valuation allowance against deferred tax in other comprehensive income
    
    
    
    
    
    
    (1,050
    )
    
    
    798Total increase (decrease) in net deferred tax assets
    
    $
    
    
    
    $
    (911
    )
    
    $
    (8,494
    )
    106




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##### Table of Contents



Note 22  Fair Value of Financial Instruments
 Disclosures about Fair
Value of Financial Instruments
 December 31, 2005Carrying
    
    EstimatedAmount
    
    Fair Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    112,912
    
    
    $
    112,912Securities
    
    
    493,409
    
    
    
    493,409Loans, net
    
    
    490,662
    
    
    
    492,580Accrued interest receivable
    
    
    5,133
    
    
    
    5,133Financial liabilities:Deposits
    
    
    867,700
    
    
    
    864,089Deposits of branches held for sale
    
    
    66,991
    
    
    
    66,616Short-term borrowings
    
    
    25,001
    
    
    
    25,001Long-term borrowings
    
    
    7,250
    
    
    
    7,441Junior subordinated debentures
    
    
    61,857
    
    
    
    65,470Accrued interest payable
    
    
    16,896
    
    
    
    16,896
 December 31, 2005Contractualor Notional
    
    Carrying
    
    EstimatedAmount
    
    Amount
    
    Fair Value(Dollars in thousands)Off-balance sheet items:Commitments to extend credit
    
    $
    186,187
    
    
    $
    
    
    
    $
    Standby letters of credit
    
    
    7,222
    
    
    
    (753
    )
    
    
    (753
    )Interest rate swap agreements
    
    
    15,807
    
    
    
    (37
    )
    
    
    (37
    )
 107




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##### Table of Contents



December 31, 2004Carrying
    
    EstimatedAmount
    
    Fair Value(Dollars in thousands)Financial assets:Cash and cash equivalents
    
    $
    233,935
    
    
    $
    233,935Securities
    
    
    379,024
    
    
    
    379,024Loans, net
    
    
    717,064
    
    
    
    719,981Accrued interest receivable
    
    
    5,122
    
    
    
    5,122Financial liabilities:Deposits
    
    
    1,178,488
    
    
    
    1,180,687Short-term borrowings
    
    
    18,809
    
    
    
    18,809Long-term borrowings
    
    
    7,250
    
    
    
    7,734Junior subordinated debentures
    
    
    61,857
    
    
    
    66,780Accrued interest payable
    
    
    10,644
    
    
    
    10,644
 December 31, 2004ContractualOr Notional
    
    Carrying
    
    EstimatedAmount
    
    Amount
    
    Fair Value(Dollars in thousands)Off-balance sheet items:Commitments to extend credit
    
    $
    192,571
    
    
    $
    
    
    
    $
    Standby letters of credit
    
    
    11,626
    
    
    
    (800
    )
    
    
    (800
    )Interest rate swap agreements
    
    
    20,930
    
    
    
    (13
    )
    
    
    (13
    )
       Cash and Cash Equivalents
  108




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##### Table of Contents



Available for Sale Securities
  Loans Receivable
  Accrued Interest Receivable
  Deposit Liabilities
  Short-term Borrowings
  Long-term Borrowings
  Junior Subordinated Debentures
  Accrued Interest Payable
  Off-Balance Sheet Instruments
   109




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##### Table of Contents



Note 23  Parent Company Financial Statements
  Condensed Balance Sheets
 December 31,2005
    
    
    2004(Dollars in thousands)AssetsCash and due from banks
    
    $
    33,743
    
    
    $
    27,533Investments in subsidiaries
    
    
    117,681
    
    
    
    121,070Loans to subsidiaries
    
    
    617
    
    
    
    3,424Premises and equipment, net
    
    
    1,376
    
    
    
    1,471Investment in subsidiaries held for disposal
    
    
    (2,884
    )
    
    
    4,385Foreclosed properties
    
    
    888
    
    
    
    888Other investments
    
    
    2,970
    
    
    
    3,269Income tax receivable
    
    
    178
    
    
    
    Other assets
    
    
    2,919
    
    
    
    3,602Total assets
    
    $
    157,488
    
    
    $
    165,642LiabilitiesAccrued interest payable
    
    $
    14,069
    
    
    $
    7,489Accrued income taxes
    
    
    
    
    
    
    292Junior subordinated debentures
    
    
    61,857
    
    
    
    61,857Other liabilities
    
    
    2,380
    
    
    
    3,112Total liabilities
    
    
    78,306
    
    
    
    72,750Stockholders EquityPreferred stock, $1 par value; 5,000,000 shares authorized,
none issued
    
    
    
    
    
    
    Common stock, $1 par value; 50,000,000 shares authorized,
18,346,442 issued and outstanding
    
    
    18,346
    
    
    
    18,346Capital surplus
    
    
    158,163
    
    
    
    158,163Accumulated deficit
    
    
    (93,528
    )
    
    
    (81,867
    )Accumulated other comprehensive loss, net
    
    
    (3,435
    )
    
    
    (642
    )Receivables from sale of stock
    
    
    (202
    )
    
    
    (946
    )Treasury stock at cost, 12,663 shares
    
    
    (162
    )
    
    
    (162
    )Total stockholders equity
    
    
    79,182
    
    
    
    92,892Total liabilities and stockholders equity
    
    $
    157,488
    
    
    $
    165,642
 110




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##### Table of Contents



Condensed Statements of Operations
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Interest and Dividend IncomeDividends from subsidiaries
    
    $
    2,650
    
    
    $
    7,200
    
    
    $
    22,250Loan and other interest from subsidiaries
    
    
    907
    
    
    
    320
    
    
    
    298Other
    
    
    
    
    
    
    
    
    
    
    Total interest and dividend income
    
    
    3,557
    
    
    
