UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, ~~2010~~2011

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to _________

Commission File Number: 000-24149

CIB MARINE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Wisconsin	37-1203599
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1930 W. Bluemound Road, Suite D, Waukesha, Wisconsin	53186
(Address of principal executive offices)	(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1.00 Par Value Per Share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þR

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ¨ £ No þ

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 þ R No ¨£

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ R No ¨£

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨R

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ £ Non-accelerated filer ¨ £ Smaller reporting company þR (Do not check if a smaller reporting company)

~~(Do~~Indicate ~~not~~by check ifmark awhether ~~smaller~~the ~~reporting~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No R

~~Indicate~~While there is currently no active trading market for shares of CIB Marine’s common stock, the aggregate market value of the common stock held by ~~check~~nonaffiliates ~~mark~~of ~~whether~~the registrant was approximately $1,811,748 (based upon the closing price of $0.10 per share of the registrant's iscommon astock ~~shell~~on ~~company~~the OTC ("Pink Sheets" as ~~defined~~of inJune ~~Rule~~30, ~~12b-2~~2011). For purposes of this market volume calculation, the ~~Exchange~~registrant ~~Act~~assumed that all executive officers and directors (and no other person). ~~Yes~~qualified ¨as No“affiliates;” þprovided, however, nothing herein shall constitute an admission or any evidence whatsoever, as to affiliate status.

~~While~~Indicate ~~there~~by ischeck ~~currently~~mark nowhether ~~active~~the ~~trading~~registrant has ~~market~~filed ~~for~~all ~~shares~~documents ofand ~~CIB~~reports ~~Marine’s~~required ~~common~~to ~~stock,~~be ~~the~~filed ~~aggregate market value of the common stock held~~ by ~~nonaffiliates~~Section ~~of the registrant was approximately $2~~12,~~324,543~~ ~~(based upon the closing price of $0.~~13 ~~per~~or ~~share~~15(d) of the ~~registrant's~~Securities ~~common~~Exchange ~~stock~~Act ~~on the OTC "Pink Sheets" as~~ of ~~June~~1934 ~~30,~~subsequent to ~~2010).~~the ~~For~~distribution ~~purposes~~ of ~~this~~securities ~~market~~under ~~volume~~plan ~~calculation,~~confirmed ~~the~~by ~~registrant~~a ~~assumed~~court. ~~that~~Yes ~~all~~R ~~executive~~No ~~officers and directors (and no other person) qualified as “affiliates;” provided, however, nothing herein shall constitute an admission or any evidence whatsoever, as to affiliate status.~~£

~~Indicate~~As byof ~~check~~March ~~mark~~12, ~~whether~~2012, ~~the~~there ~~registrant~~were ~~has~~18,346,391 shares ~~filed~~issued ~~all documents~~ and ~~reports required to be filed by Sections 12~~18,135,344 13shares oroutstanding ~~15(d)~~ of the ~~Securities~~registrant’s ~~Exchange~~common ~~Act~~stock, of$1.00 ~~1934~~par ~~subsequent~~value toper ~~the distribution of securities under plan confirmed by a court~~share. ~~Yes þ No ¨~~

As of March 21, 2011, there were 18,346,391 shares issued and 18,135,344 shares outstanding of the registrant’s common stock, $1.00 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its ~~2011~~2012 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the registrant’s fiscal year are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 hereof as noted therein.

EXPLANATORY NOTE

This document is intended to speak as of December 31, ~~2010~~2011, except as otherwise noted.

FORM 10-K TABLE OF CONTENTS

		Page	~~Page~~
	Part I	~~Part I~~
Item 1	— Business	~~— Business~~2	3
Item 1A	— Risk Factors	~~— Risk Factors~~13	15
Item 1B	— Unresolved Staff Comments	~~— Unresolved Staff Comments~~23	25
Item 2	— Properties	~~— Properties~~23	25
Item 3	— Legal Proceedings	~~— Legal Proceedings~~24	25
		Part II
Item 4	— Mine Safety Disclosures	24
Item 5		— Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
	Part II
Item 6		— Selected Financial Data	27
Item 5	— Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 7		— Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 6	— Selected Financial Data	26
Item 7A		— Quantitative and Qualitative Disclosures About Market Risk	59
Item 7	— Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 8		— Financial Statements and Supplementary Data	62
Item 7A	— Quantitative and Qualitative Disclosures About Market Risk	60
Item 9		— Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	107
Item 8	— Financial Statements and Supplementary Data	64
Item 9A		— Controls and Procedures	107
Item 9	— Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	109
Item 9B		— Other Information	108
Item 9A	— Controls and Procedures	109
		Part III
Item 9B	— Other Information	110
Item 10		— Directors, Executive Officers and Corporate Governance	108
	Part III
Item 11		— Executive Compensation	109
Item 10	— Directors, Executive Officers and Corporate Governance	110
Item 12		— Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	109
Item 11	— Executive Compensation	110
Item 13		— Certain Relationships and Related Transactions, and Director Independence	109
Item 12	— Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	110
Item 14		— Principal Accountant Fees and Services	109
Item 13	— Certain Relationships and Related Transactions, and Director Independence	111
		Part IV
Item 14	— Principal Accountant Fees and Services	111
Item 15		— Exhibits and Financial Statement Schedules	109
	Part IV
Signatures			112
Item 15	— Exhibits and Financial Statement Schedules	111
Signatures		114

PART I

ITEM 1. BUSINESS

CIB MARINE

CIB Marine Bancshares, Inc. (“CIB Marine” ~~or “Company”~~) is a one-bank holding company with its principal executive offices in Waukesha, Wisconsin, a suburb of Milwaukee. CIB Marine is a corporation formed under the laws of the State of Wisconsin in 1999. At December 31, ~~2010~~2011, CIB Marine owned and operated CIBM Bank ~~(“Bank”)~~, a commercial banking organization with offices in Illinois, Wisconsin, ~~Indiana~~ and ~~Arizona~~Indiana.

CIBM Bank offers a full array of traditional banking services. These services include a broad range of loan products, such as commercial loans, commercial real estate loans, construction and development loans, residential real estate loans, consumer loans, and commercial and standby letters of credit; accepting demand, savings and time deposits, providing commercial paper and repurchase agreements; and providing other banking services.

~~Additional~~Markets ~~Information~~Served

AsAt ofDecember ~~April 30~~31, ~~2009~~2011, ~~the~~CIB ~~Company~~Marine ~~was~~and inCIBM Bank ~~default~~served onthe ~~each~~central ofIllinois, ~~its~~greater ~~Junior~~Milwaukee ~~Subordinated~~and ~~Debentures~~greater ~~(“Debentures”)~~Indianapolis ~~issued~~geographic inmarkets ~~conjunction~~or ~~with~~regions. ~~four~~The ~~tranches~~Arizona ofbranch was ~~trust~~closed ~~preferred~~during ~~securities~~2011, ~~(“TruPS”)~~but ~~offerings~~loans generated by ~~the~~that ~~Company~~branch ~~between~~continue ~~March~~to ~~2000~~be ~~and~~serviced ~~September~~by ~~2002~~CIB Marine. AsCIBM aBank ~~result,~~had ~~the~~13 ~~holders~~banking offacilities with ~~the~~total ~~TruPS~~assets ~~(“TruPS~~of ~~Holders”)~~$500.2 ~~could have~~million, atloans ~~their~~of ~~discretion,~~$356.8 ~~accelerated~~million ~~the~~and ~~principal~~total ondeposits ~~the~~of ~~Debentures~~$431.1 Onmillion ~~July~~at ~~16,~~December ~~2009~~31, ~~CIB~~2011. ~~Marine~~The ~~filed~~commercial lending, acommercial ~~Current~~real ~~Report~~estate onand ~~Form~~construction ~~8-K~~and ~~regarding~~development asegments ~~pre-packaged Plan of Reorganization~~ (~~“Plan”)~~collectively ~~that~~referred ~~was presented~~ to as the ~~TruPS~~“Commercial ~~Holders~~Segments”) comprise ~~for~~approximately ~~their~~80% ~~approval~~of ~~to exchange principal and accrued interest on~~ the ~~Debentures~~total ~~for~~loan ~~two~~balance ~~series~~at ofDecember ~~preferred~~31, ~~stock~~2011.

