CIB MARINE BANCSHARES INC, 10-Q, 2000-08-11

CIB MARINE BANCSHARES INC
10-Q, 2000-08-11
STATE COMMERCIAL BANKS

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<PAGE> 1

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

<TABLE>
<S> <C> <C>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
COMMISSION FILE NUMBER 000-24149
</TABLE>

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

<TABLE>
<S> <C>
WISCONSIN 37-1203599
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
</TABLE>

N27 W24025 PAUL COURT,
PEWAUKEE, WISCONSIN 53072
(Address of principal executive offices, Zip Code)

(262) 695-6010
(Registrant's telephone number, including area code)

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

At August 11, 2000, CIB Marine had 16,845,000 shares of common stock
outstanding.
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<PAGE> 2

CIB MARINE BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents:
Cash and Due from Banks................................... $ 20,349 $ 21,941
Federal Funds Sold........................................ 13,882 2,157
---------- ----------
Total Cash and Cash Equivalents................... 34,231 24,098
---------- ----------
Loans Held for Sale......................................... 4,506 2,148
Securities:
Available for Sale, at fair value......................... 262,343 216,460
Held to Maturity (approximate fair value of $135,735 and
$145,122, respectively)................................ 137,793 146,890
---------- ----------
Total Securities.................................. 400,136 363,350
---------- ----------
Loans....................................................... 1,612,215 1,387,831
Less: Allowance for Loan Loss............................. (19,607) (15,813)
---------- ----------
Net Loans................................................... 1,592,608 1,372,018
---------- ----------
Premises and Equipment, net................................. 21,339 21,499
Accrued Interest Receivable................................. 16,588 13,141
Deferred Income Taxes....................................... 10,876 9,018
Goodwill and Core Deposit Intangibles, net.................. 13,444 14,171
Foreclosed Properties....................................... 5,937 1,099
Other Assets................................................ 6,980 4,298
---------- ----------
Total Assets...................................... $2,106,645 $1,824,840
========== ==========
LIABILITIES
Deposits:
Noninterest-bearing Demand................................ $ 107,057 $ 98,642
Interest-bearing Demand................................... 43,458 45,107
Savings................................................... 207,254 209,333
Time...................................................... 1,426,350 1,175,374
---------- ----------
Total Deposits.................................... 1,784,119 1,528,456
---------- ----------
Short-term Borrowings....................................... 86,450 113,219
Accrued Interest Payable.................................... 10,162 8,228
Accrued Income Taxes........................................ 656 824
Other Liabilities........................................... 3,354 3,028
Long-term Borrowings........................................ 34,750 9,750
Guaranteed Trust Preferred Securities....................... 10,000 --
---------- ----------
Total Liabilities................................. 1,929,491 1,663,505
---------- ----------
STOCKHOLDERS' EQUITY
Common Stock, $1 par value; 50,000,000 Shares Authorized,
16,845,000 and
16,469,250 Issued and Outstanding, respectively........... 16,845 16,469
Capital Surplus............................................. 133,398 126,891
Retained Earnings........................................... 28,752 20,009
Accumulated Other Comprehensive Loss........................ (1,841) (2,034)
---------- ----------
Total Stockholders' Equity........................ 177,154 161,335
---------- ----------
Total Liabilities and Stockholders' Equity........ $2,106,645 $1,824,840
========== ==========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements
2
<PAGE> 3

CIB MARINE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans.................................... $ 37,895 $ 23,193 $ 71,648 $ 43,854
Loans Held For Sale...................... 81 78 121 168
Securities:
Taxable................................ 5,198 3,642 9,914 6,424
Tax-exempt............................. 713 415 1,502 797
Dividends.............................. 53 51 178 102
Federal Funds Sold....................... 154 62 246 111
----------- ----------- ----------- -----------
Total Interest and Dividend
Income....................... 44,094 27,441 83,609 51,456
----------- ----------- ----------- -----------
INTEREST EXPENSE
Deposits................................. 23,190 13,769 44,000 25,749
Short-term Borrowings.................... 1,533 330 3,040 476
Long-term Borrowings..................... 504 253 770 503
Trust Preferred Securities............... 274 -- 300 --
----------- ----------- ----------- -----------
Total Interest Expense......... 25,501 14,352 48,110 26,728
----------- ----------- ----------- -----------
Net Interest Income............ 18,593 13,089 35,499 24,728
Provision for Loan Loss.................. 1,915 1,484 4,275 2,970
----------- ----------- ----------- -----------
Net Interest Income After
Provision for Loan Loss...... 16,678 11,605 31,224 21,758
----------- ----------- ----------- -----------
NONINTEREST INCOME
Loan Fees................................ 729 732 1,290 1,349
Deposit Service Charges.................. 490 320 880 616
Other Service Fees....................... 198 109 320 191
Trust.................................... 169 130 324 263
Gain on Sale of Branch................... -- -- -- 805
Other.................................... 231 18 380 25
----------- ----------- ----------- -----------
Total Noninterest Income....... 1,817 1,309 3,194 3,249
----------- ----------- ----------- -----------
NONINTEREST EXPENSE
Compensation and Employees Benefits...... 6,475 4,796 12,524 9,481
Equipment................................ 580 505 1,151 1,016
Occupancy and Premises................... 939 731 1,906 1,374
Professional Services.................... 720 485 1,064 704
Advertising/Marketing.................... 210 197 486 349
Amortization of Intangibles.............. 350 242 699 343
Other.................................... 1,357 1,155 2,701 2,079
----------- ----------- ----------- -----------
Total Noninterest Expense...... 10,631 8,111 20,531 15,346
----------- ----------- ----------- -----------
Income Before Income Taxes............... 7,864 4,803 13,887 9,661
Income Tax Expense....................... 2,678 1,658 4,770 3,394
----------- ----------- ----------- -----------
NET INCOME..................... $ 5,186 $ 3,145 $ 9,117 $ 6,267
=========== =========== =========== ===========
EARNINGS PER SHARE
Basic.................................... $ 0.31 $ 0.20 $ 0.55 $ 0.39
Diluted.................................. 0.31 0.19 0.54 0.39
Weighted Average Shares -- Basic......... 16,710,684 16,074,764 16,597,788 16,073,862
Weighted Average Shares -- Diluted....... 16,918,728 16,259,289 16,798,617 16,254,194
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements
3
<PAGE> 4

CIB MARINE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER
-------------------- COMPREHENSIVE
PAR CAPITAL RETAINED INCOME TREASURY
SHARES VALUE SURPLUS EARNINGS (LOSS) STOCK TOTAL
---------- ------- -------- -------- ------------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1998.............. 16,072,950 $16,073 $120,381 $ 6,867 $ 775 $ -- $144,096
Comprehensive Income:
Net Income.............................. 6,267 6,267
Other Comprehensive Income:
Unrealized Securities Holding Losses
Arising During the Year............. (2,289) (2,289)
Income Tax Effect..................... 879 879
------- ------- --------
6,267 (1,410) 4,857
------- ------- --------
Exercise of Stock Options............... 3,750 4 54 (4) 54
Non-Cash Compensation................... 92 92
---------- ------- -------- ------- ------- ------ --------
BALANCE, JUNE 30, 1999.................. 16,076,700 $16,077 $120,527 $13,130 $ (635) $ -- $149,099
========== ======= ======== ======= ======= ====== ========
BALANCE, DECEMBER 31, 1999.............. 16,469,250 $16,469 $126,891 $20,009 $(2,034) $ -- $161,335
Comprehensive Income:
Net Income.............................. 9,117 9,117
Other Comprehensive Income:
Unrealized Securities Holding Gains
Arising During the Year............. 310 310
Income Tax Effect..................... (117) (117)
------- ------- --------
9,117 193 9,310
------- ------- --------
Exercise of Stock Options............... 15,900 16 172 (16) 172
Common Stock Issuance................... 359,850 360 6,302 (358) 6,304
Non-Cash Compensation................... 33 33
---------- ------- -------- ------- ------- ------ --------
BALANCE, JUNE 30, 2000.................. 16,845,000 $16,845 $133,398 $28,752 $(1,841) $ -- $177,154
========== ======= ======== ======= ======= ====== ========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements
4
<PAGE> 5

CIB MARINE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
2000 1999
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income................................................ $ 9,117 $ 6,267
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Depreciation and Amortization............................. (2,711) 574
Non-Cash Compensation..................................... 33 92
Provision for Loan loss................................... 4,275 2,970
Originations of Loans Held for Sale....................... (39,326) (68,938)
Purchases of Loans Held for Sale.......................... (27,980) --
Proceeds from Sale of Loans Held for Sale................. 64,948 74,270
Deferred Tax Benefits..................................... (2,143) (2,296)
Gain on Sale of Branch.................................... -- (805)
Gain on Sale of Other Assets.............................. (304) (4)
Decrease in Interest Receivable and Other Assets.......... (4,104) (2,059)
Increase (Decrease) in Interest Payable and Other
Liabilities............................................ 2,260 (382)
--------- ---------
Net Cash Provided by Operating Activities......... 4,065 9,689
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of Securities Available for Sale............... 20,512 19,604
Maturities of Securities Held to Maturity................. 25,526 44,037
Purchase of Securities Available for Sale................. (60,009) (97,602)
Purchase of Securities Held to Maturity................... (11,428) (40,375)
Proceeds from Sales of Securities Available for Sale...... 3 --
Repayments of Mortgage-Backed Securities Held to
Maturity............................................... 2,757 3,023
Repayments of Mortgage-Backed Securities Available for
Sale................................................... 3,643 2,350
Net Decrease (Increase) in other equities (including FHLB
stock)................................................. 1,027 (898)
Purchase of Mortgage-Backed Securities Available for
Sale................................................... (10,731) (3,505)
Purchase of Mortgage-Backed Securities Held to Maturity... (7,715) --
Net Increase in Loans..................................... (228,314) (212,088)
Proceeds from Sale of Foreclosed Properties............... 1,323 --
Proceeds from Sale of Fixed Assets........................ -- 7
Proceeds from Sale of Branch.............................. -- 3,085
Capital Expenditures...................................... 1,164 (1,460)
Purchase of Branch Assets and Deposits, net of Goodwill... -- 101,491
--------- ---------
Net Cash Used in Investing Activities............. (262,242) (182,331)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in Deposits...................................... 255,557 133,633
Proceeds from Long-term Borrowings........................ 23,346 --
Proceeds from Issuance of Guaranteed Trust Preferred
Securities............................................. 9,700 --
Proceeds from Issuance of Common Stock.................... 6,304 --
Proceeds from Stock Options Exercised..................... 172 54
Net (Decrease) Increase in Short-term Borrowings.......... (26,769) 41,135
--------- ---------
Net Cash Provided by Financing Activities......... 268,310 174,822
--------- ---------
Net Increase in Cash and Cash Equivalents................... 10,133 2,180
Cash and Cash Equivalents, Beginning of Period.............. 24,098 22,080
--------- ---------
Cash and Cash Equivalents, End of Period.................... $ 34,231 $ 24,260
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................. $ 46,176 $ 26,369
Income Taxes.............................................. 6,853 5,750
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
Transfers of Loans to Foreclosed Properties............... 5,937 --
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements
5
<PAGE> 6

CIB MARINE BANCSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements should be read
in conjunction with CIB Marine Bancshares, Inc.'s ("CIB Marine") 1999 Annual
Report on Form 10-K. In the opinion of management, the unaudited consolidated
financial statements included in this report reflect all adjustments which are
necessary to present fairly CIB Marine's financial condition, results of
operations and cash flows as of and for the three and six-month periods ended
June 30, 2000 and 1999. The results of operations for the three and six-month
periods ended June 30, 2000, are not necessarily indicative of results to be
expected for the entire year.