    7,520
    
    
    
    22,548Interest ExpenseShort-term borrowings
    
    
    
    
    
    
    1,170
    
    
    
    965Junior subordinated debentures
    
    
    6,636
    
    
    
    5,710
    
    
    
    5,198Total interest expense
    
    
    6,636
    
    
    
    6,880
    
    
    
    6,163Net interest income (loss)
    
    
    (3,079
    )
    
    
    640
    
    
    
    16,385Noninterest incomeEquity in undistributed earnings (loss)
of subsidiaries
    
    
    (1,819
    )
    
    
    (24,597
    )
    
    
    (144,093
    )Fees from subsidiaries
    
    
    7,348
    
    
    
    11,660
    
    
    
    11,267Gain on sale of assets/subsidiaries, net
    
    
    
    
    
    
    14,889
    
    
    
    Other income
    
    
    346
    
    
    
    120
    
    
    
    2,884Total noninterest income (loss)
    
    
    5,875
    
    
    
    2,072
    
    
    
    (129,942
    )Noninterest expenseCompensation and employee benefits
    
    
    11,179
    
    
    
    12,240
    
    
    
    12,570Equipment
    
    
    1,155
    
    
    
    1,079
    
    
    
    678Occupancy and premises
    
    
    966
    
    
    
    815
    
    
    
    827Professional services
    
    
    1,431
    
    
    
    3,817
    
    
    
    769Write down and losses on assets
    
    
    113
    
    
    
    1,075
    
    
    
    2,406Other
    
    
    2,413
    
    
    
    1,964
    
    
    
    2,323Total noninterest expense
    
    
    17,257
    
    
    
    20,990
    
    
    
    19,573Loss before income taxes
    
    
    (14,461
    )
    
    
    (18,278
    )
    
    
    (133,130
    )Income tax expense (benefit)
    
    
    (2,800
    )
    
    
    (931
    )
    
    
    4,518Net loss
    
    $
    (11,661
    )
    
    $
    (17,347
    )
    
    $
    (137,648
    )
 111




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##### Table of Contents



Condensed Statement of Cash Flows
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Cash Flows from Operating Activities:Net loss
    
    $
    (11,661
    )
    
    $
    (17,347
    )
    
    $
    (137,648
    )Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:Equity in undistributed (earnings) loss of subsidiaries
    
    
    (721
    )
    
    
    24,597
    
    
    
    144,093Depreciation and amortization
    
    
    614
    
    
    
    623
    
    
    
    454Deferred tax expense (benefit)
    
    
    
    
    
    
    (6,244
    )
    
    
    6,570Write down and losses on assets
    
    
    113
    
    
    
    1,075
    
    
    
    2,408Gain on sale of subsidiaries
    
    
    
    
    
    
    (14,889
    )
    
    
    Decrease (increase) in interest receivable and other
assets
    
    
    224
    
    
    
    (1,877
    )
    
    
    (3,107
    )Increase in interest payable junior subordinated
debentures
    
    
    6,581
    
    
    
    5,655
    
    
    
    1,505Increase (decrease) in other interest payable and
other liabilities
    
    
    (1,200
    )
    
    
    (325
    )
    
    
    3,375Net cash provided by (used in) operating activities
    
    
    (6,050
    )
    
    
    (8,732
    )
    
    
    17,650Cash Flows from Investing Activities:Decrease in investment in limited partnerships and
other investments
    
    
    
    
    
    
    3,022
    
    
    
    899Net (increase) decrease in loans
    
    
    2,807
    
    
    
    5,137
    
    
    
    (3,008
    )Net increase in investment in subsidiaries
    
    
    
    
    
    
    (19,350
    )
    
    
    (23,081
    )Dividends received from subsidiaries
    
    
    2,650
    
    
    
    7,200
    
    
    
    22,250Capital expenditures
    
    
    (465
    )
    
    
    (236
    )
    
    
    (1,080
    )Decrease (increase) in investment in subsidiaries held
for disposal
    
    
    7,268
    
    
    
    (4,384
    )
    
    
    Sale of subsidiaries, net of cash
    
    
    
    
    
    
    68,891
    
    
    
    Net cash provided by (used in) investing activities
    
    
    12,260
    
    
    
    60,280
    
    
    
    (4,020
    )Cash Flows from Financing Activities:Proceeds from stock options exercised
    
    
    
    
    
    
    
    
    
    
    414Sale of treasury stock (1)
    
    
    
    
    
    
    (1,761
    )
    
    
    Net decrease in short-term borrowings
    
    
    
    
    
    
    (23,595
    )
    
    
    (13,216
    )Net cash used in financing activities
    
    
    
    
    
    
    (25,356
    )
    
    
    (12,802
    )Net increase in cash and cash equivalents
    
    
    6,210
    
    
    
    26,192
    
    
    
    828Cash and cash equivalents, beginning of year
    
    
    27,533
    
    
    
    1,341
    
    
    
    513Cash and cash equivalents, end of year
    
    $
    33,743
    
    
    $
    27,533
    
    
    $
    1,341
 
 (1)
    
    Treasury stock sold in conjunction with the sale of CIB  Chicago. 112




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##### Table of Contents



Note 24  Quarterly Consolidated Financial Information (Unaudited)
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TOTAL(Dollars in thousands, except share data)2005Total interest income
    
    $
    15,406
    
    
    $
    14,675
    
    
    $
    14,947
    
    
    $
    14,821
    
    
    $
    59,849Total interest expense
    
    
    8,383
    
    
    
    8,633
    
    
    
    8,817
    
    
    
    8,962
    
    
    
    34,795Net interest income
    
    
    7,023
    
    
    
    6,042
    
    
    
    6,130
    
    
    
    5,859
    
    
    
    25,054Provision for credit losses
    
    
    (1,127
    )
    