OnServices ~~September~~are ~~16,~~provided ~~2009,~~in ~~following~~person ~~receipt~~at ofCIBM Bank’s ~~approval~~offices ~~of the Plan by the requisite TruPS Holders, the Company filed the Plan~~ in ~~the~~its ~~United~~markets ~~States~~discussed ~~Bankruptcy~~above ~~Court~~and ~~(“Bankruptcy~~electronically ~~Court”)~~using ~~for~~CIBM ~~the~~Bank’s ~~Eastern~~internet ~~District~~banking ~~of Wisconsin (Case No~~services. ~~09-33318) under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”). The restructuring of the Company pursuant to the Plan had no direct impact on the operations of CIBM Bank.~~

OnNonbank October 29, 2009, the Bankruptcy Court entered an order confirming the Plan (“Confirmation Order”). The Company substantially completed its financial restructuring pursuant to the Plan on the effective date of December 30, 2009. Under the Plan, the former TruPS Holders exchanged $107.2 million of cumulative high-interest Debentures comprising $61.9 million principal and $45.3 million of accrued interest, for shares of two series of CIB Marine preferred stock with a carrying value of $51 million. In the exchange, 55,624 shares of Series A 7% fixed rate noncumulative perpetual preferred stock with a stated value of $1,000 per share (“Series A Preferred”) and 4,376 shares of Series B 7% fixed rate convertible noncumulative perpetual preferred stock with a stated value of $1,000 per share (“Series B Preferred” and together with Series A Preferred “CIB Marine Preferred”) were issued. Each share of Series B Preferred is convertible into 4,000 shares of CIB Marine common stock only upon the consummation of a merger transaction involving CIB Marine where CIB Marine is not the surviving entity. The CIB Marine Preferred has no stated redemption date and holders have no right to compel the redemption of any or all of the shares. Further, dividends are noncumulative, and payable only to the extent CIB Marine declares a dividend, at its discretion and subject to regulatory approval (see Note 14 to the consolidated financial statements appearing in Item 8 of Part II to this Annual Report on Form 10-K (“Form 10-K”)). Under the Plan, the ownership interests of holders of CIB Marine common stock survived the emergence from Chapter 11 bankruptcy. An extraordinary gain of $54.5 million, net of amortization costs of $1.2 million and reorganization costs of $0.5 million, was recorded in the fourth quarter of 2009 on the extinguishment of debt securities related to the exchange.Subsidiaries

OnAt ~~May~~December 1031, ~~2010~~2011, ~~the~~CIB ~~Bankruptcy~~Marine ~~Court~~has ~~issued~~one wholly-owned ~~its~~nonbanking ~~final~~subsidiary, ~~decree~~CIB ~~thereby~~Marine ~~closing~~Capital, LLC (“CIB Marine Capital”) that had ceased operations during 2003 and is in the ~~Chapter~~process 11of ~~bankruptcy~~winding ~~case~~down. ~~for~~A former nonbank subsidiary of CIB Marine, CIB Construction, LLC (“CIB Construction”), was dissolved in December 2011.

~~Markets~~CIB ~~Served~~Marine Capital, LLC

AtIn ~~December~~April 312001, ~~2010~~CIB Marine established CIB Marine Capital, a Wisconsin limited liability company. CIB Marine ~~and~~Capital ~~CIBM~~provided ~~Bank~~leveraged ~~served~~financing, including mezzanine loans to commercial customers. Typically, the ~~Central~~collateral ~~Illinois~~coverage on the loans was insufficient to secure a senior debt position. The loans were, ~~Greater~~by ~~Milwaukee~~their nature, ~~Greater~~inherently ~~Indianapolis~~riskier than senior debt position loans. During 2003, CIB Marine ceased to offer new loans through CIB Marine Capital and ~~Phoenix~~began ~~geographic~~winding ~~markets~~down orits ~~regions~~affairs. ~~CIBM~~At ~~Bank~~December 31, 2007, CIB Marine Capital had 15no ~~banking~~loans ~~facilities~~outstanding, but ~~with~~was ~~total~~continuing ~~assets~~collection efforts on previously charged-off loans. During 2008, CIB Marine sold the operations and the majority of ~~$580~~the loans of its Florida banking subsidiary, and CIB Marine transferred the loans not purchased by the buyer to CIB Marine Capital.0 At ~~million~~December 31, 2011, CIB Marine Capital had loans and loans held for sale with a total ~~deposits~~net carrying value of $~~497~~2.98 million. atCIB Marine ~~December~~Capital 31is continuing to wind down its affairs, ~~2010~~including the sale or collection of those outstanding loans.

3CIB Construction, LLC

~~Services~~In ~~are~~2002, ~~provided~~CIB Marine acquired through its wholly-owned subsidiary, CIB Construction, 84% of Canron Corporation (“Canron”), a steel fabrication and erection company that had operations in ~~person~~the atUnited ~~CIBM~~States ~~Bank’s~~(“U.S.”), ~~offices~~Canada and Mexico. Canron was acquired from a borrower who was in default of its ~~markets~~obligations ~~discussed~~and ~~above~~was classified as an asset held for disposal. In September 2003, Canron commenced a voluntary liquidation and ~~electronically~~winding ~~using~~down ~~CIBM~~of ~~Bank’s~~its ~~internet~~affairs. ~~banking~~In ~~services~~August 2005, Canron authorized and began liquidation distributions to its shareholders and in December 2006, Canron filed Articles of Dissolution. In December 2011, Canron made final distributions and CIB Construction was dissolved.

~~Nonbank Subsidiaries~~2

AtTotal December 31, 2010, CIB Marine had two wholly-owned nonbanking subsidiaries that had ceased operations during 2003 and are in the process of winding down: CIB Marine Capital, LLC (“CIB Marine Capital”); and CIB Construction, LLC (“CIB Construction”).Employees

At December 31, 2011, CIB Marine ~~Capital~~and its bank and nonbank subsidiaries had a combined total of 146 employees, ~~LLC~~of which 127 were full-time employees.

In April 2001, CIB Marine established CIB Marine Capital, a Wisconsin limited liability company. CIB Marine Capital provided leveraged financing, including mezzanine loans to commercial customers. Typically, the collateral coverage on the loans was insufficient to secure a senior debt position. The loans were, by their nature, inherently riskier than senior debt position loans. During 2003, CIB Marine ceased to offer new loans through CIB Marine Capital and began winding down its affairs. At December 31, 2007, CIB Marine Capital had no loans outstanding, but was continuing collection efforts on previously charged-off loans. During 2008, CIB Marine sold the operations and the majority of the loans of its Florida banking subsidiary, and CIB Marine transferred the loans not purchased by the buyer to CIB Marine Capital. At December 31, 2010, CIB Marine Capital had loans and loans held for sale with a total net carrying value of $6.9 million. CIB Marine Capital is continuing to wind down its affairs, including the sale or collection of those outstanding loans.Competition

~~CIB~~The ~~Construction~~banking industry is highly competitive. CIBM Bank competes for loans, ~~LLC~~deposits and other financial services in its markets and surrounding areas. In addition to local, regional, and national banking competition in the markets it serves, CIBM Bank competes with other financial institutions, money market and other mutual funds, insurance companies, brokerage companies and other non-depository financial service companies, including certain governmental organizations which may offer subsidized financing at lower rates than those offered by CIBM Bank. Competition involves efforts to retain current customers, and to obtain new loans and deposits, the scope of services offered, interest rates paid on deposits and charged on loans, as well as other aspects of banking.

~~In 2002,~~ CIB Marine ~~acquired~~believes ~~through~~that its ~~wholly~~long-~~owned~~standing presence ~~subsidiary, CIB Construction, 84% of Canron Corporation (“Canron”), a steel fabrication and erection company that had operations~~ in the ~~United~~communities ~~States~~it ~~(“U.S.”),~~serves ~~Canada~~ and ~~Mexico. Canron was acquired from a borrower who was in default of~~ its ~~obligations~~commitment ~~and~~to ~~it is classified as an asset held for disposal. In September 2003~~local, ~~Canron~~personal ~~commenced~~service aimproves ~~voluntary liquidation and winding down of~~ its ~~affairs.~~ability ~~In August 2005, Canron authorized and began liquidation distributions~~ to ~~its~~compete ~~shareholders~~favorably ~~and~~ in December 2006, Canron filed Articles of Dissolution. Substantial liquidation is expected during 2011. At December 31, 2010, CIB Construction had $1.1 million in assets and $1.1 million in liabilities. For more information, see Item 7 of Part II of ~~this~~attracting ~~Form~~retail ~~10-K~~ and ~~Note~~business ~~8 to the consolidated financial statements appearing in Item 8 of Part II to this Form 10-K~~customers.

~~Total~~SUPERVISION ~~Employees~~AND REGULATION

~~At December 31, 2010, CIB Marine and all of its bank and nonbank subsidiaries had a combined total of 153 employees, of which 137 were full-time employees.~~General

~~COMPETITION~~Bank holding companies and financial institutions are extensively regulated under both federal and state law. Any significant change in the banking laws and regulations applicable to CIB Marine or CIBM Bank could materially impact CIB Marine’s operations or change the manner in which it conducts business. Federal and state regulation of financial institutions is intended primarily for the protection of the federal deposit insurance fund and depositors and not CIB Marine’s stockholders.