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

Reclassifications have been made to certain amounts as of December 31, 1999
and for the three and six-month periods ended June 30, 1999, to be consistent
with classifications for 2000.

NOTE 2 -- STOCK SPLIT

On June 29, 2000, CIB Marine announced a 150-for-1 stock split of its
outstanding common stock to stockholders of record on July 1, 2000, to be
effected in the form of a stock dividend. All share and per share data contained
in this document have been restated to reflect the effect of this stock split.

NOTE 3 -- EARNINGS PER SHARE COMPUTATIONS

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

<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
NET INCOME............................... $ 5,186 $ 3,145 $ 9,117 $ 6,267
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic.................................. 16,710,684 16,074,764 16,597,788 16,073,862
Effect of dilutive stock options
outstanding....................... 208,044 184,525 200,829 180,332
----------- ----------- ----------- -----------
Diluted................................ 16,918,728 16,259,289 16,798,617 16,254,194
EARNINGS PER SHARE
Basic.................................. $ 0.31 $ 0.20 $ 0.55 $ 0.39
Effect of dilutive stock options
outstanding....................... -- (0.01) (0.01) --
----------- ----------- ----------- -----------
Diluted................................ $ 0.31 $ 0.19 $ 0.54 $ 0.39
=========== =========== =========== ===========
</TABLE>

NOTE 4 -- BUSINESS COMBINATIONS

On February 26, 1999, CIB Marine sold a banking office in Charleston,
Illinois along with $14.4 million of loans and $12.2 million of deposits. The
transaction was accounted for as a sale. The net proceeds were

6
<PAGE> 7

$3.1 million and the $0.8 million gain on the transaction is reflected as a
component of noninterest income in the Unaudited Consolidated Statement of
Income.

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

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

NOTE 5 -- LONG-TERM BORROWINGS AND RELATED INTEREST RATE SWAP

The following table presents information regarding amounts payable to the
Federal Home Loan Bank of Chicago that are included in the balance sheets as
long-term borrowings at June 30, 2000 and December 31, 1999.

<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------ ------------------ SCHEDULED CALLABLE AT
BALANCE RATE BALANCE RATE MATURITY PAR AFTER
------- ---- ------- ---- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
$3,250.. 4.95% $3,250 4.95% 1/16/08 1/16/01
2,500.. 4.95 2,500 4.95 1/16/08 1/16/01
2,000.. 4.95 2,000 4.95 1/16/08 1/16/01
25,000.. 6.01 -- -- 6/30/08 N/A
2,000.. 5.09 2,000 5.09 2/20/08 2/20/01
------- ---- ------ ----
$34,750.. 5.72% $9,750 4.98%
======= ==== ====== ====
</TABLE>

CIB Marine is required to maintain qualifying collateral as security for
Federal Home Loan Bank borrowings including letters of credit. CIB Marine had
eligible collateral of $95.9 million and $46.4 million at June 30, 2000 and
December 31, 1999, respectively. As of June 30, 2000 this collateral consisted
of securities with a fair market value of $65.9 million, and 1-4 family
residential mortgages not more than 90 days delinquent of $30.0 million.

On February 25, 2000 CIB Marine assumed a $25.0 million Federal Home Loan
Bank of Chicago advance due June 30, 2008 with a net cost, including premium, of
7.05%. The premium amount of $1.7 million is classified in other assets and is
being amortized to interest expense over the life of the borrowing. As of June
30, 2000, the unamortized balance related to this premium was $1.6 million. In
conjunction with this advance, CIB Marine entered into an interest rate swap
with the Federal Home Loan Bank of Chicago with a $25.0 million notional value
and maturing on June 30, 2008, whereby CIB Marine pays a variable rate of
interest at the 1 month LIBOR rate and earns a fixed rate of interest at 7.08%.
As of June 30, 2000, the fair market value of the swap was approximately $0.1
million and the net cash received from the hedging relationship for the six
month period ended June 30, 2000 was approximately $0.1 million. CIB Marine's
management believes the swap transaction will reduce interest rate risk by
converting the fixed rate on the advance to a variable rate similar to the loans
funded with the proceeds of these borrowings.

7
<PAGE> 8

NOTE 6 -- GUARANTEED TRUST PREFERRED SECURITIES

In March 2000, CIB Marine issued $10.0 million in guaranteed trust
preferred securities through a wholly owned special-purpose trust. These
securities qualify as Tier I equity capital for regulatory capital purposes. The
securities are classified in the liability section of the Consolidated Balance
Sheet, and the distributions on the securities are classified as interest
expense on the Consolidated Statements of Income. Such distributions are
cumulative and are payable to the security holders semi-annually at a rate of
10.875% per annum. The obligations of the trust are fully and unconditionally
guaranteed on a subordinated basis by CIB Marine. These securities are
mandatorily redeemable upon their maturity on March 8, 2030 and are callable
beginning March 8, 2010 at a premium, which premium declines ratably to par by
2020. Issuance costs of $0.3 million related to the securities are classified as
other assets on the balance sheet and are being amortized over the expected life
of the securities as an adjustment to interest expense. CIB Marine used the net
proceeds of $9.7 million to reduce its debt at a non-affiliated bank.

NOTE 7 -- STOCK OPTION ACTIVITY

The following is a reconciliation of stock option activity for the six
months ended June 30, 2000.

<TABLE>
<CAPTION>
NUMBER OF RANGE OF OPTION WEIGHTED AVERAGE
SHARES PRICES PER SHARE EXERCISE PRICE
--------- ---------------- ----------------
<S> <C> <C> <C>
Shares under option December 31, 1999............ 1,108,050 $ 4.95 - $16.79 $12.80
Granted........................................ -- -- --
Lapsed or surrendered.......................... (19,950) 10.87 - 16.79 13.65
Exercised...................................... (15,900) 8.50 - 13.07 9.19
--------- --------------- ------
Shares under option June 30, 2000................ 1,072,200 $ 4.95 - $16.79 $12.84
========= =============== ======
</TABLE>

On July 27, 2000, CIB Marine granted non-qualified stock options to certain
directors and key employees to purchase in aggregate 329,441 shares of common
stock at $18.40 per share. These nonqualified options vest annually in 20%
installments commencing with the first anniversary of the grant date and expire
in 10 years. After this grant, there were 1,401,641 options outstanding at an
average exercise price of $14.15 per share.

NOTE 8 -- RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS 133). The statement, as amended by SFAS 137,
Accounting for Derivative Instruments and Hedging Activities -- Deferral of
Effective Date of FASB Statement No. 133, and SFAS 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities -- an amendment of FASB
Statement No. 133, establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in a
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
typically allows a derivative's gains and losses to offset related results in
the hedged item in the income statement and requires that a company must
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting treatment. The statement must be adopted for fiscal
years beginning after June 15, 2000. A company also may implement the statement
as of the beginning of any quarter after issuance. SFAS 133 cannot be applied
retroactively. SFAS 133 must be applied to (a) derivative instruments and (b)
certain derivative instruments embedded in hybrid contracts that were issued,
acquired or substantially modified after December 31, 1997 (and, at the entity's
election, before January 1, 1998). The adoption of this statement at January 1,
2001 is not expected to have a material effect on CIB Marine's financial
position, liquidity or results of operations.

NOTE 9 -- SALE/LEASEBACK OF BANK PREMISES

On June 30, 2000 CIB Marine entered into a sale/leaseback transaction
involving one of its banking facilities which resulted in a net gain of
approximately $0.1 million which is being amortized over the 10-year lease term.
This lease is being accounted for as an operating lease.

8
<PAGE> 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following section is a discussion and analysis of CIB Marine's
consolidated financial condition as of June 30, 2000 and its results of
operations for the three-month and six-month periods then-ended. References in
the discussion below to "CIB Marine" include CIB Marine's subsidiaries unless
otherwise specified. This discussion and analysis should be read in conjunction
with the consolidated financial statements and notes contained in "Part I, Item
1" of this report as well as CIB Marine's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, which was filed with the Securities and
Exchange Commission. All share and per share data contained in this document
have been restated to reflect the effect of the 150-for-1 stock split, as
previously discussed in "Notes to Unaudited Consolidated Financial
Statements -- Note 2."

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

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

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

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

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

-- Adverse changes in CIB Marine's loan and investment portfolios;

-- Changes in the financial condition or operating results of one or more
borrowers or related groups of borrowers or borrowers within a single
industry or small geographic region where CIB Marine has a concentration
of credit extended to those borrowers or related groups or to borrowers
within that single industry or small geographic region;

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

-- Other risks set forth from time to time in CIB Marine's filings with the
Securities and Exchange Commission.

These risks and uncertainties should be considered in evaluating
forward-looking statements, and undue reliance should not be placed on such
statements. CIB Marine does not assume any obligation to update or revise any
forward-looking statements subsequent to the date on which they are made,
whether as a result of new information, future events or otherwise.
9
<PAGE> 10

RESULTS OF OPERATIONS

OVERVIEW

CIB Marine's net income was $5.2 million for the second quarter of 2000, as
compared to $3.1 million for the same period in the previous year, an increase
of 64.9%. The increase in net income is primarily due to the growth of CIB
Marine. Total assets at June 30, 2000 were $2.1 billion, a 15.4% increase from
total assets of $1.8 billion at December 31, 1999, and a 43.5% increase from
$1.5 billion at June 30, 1999.

Basic and diluted earnings per share were both $0.31 for the three-month
period ended June 30, 2000, and $0.20 and $0.19, respectively, for the
three-month period ended June 30, 1999. The return on average assets for the
three-month period ended June 30, 2000, was 1.02%, as compared to 0.90% for the
same period in 1999. The return on average equity for the three-month period
ended June 30, 2000, was 12.13%, as compared to 8.46% for the same period in
1999.

CIB Marine's net income for the six months ended June 30, 2000, was $9.1
million. as compared to $6.3 million for the same period in 1999, representing
an increase of 45.5%. Net income for the first six months of 1999 included a
$0.8 million pre-tax, or $0.5 million after-tax, gain on the sale of a branch
facility. Excluding this branch sale, net income for the first six months of
1999 would have been $5.8 million and the increase in year 2000 would have been
58.7%. The increase in net income is primarily due to the growth of CIB Marine.