    
    (1,916
    )
    
    
    (5,238
    )
    
    
    (388
    )
    
    
    (8,669
    )Net interest income after provision for credit losses
    
    
    8,150
    
    
    
    7,958
    
    
    
    11,368
    
    
    
    6,247
    
    
    
    33,723Gain on sale of investment securities, net
    
    
    
    
    
    
    154
    
    
    
    201
    
    
    
    
    
    
    
    355Other noninterest income
    
    
    918
    
    
    
    579
    
    
    
    588
    
    
    
    455
    
    
    
    2,540Other noninterest expense
    
    
    13,089
    
    
    
    13,922
    
    
    
    12,434
    
    
    
    11,525
    
    
    
    50,970Loss from continuing operations before income taxes
    
    
    (4,021
    )
    
    
    (5,231
    )
    
    
    (277
    )
    
    
    (4,823
    )
    
    
    (14,352
    )Income tax (benefit) expense
    
    
    5
    
    
    
    (162
    )
    
    
    (2,113
    )
    
    
    1,062
    
    
    
    (1,208
    )Loss from continuing operations
    
    
    (4,026
    )
    
    
    (5,069
    )
    
    
    1,836
    
    
    
    (5,885
    )
    
    
    (13,144
    )Discontinued operations:Pretax income from discontinued operations
    
    
    728
    
    
    
    2,745
    
    
    
    51
    
    
    
    126
    
    
    
    3,650Pretax gain on sales of discontinued operations (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    200Total pretax income from discontinued operations
    
    
    728
    
    
    
    2,745
    
    
    
    51
    
    
    
    326
    
    
    
    3,850Taxes effect for discontinued operations
    
    
    1,895
    
    
    
    162
    
    
    
    2,102
    
    
    
    (1,792
    )
    
    
    2,367Net income from discontinued operations
    
    
    (1,167
    )
    
    
    2,583
    
    
    
    (2,051
    )
    
    
    2,118
    
    
    
    1,483Net loss
    
    $
    (5,193
    )
    
    $
    (2,486
    )
    
    $
    (215
    )
    
    $
    (3,767
    )
    
    $
    (11,661
    )Earnings (loss) per share:BasicLoss from continuing operations
    
    $
    (0.22
    )
    
    $
    (0.28
    )
    
    $
    0.10
    
    
    $
    (0.32
    )
    
    $
    (0.72
    )Discontinued operations
    
    
    (0.06
    )
    
    
    0.14
    
    
    
    (0.11
    )
    
    
    0.11
    
    
    
    0.08Net Loss
    
    $
    (0.28
    )
    
    $
    (0.14
    )
    
    $
    (0.01
    )
    
    $
    (0.21
    )
    
    $
    (0.64
    )DilutedLoss from continuing operations
    
    $
    (0.22
    )
    
    $
    (0.28
    )
    
    $
    0.10
    
    
    $
    (0.32
    )
    
    $
    (0.72
    )Discontinued operations
    
    
    (0.06
    )
    
    
    0.14
    
    
    
    (0.11
    )
    
    
    0.11
    
    
    
    0.08Net loss
    
    $
    (0.28
    )
    
    $
    (0.14
    )
    
    $
    (0.01
    )
    
    $
    (0.21
    )
    
    $
    (0.64
    )2004Total interest income
    
    $
    19,869
    
    
    $
    17,832
    
    
    $
    16,331
    
    
    $
    15,947
    
    
    $
    69,979Total interest expense
    
    
    10,270
    
    
    
    9,321
    
    
    
    8,933
    
    
    
    8,763
    
    
    
    37,287Net interest income
    
    
    9,599
    
    
    
    8,511
    
    
    
    7,398
    
    
    
    7,184
    
    
    
    32,692Provision for credit losses
    
    
    7,321
    
    
    
    8,670
    
    
    
    (738
    )
    
    
    2,179
    
    
    
    17,432Net interest income (loss) after provision for credit losses
    
    
    2,278
    
    
    
    (159
    )
    
    
    8,136
    
    
    
    5,005
    
    
    
    15,260Other noninterest income
    
    
    819
    
    
    
    791
    
    
    
    846
    
    
    
    1,222
    
    
    
    3,678Other noninterest expense
    
    
    13,050
    
    
    
    13,598
    
    
    
    13,645
    
    
    
    12,436
    
    
    
    52,729Loss from continuing operations before income taxes
    
    
    (9,953
    )
    
    
    (12,966
    )
    
    
    (4,663
    )
    
    
    (6,209
    )
    
    
    (33,791
    )Income tax benefit
    
    
    (1,401
    )
    
    
    (1,142
    )
    
    
    (1,176
    )
    
    
    (1,521
    )
    
    
    (5,240
    )Loss from continuing operations
    
    
    (8,552
    )
    
    
    (11,824
    )
    
    
    (3,487
    )
    
    
    (4,688
    )
    
    
    (28,551
    )Discontinued operationsPretax income (loss) from discontinued operations
    
    
    (2,182
    )
    
    
    (3,146
    )
    
    
    3,632
    
    
    
    2,188
    
    
    
    492Pretax gain
(loss) on sales of discontinued operations (2)
    
    
    
    
    
    
    235
    
    
    
    (736
    )
    
    
    15,627
    
    
    
    15,126Total pretax income (loss) from discontinued operations
    
    
    (2,182
    )
    
    
    (2,911
    )
    
    
    2,896
    
    
    
    17,815
    
    
    
    15,618Taxes effect for discontinued operations
    
    
    1,061
    
    
    
    1,130
    
    
    
    1,198
    
    
    
    1,025
    
    
    
    4,414Net income (loss) from discontinued operations
    
    
    (3,243
    )
    
    
    (4,041
    )
    
    
    1,698
    
    
    