~~The~~CIB ~~banking~~Marine ~~industry~~ is ~~highly~~a ~~competitive.~~registered ~~CIBM~~bank ~~Bank~~holding company ~~competes~~under ~~for loans, deposits and other financial services in its markets and surrounding areas. In addition to local, regional, and national banking competition in~~ the ~~markets it serves, the~~ Bank ~~competes~~Holding ~~with~~Company ~~other~~Act ~~financial~~of ~~institutions~~1956, ~~money~~as ~~market~~amended ~~and other mutual funds~~(“BHCA”), ~~insurance companies, brokerage companies~~ and ~~other~~is ~~non-depository~~regulated ~~financial~~by ~~service~~the ~~companies,~~Board of ~~including~~Governors ~~certain~~of ~~governmental~~the ~~organizations~~Federal ~~which~~Reserve ~~may~~(“FRB”). ~~offer~~CIBM ~~subsidized~~Bank ~~financing~~has atthe ~~lower~~Federal ~~rates~~Deposit ~~than~~Insurance ~~those~~Corporation ~~offered~~(“FDIC”) as byits ~~CIBM~~primary ~~Bank.~~federal ~~Competition involves efforts to retain current customers~~regulator, and tois ~~obtain~~also ~~new~~regulated ~~loans~~by ~~and deposits,~~ the ~~scope~~Illinois Department of ~~services~~Financial ~~offered, interest rates paid on deposits~~ and ~~charged~~Professional ~~on loans~~Regulation, ~~as well as other aspects~~ Division of ~~banking~~Banking (“IDFPR”).

CIB Marine ~~believes~~and ~~that~~ its ~~long-standing~~nonbank ~~presence~~subsidiary inare subject ~~the~~to ~~communities~~examination itby ~~serves~~the ~~and~~FRB. ~~its~~The ~~commitment~~IDFPR toand ~~local,~~FDIC ~~personal~~are ~~service~~primarily responsible ~~improves~~for ~~its~~examination ~~ability~~of toCIBM ~~compete~~Bank ~~favorably in attracting retail~~ and ~~business~~its ~~customers~~nonbank subsidiary.

4The bank regulatory agencies have extensive oversight authority relative to the depository holding companies and institutions that they supervise. They have been granted wide-ranging enforcement and supervision powers and exercise this authority to help ensure that depository holding companies and institutions under their jurisdiction operate on a safe and sound basis and in compliance with applicable laws. Holding companies and institutions that fail to conduct their operations on a safe and sound basis or in compliance with applicable laws can be compelled by the regulators to change the way they do business and may be subject to regulatory enforcement actions, including encumbrances imposed on their operations. Currently, CIB Marine is subject to a Written Agreement (“Written Agreement”) with the Federal Reserve Bank of Chicago (“Federal Reserve Bank”) and CIBM Bank is subject to a Consent Order with the FDIC and IDFPR (“Consent Order”). For more information, see Note 13 to the consolidated financial statements appearing in Item 8 of Part II to this to this Annual Report on Form 10-K (“Form 10-K”).

~~SUPERVISION~~The ~~AND~~following ~~REGULATION~~discussion summarizes the material elements of the regulatory framework applicable to CIB Marine and its subsidiaries. It is not meant to be a complete discussion of all applicable federal and state banking statutes and regulations. To the extent this discussion describes statutory and regulatory provisions it is qualified in its entirety by reference to those provisions.

~~General~~3

~~Bank~~The ~~holding~~Dodd-Frank ~~companies~~Wall ~~and~~Street ~~financial~~Reform ~~institutions are extensively regulated under both federal~~ and Consumer ~~state~~Protection law. Any significant change in the banking laws and regulations applicable to CIB Marine or CIBM Bank could materially impact CIB Marine’s operations or change the manner in which it conducts business. Federal and state regulation of financial institutions is intended primarily for the protection of the federal deposit insurance fund and depositors and not CIB Marine’s shareholders.Act

~~CIB~~On ~~Marine~~July is21, a2010, ~~registered~~President ~~bank~~Obama ~~holding~~signed into ~~company~~law ~~under~~ the ~~Bank~~Dodd-Frank ~~Holding~~Wall ~~Company~~Street ~~Act~~Reform ofand ~~1956,~~Consumer asProtection ~~amended~~Act (“~~BHCA~~Dodd-Frank Act”),. The Dodd-Frank Act has had and iswill ~~regulated~~continue byto have a broad impact on the ~~Federal~~financial ~~Reserve~~services ~~Board~~industry, including significant regulatory and compliance changes such as, among other things, (~~“FRB”~~1). ~~CIBM~~enhanced ~~Bank~~resolution ~~has~~authority of troubled and failing banks and their holding companies; (2) created a new bureau tasked with establishing and implementing rules and regulations under certain federal consumer protection laws; (3) increased capital and liquidity requirements; (4) repealed the prohibition ~~Federal~~on ~~Deposit~~the ~~Insurance~~payment ~~Corporation~~of interest on demand deposits; (~~“FDIC”~~5) asincreased ~~its~~regulatory ~~primary~~examination fees; (6) required changes to assessments to be paid to the FDIC for federal ~~regulator~~deposit insurance; and (7) numerous other provisions designed to improve supervision and oversight of, and isstrengthening ~~also~~safety ~~regulated~~and bysoundness for, the ~~Illinois~~financial ~~Department~~services ofsector. ~~Financial~~Additionally, the Dodd-Frank Act established a new framework for systemic risk oversight within the financial system to be distributed among new and ~~Professional~~existing ~~Regulation~~federal regulatory agencies, ~~Division~~including the Financial Stability Oversight Council, the FRB, the Office of ~~Banking~~the ~~(“IDFPR”)~~Comptroller of the Currency, and the FDIC.

~~CIB~~The ~~Marine~~Dodd-Frank ~~and~~Act ~~its~~contains ~~nonbank~~a ~~subsidiaries~~number ~~are~~of provisions ~~subject~~relating to ~~examination~~corporate bygovernance ~~the~~and ~~FRB~~executive compensation practices and disclosure. The ~~IDFPR~~Dodd-Frank Act, among other things, granted shareholders of certain U.S. publicly-traded companies a nonbinding shareholder vote on executive compensation; enhanced disclosure of so-called golden parachute arrangements in connection with acquisition or merger solicitations; required companies listed on national securities exchanges to adopt incentive-based compensation clawback policies to recover erroneously awarded executive compensation; enhanced independence requirements for compensation committee members; required disclosure of the relationship between executive compensation and ~~FDIC~~company ~~periodically~~performance, ~~conduct~~and ~~examinations~~the ratio of ~~CIBM~~mean ~~Bank~~employee compensation to Chief Executive Officer (“CEO”) compensation; and ~~its~~provided ~~nonbank~~the ~~subsidiary~~Securities and Exchange Commission (“SEC”) with authority to adopt proxy access rules that would allow shareholders of publicly traded companies to nominate candidates for election as a director and have those nominees included in a company’s proxy materials.

~~The~~During ~~bank~~2011, ~~regulatory~~the ~~agencies~~SEC ~~have~~adopted ~~extensive~~new ~~oversight~~rules which ~~authority~~implemented ~~relative~~sections toof the ~~depository~~Dodd-Frank ~~holding~~Act ~~companies~~ and ~~institutions~~specify that ~~they~~companies ~~supervise.~~provide ~~They~~shareholders ~~have~~with ~~been~~an ~~granted~~advisory ~~wide-ranging~~vote ~~enforcement~~on ~~and~~executive compensation, ~~supervision~~generally ~~powers~~known ~~and~~as ~~exercise~~“say-on-pay” ~~this~~votes; ~~authority~~provide toshareholders ~~help~~with ~~ensure~~an ~~that~~advisory ~~depository~~vote ~~holding~~on ~~companies~~the ~~and~~frequency ~~institutions under their jurisdiction operate~~ of say-on-pay avotes; ~~safe~~ and ~~sound~~provide ~~basis~~shareholders ~~and~~with inan ~~compliance~~advisory ~~with~~vote ~~applicable~~on ~~laws.~~compensation ~~Holding~~arrangements ~~companies~~ and ~~institutions~~understandings ~~that~~in ~~fail~~connection with tomerger ~~conduct~~transactions, ~~their~~known ~~operations~~as on“golden aparachute” ~~safe~~arrangements. ~~and~~Under ~~sound~~the ~~basis~~final orrules, insay-on-pay ~~compliance~~votes ~~with~~must ~~applicable~~occur at ~~laws~~least ~~can~~once beevery ~~compelled~~three byyears ~~the~~beginning ~~regulators~~with ~~to change~~ the ~~way~~first ~~they~~annual doshareholders' ~~business~~meeting ~~and~~taking ~~may~~place beon ~~subject~~or toafter ~~regulatory~~January ~~enforcement actions~~21, ~~including~~2011 (January ~~encumbrances~~21, ~~imposed~~2013 onfor ~~their~~smaller ~~operations. Currently~~companies, such as CIB Marine). isThe ~~subject~~rule toamendments arequire ~~Written~~companies ~~Agreement~~to ~~(“Written~~provide ~~Agreement”)~~disclosure ~~with~~in the ~~Federal~~annual ~~Reserve~~meeting ~~Bank~~proxy ofstatement ~~Chicago~~regarding ~~(“Federal~~the ~~Reserve~~say-on-pay ~~Bank”)~~vote, ~~and~~including ~~CIBM~~whether ~~Bank~~the vote is ~~subject~~non-binding. toThe arules ~~Consent~~also ~~Order~~require additional ~~with~~disclosure in the ~~FDIC~~Compensation Discussion and ~~IDFPR~~Analysis ~~(“Consent~~of ~~Order”).~~the ~~For~~proxy ~~more~~regarding ~~information~~whether, ~~see~~and ~~Notes~~if 1so ~~and~~how, 14companies tohave considered the ~~consolidated~~results ~~financial statements appearing in Item 8~~ of ~~Part~~the IImost torecent ~~this Form 10~~say-Kon-pay vote.