Basic and diluted earnings per share were $0.55 and $0.54, respectively,
for the six-month period ended June 30, 2000, as compared to $0.39 and $0.39,
respectively, for the same period in the previous year. The return on average
assets for the six-month period ended June 30, 2000 was 0.93% as compared to
0.97% for the same period in the prior year. The return on average equity for
the six-month period ended June 30, 2000 was 10.92%, as compared to 8.58% for
the same period in the previous year.

The following table provides an overview of CIB Marine's growth. The table
indicates the percentage increase in the average balance sheet or income
statement items from the three and six-month periods ended June 30, 1999, to the
comparable periods ended June 30, 2000.

<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, 2000 VS. JUNE 30, 2000 VS.
JUNE 30, 1999 JUNE 30, 1999
----------------- -----------------
<S> <C> <C>
AVERAGE BALANCE SHEET ITEMS:
Commercial real estate, construction agriculture &
commercial loans...................................... 53.53% 55.73%
Loans, including held for sale........................... 49.64 51.12
Total assets............................................. 46.14 51.21
Total deposits........................................... 44.10 50.28
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 VS. JUNE 30, 2000 VS.
QUARTER ENDED JUNE 30, 1999 JUNE 30, 1999
JUNE 30, 2000 VS. (INCLUDING GAIN ON (EXCLUDING GAIN ON
JUNE 30, 1999 SALE OF BRANCH) SALE OF BRANCH)
----------------- ------------------- -------------------
<S> <C> <C> <C>
INCOME STATEMENT ITEMS:
Net interest income after provision
for loan loss (TE)................. 44.61% 44.42% 44.42%
Noninterest income.................... 38.81 (1.69) 17.17
Noninterest expense................... 31.07 33.79 33.79
Net income............................ 64.90 45.48 58.72
Diluted earnings per share............ 63.16 38.46 58.82
</TABLE>

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

(TE) Tax-equivalent basis at 35%.

10
<PAGE> 11

CIB Marine achieved this growth by focusing on the development of banking
relationships with small to medium-sized businesses and through the opening of
new banks and branches, internal growth and acquisitions. During 1999 and the
first six months of 2000, CIB Marine established Marine Bank-Omaha, opened eight
banking facilities and purchased three banking facilities. On March 29, 1999 CIB
Marine purchased two banking facilities in the Chicago metropolitan market, one
in Arlington Heights and one in Mount Prospect. CIB Marine assumed $115.8
million in deposits as a result of the purchase of these two facilities. On
September 24, 1999 CIB Marine purchased a banking facility in Zion, Illinois and
assumed $28.2 million of deposits. CIB Marine had 41 banking facilities and 555
full-time equivalent employees on June 30, 2000 and 35 banking facilities and
450 full-time equivalent employees at June 30, 1999.

The following table sets forth selected unaudited consolidated financial
data. The selected financial data should be read in conjunction with the
unaudited consolidated financial statements, including the related notes.

11
<PAGE> 12

CIB MARINE BANCSHARES, INC.

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
AT OR FOR THE SIX MONTHS
AT OR FOR THE QUARTER ENDED ENDED
----------------------------- -----------------------------
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
SELECTED STATEMENT OF INCOME DATA
Interest and dividend income:
Loans................................................. $ 37,895 $ 23,193 $ 71,648 $ 43,854
Loans held for sale................................... 81 78 121 168
Securities:
Taxable............................................. 5,198 3,642 9,914 6,424
Tax-exempt.......................................... 713 415 1,502 797
Dividends........................................... 53 51 178 102
Federal funds sold.................................... 154 62 246 111
----------- ----------- ----------- -----------
Total interest and dividend income.............. 44,094 27,441 83,609 51,456
----------- ----------- ----------- -----------
Interest expense:
Deposits.............................................. 23,190 13,769 44,000 25,749
Short-term borrowings................................. 1,533 330 3,040 476
Long-term borrowings.................................. 504 253 770 503
Guaranteed trust preferred securities................. 274 -- 300 --
----------- ----------- ----------- -----------
Total interest expense.......................... 25,501 14,352 48,110 26,728
----------- ----------- ----------- -----------
Net interest income............................. 18,593 13,089 35,499 24,728
Provision for loan loss................................. 1,915 1,484 4,275 2,970
----------- ----------- ----------- -----------
Net interest income after provision for loan
loss.......................................... 16,678 11,605 31,224 21,758
----------- ----------- ----------- -----------
Noninterest income:
Banking and trust service fees........................ 1,586 1,291 2,814 2,419
Gain on sale of branch................................ -- -- -- 805
Other................................................. 231 18 380 25
----------- ----------- ----------- -----------
Total noninterest income........................ 1,817 1,309 3,194 3,249
----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits........................ 6,475 4,796 12,524 9,481
Equipment............................................. 580 505 1,151 1,016
Occupancy and premises................................ 939 731 1,906 1,374
Professional services................................. 720 485 1,064 704
Advertising / marketing............................... 210 197 486 349
Amortization of intangibles........................... 350 242 699 343
Other................................................. 1,357 1,155 2,701 2,079
----------- ----------- ----------- -----------
Total noninterest expense....................... 10,631 8,111 20,531 15,346
----------- ----------- ----------- -----------
Income before income taxes.............................. 7,864 4,803 13,887 9,661
Income tax expense...................................... 2,678 1,658 4,770 3,394
----------- ----------- ----------- -----------
Net income...................................... $ 5,186 $ 3,145 $ 9,117 $ 6,267
=========== =========== =========== ===========
PER SHARE DATA
Basic earnings........................................ $ 0.31 $ 0.20 $ 0.55 $ 0.39
Diluted earnings...................................... 0.31 0.19 0.54 0.39
Dividends............................................. -- -- -- --
Book value (at end of period)......................... 10.52 9.27 10.52 9.27

SELECTED FINANCIAL CONDITION DATA
Securities............................................ $ 400,136 $ 287,177 $ 400,136 $ 287,177
Loans, including held for sale........................ 1,616,721 1,117,289 1,616,721 1,117,289
Total assets.......................................... 2,106,645 1,468,516 2,106,645 1,468,516
Deposits.............................................. 1,784,119 1,247,812 1,784,119 1,247,812
Borrowings, including guaranteed trust preferred
securities.......................................... 131,200 63,821 131,200 63,821
Stockholders' equity.................................. 177,154 149,099 177,154 149,099
</TABLE>

12
<PAGE> 13

Asset Quality Ratios:
Nonaccrual loans to loans, including held for
sale.............................................. 0.10% 0.35% 0.10% 0.35%
Allowance for loan loss to loans, including held for
sale.............................................. 1.21 1.16 1.21 1.16
Allowance for loan loss to nonperforming assets..... 258.60 329.28 258.60 329.28
Net charge-offs to average loans including held for
sale.............................................. 0.01 0.01 0.03 0.06
Nonperforming assets to total assets (7)............ 0.36 0.27 0.36 0.27
Nonaccrual loans and 90+ days past due loans to
loans, including held for sale.................... 0.19 0.66 0.19 0.66
Nonaccrual loans and 90+ days past due loans to
total assets...................................... 0.15 0.51 0.15 0.51
Nonperforming assets and 90+ days past due to total
assets............................................ 0.43 0.51 0.43 0.51
Allowance as a percent of nonperforming assets and
90+ days past due loans........................... 216.20 175.01 216.20 175.01

Balance Sheet Ratios:
Average loans to average deposits................... 90.64 87.28 90.15 89.65
Average interest-earning assets to average
interest-bearing liabilities...................... 112.67 115.96 112.67 117.35

Capital Ratios:
Total equity to total assets........................ 8.41% 10.15% 8.41% 10.15%
Total risk-based capital ratio...................... 10.34 11.61 10.34 11.61
Tier 1 risk-based capital ratio..................... 9.30 10.60 9.30 10.60
Leverage capital ratio.............................. 8.64 9.87 8.64 9.87

Other Data:
Number of employees (full-time equivalent).......... 555 450 555 450
Number of banking facilities........................ 41 35 41 35
Shares outstanding at the end of period............. 16,845,000 16,076,700 16,845,000 16,076,700
Weighted average shares outstanding -- basic........ 16,710,684 16,074,764 16,597,788 16,073,862
Weighted average shares outstanding -- diluted...... 16,918,728 16,259,289 16,798,617 16,254,194
Trust assets under administration................... $ 143,599 $ 130,146 $ 143,599 $ 130,146
</TABLE>

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

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

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

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

(4) The efficiency ratio is noninterest expense divided by the sum of net
interest income (on a tax equivalent basis of 35%) plus noninterest income
excluding gains and losses on securities.

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

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

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

13
<PAGE> 14

NET INTEREST INCOME

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

The following tables set forth information for the three and six-month
periods ended June 30, 2000 and 1999 regarding average balances, interest income
and interest expense and average rates earned or paid for each of CIB Marine's
major asset and liability categories, and for total liabilities and
stockholders' equity. The following tables express interest income on a
tax-equivalent basis in order to compare the effective yield on earning assets.
This means that interest income on tax-exempt loans and tax-exempt investment
securities has been adjusted to reflect the income tax savings provided by these
tax-exempt assets. The tax-equivalent adjustment was based on CIB Marine's
effective federal income tax rate of 35%.