    16,790
    
    
    
    11,204Net income (loss)
    
    $
    (11,795
    )
    
    $
    (15,865
    )
    
    $
    (1,789
    )
    
    $
    12,102
    
    
    $
    (17,347
    )Earnings (loss) per share:BasicLoss from continuing operations
    
    $
    (0.47
    )
    
    $
    (0.65
    )
    
    $
    (0.19
    )
    
    $
    (0.25
    )
    
    $
    (1.56
    )Discontinued operations
    
    
    (0.18
    )
    
    
    (0.22
    )
    
    
    0.09
    
    
    
    0.92
    
    
    
    0.61Net income (loss)
    
    $
    (0.65
    )
    
    $
    (0.87
    )
    
    $
    (0.10
    )
    
    $
    0.67
    
    
    $
    (0.95
    )DilutedLoss from continuing operations
    
    $
    (0.47
    )
    
    $
    (0.65
    )
    
    $
    (0.19
    )
    
    $
    (0.25
    )
    
    $
    (1.56
    )Discontinued operations
    
    
    (0.18
    )
    
    
    (0.22
    )
    
    
    0.09
    
    
    
    0.92
    
    
    
    0.61Net income (loss)
    
    $
    (0.65
    )
    
    $
    (0.87
    )
    
    $
    (0.10
    )
    
    $
    0.67
    
    
    $
    (0.95
    )
 
 (1)
    
    In the fourth quarter of 2005, CIB Marine sold MICR and recognized a $0.2 million gain
on the sale.(2)
    
    In the fourth quarter of 2004, CIB Marine sold CIB  Chicago and recognized a
$15.6 million gain on the sale. 113




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##### Table of Contents



Note 25  Subsequent Events
 CIB Construction/Canron
  Regulatory Orders and Agreements
  Liquidity
   FDIC Deposit Insurance Premiums
   Stock Options
  FHLB Stock Investment Activity
  114




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 (a) Evaluation of Disclosure Controls and Procedures
     (b) Changes in Internal Control over Financial Reporting
   (i)
    
    CIB Marine did not have sufficient or adequate policies and procedures
over Information Technology change management.
 
    
    The company completed the development and implementation of:
 o
    
    change management procedures;o
    
    enhanced change management controls; ando
    
    enhanced change management testing standards.
 115




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Directors
 Term ExpiredServing
    
    or Scheduled
    
    Position with CIB Marine or Other Principal Occupation and OtherName and Age
    
    Since
    
    to Expire
    
    DirectorshipsJosé Araujo (60)
    
    
    1988
    
    
    
    2005
    
    
    President of Joaraucar Consulting, Inc., an
industrial gas service company, since October
1997; Director of Central Illinois Bank since
1987; and Chairman of the Board of Citrus Bank
from March 2004 to January 2005, International
Business Development Officer of Citrus Bank
since April 2003, and Director of Citrus Bank
since 2001.(1)Norman E. Baker (59)
    
    
    1988
    
    
    
    2004
    
    
    President and Chief Executive Officer of Estoy
Pronto, Inc., a consulting and investment
company, since July 1994; Chairman of Central
Illinois Bank from February 2004 to March 2006,
Director of Central Illinois Bank since 1988;
Director of CIB  Indiana, from 1998 until its
merger into Marine  Wisconsin in August 2006;
Director of Marine  Wisconsin since September
2006, Chairman of Marine  FSB from February
2004 to June 2005 and Director of Marine  FSB
from October 1999 until its merger into Marine
 Wisconsin in March 2006.W. Scott Blake (45)
    
    
    1987
    
    
    
    2004
    
    
    President of Blake Capital Corp., a real estate
development, investment and property management
company, since July 1998; Chairman of CIB
Marine since February 2004; Chairman of Marine
 Wisconsin since March 2006; Director of
Marine  Wisconsin since December 2002; Manager
of CIB Marine Capital LLC since 2001; and
Director of MICR, Inc. since 2000.(2)
(3)Stanley J. Calderon
(60)
    
    
    2004
    
    
    
    2006
    
    
    Director of CIB Marine since November 2004,
President and Chief Executive Officer of CIB
Marine since April 2004; Director of the
following bank and nonbank subsidiaries of CIB
Marine: Central Illinois Bank since December
2004, Marine  Wisconsin since February 2005;
Citrus Bank since February 2005, and CIB Marine
Information Services, Inc. since March 2005.
Prior to joining CIB Marine, Mr. Calderon was
Executive Vice President and Manager of Middle
Market Banking for the Midwest Region of Bank
One from 1999 to 2003.(4)Steven C. Hillard (43)
    
    
    2004
    
    
    
    2006
    
    
    President of HILMUN Holdings, Inc., a
diversified holding company with interests in
manufacturing and financial investments, since
September 1991; Chief Executive Officer and
Chairman of the Board of Pinnacle Door Company,
a distributor and installer of garage doors,
since September 1992; Managing member of HILMUN
Development, LLC, a real estate development
company, since 1993; Chairman, President and
Chief Executive Officer of Strategic Capital
Bancorp, Inc. from November 2002 to September
2004; President of CMI Johnson  Ross
Corporation, a manufacturer of construction
equipment, from July 1997 to
 116




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##### Table of Contents



Term ExpiredServing
    
    or Scheduled
    
    Position with CIB Marine or Other Principal Occupation and OtherName and Age
    
    Since
    
    to Expire
    
    Directorships2001; Director of
CIB Marine from 1991 to 2002 and since
September 2004; and Director of MICR, Inc.
since December 2004.(3)Gary L. Longman (57)
    
    
    2004
    
    
    
    2006
    
    
    Retired; Partner at KPMG, LLP from 1980 to 2000.Jerry D. Maahs (74)
    
    
    1987
    
    
    