~~The~~Companies ~~following~~also ~~discussion~~are ~~summarizes~~required ~~the~~to ~~material~~hold ~~elements~~a of"frequency" vote ~~the~~at ~~regulatory~~least ~~framework~~once ~~applicable~~every six years in order to ~~CIB~~allow ~~Marine~~shareholders ~~and~~to ~~its~~decide ~~subsidiaries.~~how Itoften isthey ~~not~~would ~~meant~~like to be apresented ~~complete~~with ~~discussion~~the say-on-pay ofvote. ~~all~~Following ~~applicable~~the ~~federal~~frequency ~~and~~vote, ~~state~~a ~~banking~~company ~~statutes~~must ~~and~~disclose ~~regulations.~~on Toan SEC Form 8-K and in the ~~extent~~annual ~~this~~meeting ~~discussion~~proxy ~~describes~~statement whether ~~statutory~~the vote is non-binding and ~~regulatory~~how ~~provisions~~often it iswill ~~qualified~~hold inthe ~~its~~say-on-pay ~~entirety~~vote: byevery ~~reference~~year, toevery ~~those~~other ~~provisions~~year, or once every three years.

Under these SEC's new rules, companies also are required to provide additional disclosure regarding "golden parachute" compensation arrangements with certain executive officers in connection with merger transactions. Under the rules, companies are required to provide additional disclosure regarding compensation arrangements with executive officers in connection with merger transactions, known as "golden parachute" arrangements. Disclosure is required of all agreements and understandings that the acquiring and target companies have with the named executive officers of both companies. The ~~Dodd-Frank~~"golden ~~Wall~~parachute" ~~Street~~disclosure ~~Reform~~also is required in connection with other transactions, including going-private transactions and ~~Consumer~~third-party ~~Protection~~tender ~~Act~~offers, so that the information is available for shareholders no matter the structure of the transaction.

~~On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).~~ The ~~Dodd-Frank~~rules ~~Act~~require will have a broad impact on the financial services industry, including significant regulatory and compliance changes such as, among other things, (1) enhanced resolution authority of troubled and failing banks and their holding companies; ~~(2) increased capital and liquidity requirements; (3) increased regulatory examination fees; (4) changes~~ to ~~assessments~~provide a toseparate beshareholder ~~paid~~advisory tovote ~~the FDIC for federal deposit insurance; and (5) numerous other provisions designed~~ to ~~improve~~approve ~~supervision~~certain ~~and~~"golden ~~oversight~~parachute" ~~of,~~compensation ~~and~~arrangements ~~strengthening~~in ~~safety~~connection ~~and soundness for, the financial services sector. Additionally, the Dodd-Frank Act establishes~~ with a ~~new framework for systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies~~merger, ~~including the Financial Stability Oversight Council~~acquisition, ~~the FRB~~consolidation, ~~the~~proposed ~~Office~~sale ofor ~~the Comptroller of the Currency, and the FDIC. While final rulemaking under the Dodd-Frank Act will occur over the course of several years, changes mandated by the Dodd-Frank Act, as well as~~ other ~~legislative~~disposition and regulatory changes, could have a significant impact on CIB Marine by, for example, requiring possible changes to business practices; requiring more stringent capital levels; changing liquidity and leverage ratio requirements; imposing additional costs; limiting fees charged to customers for services; impacting the value of ~~our~~all ~~assets;~~ or ~~otherwise~~substantially ~~adversely~~all ~~affecting business~~assets. ~~These~~Companies ~~changes~~are ~~may also require investment in significant management attention and resources in order~~ required to comply with ~~new~~the ~~statutory~~golden ~~and~~parachute ~~regulatory~~compensation ~~requirements.~~shareholder ~~Given~~advisory ~~the~~vote ~~uncertainty~~and ~~associated~~disclosure ~~with~~requirements ~~the manner~~ in ~~which~~proxy ~~the~~statements ~~provisions~~and ofother ~~the~~schedules ~~Dodd-Frank~~and ~~Act~~forms ~~may~~initially befiled ~~implemented~~on byor ~~the~~after ~~various~~April ~~regulatory agencies~~25, ~~the full extent of the impact that such requirements will have on CIB Marine’s operations is unclear~~2011.

~~The~~Expansion following summary is intended only to highlight those provisions of the Dodd-Frank Act that CIB Marine believes will have the most significant potential impact on its operations in the future. The summary does not describe every provision of the Dodd-Frank Act that may in any way affect CIB Marine, and is not intended to provide a summary of the legislation in its entirety. Key provisions of the Dodd-Frank Act that are likely to affect CIB Marine, CIBM Bank and its other subsidiaries in the near- and long-term include:Activities

~~Changes~~The inBHCA ~~FDIC~~requires ~~insurance.~~every ~~The~~bank ~~Dodd-Frank~~holding ~~Act~~company to ~~makes~~obtain ~~permanent~~the prior approval of the ~~$250,000~~FRB ~~deposit~~before ~~insurance~~merging ~~limit~~with ~~for~~another ~~insured~~bank ~~deposits.~~holding ~~Amendments~~company, toacquiring substantially all the ~~Federal~~assets of ~~Deposit~~any ~~Insurance~~bank ~~Act~~or ~~also~~bank ~~revise~~holding ~~the~~company, ~~assessment~~or ~~base~~acquiring ~~against~~directly ~~which~~or anindirectly ~~insured~~any ~~depository~~ownership ~~institution’s~~or ~~deposit~~control ~~insurance~~of ~~premiums~~more ~~paid~~than to5% of the ~~FDIC’s~~voting shares ~~Deposit~~of ~~Insurance~~any ~~Fund~~bank. ~~(“DIF”)~~The ~~will~~BHCA bealso ~~calculated.~~prohibits ~~See~~a ~~“Federal~~bank ~~Deposit~~holding ~~Insurance”~~company, ~~section~~with ~~below~~particular ~~for~~exceptions, ~~additional~~from ~~information~~acquiring ~~regarding~~direct ~~changes~~or inindirect ownership ~~FDIC~~of ~~Insurance.~~more ~~Under~~than 5% of the ~~Dodd-Frank~~voting ~~Act,~~shares ~~beginning~~of ~~December~~any ~~31,~~company ~~2010~~which is not a bank or bank holding company and ~~continuing~~from ~~through~~engaging ~~January~~in any 1business other than that of banking, ~~2013~~managing and controlling banks, ~~all~~or ~~funds~~furnishing ~~held~~services into ~~noninterest-bearing~~banks ~~transaction~~and ~~accounts~~their ~~will~~subsidiaries. Bank beholding ~~fully~~companies ~~guaranteed~~may, however, engage in some businesses and activities determined by the ~~FDIC~~FRB ~~for~~to ~~the~~be ~~full~~closely ~~amount~~related ofto ~~the~~banking or ~~account~~managing and controlling banks.

~~Increased~~Interstate ~~Capital~~Banking ~~Standard Requirements~~ and Enhanced Regulatory Supervision. The Dodd-Frank Act mandates federal banking agencies to establish new minimum leverage and risk-based capital requirements for banks and bank holding companies. These regulations, which are required to be effective within 18 months from the enactment of the Dodd-Frank Act, are required to be no less stringent than current capital requirements applied to insured depository institutions and may, in fact, be higher when established by the agencies. The new law further mandates regulators to adapt capital requirements as banks grow in size or engage in riskier activities, and codifies for the first time the requirement imposed by bank regulators that a bank holding company must serve as a “source of strength” or provider of funds to its subsidiary depository institutions, if those funds are ever needed. The Dodd-Frank Act also increases regulatory oversight, supervision and examination of banks, bank holding companies and their respective subsidiaries by the appropriate regulatory agency.Branching

~~Consumer Financial Protection Bureau.~~ The Dodd-Frank Act ~~establishes~~removed ~~a new independent regulator and supervisor,~~ the ~~Consumer~~restrictions on ~~Financial~~interstate ~~Protection~~branching ~~Bureau~~under ~~(“CFPB”) as an executive agency within~~ the ~~FRB,~~Riegle-Neal ~~empowered~~Interstate ~~with~~Banking ~~broad authority to regulate the offering~~ and ~~provision~~Branching ofEfficiency ~~consumer~~Act ~~financial~~by ~~products~~allowing ~~and services. The CFPB will have primary examination and enforcement authority over all insured~~ banks ~~with~~to ~~more~~branch ~~than $10 billion~~ in ~~assets,~~any state ~~and monitor consumer compliance for smaller banks~~if, ~~and~~under ~~will become~~ the ~~one~~laws ~~central~~of ~~federal~~the ~~regulator~~state ~~with~~in ~~consolidated~~which ~~consumer protection authority for banks. The CFPB will have authority to require reports and conduct examinations of~~ the ~~largest~~branch ~~depository~~is ~~institutions~~ to ~~assess~~be ~~compliance with federal consumer financial laws~~located, toa ~~obtain~~state-bank ~~information~~chartered ~~about~~by ~~activities~~that ~~and~~state ~~compliance~~would ~~systems,~~be ~~and~~ permitted to ~~detect~~establish ~~and~~the ~~assess risks to consumers and markets for consumer financial products and services~~branch.