14
<PAGE> 15

QUARTERLY SUMMARY OF AVERAGE BALANCES AND INTEREST RATES

<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, 2000 QUARTER ENDED JUNE 30, 1999
------------------------------------- -------------------------------------
AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE
BALANCE EARNED/PAID YIELD/COST BALANCE EARNED/PAID YIELD/COST
---------- ----------- ---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning Assets (TE):
Securities
Taxable............................ $ 341,318 $ 5,251 6.19% $ 262,089 $ 3,691 5.65%
Tax-exempt......................... 57,277 1,097 7.70 32,686 638 7.83
---------- ------- ---------- ---------- ------- ----------
Total Securities....................... 398,595 6,348 6.41 294,775 4,329 5.89
Loans (1)
Commercial and agricultural........ 1,511,314 36,827 9.80 984,376 21,989 8.96
Real estate........................ 35,989 815 9.11 37,993 814 8.59
Installment and other consumer..... 13,314 287 8.67 18,827 406 8.65
---------- ------- ---------- ---------- ------- ----------
Total loans............................ 1,560,617 37,929 9.77 1,041,196 23,209 8.94
Federal funds sold................... 9,135 154 6.78 4,768 62 5.22
Loans held for sale.................. 3,377 81 9.65 3,964 78 7.89
---------- ------- ---------- ---------- ------- ----------
Total interest-earning assets (TE)..... 1,971,724 $44,512 9.08% 1,344,703 $27,678 8.26%
======= ========== ======= ==========
Noninterest-earning Assets:
Cash and due from banks.............. 19,254 16,117
Premises and equipment............... 22,643 20,864
Allowance for loan loss.............. (19,317) (12,417)
Accrued interest receivable and other
assets............................. 50,098 29,695
---------- ----------
Total noninterest-earning assets....... 72,678 54,259
---------- ----------
Total Assets........................... $2,044,402 $1,398,962
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing Liabilities:
Deposits:
Interest-bearing demand deposits... $ 45,649 $ 302 2.66% $ 39,955 $ 245 2.46%
Money market....................... 174,718 2,379 5.48 128,928 1,474 4.59
Other savings deposits............. 36,888 287 3.13 33,812 271 3.21
Time Deposits of $100,000 or
more............................. 466,645 7,442 6.41 271,676 3,444 5.08
Time Deposits...................... 893,310 12,780 5.75 641,012 8,354 5.23
---------- ------- ---------- ---------- ------- ----------
Total interest-bearing deposits........ 1,617,210 23,190 5.77 1,115,383 13,788 4.96
Borrowings -- short-term............. 89,660 1,533 6.88 24,815 331 5.35
Borrowings -- long-term.............. 33,141 504 6.12 19,473 253 5.21
Guaranteed trust preferred
securities......................... 10,000 274 11.02 -- -- --
---------- ------- ---------- ---------- ------- ----------
Total borrowed funds................... 132,801 2,311 7.00 44,288 584 5.29
Total interest-bearing liabilities..... 1,750,011 $25,501 5.86 1,159,671 $14,372 4.97
======= ========== ======= ==========
Noninterest-bearing Liabilities:
Noninterest-bearing demand
deposits........................... 108,332 82,084
Accrued Interest and other
liabilities........................ 14,135 8,037
---------- ----------
Total noninterest-bearing
liabilities.......................... 122,467 90,121
---------- ----------
Stockholders' Equity................... 171,924 149,170
---------- ----------
Total Liabilities and Stockholders'
Equity............................... $2,044,402 $1,398,962
========== ==========
Net Interest Income (TE) and Interest
rate spread(2)....................... $19,011 3.22% $13,306 3.29%
======= ========== ======= ==========
Net Interest Margin (TE)(3)............ 3.88% 3.97%
========== ==========
</TABLE>

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

(TE) -- Tax equivalent basis of 35%

(1) Loan balance totals include non-accrual loans.

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

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

15
<PAGE> 16

SIX MONTH SUMMARY OF AVERAGE BALANCES AND INTEREST RATES

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 2000 SIX MONTHS ENDED JUNE 30, 1999
------------------------------------- -------------------------------------
AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE
BALANCE EARNED/PAID YIELD/COST BALANCE EARNED/PAID YIELD/COST
---------- ----------- ---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning Assets (TE):
Securities
Taxable.............................. $ 330,015 $10,092 6.15% $ 228,021 $ 6,526 5.77%
Tax-exempt........................... 60,659 2,311 7.66 31,501 1,226 7.85
---------- ------- ------ ---------- ------- -----
Total Securities................. 390,674 12,403 6.38 259,522 7,752 6.02
Loans (1)
Commercial and agricultural.......... 1,458,661 69,523 9.58 936,678 41,373 8.91
Real estate.......................... 36,286 1,588 8.80 38,502 1,661 8.70
Installment and other consumer....... 14,050 596 8.53 20,510 885 8.70
---------- ------- ------ ---------- ------- -----
Total loans...................... 1,508,997 71,707 9.56 995,690 43,919 8.89
Federal funds sold..................... 7,606 246 6.50 4,274 111 5.24
Loans held for sale.................... 2,607 121 9.33 4,596 168 7.37
---------- ------- ------ ---------- ------- -----
Total interest-earning assets
(TE)........................... 1,909,884 $84,477 8.90% 1,264,082 $51,950 8.29%
======= ====== ======= =====
Noninterest-earning Assets:
Cash and due from banks................ 19,209 14,093
Premises and equipment................. 22,306 18,152
Allowance for loan loss................ (18,401) (11,781)
Accrued interest receivable and other
assets............................... 47,204 25,023
---------- ----------
Total noninterest-earning
assets......................... 70,318 45,487
---------- ----------
Total Assets................. $1,980,202 $1,309,569
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing Liabilities:
Deposits:
Interest-bearing demand deposits..... $ 46,085 $ 612 2.67% $ 38,626 $ 482 2.52%
Money market......................... 173,068 4,542 5.28 106,981 2,408 4.54
Other savings deposits............... 37,104 578 3.13 31,116 496 3.21
Time Deposits of $100,000 or more.... 459,707 14,324 6.27 258,630 6,630 5.17
Time Deposits........................ 856,709 23,945 5.62 603,951 15,764 5.26
---------- ------- ------ ---------- ------- -----
Total interest-bearing
deposits....................... 1,572,673 44,001 5.63 1,039,304 25,780 5.00
Borrowings -- short-term............... 90,775 3,040 6.73 17,860 476 5.37
Borrowings -- long-term................ 26,101 770 5.93 20,000 503 5.07
Guaranteed trust preferred
securities........................... 5,495 300 10.98 -- -- --
---------- ------- ------ ---------- ------- -----
Total borrowed funds............. 122,371 4,110 6.75 37,860 979 5.21
Total interest-bearing
liabilities................ 1,695,044 $48,111 5.71 1,077,164 $26,759 5.01
======= ====== ======= =====
Noninterest-bearing demand deposits.... 104,107 76,503
Accrued Interest and other
liabilities.......................... 13,208 8,616
---------- ----------
Total noninterest-bearing
liabilities.................... 117,315 85,119
---------- ----------
Stockholders' Equity..................... 167,843 147,286
---------- ----------
Total Liabilities and
Stockholders' Equity........... $1,980,202 $1,309,569
========== ==========
NET INTEREST INCOME (TE) AND INTEREST
RATE SPREAD (2)........................ $36,366 3.19% $25,191 3.28%
======= ====== ======= =====
NET INTEREST MARGIN (TE)(3).............. 3.83% 4.02%
====== =====
</TABLE>

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

(TE) -- Tax equivalent basis of 35%

(1) Loan balance totals include non-accrual loans.

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

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

16
<PAGE> 17

Net interest income on a tax-equivalent basis was $19.0 million for the
quarter ended June 30, 2000, representing an increase of $5.7 million, or 42.9%,
from net interest income of $13.3 million for the same period in 1999. For the
first six months of 2000, net interest income on a tax-equivalent basis was
$36.4 million, an increase of $11.2 million, or 44.4%, over the same period in
1999. The increase in the volume of earning assets, and the liabilities to fund
these assets, accounted for the majority of the increases in net interest
income. These increases were partially offset by 7 and 9 basis point reductions
in the interest rate spreads between the comparable three and six-month periods,
respectively.

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

<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, 2000 SIX MONTHS ENDED JUNE 30, 2000
COMPARED TO QUARTER ENDED COMPARED TO SIX MONTHS ENDED
JUNE 30, 1999(1) JUNE 30, 1999 (1)
------------------------------------- -------------------------------------
VOLUME RATE TOTAL % CHANGE VOLUME RATE TOTAL % CHANGE
------- ------ ------- -------- ------- ------ ------- --------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME (TE)
Securities -- taxable............. $ 1,186 $ 374 $ 1,560 42.26% $ 3,110 456 3,566 54.64%
Securities -- tax-exempt.......... 470 (11) 459 71.94 1,115 (30) 1,085 88.50
------- ------ ------- ------ ------- ------ ------- ------
Total Securities.................. 1,656 363 2,019 46.64 4,225 426 4,651 60.00
Commercial and agricultural....... 12,624 2,214 14,838 67.48 24,769 3,381 28,150 68.04
Real estate....................... (45) 46 1 0.12 (93) 20 (73) (4.39)
Installment and other consumer.... (120) 1 (119) (29.31) (273) (16) (289) (32.66)
------- ------ ------- ------ ------- ------ ------- ------
Total Loans (including fees)...... 12,459 2,261 14,720 63.42 24,403 3,385 27,788 63.20
Federal funds sold................ 70 22 92 148.39 103 32 135 121.62
Loans held for sale............... (13) 16 3 3.85 (85) 38 (47) (27.98)
------- ------ ------- ------ ------- ------ ------- ------
Total Interest Income (TE)........ 14,172 2,662 16,834 60.82 28,646 3,881 32,527 62.61
------- ------ ------- ------ ------- ------ ------- ------
INTEREST EXPENSE
Interest-bearing demand
deposits........................ 36 21 57 23.27 98 32 130 26.97
Money market...................... 585 320 905 61.40 1,689 445 2,134 88.62
Other savings deposits............ 24 (8) 16 5.90 95 (13) 82 16.53
Time deposits of $100,000 or
more............................ 2,930 1,068 3,998 116.09 6,045 1,649 7,694 116.05
Other time deposits............... 3,524 902 4,426 52.98 7,040 1,141 8,181 51.90
------- ------ ------- ------ ------- ------ ------- ------
Total Deposits.................... 7,099 2,303 9,402 68.19 14,967 3,254 18,221 70.68
Borrowings -- short term.......... 1,084 118 1,202 363.14 2,415 149 2,564 538.66
Borrowings -- long term........... 201 50 251 99.21 172 95 267 53.08
Guaranteed trust preferred
securities...................... 274 -- 274 N/A 300 -- 300 N/A
------- ------ ------- ------ ------- ------ ------- ------
Total Borrowed Funds.............. 1,559 168 1,727 295.72 2,887 244 3,131 319.82
------- ------ ------- ------ ------- ------ ------- ------
Total Interest Expense............ 8,658 2,471 11,129 77.44 17,854 3,498 21,352 79.79
------- ------ ------- ------ ------- ------ ------- ------
Net Interest Income (TE)...... $ 5,514 $ 191 $ 5,705 42.88% $10,792 $ 383 $11,175 44.36%
======= ====== ======= ====== ======= ====== ======= ======
</TABLE>

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

(TE) -- Tax-equivalent basis, of 35%

(1) Variances which were not specifically attributable to volume or rate have
been allocated proportionally between volume and rate using absolute values
as a basis for the allocation. Nonaccruing loans were included in the
average balances used in determining yields.

Interest Income. For the second quarter of 2000 total interest income was
$44.1 million, which represented an increase of 60.7% from the same period in
the previous year. For the six-month period ended June 30, 2000, total interest
income was $83.6 million, which represented a 62.5% increase from the same
period in the previous year. The principal reason for these increases was an
increase in the volume of CIB Marine's average earning assets. Average earning
assets increased by $627.0 million, or 46.6%, and $645.8 million, or 51.1%,
during the second quarter and first six months of 2000, respectively, as
compared to the same periods in the previous year. Also contributing to these
increases were 82 and 61 basis point increases

17
<PAGE> 18

in the average interest rates earned on interest-earning assets from the
comparable periods in 1999. The increase in the average interest rates earned
was primarily the result of a gradual increase in market interest rates between
the periods.