    2005
    
    
    Chairman and Chief Executive Officer of Alto
Shaam, Inc. since 2001; President and Chief
Executive Officer of Alto Shaam, Inc. from 1968
to 2001; Chief Executive Officer of Enthermics,
Inc., manufacturers of medical equipment
products, since 1980; President and Chief
Executive Officer of AS International, an
international sales company since 1975;
Director of The Howard Company, a provider of
menu systems and retail merchandising displays,
since 1994; and Director of Marine  Wisconsin
since 1997.(5)Donald M. Trilling (75)
    
    
    1987
    
    
    
    2004
    
    
    Chairman of the Board of CIB Marine from
September 1987 to February 2004; Secretary of
Illini Tile Distributors Inc., an importer and
distributor of ceramic tiles, from 1983 to
2002; Director of Central Illinois Bank from
1987 to April 2004.(6)Howard E. Zimmerman
(76)
    
    
    1987
    
    
    
    2005
    
    
    Retired; Chairman of the Board of Zimmerman
Real Estate Group, a real estate appraisal and
consulting company since 1986.
 
 (1)
    
    Mr. Araujo passed away in March 2007.(2)
    
    Mr. Blake resigned as Chairman of CIB Marine in the first quarter of 2007. Mr. Blake remains a
director of CIB Marine.(3)
    
    In November 2005, CIB Marine sold substantially all of the assets of MICR.(4)
    
    On March 2, 2007, Mr. Calderon resigned from his positions as President and Chief Executive
Officer of CIB Marine and was succeeded by Mr. John P. Hickey, Jr. who was also appointed to
CIB Marines Board of Directors in May, 2007. Mr. Calderon was appointed Chairman of the
Board of Directors of CIB Marine on March 8, 2007. See Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations  Subsequent Events  Management
Changes for additional information relative to management and Board of Directors changes.(5)
    
    Mr. Maahs passed away in April 2006.(6)
    
    In September 2003, Illini Tile Distributors, Inc. entered into liquidation through an
assignment for the benefit of creditors under Illinois law. Executive Officers
  Name and Age
    
    Office and ExperienceStanley J. Calderon (60)
    
    Mr. Calderon has served as
President and Chief Executive
Officer of CIB Marine since April
2004; Director of CIB Marine since
November 2004; and Director of the
following bank and nonbank
subsidiaries of CIB Marine:Central Illinois Bank since
December 2004, Marine  Wisconsin
since February 2005, Citrus Bank
since February 2005, and CIB
Marine Information Services, Inc.
since March 2005. Prior to joining
CIB Marine, Mr. Calderon was
Executive Vice President and
Manager of Middle Market Banking
for the Midwest Region of Bank One
from 1999 to 2003.(1)Michael L. Rechkemmer (56)
    
    Mr. Rechkemmer has been Executive
Vice President of CIB Marine since
July 1999 and Chief Operations
Officer since April 2000. He was
CIB  Chicagos Vice Chairman and
Chief Operating Officer from
January 1997 to June 1998, its
President and Chief Executive
Officer from July 1994 to December
1996, and its interim President
and CEO from March 2004 to
November 2004. Prior to joining
CIB  Chicago, Mr. Rechkemmer was
President and Chief Executive
Officer of Mid America Bank N.A.
from January 1991 to June 1994.Steven T. Klitzing (42)
    
    Mr. Klitzing is Executive Vice
President, Chief Financial
Officer, Treasurer and Assistant
Secretary of CIB Marine and has
held those positions since
December 1993. Mr. Klitzing has
been with CIB Marine since 1986
and has held various positions
with CIB Marine and its
subsidiaries since that date.Daniel J. Rasmussen (39)
    
    Mr. Rasmussen is Senior Vice
President, General Counsel and
Secretary of CIB Marine and has
held those positions since April
2005. He was a Vice President and
Senior Attorney of CIB Marine from
1999 to 2005. Prior to joining CIB
Marine, Mr. Rasmussen was engaged
in the private practice of law in
Wausau, Wisconsin.(2)Patrick J. Straka (38)
    
    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.
 117




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##### Table of Contents



(1)
    
    On March 2, 2007, Mr. Calderon resigned from his positions as President and Chief
Executive Officer of CIB Marine and was succeeded by Mr. John P. Hickey, Jr., who was also
appointed to CIB Marines Board of Directors in May, 2007. Mr. Calderon was appointed
Chairman of the Board of Directors of CIB Marine on March 8, 2007. See Item 7  Managements
Discussion and Analysis of Financial Condition and Results of Operations  Subsequent Events
 Management Changes for additional information relative to management and Board of Directors
changes.(2)
    
    On April 15, 2005, Daniel J. Rasmussen was named Senior Vice President and General Counsel of
CIB Marine and succeeded Donald J. Straka who was assigned other duties in April 2005 and
resigned his employment with CIB Marine in June 2005. See Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations  Subsequent Events  Management
Changes for additional information relative to management and Board of Directors changes. Audit Committee Financial Expert
  Code of Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
   
 ITEM 11. EXECUTIVE COMPENSATION
  Long-TermAnnual Compensation
    
    CompensationAwardsSecuritiesUnderlying StockName and Position
    
    Year
    
    Salary
    
    Bonus
    
    Options (#)
    
    All Other Comp(1)Stanley J. Calderon
    
    
    2005
    
    
    $
    409,500
    
    
    $
    
    
    
    
    150,000
    
    
    $
    10,384President and CEO
    
    
    2004
    
    
    
    325,673
    
    
    
    
    
    
    
    
    
    
    
    3772003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Steven T. Klitzing
    
    
    2005
    
    
    $
    194,025
    
    
    $
    
    
    
    
    30,000
    
    
    $
    5,574Executive Vice President, Chief
    
    
    2004
    
    
    
    190,125
    
    
    