~~The~~Capital Dodd-Frank Act directs the CFPB to prevent persons from engaging in or committing an unfair, deceptive or abusive act or practice in connection with a transaction with a consumer for a consumer financial product or service, or the offering thereof, to help ensure that “fair disclosures” are provided to consumers, and that information relevant to the purchase of consumer products or services is disclosed to the consumer in plain language in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service. Also, new national minimum underwriting standards for home mortgages were established whereby lenders are required to help ensure that a borrower can repay a home loan by verifying income, credit history and job status.Standards

~~Corporate~~The ~~governance~~federal ~~and~~banking ~~executive~~agencies ~~compensation.~~impose ~~The Dodd~~risk-~~Frank~~based capital ~~Act~~requirements ~~contains a number of provisions relating to corporate governance~~ and ~~executive~~guidelines ~~compensation practices and disclosure. The Dodd-Frank Act, among others, grants shareholders of certain U.S. publicly-traded companies a nonbinding shareholder vote~~ on ~~executive~~bank ~~compensation;~~holding ~~enhances disclosure of so-called golden parachute arrangements in connection with acquisition or merger solicitations; requires~~ companies ~~listed~~and onbanks ~~national securities exchanges~~ to ~~adopt~~provide ~~incentive-based compensation clawback policies to recover erroneously awarded executive compensation; enhances independence requirements~~ for ~~compensation~~a ~~committee~~measure ~~members; requires disclosure~~ of ~~the~~capital ~~relationship~~that ~~between~~reflects ~~executive compensation and company performance, and~~ the ~~ratio~~ degree of ~~mean~~risk ~~employee~~associated ~~compensation to Chief Executive Officer (“CEO”) compensation; and provides the Securities and Exchange Commission (“SEC”)~~ with ~~authority~~a tobanking ~~adopt~~organization’s ~~proxy~~operations ~~access~~for ~~rules~~both ~~that~~transactions ~~would~~reported ~~allow~~on ~~shareholders~~the ofbalance ~~publicly~~sheet ~~traded companies to nominate candidates for election~~ as ~~a director~~ assets and ~~have~~ those ~~nominees~~recorded ~~included~~as inoff-balance asheet ~~company’s proxy materials~~items. ~~The~~A ~~specific~~bank ~~details~~holding ofcompany ~~most~~or ofbank’s ~~these~~capital, ~~requirements will be set forth~~ in ~~rules~~turn, tois bedivided ~~issued~~into bytwo ~~the SEC in the coming months.~~tiers:

~~Additional~~• ~~provisions~~core capital (commonly referred to as Tier 1 capital), which generally includes common equity, qualifying noncumulative perpetual preferred stock, and for bank holding companies, a limited amount of ~~the~~qualifying ~~Dodd-Frank~~cumulative ~~Act~~perpetual ~~are~~preferred ~~discussed~~stock ~~throughout~~and ~~the~~minority ~~remainder~~interests in equity accounts of ~~this~~consolidated ~~Item~~subsidiaries (including junior subordinated debentures net of investment in trust, provided that not more than 25% of the qualifying Tier 1. capital may consist of junior subordinated debentures, net of investment in trust), less goodwill and certain other intangible assets; and

6• supplementary capital (commonly referred to as Tier 2 capital), which includes, among other items, perpetual preferred stock not meeting the Tier 1 definition, mandatory convertible securities, and limited amounts of subordinated debt and reserves for loan losses.

~~Expansion~~Bank ~~Activities~~holding companies and banks are currently required to maintain Tier 1 capital equal to at least 4% and “total capital” (the sum of Tier 1 and Tier 2 capital) equal to at least 8% of its total risk-weighted assets, including certain off-balance-sheet items such as unused lending commitments and standby letters of credit.

The ~~BHCA requires every bank holding company to obtain the prior approval of the~~ FRB ~~before~~and ~~merging with another bank holding company, acquiring substantially all~~ the ~~assets~~FDIC ofhave ~~any~~also ~~bank~~adopted rules orto ~~bank~~incorporate ~~holding~~market ~~company,~~and orinterest ~~acquiring~~rate ~~directly~~risk orcomponents ~~indirectly~~into ~~any~~their ~~ownership~~risk-based orcapital ~~control~~standards. ofAmendments ~~more~~to ~~than~~the 5%risk-based capital ofrequirements included the ~~voting~~incorporation ~~shares~~ of ~~any~~market ~~bank.~~risk ~~The~~for ~~BHCA~~institutions ~~also prohibits a bank holding company,~~ with ~~particular~~substantial ~~exceptions,~~trading ~~from~~activities ~~acquiring direct~~ or ~~indirect~~institutions where ~~ownership of more than 5% of~~ the ~~voting~~federal ~~shares~~banking ofregulator ~~any~~deems ~~company~~it ~~which~~necessary isfor ~~not~~safety ~~a bank or bank holding company~~ and ~~from~~soundness. ~~engaging~~Under inthese ~~any~~market ~~business~~risk ~~other than that of banking~~requirements, ~~managing~~capital must ~~and~~be ~~controlling~~allocated ~~banks, or furnishing services~~ to ~~banks~~support ~~and~~the ~~their~~amount ~~subsidiaries.~~of ~~Bank~~market ~~holding~~risk ~~companies~~related ~~may,~~to ~~however,~~a ~~engage~~financial ininstitution’s ~~some~~ongoing ~~businesses~~trading ~~and~~ activities. ~~determined~~The market byrisk ~~the~~requirements ~~FRB~~do tonot bepresently ~~closely~~apply ~~related~~ to ~~banking~~CIB Marine or ~~managing~~ ~~and~~CIBM ~~controlling banks~~Bank.

~~Interstate~~The ~~Banking~~FRB also requires bank holding companies to maintain a minimum “leverage ratio” of Tier 1 capital to adjusted total assets of 3% if the bank holding company has the highest regulatory rating and ~~Branching~~meets certain other requirements. For all other bank holding companies, the minimum ratio of Tier 1 capital to total assets is 4%.

Prior to the Dodd-Frank Act, the Riegle-Neal Interstate Banking and Branching Efficiency Act (“Riegle-Neal Act”) enacted in 1994 permitted an adequately capitalized and adequately managed bank holding company, with FRB approval, to acquire banking institutions located in states other than the bank holding company’s home state without regard to whether the transaction is prohibited under state law. In addition, national banks and state banks with different home states are permitted to merge across state lines, with the approval of the appropriate federal banking agency, unless the home state of a participating banking institution has passed legislation that expressly prohibits interstate mergers. De novo interstate branching was permitted if the laws of the host state so authorized.5

CIB Marine is subject to a Written Agreement entered into with the Federal Reserve Bank in the second quarter of 2004. The ~~Dodd-Frank~~Written ~~Act~~Agreement ~~removes~~requires CIB Marine, among other things, to obtain Federal Reserve Bank approval before incurring additional borrowings or debt and also requires CIB Marine to maintain a sufficient capital position for the ~~restrictions~~consolidated onorganization ~~interstate~~including ~~branching~~the ~~under~~current and future capital requirements of its subsidiary bank, nonbank subsidiaries and the ~~Riegle-Neal~~consolidated ~~Act~~organization. byAt ~~allowing~~December ~~banks~~31, to2011, ~~branch~~CIB inMarine’s ~~any~~Tier ~~state~~1 leverage ifratio was 13.15%, ~~under~~which was above the ~~laws~~minimum capital requirement. Depending on the overall size of its balance sheet and respective risk weightings for its assets, as well as the ~~state~~extent of continuing losses incurred by CIB Marine in ~~which~~future ~~the~~periods, including ~~branch~~those isresulting tofrom besecurity ~~located~~and loan-related credit losses, awrite ~~state~~downs in loans held for sale or other real estate owned (“OREO”), or non-~~bank~~credit ~~chartered~~related byother-than-temporarily ~~that~~impaired ~~state~~(“OTTI”) ~~would~~securities, beCIB ~~permitted~~Marine’s capital toratios ~~establish~~could decline in the ~~branch~~future.

~~Capital~~In ~~Standards~~December 2010 and January 2011, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision (“Basel Committee”), published final texts of the reforms on capital and liquidity generally referred to as “Basel III.” Basel III provides that: (i) the minimum requirement for the Tier 1 common equity ratio will be increased from the current 2% level to 4.5% and (ii) the minimum requirement for the Tier 1 capital ratio will be increased from 4% to 6%, each to be phased in by January 1, 2015. In addition, Basel III includes a “capital conservation buffer” that requires banking organizations to maintain an additional 2.5% of Tier 1 common equity to total risk weighted assets on top of the minimum requirement, which will be phased in between January 1, 2016 and January 1, 2019. The capital conservation buffer is designed to absorb losses in periods of financial and economic distress and, while banks are allowed to draw on the buffer during periods of stress, if a bank’s regulatory capital ratios approach the minimum requirement, the bank will be subject to constraints on earnings distributions. In addition, Basel III includes a countercyclical buffer within a range of 0% - 2.5%, which would be implemented according to national circumstances. These capital requirements are supplemented under Basel III by a non-risk-based leverage ratio. A minimum Tier 1 leverage ratio of 3% will be tested during the parallel run period starting January 1, 2013. Based on the results of the parallel run period, any final adjustments would be carried out in the first half of 2017.