Interest earned on loans was the largest component of total interest income
and represented 86.1% and 84.8% of total interest income in the second quarters
of 2000 and 1999, respectively, and 85.8% and 85.6% of total interest income for
the first six-months of 2000 and 1999, respectively. Interest income on
securities in CIB Marine's portfolio accounted for the majority of the remaining
balance in total interest income.

Interest Expense. Total interest expense for the second quarter of 2000
increased by $11.1 million, or 77.4%, as compared to the same period in the
previous year. For the six-month period ended June 30, 2000, total interest
expense increased by $21.4 million, or 80.0%, as compared to the same period in
the previous year. These increases were due primarily to a $590.3 million, or
50.9%, and $617.9 million, or 57.4%, increase in the volume of average
interest-bearing liabilities for the three and six-month periods ended June 30,
2000, respectively. Also contributing to these increases were 89 and 70 basis
point increases in the average interest rate paid on interest-bearing
liabilities during the three and six-month periods ended June 30, 2000, as
compared to the same periods in the previous year. Average interest-bearing
deposits represented $501.8 million, or 85.0%, and $533.4 million, or 86.3%, of
the increase in average interest-bearing liabilities during the three and
six-month periods ended June 30, 2000.

Interest expense on time deposits represents the largest component of total
interest expense. The ratio of interest expense on time deposits to total
interest expense was 79.3% and 82.2% for the second quarters of 2000 and 1999,
respectively, and 79.5% and 83.8% for the six-month periods ended June 30, 2000
and 1999, respectively. These increases were primarily the result of a $447.3
million, or 49.0%, and a $453.8 million, or 52.6%, increase in the average
outstanding balance of these deposits during the second quarter and six-month
periods ended June 30, 2000, respectively, as compared to the same periods in
the previous year. Also contributing to these increases were 80 and 61 basis
point increases in the weighted average interest rate paid on these deposits
during the three and six month periods ended June 30, 2000, as compared to the
same periods in the previous year. The increase in the interest rates paid was
due primarily to an increasing interest rate environment. CIB Marine has used
time deposits to fund a large portion of the growth in its loan portfolio.

CIB Marine's interest rate spread was 3.22% and 3.29% for the second
quarters of 2000 and 1999, respectively, and 3.19% and 3.28% for the six-month
periods ended June 30, 2000, and 1999, respectively. The net interest margin was
3.88% and 3.97% for the second quarters of 2000 and 1999, respectively, and
3.83% and 4.02% for the six-month periods ended June 30, 2000 and 1999,
respectively.

PROVISION FOR LOAN LOSS AND ALLOWANCE FOR LOAN LOSS

The provision for loan loss represents charges made to earnings in order to
maintain an adequate allowance for loan loss. CIB Marine maintains an allowance
for loan loss to absorb an estimate of probable losses in the loan and lease
portfolio. The provision for loan loss was $1.9 million for the second quarter
of 2000 as compared to $1.5 million for the second quarter of 1999. The
provision for loan loss for the six-month periods ended June 30, 2000 and 1999,
was $4.3 million and $3.0 million, respectively. At June 30, 2000, the allowance
for loan loss was $19.6 million, or 1.21% of total loans outstanding, as
compared to $15.8 million and 1.16%, respectively, at December 31, 1999. A
significant portion of the increase in the provision during both the three and
six-month periods was the result of the growth in the loan portfolio. CIB Marine
increases the allowance by the amount of the provision for loan loss as well as
recoveries of previously charged-off loans and decreases the allowance by the
amount of loan charge-offs. The methodology for assessing the adequacy of the
allowance consists of several key elements, which include estimates for general,
specific and unallocated reserves.

The general reserves are calculated by applying a general loss ratio to
outstanding loans and leases. The general loss ratios vary by loan type and the
internal credit risk grade. Changes in internal credit risk grades and in
general loss ratios affect the amount of the general reserves. General loss
ratios are based on historical loss experience of CIB Marine and the industry.
These ratios may be adjusted for significant factors that, in

18
<PAGE> 19

CIB Marine's judgment, affect the collectibility of the portfolio as of the
evaluation date, including general changes in the loan and lease portfolio and
in economic conditions.

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

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

The following table summarizes changes in the allowance for loan loss for
the three and six-month periods ended June 30, 2000 and 1999.

<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
2000 1999 2000 1999
------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at Beginning of Period......................... $17,925 $11,671 $15,813 $10,657
Loans Charged-Off:
Commercial........................................... (162) (82) (195) (165)
Agricultural......................................... -- -- -- --
Real estate:
1-4 family........................................ (62) -- (14) (47)
Commercial........................................ -- (43) (212) (143)
Construction...................................... (20) (27) -- (27)
Consumer............................................. (22) (11) (63) (38)
Credit card.......................................... -- -- (42) (2)
Other................................................ -- (24) -- (274)
------- ------- ------- -------
Total Charged-off............................ (266) (187) (526) (696)
------- ------- ------- -------
Recoveries of Loans Charged-Off:
Commercial........................................... 1 27 5 37
Agricultural......................................... -- -- -- --
Real estate:
1-4 family........................................ 20 1 -- 9
Commercial........................................ -- -- 20 --
Construction...................................... 12 -- -- --
Consumer............................................. -- 3 20 22
Credit card.......................................... -- 1 -- 1
Other................................................ -- -- -- --
------- ------- ------- -------
Total Recoveries............................. 33 32 45 69
------- ------- ------- -------
Net Loans Charged-Off.................................. (233) (155) (481) (627)
Provision for loan loss................................ 1,915 1,484 4,275 2,970
------- ------- ------- -------
Balance at End of Period............................... $19,607 $13,000 $19,607 $13,000
======= ======= ======= =======
</TABLE>

Increases in the provision and the allowance were primarily related to the
increase in average loans outstanding between the periods. Total charge-offs for
the second quarter of 2000 were $0.3 million as compared to $0.2 million for the
second quarter of 1999. Total charge-offs during the six-month periods ended
June 30, 2000, and 1999, amounted to $0.5 million and $0.7 million,
respectively. Recoveries during all of

19
<PAGE> 20

these periods were below $0.1 million. Commercial real estate loans accounted
for $0.2 million, or 60.9%, of the total charge-offs in the quarter ended in
June 30, 2000, and $0.1 million, or 43.9%, of the charge-offs in the second
quarter of 1999. For the six-month periods ended June 30, 2000, and 1999,
commercial real estate loans accounted for $0.2 million, or 37.1%, and $0.2
million, or 23.7%, respectively, of the charge-offs.

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

The level of nonperforming assets is an important element in assessing CIB
Marine's asset quality and the associated risk in its loan portfolio.
Nonperforming assets include nonaccrual loans, restructured loans and foreclosed
properties. Loans are placed on nonaccrual status when CIB Marine determines
that the collection of principal and interest amounts is uncertain. A loan is
classified as restructured when the interest rate is reduced or the term is
extended beyond the original maturity date because of the inability of the
borrower to service the loan under the original terms. Foreclosed properties
represent properties acquired by CIB Marine through loan defaults by its
customers.

20
<PAGE> 21

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

<TABLE>
<CAPTION>
AT OR FOR THE QUARTER ENDED
----------------------------------------
JUNE 30, DECEMBER 31, JUNE 30,
2000 1999 1999
---------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonperforming Assets
Nonaccrual Loans:
Commercial..................................... $ 436 $ 1,298 $ 1,149
Agricultural................................... -- -- --
Real estate:
1-4 family................................... 455 566 109
Commercial................................... 646 798 1,940
Construction................................. -- 180 252
Consumer....................................... 97 161 157
Credit card.................................... -- -- --
Other.......................................... -- -- 341
---------- ---------- ----------
Total nonaccrual loans.................... 1,634 3,003 3,948
---------- ---------- ----------
Foreclosed properties............................. 5,937 1,099 --
Restructured loans................................ 11 268 --
---------- ---------- ----------
Total Nonperforming Assets................ $ 7,582 $ 4,370 $ 3,948
========== ========== ==========
LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
Commercial..................................... $ 726 $ 1,079 $ 3,447
Agricultural................................... -- -- --
Real estate:
1-4 family................................... -- 126 --
Commercial................................... 739 1,421 --
Construction................................. -- 850 --
Consumer....................................... 14 16 9
Credit card.................................... 8 9 24
Other.......................................... -- 13 --
---------- ---------- ----------
TOTAL 90 DAYS OR MORE PAST DUE AND STILL
ACCRUING....................................... $ 1,487 $ 3,514 $ 3,480
========== ========== ==========
Allowance for loan loss............................. $ 19,607 $ 15,813 $ 13,000
Loans at end of period, including held for sale..... 1,616,721 1,389,979 1,117,289
Average loans, including held for sale.............. 1,563,944 1,459,213 1,045,160
RATIOS
Ratio of allowance to loans......................... 1.21% 1.14% 1.16%
Ratio of net loans charged-off to average loans..... 0.01 0.01 0.01
Ratio of recoveries to loans charged-off............ 12.41 9.93 17.11
Nonaccrual loans as a percent of loans.............. 0.10 0.22 0.35
Nonperforming assets as a percent of total assets... 0.36 0.24 0.27
Foreclosed properties as a percent of loans......... 0.37 0.08 --
Allowance as a percent of nonaccrual loans.......... 1,199.94 526.57 329.28
Allowance as a percent of nonperforming assets...... 258.60 361.85 329.28
Nonaccrual loans and 90+ days past due loans as a
percent of loans.................................. 0.19 0.47 0.66
Nonaccrual loans and 90+ days past due loans as a
percent of total assets........................... 0.15 0.36 0.51
Nonperforming assets and 90+ days past due loans as
a percent of total assets......................... 0.43 0.43 0.51
Allowance as a percent of nonperforming assets and
90+ days past due loans........................... 216.20 200.57 175.01
</TABLE>

21
<PAGE> 22

Total nonaccrual loans were $1.6 million at June 30, 2000, $3.0 million at
December 31, 1999, and $3.9 million at June 30, 1999. The ratio of nonaccrual
loans to total loans was 0.10%, 0.22% and 0.35% at June 30, 2000, December 31,
1999 and June 30, 1999, respectively.

Foreclosed properties increased to $5.9 million at June 30, 2000 from $1.1
million at December 31, 1999. The increase was primarily the result of $5.8
million in loans from two borrowing relationships that were transferred to
nonaccrual during the first and second quarters of 2000 and then subsequently
transferred to foreclosed properties during the second quarter of 2000.

One of these borrowing relationships was comprised of commercial real
estate loans totaling $3.0 million and real estate and equipment loans totaling
$0.8 million. In April of 2000, this borrower completed a voluntary turnover of
its assets to CIB Marine and the approximate net realizable value of $3.8
million was transferred to foreclosed properties. The other borrowing
relationship was comprised of $1.2 million in commercial real estate loans and
$0.8 million in equipment loans which was transferred to foreclosed properties
on June 30, 2000. This property was subsequently sold to a third party in August
2000.