    
    
    
    
    
    
    
    
    573Financial Officer and Treasurer
    
    
    2003
    
    
    
    195,000
    
    
    
    
    
    
    
    
    
    
    
    4,217Margaret A. Incandela
    
    
    2005
    
    
    $
    184,688
    
    
    $
    27,368
    (2)
    
    
    50,000
    
    
    $
    5,395Executive Vice President and
    
    
    2004
    
    
    
    154,737
    
    
    
    
    
    
    
    
    
    
    
    Chief Credit Officer
    
    
    2003
    
    
    
    23,193
    
    
    
    
    
    
    
    
    
    
    
    Daniel J. Rasmussen
    
    
    2005
    
    
    $
    132,753
    
    
    $
    10,000
    
    
    
    20,000
    
    
    $
    4,152Senior Vice President, General
    
    
    2004
    
    
    
    112,500
    
    
    
    
    
    
    
    
    
    
    
    224Counsel and Secretary
    
    
    2003
    
    
    
    107,500
    
    
    
    
    
    
    
    
    
    
    
    1,114
 118




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##### Table of Contents



Long-TermAnnual Compensation
    
    CompensationAwardsSecuritiesUnderlying StockName and Position
    
    Year
    
    Salary
    
    Bonus
    
    Options (#)
    
    All Other Comp(1)Michael L. Rechkemmer
    
    
    2005
    
    
    $
    178,777
    
    
    $
    
    
    
    
    20,000
    
    
    $
    6,634Executive Vice President and
    
    
    2004
    
    
    
    173,550
    
    
    
    
    
    
    
    
    
    
    
    1,466Chief Operations Officer
    
    
    2003
    
    
    
    178,000
    
    
    
    
    
    
    
    
    
    
    
    4,177Patrick J. Straka
    
    
    2005
    
    
    $
    170,018
    
    
    $
    
    
    
    
    15,000
    
    
    $
    4,823Senior Vice President and
    
    
    2004
    
    
    
    156,833
    
    
    
    
    
    
    
    
    
    
    
    409Chief Investment Officer
    
    
    2003
    
    
    
    160,000
    
    
    
    
    
    
    
    
    
    
    
    3,359
 
 (1)
    
    Includes amounts representing life insurance premiums paid by CIB Marine for each named
executive, allocations by CIB Marine to each named executive participating in CIB Marines
401(k) plan, and allocations to each named executive pursuant to CIB Marines employee stock
ownership plan. During 2005 and 2004, CIB Marine did not make contributions to the employee
stock ownership plan.(2)
    
    On December 7, 2005, Margaret A. Incandela resigned from all positions with CIB Marine,
including Chief Credit Officer. Prior to her resignation, the Company transferred ownership to
Ms. Incandela of the company owned vehicle used by Ms. Incandela as a bonus. The fair market
value of the vehicle at the time of transfer was $27,368.  Options
  Potential RealizableValue at AssumedAnnual Rates of StockPrice Appreciation forIndividual Grants
    
    Options Term% of TotalNumber of
    
    OptionsSecurities
    
    Granted toUnderlying
    
    Employees in
    
    Exercise
    
    ExpirationName
    
    Option (#)
    
    Fiscal Year
    

Price ($/Sh)
    
    Date
    
    5% ($)
    
    10% ($)Stanley J. Calderon
    
    
    150,000
    
    
    
    28.6
    %
    
    $
    4.10
    
    
    
    9/29/2015
    
    
    $
    386,770
    
    
    $
    980,152Steven T. Klitzing
    
    
    30,000
    
    
    
    5.7
    
    
    
    4.10
    
    
    
    9/29/2015
    
    
    
    77,354
    
    
    
    196,030Margaret A. Incandela
    
    
    50,000
    
    
    
    9.5
    
    
    
    4.10
    
    
    
    9/29/2015
    
    
    
    128,923
    
    
    
    326,717Daniel J. Rasmussen
    
    
    20,000
    
    
    
    3.8
    
    
    
    4.10
    
    
    
    9/29/2015
    
    
    
    51,569
    
    
    
    130,687Michael L. Rechkemmer
    
    
    20,000
    
    
    
    3.8
    
    
    
    4.10
    
    
    
    9/29/2015
    
    
    
    51,569
    
    
    
    130,687Patrick J. Straka
    
    
    15,000
    
    
    
    2.9
    
    
    
    4.10
    
    
    
    9/29/2015
    
    
    
    38,677
    
    
    
    98,015
  Total Number of Securities
    
    Total Value of Unexercised,Underlying Unexercised Options
    
    In-the-Money Options HeldHeld at Fiscal Year End
    
    at Fiscal Year End(1)Number ofShares Acquired
    
    ValueName
    
    on Exercise
    
    Realized
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableStanley J. Calderon
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    Steven T. Klitzing
    
    
    
    
    
    
    
    
    
    
    54,953
    
    
    
    32,709
    
    
    
    
    
    
    
    Margaret A. Incandela
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Daniel J. Rasmussen
    
    
    
    
    
    
    
    
    
    
    3,774
    
    
    
    20,273
    
    
    
    
    
    
    
    Michael L. Rechkemmer
    
    
    
    
    
    
    
    
    
    
    39,504
    
    
    
    21,966
    
    
    
    
    
    
    
    Patrick J. Straka
    
    
    
    
    
    
    
    
    
    
    32,256
    
    
    
    16,639
    
    
    
    
    
    
    
    
 
 (1)
    
    This amount represents the difference between the fair market value of one share of CIB
Marine common stock on December 31, 2005 and the option exercise price times the total number
of shares subject to exercisable or unexercisable options. Because there is no public market
for CIB Marine common stock, the per share fair market value was derived by using CIB Marines
book value at December 31, 2005, which was $4.42. There were no unexercised in-the-money
options at year-end. 119