The ~~federal~~Basel ~~banking~~III ~~agencies~~liquidity ~~impose~~proposals ~~risk-based~~have three ~~capital~~main ~~requirements~~elements: ~~and~~(i) ~~guidelines~~a on“liquidity coverage ratio” designed to help ensure that a bank ~~holding~~maintains ~~companies~~an ~~and~~adequate ~~banks~~level of unencumbered high-quality assets sufficient to ~~provide~~meet ~~for~~the bank’s liquidity needs over a ~~measure~~30-day oftime ~~capital~~horizon ~~that~~under ~~reflects~~an ~~the~~acute liquidity ~~degree~~stress scenario, (ii) a “net stable funding ratio” designed to promote more medium and long-term funding of ~~risk~~the ~~associated~~assets ~~with~~and activities of banks over a ~~banking~~one-year ~~organization’s~~time ~~operations~~horizon, ~~for~~and ~~both~~(iii) ~~transactions~~a ~~reported~~set onof monitoring tools that the ~~balance~~Basel ~~sheet~~Committee indicates should be considered as ~~assets~~the ~~and~~minimum ~~those~~types ~~recorded~~of asinformation ~~off-balance~~that ~~sheet~~banks ~~items.~~should Areport ~~bank~~to ~~holding~~supervisors. ~~company~~After oran ~~bank’s~~observation period ~~capital,~~beginning in ~~turn~~2011, isthe ~~divided~~liquidity ~~into~~coverage ~~two~~ratio ~~tiers:~~will become effective on January 1, 2015. The revised net stable funding ratio will become effective January 1, 2018.

•The ~~core~~U.S. ~~capital~~federal ~~(commonly~~banking ~~referred~~agencies togenerally expressed assupport ~~Tier~~for 1Basel ~~capital),~~III. ~~which~~Although ~~generally~~Basel ~~includes~~III ~~common~~is ~~equity,~~described ~~qualifying~~as ~~noncumulative~~a ~~perpetual~~“final ~~preferred stock~~text,” ~~and~~it ~~for~~is ~~bank~~subject ~~holding~~to ~~companies,~~the ~~a limited amount~~ resolution of ~~qualifying~~certain ~~cumulative~~issues ~~perpetual preferred stock~~ and ~~minority~~to ~~interests~~further inguidance ~~equity~~and ~~accounts~~modification, ofas ~~consolidated~~well ~~subsidiaries~~as ~~(including~~to ~~junior~~adoption ~~subordinated~~by ~~debentures~~United ~~net~~States ofbanking ~~investment in trust~~regulators, ~~provided~~including decisions ~~that~~as ~~not~~to ~~more~~whether ~~than~~and ~~25%~~to ofwhat ~~the~~extent ~~qualifying~~it ~~Tier~~will 1apply ~~capital~~to ~~may~~United ~~consist~~States ofbanks ~~junior~~that ~~subordinated~~are ~~debentures,~~not ~~net of investment in trust)~~large, ~~less~~internationally ~~goodwill~~active ~~and certain other intangible assets; and~~banks.

•The ~~supplementary~~Dodd-Frank Act mandates federal banking agencies to establish new minimum leverage and risk-based capital ~~(commonly~~requirements ~~referred~~for banks and bank holding companies. These regulations, which originally were required to asbe ~~Tier~~effective 2within 18 months from the enactment of the Dodd-Frank Act, are required to be no less stringent than current capital) requirements applied to insured depository institutions and may, ~~which~~in ~~includes~~fact, ~~among~~be ~~other~~higher ~~items~~when established by the agencies. The new law further mandates regulators to adapt capital requirements as banks grow in size or engage in riskier activities, ~~perpetual~~and ~~preferred~~codifies ~~stock~~for ~~not~~the ~~meeting~~first time the ~~Tier~~requirement 1imposed ~~definition~~by bank regulators that a bank holding company must serve as a “source of strength” or provider of funds to its subsidiary depository institutions, ~~mandatory~~if ~~convertible~~those ~~securities~~funds are ever needed. The Dodd-Frank Act also increases regulatory oversight, supervision and ~~limited~~examination ~~amounts~~ of ~~subordinated~~banks, ~~debt~~bank holding companies and ~~reserves~~their respective ~~for~~subsidiaries ~~loan~~by ~~losses~~the appropriate regulatory agency.

~~Bank~~CIB ~~holding~~Marine ~~companies~~is ~~and~~not ~~banks~~able ~~are currently required~~ to ~~maintain~~predict ~~Tier 1 capital equal to~~ at ~~least~~this time ~~4% and “total capital” (~~the ~~sum~~content of ~~Tier~~capital 1 and ~~Tier~~liquidity 2guidelines ~~capital)~~or ~~equal~~regulations tothat atmay ~~least~~be 8%adopted ofby ~~its~~regulatory ~~total~~agencies ~~risk-weighted~~having ~~assets,~~authority over ~~including~~the ~~certain~~holding ~~off-balance-sheet~~company ~~items~~or ~~such~~CIBM asBank ~~unused~~or ~~lending~~the ~~commitments~~impact ~~and~~that ~~standby~~any ~~letters~~changes ofin ~~credit~~regulation would have.

The FRB and the FDIC have also adopted rules to incorporate market and interest rate risk components into their risk-based capital standards. Amendments to the risk-based capital requirements included the incorporation of market risk for institutions with substantial trading activities or institutions where the federal banking regulator deems it necessary for safety and soundness. Under these market risk requirements, capital must be allocated to support the amount of market risk related to a financial institution’s ongoing trading activities. The market risk requirements do not presently apply to CIB Marine or CIBM Bank.6

~~The~~Holding ~~FRB~~Company also requires bank holding companies to maintain a minimum “leverage ratio” of Tier 1 capital to adjusted total assets of 3% if the bank holding company has the highest regulatory rating and meets certain other requirements. For all other bank holding companies, the minimum ratio of Tier 1 capital to total assets is 4%.Obligations

7Under current FRB policy, a bank holding company is expected to act as a source of financial and managerial strength to its subsidiary bank and to maintain resources adequate to support its subsidiary bank. This support may be required at times when the bank holding company may not have the resources to provide it. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a bank regulatory agency to maintain the capital of a subsidiary bank would be assumed by the bankruptcy trustee and entitled to priority of payment. The Dodd-Frank Act codifies for the first time the requirement imposed by bank regulators that a bank holding company must serve as a “source of strength” or provider of funds to its subsidiary depository institutions, if those funds are ever needed.

~~CIB~~Incentive ~~Marine~~Compensation isPolicies subject to a Written Agreement entered into with the Federal Reserve Bank in the second quarter of 2004. The Written Agreement requires CIB Marine, among other things, to obtain Federal Reserve Bank approval before incurring additional borrowings or debt and also requires CIB Marine to maintain a sufficient capital position for the consolidated organization including the current and future capital requirements of its subsidiary bank, nonbank subsidiaries and the consolidated organization. At December 31, 2010, CIB Marine’s Tier 1 leverage ratio was 11.80%, above the minimum capital requirement. Depending on the overall size of its balance sheet and respective risk weightings for its assets, as well as the extent of continuing losses incurred by CIB Marine in future periods, including those resulting from security and loan-related credit losses, write downs in loans held for sale or other real estate owned (“OREO”), or non-credit related other-than-temporarily impaired (“OTTI”) from securities, CIB Marine’s capital ratios could decline in the future.Restrictions