The increase in foreclosed properties was partially offset by the sale of a
$1.1 million property which had previously been transferred into foreclosed
properties in the third quarter of 1999.

Impaired loans were $3.0 million, $1.9 million and $3.3 million at June 30,
2000, December 31, 1999 and June 30, 1999, respectively. Nonaccrual loans
represented approximately 44.0% of the impaired loan balance at June 30, 2000,
and 100.0% of the impaired loan balances at both December 31, 1999 and June 30,
1999, respectively.

Loans 90 days or more past due and still accruing are delinquent loans with
respect to the payment of principal and/or interest, and which management
believes all contractual principal and interest amounts due will be collected.
CIB Marine had $1.5 million in loans 90 days or more past due and still accruing
June 30, 2000, and $3.5 million at both December 31, 1999 and June 30, 1999.
Accrued interest on loans 90 days past due or more and still accruing as of June
30, 2000 was $0.03 million. The ratio of nonperforming assets and loans 90 days
or more past due and still accruing to total assets was 0.43% at both June 30,
2000 and December 31, 1999, and was 0.51% at June 30, 1999.

NONINTEREST INCOME

Noninterest income for the second quarter of 2000 was $1.8 million,
representing a 37.3% increase from the second quarter of 1999. This increase was
primarily a result of a $0.2 million gain on the sale of a foreclosed property
and a $0.2 million increase in deposit service charges due primarily to an
increase in the per-item charge for overdrafts on checking accounts.

For the six-month period ended June 30, 2000, non-interest income was $3.2
million, a decrease of approximately $55,000, or 1.7%, as compared to the same
period in the previous year. This decrease was due primarily to the recognition
of a $0.8 million gain during the six-month period ended June 30, 1999, on the
sale of a branch facility in Charleston, Illinois. Partially offsetting the
impact of this sale was a $0.3 million, or 42.9%, increase in deposit service
charges for the six-month period ended June 30, 2000, as compared to the same
period in the previous year, and a $0.2 million gain on the sale of a foreclosed
property.

NONINTEREST EXPENSE

Total noninterest expense increased $2.5 million, or 31.0%, in the second
quarter of 2000, as compared to the same period in the previous year. For the
six-month period ended June 30, 2000, total noninterest expense increased $5.2
million or 33.8%. These increases were primarily the result of CIB Marine's
growth, including internal growth and the acquisition and opening of new branch
facilities and banks.

Compensation and employee benefits expense was $6.5 million in the second
quarter of 2000, as compared to $4.8 million in the second quarter of 1999, an
increase of 35.0%. For the six-month periods ended June 30, 2000 and 1999,
compensation and benefits expense was $12.5 million and $9.5 million,
respectively, an increase of 32.1%. In general, these increases were due to the
hiring of additional personnel as a result of

22
<PAGE> 23

CIB Marine's growth, including the staffing of new facilities, and annual merit
increases. As a result of CIB Marine's growth, the total number of full-time
equivalent employees increased to 555 at June 30, 2000 from 503 and 450 at
December 31, 1999 and June 30, 1999, respectively, representing increases of
10.3% and 23.3% for the six and twelve month periods, respectively.

Equipment, occupancy and premises expense increased by $0.3 million, or
24.2%, from the second quarter of 1999 to the second quarter of 2000, and by
$0.7 million, or 27.9%, from the six-month period ended June 30, 1999. These
increases were primarily the result of new bank and branch facilities.

Professional service expense increased by $0.2 million, or 50.0%, from the
second quarter of 1999 to the second quarter of 2000, and by $0.4 million, or
51.3%, from the six-month period ended June 30, 1999. These increases were
primarily attributable to increased legal and accounting services.

Amortization of intangible assets expense increased $0.1 million, or 44.6%,
from the second quarter of 1999 to the second quarter of 2000, and by $0.4
million, or 103.6%, from the six-month period ended June 30, 1999 to the
six-month period ended June, 30 2000. These increases were primarily due to
intangible asset increases of $9.5 million relating to the two banking offices
purchased on March 29, 1999, and $2.0 million for the banking office purchased
in September 1999.

Other noninterest expense increased by $0.2 million, or 15.5%, from the
second quarter of 1999 to the second quarter of 2000, and by $0.6 million or
29.8%, from the six-month period ended June 30, 1999. These increases were due
primarily to increases in expenditures for telephone and data lines, office
supplies and postage, resulting primarily from CIB Marine's growth.

CIB Marine's efficiency ratios were 51.0% and 55.5% for the second quarters
ended June 30, 2000 and 1999, respectively, and 51.9% and 54.0% for the
six-month period ended June 30, 2000 and 1999, respectively. Excluding the
effect of the gain on the branch sale, the efficiency ratio for the first six
months of 1999 would have been 55.5%. Total noninterest expense as a percentage
of average assets was 2.09% and 2.33% for the quarters ended June 30, 2000 and
1999, respectively, and 2.09% and 2.36% for the six-month periods ended June 30,
2000 and 1999, respectively.

INCOME TAXES

CIB Marine records a provision for income taxes currently payable, along
with a provision for income taxes payable in the future. Deferred taxes arise
from temporary differences between financial statement and income tax reporting.
The effective tax rates for the three and six-months ended June 30, 2000 were
34.1% and 34.3%, respectively, as compared to 34.5% and 35.1% for the same
periods in 1999.

FINANCIAL CONDITION

OVERVIEW

CIB Marine's total assets increased by $281.8 million, or 15.4%, during the
six months ended June 30, 2000. This increase was primarily the net result of
the implementation of CIB Marine's growth and acquisition strategy. Gross loans
increased by $224.4 million, or 16.2%, and investment securities increased by
$36.8 million, or 10.1%, during the first six months of 2000. These increases
were primarily funded by a $251.0 million, or 21.4%, increase in time deposit
liabilities and a $35.0 million, or approximately 359.0%, increase in long-term
borrowings consisting of FHLB borrowings and guaranteed trust preferred
securities.

SECURITIES

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

23
<PAGE> 24

<TABLE>
<CAPTION>
AT JUNE 30, 2000 AT DECEMBER 31, 1999
-------------------- --------------------
YIELD TO YIELD TO
AMOUNT MATURITY AMOUNT MATURITY
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD TO MATURITY
U.S. Government & Agencies...................... $ 67,339 6.26% $ 73,940 6.10%
Obligations of states and political
subdivisions.................................. 49,068 7.34 57,679 7.04
Other notes and bonds........................... 450 7.10 450 7.11
Mortgage backed securities...................... 20,936 6.75 14,821 6.97
-------- ----- -------- -----
Total Securities Held To Maturity..... 137,793 6.72 146,890 6.56
-------- ----- -------- -----
AVAILABLE FOR SALE
U.S. Government & Agencies...................... 227,211 5.96% 190,585 5.83%
Obligations of states and political
subdivisions.................................. 4,110 11.00 3,735 10.49
Other notes and bonds........................... 4,604 6.35 2,107 6.80
Mortgage backed securities...................... 25,923 6.34 18,821 6.04
Federal Home Loan Bank stock.................... 3,455 7.25 4,482 6.50
Other equities.................................. 37 N/A 37 N/A
-------- ----- -------- -----
Total Securities Available for Sale
Before SFAS 115 Adjustment.......... 265,340 6.10 219,767 5.95
-------- ----- -------- -----
Total Securities Before SFAS 115
Adjustment.......................... 403,133 6.31% 366,657 6.20%
===== =====
SFAS 115 Available For Sale Market Value
Adjustment.................................... (2,997) (3,307)
-------- --------
TOTAL SECURITIES................................ $400,136 $363,350
======== ========
</TABLE>

Total securities outstanding at June 30, 2000, were $400.1 million as
compared to $363.4 million at December 31, 1999, an increase of 10.1%. The
increase in the securities portfolio was directly related to CIB Marine's growth
during this period. The ratio of total securities to total assets was 19.0% at
June 30, 2000 as compared to 19.9% at December 31, 1999. Because CIB Marine's
securities portfolio is one of its sources of liquidity, the size of its
portfolio has been increased as total assets have increased.

The mix of securities in CIB Marine's portfolio has remained relatively
constant during the past three years. Ignoring SFAS No. 115 market value
adjustments, at June 30, 2000 and December 31, 1999, U.S. Government and Agency
securities represented 73.1% and 72.1% of the portfolio, respectively; mortgage
backed securities represented 11.6% and 9.2% of the portfolio, respectively; and
obligations of states and political subdivisions, most of which are general
obligations of states or political subdivisions of states in which CIB Marine's
subsidiaries are located, represented 13.2% and 16.7% of the portfolio,
respectively.

As of June 30, 2000, $262.3 million, or 65.6%, of the portfolio was
classified as available for sale and $137.8 million or 34.4%, of the portfolio
was classified as held to maturity. At December 31, 1999, these ratios were
59.6% and 40.4%, respectively. Securities available for sale increased $45.9
million, or 21.2%, from December 31, 1999 to June 30, 2000, while securities
held to maturity decreased $9.1 million, or 6.2%.

On June 30, 2000, the net unrealized loss of the available for sale
securities was $3.0 million, as compared to a net unrealized loss of $3.3
million at December 31, 1999. The increase in the unrealized value of these
securities over the first six months of 2000 was a direct result of decreases in
market interest rates offered on similar investments.

LOANS

Loans, net of the allowance for loan loss, were $1.6 billion at June 30,
2000, an increase of $220.6 million, or 16.1%, from December 31, 1999. Net loans
represented 75.6% and 75.2% of CIB Marine's total assets at June 30, 2000, and
December 31, 1999, respectively. Most of the increase in CIB Marine's loan
portfolio was in commercial real estate loans, commercial loans and construction
loans which, in the aggregate represented

24
<PAGE> 25

94.9% of gross loans at June 30, 2000 and 94.5% of gross loans at December 31,
1999. These increases are consistent with CIB Marine's strategy to focus on
establishing banking relationships with small to medium sized businesses and has
been achieved by hiring lenders who have experience and expertise in making
loans to these customers.