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##### Table of Contents



Compensation of Directors
 Directors Fees and Compensation
    Compensation Committee Interlocks and Insider Participation
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Security Ownership by Certain Beneficial Owners
  Amount and Nature of
    
    Percent ofName and Address of Beneficial Owner
    
    Beneficial Ownership
    
    Common StockJohn and Mary Lydia Hadley915 W. Park Avenue
    
    
    1,116,950
    (1)
    
    
    6.09
    %Champaign, Illinois 61821
 
 (1)
    
    Based solely on information in CIB Marines stock transfer records. Security Ownership of Management
  120




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##### Table of Contents



Name of Beneficial Owner
    
    Shares Beneficially Owned
    
    Percent of ClassJose Araujo
    
    
    116,515
    (1)
    
    
    *Norman E. Baker
    
    
    403,450
    (2)
    
    
    2.20
    %W. Scott Blake
    
    
    227,200
    (3)
    
    
    1.24
    %Stanley J. Calderon
    
    
    30
    
    
    
    *Steven C. Hillard
    
    
    165,030
    
    
    
    *Margaret A. Incandela
    
    
    30
    
    
    
    *Steven T. Klitzing
    
    
    82,417
    (4)
    
    
    *Gary L. Longman
    
    
    
    
    
    
    *Jerry D. Maahs
    
    
    318,550
    (5)
    
    
    1.74
    %Daniel J. Rasmussen
    
    
    4,002
    (6)
    
    
    *Michael L. Rechkemmer
    
    
    50,639
    (7)
    
    
    *Patrick J. Straka
    
    
    46,191
    (8)
    
    
    *Donald M. Trilling
    
    
    232,832
    (9)
    
    
    1.27
    %Howard E. Zimmerman
    
    
    141,600
    (10)
    
    
    *All Directors and
Executive Officers as a
group (14 persons)
    
    
    1,788,486
    
    
    
    9.75
    %
 
 *
    
    Less than one percent(1)
    
    Includes 34,000 shares that Mr. Araujo has the right to acquire within 60 days upon the
exercise of stock options. Mr. Araujo passed away in March 2007.(2)
    
    Includes 34,000 shares Mr. Baker has the right to acquire within 60 days upon the exercise of
stock options.(3)
    
    Includes 34,000 shares that Mr. Blake has the right to acquire within 60 days upon the
exercise of stock options.(4)
    
    Includes 54,953 shares that Mr. Klitzing has the right to acquire within 60 days upon the
exercise of stock options.(5)
    
    Includes 285,000 shares jointly owned by Mr. Maahs and his wife and 33,550 shares that Mr.
Maahs has the right to acquire within 60 days upon the exercise of stock options. Mr. Maahs
passed away in April 2006.(6)
    
    Includes 3,774 shares that Mr. Rasmussen has the right to acquire within 60 days upon the
exercise of stock options.(7)
    
    Includes 39,504 shares that Mr. Rechkemmer has the right to acquire within 60 days upon the
exercise of stock options.(8)
    
    Includes 1,400 shares jointly owned by Mr. Straka and his wife, 6,300 shares owned by
partnerships with respect to which Mr. Straka shares voting and investment power, and 32,256
shares that Mr. Straka has the right to acquire within 60 days upon the exercise of stock
options.(9)
    
    Includes 68,705 shares held in a trust for the benefit of Mr. Trillings wife and 35,350
shares that Mr. Trilling has the right to acquire within 60 days upon the exercise of stock
options.(10)
    
    Includes 3,250 shares held in a trust for the benefit of Mr. Zimmermans wife and 33,000
shares Mr. Zimmerman has the right to acquire within 60 days upon the exercise of stock
options.
 Securities Authorized for Issuance Under Equity Compensation Plans
  Equity Compensation Plan Information(1)Number of
    
    Weighted-
    
    Number of securitiessecurities to be
    
    average exercise
    
    remaining available forissued upon
    
    price of
    
    future issuance underexercise of
    
    outstanding
    
    equity compensationoutstanding
    
    options,
    
    plans (excludingoptions, warrants
    
    warrants and
    
    securities reflected inPlan category
    
    and rights
    
    rights
    
    column (a))(a)
    
    (b)
    
    (c)Equity compensation plans approved by security holders
    
    
    1,021,487
    
    
    $
    10.85
    
    
    
    614,243Equity compensation plans not approved by security
holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,021,487
    
    
    $
    10.85
    
    
    
    614,243
 
 (1)
    
    See Notes 1, 18 and 19 to the Consolidated Financial Statements in this Form 10-K for
additional information regarding our stock-based compensation plans.
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  121




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2005
    
    
    2004(Dollars in thousands)Audit fees
    
    $
    450
    
    
    $
    625Audit related fees (1)
    
    
    
    
    
    
    6Tax fees (2)
    
    
    177
    
    
    
    80Total fees
    
    $
    627
    
    
    $
    711
 
 (1)
    
    Audit related fees consisted of audits of financial statements of certain employee benefit
plans, audits of mortgage banking compliance and due diligence services.(2)
    
    Tax fees consisted of fees for tax consultation and tax compliance services, and included $80
thousand and $9 thousand paid in relation to Canron during 2005 and 2004, respectively.
 Pre-Approval Policy and Procedures
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)(1) Financial Statements
  
    
    Report of Independent Registered Public Accounting Firm.
    
    Consolidated Balance Sheets as of December 31, 2005 and 2004.
    
    Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004, and 2003.
    
    Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2005, 2004 and 2003.
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003.
    
    Notes to Consolidated Financial Statements.
 (a)(2) Financial Statement Schedules
  (a)(3) Exhibits
 Exhibit No.
    