In ~~September~~June 2010, the ~~Group~~federal ofbanking ~~Governors~~agencies issued ~~and~~guidance ~~Heads~~which ofapplies ~~Supervision,~~to ~~the~~all ~~oversight~~banking ~~body~~organizations ofsupervised by the ~~Basel~~agencies ~~Committee~~ (~~“Basel~~thereby ~~Committee”),~~including ~~announced~~both ~~minimum~~CIB ~~capital~~Marine ~~ratios~~ and ~~transition periods, and endorsed the statements the Basel Committee released in July 2010~~CIBM Bank). ~~The~~Pursuant ~~announcement~~to ~~provides that: (i)~~ the ~~minimum requirement for the Tier 1 common equity ratio will be increased from the current 2% level to 4.5%~~guidance, to be ~~phased~~consistent inwith bysafety ~~January 1, 2015,~~ and ~~(ii)~~soundness ~~the minimum requirement for the Tier 1 capital ratio will be increased from 4% to 6%~~principles, toa bebanking ~~phased~~organization’s inincentive compensation byarrangements ~~January~~should: (1,) ~~2015.~~provide Inemployees ~~addition,~~with ~~Basel~~incentives ~~III includes a “capital conservation buffer”~~ that ~~requires~~appropriately ~~banking~~balance ~~organizations~~risk toand ~~maintain~~reward; ~~an additional~~ (2~~.5%~~) ofbe ~~Tier~~compatible with 1effective ~~common~~controls ~~equity~~and ~~to total~~ risk ~~weighted~~management; ~~assets~~and on(3) ~~top of the minimum requirement, which will~~ be ~~phased~~supported inby ~~between~~strong ~~January~~corporate 1,governance ~~2016~~including ~~and~~active ~~January 1, 2019. The capital conservation buffer is designed to absorb losses in periods of financial~~ and ~~economic~~effective oversight ~~distress~~by ~~and, while banks are allowed to draw on~~ the ~~buffer~~banking ~~during periods of stress, if a bank~~organization’s ~~regulatory~~board ~~capital ratios approach the minimum requirement, the bank will be subject to constraints on earnings distributions. In addition, Basel III includes a countercyclical buffer within a range~~ of ~~0% - 2~~directors.~~5%,~~ ~~which~~Monitoring ~~would~~methods beand ~~implemented~~processes ~~according~~used ~~to national circumstances. These capital requirements are supplemented under Basel III~~ by a ~~non-risk-based~~banking ~~leverage~~organization should ~~ratio. A minimum Tier 1 leverage ratio of 3% will~~ be ~~tested~~commensurate ~~during~~with the ~~parallel~~size ~~run~~and ~~period~~complexity ~~starting January 1, 2013. Based on the results~~ of the ~~parallel~~organization ~~run~~and ~~period,~~its ~~any~~use ~~final adjustments would be carried out in the first half~~ of ~~2017~~incentive compensation.

~~The~~Safety Basel III liquidity proposals have three main elements: (i) a “liquidity coverage ratio” designed to help ensure that a bank maintains an adequate level of unencumbered high-quality assets sufficient to meet the bank’s liquidity needs over a 30-day time horizon under an acute liquidity stress scenario, (ii) a “net stable funding ratio” designed to promote more medium and ~~long-term~~Soundness funding of the assets and activities of banks over a one-year time horizon, and (iii) a set of monitoring tools that the Basel Committee indicates should be considered as the minimum types of information that banks should report to supervisors. After an observation period beginning in 2011, the liquidity coverage ratio will become effective on January 1, 2015. The revised net stable funding ratio will become effective January 1, 2018.Guidelines

The ~~U.S.~~state and federal banking agencies have ~~expressed~~adopted ~~support~~guidelines ~~for~~to ~~the~~assist ~~agreements~~in ~~reached~~identifying byand ~~the~~addressing ~~Group~~potential ofsafety ~~Governors~~ and ~~Heads~~soundness ofconcerns ~~Supervision~~before ~~set~~capital ~~forth~~becomes impaired. inThe ~~the~~guidelines ~~announcement~~establish ~~made~~operational inand ~~September~~managerial ~~2010.~~standards ~~While~~relating ~~the~~to ~~announcement~~internal ~~provided~~controls, ~~clarity~~information onsystems, ~~the~~and internal ~~minimum~~audit ~~capital~~systems; ~~levels,~~loan ~~many~~documentation; ofcredit ~~the~~underwriting; ~~details~~interest ofrate ~~the~~exposure; ~~new~~asset ~~framework~~growth ~~will~~and ~~remain~~asset ~~unclear~~quality; ~~until~~and ~~the~~compensation, fees, ~~final~~and ~~release is issued~~benefits. ~~Implementation~~In ofaddition, ~~any~~the ~~final~~banking ~~provisions~~agencies ofhave ~~Basel~~adopted ~~III~~safety inand ~~the~~soundness ~~U.S.~~guidelines ~~will~~for ~~require~~asset ~~implementing~~quality ~~regulations~~ and ~~guidelines~~for byevaluating and ~~U.S.~~monitoring ~~banking~~earnings ~~regulators,~~to ~~which~~help ~~may~~ensure ~~differ~~that inearnings ~~significant~~are ~~ways~~sufficient ~~from~~for the ~~recommendations~~maintenance ~~published~~of byadequate ~~the~~capital ~~Basel~~and ~~Committee~~reserves. ~~It is unclear how U.S. banking regulators will define “well capitalized” in their implementation of Basel III.~~

~~CIB~~Prompt ~~Marine~~Corrective is not able to predict at this time the content of capital and liquidity guidelines or regulations that may be adopted by regulatory agencies having authority over the holding company or CIBM Bank or the impact that any changes in regulation would have. If new standards require community banks such as CIBM Bank to maintain more capital, with common equity as a more predominant component, or manage the configuration of its assets and liabilities in order to comply with formulaic liquidity requirements, such regulation could significantly impact its financial condition, results of operations, and capital position.Action

8The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the federal banking regulators to take prompt corrective action with respect to FDIC insured depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” A depository institution’s capital tier depends upon how its capital levels compare to various relevant capital measures and certain other factors established by regulation. Under applicable regulations, an FDIC-insured bank is defined as well capitalized if it maintains a leverage ratio of Tier 1 capital to quarterly average total assets of at least 5%, a total capital ratio of qualifying total capital to risk-weighted assets, including certain off-balance sheet items, of at least 10% and a Tier 1 capital ratio of Tier 1 capital to risk-weighted assets of at least 6% and is not otherwise in “troubled condition” as specified by its appropriate federal regulatory agency.

~~Holding~~A ~~Company~~bank ~~Obligations~~is generally considered to be adequately capitalized if it is not defined as well capitalized but meets all of its minimum capital requirements: a leverage ratio of 4% or greater (or 3% or greater if it receives the highest composite examination rating by its examiners, subject to appropriate federal banking agency guidelines); a total capital ratio of 8% or greater; and a Tier 1 capital ratio of 4% or greater. A bank will be considered undercapitalized if it fails to meet any minimum required measure, significantly undercapitalized if it is significantly below such measure and critically undercapitalized if it maintains a level of tangible equity capital equal to or less than 2% of total assets. A bank may be reclassified to be in a capitalization category that is next below that indicated by its actual capital position if it receives a less than satisfactory examination rating by its examiners with respect to its assets, management, earnings, or liquidity that has not been corrected, or it is determined that the bank is in an unsafe or unsound condition or engages in an unsafe or unsound practice. The federal banking agencies, however, may not treat a significantly undercapitalized institution as critically undercapitalized unless its capital ratio actually warrants such treatment. Regulators also have the authority to increase minimum capital levels above those requirements discussed above.

~~Under~~FDICIA ~~current~~generally ~~FRB~~prohibits ~~policy,~~ a ~~bank~~depository institution ~~holding~~from ~~company~~making isany ~~expected~~capital todistribution, ~~act~~including aspayment ~~a source~~ of ~~financial~~dividends ~~and~~or ~~managerial~~paying ~~strength~~any tomanagement ~~its~~fee ~~subsidiary bank and~~ to ~~maintain resources adequate to support~~ its ~~subsidiary bank. This support may be required at times when the bank~~ holding company, if ~~may~~the ~~not~~depository ~~have~~institution ~~the~~would ~~resources~~thereafter tobe ~~provide it~~undercapitalized. InUndercapitalized ~~the~~depository ~~event~~institutions ofare asubject ~~bank holding company’s bankruptcy, any commitment by the bank holding company~~ to agrowth limitations ~~bank~~and ~~regulatory~~are ~~agency~~required to ~~maintain~~submit ~~the~~a capital ofrestoration aplan ~~subsidiary bank would be assumed by the bankruptcy trustee and entitled~~ to ~~priority~~become ofadequately ~~payment~~capitalized. ~~The~~If ~~Dodd-Frank~~a ~~Act~~depository ~~codifies~~institution fails ~~for~~to ~~the~~submit ~~first~~an ~~time~~acceptable ~~the~~plan, ~~requirement~~it ~~imposed~~is bytreated ~~bank regulators that a bank holding company must serve~~ as ~~a “source of strength” or provider of funds to its subsidiary depository institutions,~~ if ~~those~~it ~~funds~~is ~~are ever~~significantly ~~needed~~undercapitalized.