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

<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
----------------------- ------------------
(DOLLARS IN THOUSANDS)
% OF % OF
BALANCE TOTAL BALANCE TOTAL
Loans: ---------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Commercial and industrial.......................... $ 532,713 33.0% $ 454,438 32.7%
Agricultural....................................... 4,200 0.2 5,973 0.4
Real estate:
1-4 family....................................... 55,925 3.5 50,292 3.6
Commercial....................................... 738,066 45.7 646,484 46.5
Construction..................................... 262,464 16.2 214,251 15.4
Consumer........................................... 10,754 0.7 13,152 0.9
Credit card loans.................................. 1,557 0.1 1,436 0.1
Other.............................................. 10,631 0.6 5,486 0.4
---------- ----- ---------- -----
Total loans.............................. 1,616,310 100.0% 1,391,512 100.0%
===== =====
Deferred Loan Fees................................. (4,095) (3,681)
Allowance for Loan Loss............................ (19,607) (15,813)
---------- ----------
Net Loans................................ $1,592,608 $1,372,018
========== ==========
</TABLE>

CREDIT CONCENTRATIONS

Pursuant to CIB Marine's loan policy, generally a concentration of credit
is deemed to exist when the total credit relationship to one borrower, a related
group of borrowers, or borrowers within or dependent upon a related industry
exceeds 25% of the capital of CIB Marine. At June 30, 2000, CIB Marine had one
borrowing relationship with individual borrowers or related groups of borrowers
that exceeded 25% of the capital. The total outstanding lending commitment
associated with this borrowing relationship, including lines of credit which
have not been fully drawn as of June 30, 2000, was $46.5 million, and amounted
to 26.3% and 2.9%, of CIB Marine's stockholders' equity and gross loans
outstanding, respectively as of that date.

In July 1999, one of CIB Marine's borrowers, who is also a stockholder of
CIB Marine and whose total borrowing relationship exceeded 25% of capital at
that time, experienced a substantial decline in net worth as a result of a
similar decline in the market value of a publicly traded common stock comprising
a large part of this borrower's net worth. The decline in the value of this
security has caused liquidity problems for this borrower with respect to its
current obligations to CIB Marine and other lenders. Since March 2000, the total
outstanding lending commitment associated with this borrowing relationship has
represented less than 25% of the capital of CIB Marine. As of June 30, 2000, the
total outstanding lending commitment associated with this borrowing
relationship, including lines of credit which have not been fully drawn, was
approximately $41.6 million. The aggregate principal amount actually drawn and
outstanding at June 30, 2000, with respect to this borrowing relationship was
approximately $33.3 million and all such loans were current with respect to
principal and interest. CIB Marine has renewed certain loans and extended new
loans to this borrower since July 1999 based upon a credit evaluation at the
time of origination or renewal. As loans to this borrower become due, CIB Marine
will evaluate the credit relationship at that time to determine whether to renew
such loans.

Since July 1999, CIB Marine has closely monitored this borrowing
relationship including the collateral margins and cash flows. This borrower
continues to work with CIB Marine to improve this borrowing

25
<PAGE> 26

relationship, including providing updated financial information so that CIB
Marine can monitor and evaluate the credit risk of this relationship. Although
CIB Marine estimates the value of the collateral securing this borrowing
relationship currently exceeds the outstanding principal balance to this
borrower, this borrowing relationship became under-collateralized pursuant to
the collateral requirements of CIB Marine's loan policy during the first quarter
of 2000.

In order to assess this borrower's liquidity needs, CIB Marine continues to
monitor the borrower's obligations to other lenders and their collateral
positions. In November 1999, two of these other lenders filed lawsuits to
recover amounts due to them. During February 2000 one of these lawsuits was
dismissed. In April 2000, CIB Marine became aware of another lawsuit, which was
filed in March 2000 by a third lender, to recover amounts due to them. This
lawsuit was dismissed in July 2000. The borrower is engaging in a voluntary and
orderly disposition of certain of its assets to satisfy various obligations to
CIB Marine and other lenders and to strengthen its liquidity position.

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

In working with this borrower to address its liquidity problems, management
determined that it was in the best interest of CIB Marine to provide this
borrower with additional cash to help it meet its current obligations both to
CIB Marine and to other lenders. On September 9, 1999, CIB Marine purchased from
this borrower limited partnership interests in three private investment funds.
CIB Marine paid $2.4 million for these limited partnership interests, of which
$1.0 million was used by the borrower to repay a loan from CIB Marine that was
previously secured by an interest in one of these limited partnerships, $0.1
million was paid to another lender and $1.3 million was invested in a
certificate of deposit at CIB Marine which was pledged to CIB Marine as
additional collateral and to be used as a reserve account for future interest
payments. The certificate of deposit was reduced by $0.5 million during the
fourth quarter of 1999 to reflect an adjustment to the purchase price of the
limited partnership interests. Since the fourth quarter of 1999, $0.7 million of
this account has been used to make required interest payments. Since June 30,
2000 the borrower added $0.3 million to this account from proceeds gained
through the sale of certain assets. As of August 11, 2000 the account balance
was $0.4 million. A description of this investment and the purchase price
adjustment is discussed below under "Other Assets".

At June 30, 2000, CIB Marine also had total borrowings within three
industries or industry groups that exceeded 25% of its capital as of that date.
The total outstanding balance to commercial and residential real estate
developers, investors and contractors was approximately $686.4 million, or 42.5%
of gross loans and 387.5% of stockholders' equity. The total outstanding balance
of loans made in the motel and hotel industry was approximately $130.3 million,
or 8.1% of gross loans and 73.5% of stockholders' equity. The total outstanding
balance of loans made in the nursing/convalescent home industry was
approximately $84.8 million, or 5.2% of gross loans outstanding and 47.9% of
stockholders' equity.

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

OTHER ASSETS

During the first six months of 2000, other assets increased $2.7 million,
or 62.4%, from $4.3 million at December 31, 1999. The majority of the increase
was the result of a $1.7 million premium paid on a $25.0 million FHLB advance
assumed in March 2000, which, at June 30, 2000, had an unamortized balance of
$1.6 million. Also contributing to the increase in other assets was a $0.3
million capitalized underwriting fee
26
<PAGE> 27

incurred with the issuance of $10.0 million in guaranteed trust preferred
securities. Additional information regarding these transactions is discussed in
"Borrowings" and "Guaranteed Trust Preferred Securities".

Other assets at June 30, 2000 and December 31, 1999 also includes a $2.3
million investment in three limited partnerships. In September 1999, CIB Marine
purchased, at the holding company level, limited partnership interests in three
private investment funds from one of its largest borrowers. These funds are
currently invested in both public and private equity securities. Two of the
funds are focused on the environmental and waste-related industries and the
other fund is focused on the health care, pharmaceutical, media and
communication industries. CIB Marine engaged in this transaction primarily to
provide this borrower, who is also a stockholder of CIB Marine, with cash to
meet its current obligations to CIB Marine. Additional information about this
borrower and its loans from CIB Marine are discussed in "Loans-Credit
Concentrations."

CIB Marine originally paid $2.4 million for the limited partnership
interests based on the value of the underlying portfolio securities held by the
private investment funds as of June 30, 1999. The amount of this investment was
$2.3 million at June 30, 2000 and is included in other assets, carried at the
lower of cost or fair market value. CIB Marine may also be required to invest up
to an additional $2.4 million over the next 3 years pursuant to further capital
call commitments.

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

DEPOSIT LIABILITIES

CIB Marine continues to experience significant growth in deposits, which
are primarily used to fund the assets growth of CIB Marine. Total deposits
increased 16.7% to $1.8 billion at June 30, 2000, from $1.5 billion at December
31, 1999.

Time deposits represented the largest component of interest-bearing deposit
liabilities. The percentage of time deposits to total deposits was 79.9% at June
30, 2000, and 76.9% at December 31, 1999. These percentages reflect CIB Marine's
significant reliance on time deposits as a source of funding. Time deposits of
$100,000 and over of $497.2 million at June 30, 2000, and $415.9 million at
December 31, 1999, represented 34.9% and 35.4% of total time deposits,
respectively. CIB Marine issues brokered time deposits periodically to meet
short term funding needs and/or when their related costs are at or below those
being offered on other deposits. Brokered time deposits were $96.9 million, or
6.8%, of total time deposits at June 30, 2000, and $80.7 million, or 6.9%, of
total time deposits at December 31, 1999. Brokered time deposits of $100,000 and
over were $90.7 million at June 30, 2000.

At June 30, 2000, noninterest-bearing demand deposits were $107.1 million;
interest-bearing demand deposits were $43.5 million and savings deposits were
$207.3 million. At December 31, 1999 these deposits were $98.6 million, $45.1
million and $209.3 million, respectively.

27
<PAGE> 28

BORROWINGS

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

<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------- -------------------
BALANCE AVG RATE BALANCE AVG RATE
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
SHORT-TERM BORROWINGS
Fed funds purchased................................ $ 28,105 7.20% $ 29,575 5.21%
Securities sold under repurchase agreements........ 32,047 6.44 27,129 5.49
Treasury, tax and loan note........................ 243 6.60 405 4.01
Federal Home Loan Bank -- short term............... -- -- 26,400 5.16
Commercial paper................................... 205 6.85 -- --
Other borrowings -- short term..................... 25,850 8.16 29,710 8.48
-------- ----- -------- ----
Total Short-Term Borrowings................ 86,450 7.21% 113,219 6.12%
-------- ----- -------- ----
LONG-TERM BORROWINGS
Federal Home Loan Bank............................. 34,750 5.72 9,750 4.98
Guaranteed trust preferred securities.............. 10,000 10.88 -- --
-------- ----- -------- ----
Total Long-Term Borrowings................. 44,750 6.87% 9,750 4.98%
-------- ----- -------- ----
TOTAL BORROWINGS........................... $131,200 7.10% $122,969 6.03%
======== ===== ======== ====
</TABLE>

Total borrowings increased $8.2 million, or 6.7%, to $131.2 million during
the six-month period ended June 30, 2000, from $123.0 million at December 31,
1999. Fed Funds purchased accounted for $28.1 million, or 21.4%, of total
borrowings at June 30, 2000 and $29.6 million, or 24.1%, of total borrowings at
December 31, 1999. Repurchase agreements accounted for $32.0 million, or 24.4%,
of total borrowings at June 30, 2000, as compared to $27.1 million, or 22.1%, of
total borrowings at December 31, 1999. Federal Home Loan Bank advances accounted
for $34.8 million, or 26.5% of total borrowings at June 30, 2000, as compared to
$36.2 million, or 29.4%, at December 31, 1999. Guaranteed trust preferred
securities accounted for $10.0 million, or 7.6% of total borrowings at June 30,
2000. There were no guaranteed trust preferred securities outstanding at
December 31, 1999. CIB Marine increased its utilization of these borrowings,
particularly long-term Federal Home Loan Bank advances and guaranteed trust
preferred securities during the first six months of 2000 in order to meet its
funding needs or when the terms on these products were more favorable than other
types of funding.

During the first quarter of 2000, CIB Marine assumed a $25.0 million
Federal Home Loan Bank of Chicago advance due June 30, 2008 with an effective
rate, including premium, of 7.05%. The $1.7 million premium is being amortized
over the life of the borrowing. CIB Marine also entered into an interest rate
swap with the Federal Home Loan Bank of Chicago with a $25.0 million notional
value and maturing on June 30, 2008. CIB Marine pays a variable rate of interest
at the one month LIBOR rate and earns a fixed rate of interest at 7.08%. CIB
Marine believes the swap transaction will reduce interest rate risk by
converting the fixed rate on the advance to a variable rate similar to the loans
funded with the proceeds of these borrowings.