    Exhibit3.1
    
    Amended and Restated Articles of Incorporation of CIB Marine Bancshares, Inc. (incorporated by reference
to Exhibit 3.1 to CIB Marines Form 10-K filed with the Securities and Exchange Commission on October 31,
2005).3.2
    
    Bylaws of CIB Marine Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to CIB Marines Form 10-K
filed with the Securities and Exchange Commission on October 31, 2005).*10.1
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan, as amended (incorporated by reference
to Exhibit 10.1 to CIB Marines Form 10-K filed with the Securities and Exchange Commission on March 31,
2003).
 122




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##### Table of Contents



Exhibit No.
    
    Exhibit*10.2
    
    First Amendment to the CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan (incorporated by
reference to Exhibit 10.1 to CIB Marines Form 10-K filed with the Securities and Exchange Commission on
October 31, 2005).*10.3
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan Key Employee Non-Qualified Stock Option
Agreement (incorporated by reference to Exhibit 99.1 of CIB Marines Form 8-K filed with the Securities
and Exchange Commission on September 23, 2005).*10.4
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan Key Employee Non-Qualified Stock Option
Agreement (accelerated vesting upon sale of subsidiary bank) (incorporated by reference to Exhibit 99.2
of CIB Marines Form 8-K filed with the Securities and Exchange Commission on September 23, 2005).*10.5
    
    CIB Marine Bancshares, Inc. 1999 Stock Option and Incentive Plan Key Employee Non  Qualified Stock
Option Agreement (accelerated vesting upon sale of subsidiary bank) (incorporated by reference to Exhibit
99.1 of CIB Marines Form 8-K filed with the Securities and Exchange Commission on November 16, 2006).*10.6
    
    CIB Marine Bancshares, Inc. Severance Pay Plan (incorporated by reference to Exhibit 10.1 of CIB Marines
Form 8-K filed with the Securities and Exchange Commission on April 18, 2005).*10.7
    
    Employment Agreement between Stanley J. Calderon and CIB Marine Bancshares, Inc. (incorporated by
reference to Exhibit 99 to CIB Marines Form 8-K filed November 22, 2004).10.8
    
    Written Agreement between CIB Marine and the Federal Reserve Bank of Chicago (incorporated by reference
to Exhibit 99.5 of CIB Marines Form 8-K filed with the Securities and Exchange Commission on June 1,
2004).10.9
    
    Cease and Desist Order issued jointly by the Federal Deposit Insurance Corporation and the State of
Illinois Office of Banks and Real Estate Bureau of Banks and Trust Companies and consented to by Central
Illinois Bank, effective May 29, 2004 (incorporated by reference to Exhibit 99.2 to CIB Marines Form 8-K
filed with the Securities and Exchange Commission on June 1, 2004).10.10
    
    Cease and Desist Order issued jointly by the Federal Deposit Insurance Corporation and the Department of
Financial Institutions State of Wisconsin and consented to by Marine Bank, effective May 29, 2004
(incorporated by reference to Exhibit 99.3 to CIB Marines Form 8-K filed with the Securities and
Exchange Commission on June 1, 2004).10.11
    
    Cease and Desist Order issued jointly by the Federal Deposit Insurance Corporation and the Department of
Financial Institutions State of Indiana and consented to by CIB Bank  Indiana, effective May 29, 2004
(incorporated by reference to Exhibit 99.4 to CIB Marines Form 8-K filed with the Securities and
Exchange Commission on June 1, 2004).10.12
    
    Written Agreement between Citrus Bank, N.A., a wholly-owned subsidiary of Citrus Financial Services,
Inc., which is wholly-owned by CIB Marine, and the Office of the Comptroller of the Currency
(incorporated by reference to Exhibit 99 of CIB Marines Form 8-K filed with the Securities and Exchange
Commission on August 23, 2004).14.1
    
    Code of Ethics (incorporated by reference to Exhibit 99 to the Companys Form 8-K filed November 2, 2004).21
    
    Subsidiaries of CIB Marine23.1
    
    Consent of KPMG LLP31.1
    
    Certification of John P. Hickey, Jr., Chief Executive Officer, under Rule 13a-14(a)/15d-14(a).31.2
    
    Certification of Steven T. Klitzing, Chief Financial Officer, under Rule 13a-14(a)/15d-14(a).32.1
    
    Certification of John P. Hickey, Jr., Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Steven T. Klitzing, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of Sarbanes- Oxley Act of 2002.
  
 *
    
    Executive compensation plans
 123




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##### Table of Contents



SIGNATURES
  CIB MARINE BANCSHARES, INC.
(registrant)By:
    /s/ JOHN P. HICKEY, Jr.Date: July 18, 2007

    John P. Hickey, Jr.
President and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ JOHN P. HICKEY, Jr.

John P. Hickey, Jr.
    
    President and Chief Executive
Officer (Principal Executive Officer)
    
    July 18, 2007/s/ STEVEN T. KLITZING

Steven T. Klitzing
    
    Chief Financial Officer 
(Principal Financial and Accounting Officer)
    
    July 18, 2007/s/ NORMAN E. BAKER

Norman E. Baker
    
    Director
    
    July 18, 2007/s/ STANLEY J. CALDERON

Stanley J. Calderon
    
    Chairman of the Board of
Directors and Director
    
    July 18, 2007/s/ W. SCOTT BLAKE

W. Scott Blake
    
    Director
    
    July 18, 2007/s/ STEVEN C. HILLARD

Steve Hillard
    
    Director
    
    July 18, 2007/s/ GARY L. LONGMAN

Gary Longman
    
    Director
    
    July 18, 2007/s/ DONALD M. TRILLING

Donald M. Trilling
    
    Director
    
    July 18, 2007/s/ HOWARD E. ZIMMERMAN

Howard E. Zimmerman
    
    Director
    
    July 18, 2007
 124