CIB Marine also has a $30.0 million revolving line of credit with an
unaffiliated commercial bank. At June 30, 2000, there was an outstanding balance
on this line of credit in the amount of $25.9 million, as compared to $29.7
million at December 31, 1999. These funds were used to capitalize the subsidiary
banks, to acquire branch facilities, provide capital support for the internal
growth of the subsidiary banks and for working capital.

GUARANTEED TRUST PREFERRED SECURITIES

In March 2000, CIB Marine issued $10.0 million in guaranteed trust
preferred securities through a wholly owned special-purpose trust. These
securities qualify as Tier I equity capital for regulatory capital purposes.
Distributions on the securities are cumulative and are payable to the security
holders semi-annually at a rate of 10.875% per annum. CIB Marine fully and
unconditionally guarantees the obligations of the trust

28
<PAGE> 29

on a subordinated basis. These securities are mandatorily redeemable upon their
maturity on March 8, 2030 and are callable beginning March 8, 2010 at a premium,
which premium declines ratably to par by 2020. Issuance costs of $0.3 million
related to the securities are classified as other assets on the balance sheet
and are being amortized over the expected life of the securities as an
adjustment to interest expense. CIB Marine used the net proceeds of $9.7 million
to reduce its debt at a non-affiliated bank.

CAPITAL

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

The risk-based capital information of CIB Marine at June 30, 2000 and
December 31, 1999 is contained in the following table. The capital levels of CIB
Marine and the subsidiary banks are, and have been, in excess of the required
regulatory minimums during the periods indicated. CIB Marine intends to maintain
its capital level and the capital levels of its banks at or above levels
sufficient to support future growth and maintain sufficiently high lending
limits to permit CIB Marine's subsidiary banks to meet the credit needs of
medium-sized commercial borrowers.

<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Risk Weighted Assets (RWA).................................. $1,887,971 $1,618,852
========== ==========
Average Assets (Quarter Only)(1)............................ $2,030,958 $1,667,517
========== ==========
Capital Components Stockholders' equity..................... $ 177,154 $ 161,335
Guaranteed trust preferred securities..................... 10,000 0
Less: Disallowed intangibles.............................. (13,444) (14,171)
Add: Unrealized loss on securities........................ 1,841 2,034
---------- ----------
Tier 1 Capital.............................................. 175,545 149,198
Allowable allowance for loan loss......................... 19,607 15,813
---------- ----------
Total Risk Based Capital.................................... $ 195,158 $ 165,011
========== ==========
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 2000
-------------------------------------
FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
---------------- -----------------
AMOUNT RATIO AMOUNT RATIO
------- ----- -------- -----
<S> <C> <C> <C> <C>
Total Capital (to RWA)................................... 195,155 10.34% 151,038 8.00%
Tier 1 Capital (to RWA).................................. 175,548 9.30 75,519 4.00
Tier 1 Leverage (to Avg Assets).......................... 175,548 8.64 81,303 4.00
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 2000
-------------------------------------
FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
---------------- -----------------
AMOUNT RATIO AMOUNT RATIO
------- ----- -------- -----
<S> <C> <C> <C> <C>
Total Capital (to RWA)................................... 165,011 10.19% 129,508 8.00%
Tier 1 Capital (to RWA).................................. 149,198 9.22 64,754 4.00
Tier 1 Leverage (to Avg Assets).......................... 149,198 8.95 66,701 4.00
</TABLE>

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

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

In March 2000, CIB Marine issued $10.0 million in guaranteed trust
preferred securities. These securities qualify as Tier 1 equity capital for
regulatory capital purposes. In March 2000, CIB Marine also raised

29
<PAGE> 30

$3.4 million of capital pursuant to a private placement offering of its common
stock. An additional $0.5 million was raised in this offering in April 2000. In
June 2000 CIB Marine raised $2.4 million in capital pursuant to another private
placement offering of its common stock. For additional information regarding
these transactions see "Guaranteed Trust Preferred Securities" and Part II:
"Other Information, Item 2, Changes in Securities and Use of Proceeds."

LIQUIDITY

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

The following discussion should be read in conjunction with the statements
of cash flows for the six months ended June 30, 2000 and 1999, contained in the
consolidated financial statements.

For the six months ended June 30, 2000, net cash provided by operating
activities was $4.1 million, compared to $9.7 million for the same period in the
previous year. The decrease in net cash provided by operating activities was due
primarily to a decrease in net proceeds from loans held for sale. For the six
months ended June 30, 2000, net cash used in investing activities was $262.2
million, as compared to $182.3 million for the same period in the previous year.
The increase in cash used for investing activities was due in part to a net
increase in loans and $101.5 million in cash provided during the six-month
period in 1999 as a result of the purchase of branch assets and deposits in
cash. Net cash provided by financing activities was $268.3 million and $174.8
million for the six-month periods ended June 30, 2000, and 1999, respectively.
Increases in deposit liabilities provided $255.6 million, or 95.2% of the net
cash provided by financing activities for 2000.

CIB Marine was able to meet its liquidity needs during the first half of
2000 and expects to meet these needs for the remainder of 2000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK SENSITIVITY

There have been no material changes in the market risks faced by CIB Marine
since December 31, 1999. For information regarding CIB Marine's market risks,
refer to its 1999 Annual Report on Form 10-K, which is on file with the
Securities and Exchange Commission.

30
<PAGE> 31

The following table illustrates the period and cumulative interest rate
sensitivity for June 30, 2000.

<TABLE>
<CAPTION>
JUNE 30, 2000
-------------------------------------------------------------------
0-3 4-6 7-12 2-5 OVER
MONTHS MONTHS MONTHS YEARS 5 YEARS TOTAL
-------- --------- --------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans.......................................... $938,369 $ 71,377 $ 100,000 $470,226 $ 36,749 $1,616,721
Securities..................................... 25,737 11,606 42,383 273,241 47,169 400,136
Federal funds sold............................. 13,882 -- -- -- -- 13,882
-------- --------- --------- -------- -------- ----------
TOTAL INTEREST-EARNING ASSETS............ 977,988 82,983 142,383 743,467 83,918 2,030,739
-------- --------- --------- -------- -------- ----------
Interest-bearing liabilities:
Time deposits.................................. 465,303 288,541 444,173 228,260 73 1,426,350
Savings and interest-bearing demand deposits... 250,712 -- -- -- -- 250,712
Short-term borrowings.......................... 85,169 825 456 -- -- 86,450
Long-term borrowings........................... -- -- -- -- 34,750 34,750
Impact of interest rate swap................... 25,000 -- -- -- (25,000) --
Guaranteed trust preferred securities.......... -- -- -- -- 10,000 10,000
-------- --------- --------- -------- -------- ----------
TOTAL INTEREST-BEARING LIABILITIES....... $826,184 $ 289,366 $ 444,629 $228,260 $ 19,823 $1,808,262
-------- --------- --------- -------- -------- ----------
Interest sensitivity GAP (by period)............. $151,804 $(206,383) $(302,246) $515,207 $ 64,095 $ 222,477
Interest sensitivity GAP (cumulative)............ 151,804 (54,579) (356,825) 158,382 222,477 222,477
Cumulative Gap as a % of Total Assets............ 7.21% (2.59) (16.94) 7.52% 10.56%
</TABLE>

The following table illustrates the expected percentage change in net
interest income over a one year period due to the immediate change in short term
U.S. prime rate of interest as of June 30, 2000, and December 31, 1999:

<TABLE>
<CAPTION>
BASIS POINT CHANGES
----------------------------------------
+200 +100 -100 -200
------- ------- ------- -------
<S> <C> <C> <C> <C>
June 30, 2000
Net Interest Income change over one year........ (1.28)% (0.64)% 0.62% 0.06%
======= ======= ======= =======
December 31, 1999
Net Interest Income change over one year........ (3.53)% (1.77)% 1.54% 2.01%
======= ======= ======= =======
</TABLE>

31
<PAGE> 32

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

a. Not Applicable

b. Not Applicable

c. On March 24, 2000 CIB Marine commenced a $5.0 million offering of its
common stock at $17.29 per share pursuant to a private placement offering
which terminated on April 7, 2000. During March CIB Marine sold 194,250
shares in this offering for a total of $3.4 million. In April, CIB Marine
sold in this offering an additional 30,750 shares for a total of $0.5
million. On June 24, 2000 CIB Marine commenced a $3.0 million offering of
its common stock at $17.90 per share pursuant to a private placement
offering which terminated on June 30, 2000. During June CIB Marine sold
134,850 shares in this offering for a total of $2.4 million. These
offerings were made to a limited number of accredited investors and to
CIB Marine's employee stock ownership plan, pursuant to Rule 506 of
Regulation D under the Securities Act of 1933. CIB Marine incurred no
commissions or underwriting discounts in either of these offerings.

d. Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

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

a. CIB Marine held its Annual Meeting of Shareholders on April 27, 2000.

b. Matters related to the election of Directors.

Votes cast for the election of three Directors to serve for a term of three
years are as follows

<TABLE>
<CAPTION>
WITHHOLD
AUTHORITY TO
DIRECTOR FOR VOTE FOR NON-VOTE
-------- ---------- ------------ ---------
<S> <C> <C> <C>
John T. Bean.................................... 13,314,300 0 3,170,850
Steven C. Hillard............................... 13,314,300 0 3,170,850
J. Michael Straka............................... 13,314,300 0 3,170,850
</TABLE>

The continuing Directors of CIB Marine whose seats were not up for election
at the annual meeting are as follows:

<TABLE>
<CAPTION>
DIRECTOR SERVING UNTIL
-------- -------------
<S> <C>
Norman E. Baker............................................. 2001
W. Scott Blake.............................................. 2001
Dean M. Katsaros............................................ 2001
Donald M. Trilling.......................................... 2001
Jose Araujo................................................. 2002
Jerry D. Maahs.............................................. 2002
Howard E. Zimmerman......................................... 2002
</TABLE>

32
<PAGE> 33

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

- Exhibit 11 -- Statement Re Computation of Earnings Per Share

- Exhibit 27 -- Financial Data Schedule

b. Reports on Form 8-K

On June 29, 2000, CIB Marine filed an 8-K reporting that the Board of
Directors had approved a 150-for-1 stock split of its outstanding common stock.
The stock split was effected in the form of a stock dividend and entitled each
shareholder of record at the close of business on July 1, 2000, to receive 149
additional shares of common stock for each share of common stock held. The
transfer agent commenced delivery of the stock dividends on July 25, 2000.

33
<PAGE> 34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on this 11th day of August 2000.

CIB MARINE BANCSHARES, INC.
(Registrant)

/s/ STEVEN T. KLITZING

--------------------------------------
Steven T. Klitzing
Senior Vice President and
Chief Financial Officer

34
<PAGE> 35

EXHIBIT INDEX

The following exhibits have been filed herewith:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>