~~Incentive Compensation Policies and Restrictions~~7

InUnder ~~June 2010~~FDICIA, ~~the~~a ~~federal~~bank ~~banking~~that ~~agencies~~is ~~issued~~not ~~guidance~~well ~~which~~capitalized is ~~applies~~generally toprohibited ~~all~~from ~~banking~~accepting ~~organizations~~or ~~supervised~~renewing bybrokered ~~the~~deposits ~~agencies~~and ~~(thereby~~offering ~~including~~interest ~~both~~rates ~~CIB~~on ~~Marine~~deposits ~~and~~significantly ~~CIBM~~higher than ~~Bank). Pursuant to~~ the ~~guidance,~~prevailing torate bein ~~consistent~~its ~~with~~normal ~~safety~~market ~~and~~area ~~soundness~~or ~~principles~~nationally, adepending ~~banking~~upon ~~organization’s~~where ~~incentive~~the ~~compensation~~deposits ~~arrangements~~are ~~should: (1) provide employees with incentives that appropriately balance risk and reward~~solicited; ~~(2)~~in beaddition, “pass-through” ~~compatible~~insurance ~~with~~coverage ~~effective~~may ~~controls~~not ~~and risk management; and (3)~~ be ~~supported~~available byfor ~~strong~~certain ~~corporate~~employee ~~governance~~benefit ~~including active and effective oversight by the banking organization’s board of directors~~accounts. ~~Monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the organization and its use of incentive compensation.~~

OnA ~~February~~number 7,of ~~2011,~~additional ~~the~~requirements ~~federal~~and restrictions ~~banking~~may ~~agencies,~~apply ~~along~~to ~~with~~significantly ~~the~~undercapitalized ~~National~~depository ~~Credit~~institutions, ~~Union~~including ~~Administration,~~orders ~~the~~to ~~SEC~~sell ~~and~~sufficient ~~the~~voting ~~Federal~~stock to ~~Housing~~become ~~Finance~~adequately ~~Agency~~capitalized, ~~published~~requirements ~~for~~to ~~comment~~reduce atotal ~~proposed~~assets ~~rule~~and ~~that~~cessation ~~would~~of ~~regulate~~receipt ~~incentive-based compensation for entities with total assets~~ of $1deposits ~~billion~~from orcorrespondent ~~more~~banks. Critically ~~These~~undercapitalized ~~proposed~~depository ~~rules~~institutions ~~incorporate~~may ~~many~~be ofrestricted ~~the~~from ~~executive~~making ~~compensation~~payments ~~principles~~of ~~described~~principal ~~above,~~and ~~including~~interest ~~a prohibition~~ on ~~compensation~~subordinated debt ~~practices~~and ~~that~~are ~~encourage~~subject ~~covered persons~~ to ~~take~~appointment ~~inappropriate risks by providing such persons with excessive compensation. Comments are due within 45 days~~ of ~~publication~~a inreceiver ~~the~~or ~~Federal Register~~conservator.

~~Safety~~At both December 31, 2011 and ~~Soundness~~2010, ~~Guidelines~~CIBM Bank, was under a Consent Order issued by the FDIC and the IDFPR. The Consent Order requires CIBM Bank, among other things, to take certain corrective actions focused on reducing exposure to nonaccrual loans, restricting lending to credits with existing nonaccrual loans, restricting the payment of dividends without regulatory approval, requiring the maintenance of a minimum Tier 1 leverage ratio of 10% and a minimum total risk-based capital ratio of 12%, the development of a management plan and implementation of its recommendations, the need for board compliance and monitoring of the provisions of the Consent Order, and the maintenance of and a plan for reducing and managing credit concentrations. Also, CIBM Bank is restricted from issuing or renewing brokered deposits unless it obtains permission from the FDIC to do so. Generally, enforcement actions such as the Consent Order can be lifted only after subsequent examinations and evaluations by the regulatory agencies determine that the issues covered by the Consent Order have been satisfactorily and sustainably resolved.

~~The~~At ~~state~~December and federal banking agencies have adopted guidelines to assist in identifying and addressing potential safety and soundness concerns before capital becomes impaired. The guidelines establish operational and managerial standards relating to internal controls31, ~~information~~2011 ~~systems,~~ and ~~internal audit systems; loan documentation; credit underwriting; interest rate exposure; asset growth and asset quality; and compensation~~2010, ~~fees,~~CIBM ~~and~~Bank was ~~benefits.~~in Incompliance ~~addition,~~with the ~~banking~~minimum ~~agencies~~capital ~~have~~requirements ~~adopted~~as ~~safety~~set ~~and~~forth ~~soundness~~in ~~guidelines~~the ~~for~~Consent ~~asset~~Order ~~quality~~ and ~~for~~was ~~evaluating~~classified ~~and~~as ~~monitoring earnings to help ensure that earnings are sufficient for the maintenance of adequate capital and reserves~~“adequately capitalized.”

~~Prompt~~In ~~Corrective~~addition ~~Action~~to measures taken under the prompt corrective action provisions, banking organizations may be subject to potential enforcement actions by the federal banking agencies for unsafe or unsound practices in conducting their business, for violations of any law, rule, regulation, or any condition imposed in writing by the agency or any written agreement with the agency. These enforcement actions may include the appointment of a conservator or receiver for a bank, the issuance of a cease and desist order that can be judicially enforced, the termination of a bank’s deposit insurance, the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against officers, directors and other institution-affiliated parties, and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if equitable relief was not granted. Finally, pursuant to an interagency agreement, the FDIC may examine without the express permission of the institution’s primary regulator, any institution that has a substandard regulatory examination score or is considered undercapitalized.

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

AThe ~~bank~~FRB’s ispolicy ~~generally~~regarding ~~considered~~dividends is tothat bea ~~adequately~~bank ~~capitalized~~holding ifcompany itshould is not ~~defined~~declare asor ~~well~~pay ~~capitalized~~a ~~but~~cash ~~meets~~dividend ~~all~~which ofwould ~~its~~impose ~~minimum~~undue ~~capital~~pressure ~~requirements:~~on athe ~~leverage~~capital ~~ratio~~ of 4%its subsidiary orbanks ~~greater (~~or 3%would orbe ~~greater~~funded ifonly itthrough ~~receives~~borrowing ~~the~~or ~~highest~~other ~~composite~~arrangements ~~examination~~that ~~rating~~might byadversely ~~its~~affect ~~examiners, subject to appropriate federal banking agency guidelines);~~ a ~~total~~bank ~~capital~~holding ~~ratio~~company’s financial ofposition. 8%The orFRB ~~greater;~~believes ~~and~~that a ~~Tier~~bank 1holding ~~capital~~company ~~ratio~~should ofnot 4%initiate or ~~greater.~~continue Acash ~~bank~~dividends ~~will~~on beits ~~considered~~common ~~undercapitalized~~stock unless ifits itnet ~~fails~~income tois ~~meet~~sufficient ~~any~~to ~~minimum~~fully ~~required~~fund ~~measure,~~each ~~significantly~~dividend ~~undercapitalized if it is significantly below such measure~~ and ~~critically~~its ~~undercapitalized~~prospective ifrate itof ~~maintains~~earnings aretention ~~level~~appears ofconsistent with ~~tangible~~its ~~equity~~ capital ~~equal~~needs, toasset orquality ~~less~~and ~~than~~overall 2%financial ~~of total assets~~condition. APursuant ~~bank may be reclassified~~ to bethe inWritten aAgreement ~~capitalization~~entered ~~category~~into ~~that~~with ~~is next below that indicated by its actual~~the ~~capital~~Federal ~~position~~Reserve ifBank, itCIB ~~receives~~Marine ahas ~~less~~agreed ~~than~~not ~~satisfactory examination rating by its examiners with respect~~ to ~~its~~declare ~~assets, management, earnings,~~ or ~~liquidity~~pay ~~that~~dividends ~~has~~without ~~not~~the ~~been~~prior ~~corrected,~~written orapproval itof ~~is determined that~~ the ~~bank~~Federal isReserve Bank inand anthe ~~unsafe~~Director orof ~~unsound~~the ~~condition~~Division orof ~~engages~~Banking inSupervision anand ~~unsafe~~Regulation orof ~~unsound~~the ~~practice~~FRB. ~~The~~CIB ~~federal~~Marine ~~banking~~is ~~agencies,~~also ~~however,~~prohibited ~~may~~from ~~not~~paying any ~~treat~~dividends aon ~~significantly~~its ~~undercapitalized~~common ~~institution~~stock ~~as critically undercapitalized~~ unless ~~its~~the ~~capital~~quarterly ~~ratio~~dividend ~~actually~~on ~~warrants~~its ~~such~~two ~~treatment.~~series ~~Regulators~~of ~~also~~preferred ~~have~~stock has ~~the~~been ~~authority~~paid toin ~~increase~~full ~~minimum~~for ~~capital~~four ~~levels~~consecutive ~~above those requirements discussed above~~quarters.

~~FDICIA~~CIB ~~generally~~Marine’s ~~prohibits~~ability ato ~~depository~~pay ~~institution~~any ~~from~~dividends to ~~making~~its ~~any~~stockholders ~~capital~~depends ~~distribution,~~in ~~including~~large ~~payment~~part ofon ~~dividends~~the orability ~~paying~~of ~~any~~CIBM ~~management~~Bank ~~fee~~to pay dividends to ~~its~~it. ~~holding~~Federal ~~company,~~law ifprohibits the ~~depository~~payment of ~~institution~~any dividends that would ~~thereafter~~cause bea bank to become undercapitalized. ~~Undercapitalized~~The ~~depository~~ability ~~institutions~~of ~~are~~state-chartered commercial banks to pay dividends is also subject to ~~growth~~restrictions ~~limitations~~primarily ~~and~~under ~~are~~the ~~required~~banking tolaws ~~submit~~of athe ~~capital~~state ~~restoration~~under ~~plan~~which tothe ~~become~~bank ~~adequately~~is ~~capitalized~~organized. IfIn athe ~~depository~~case ~~institution~~of CIBM ~~fails~~Bank, the laws of Illinois are applicable. In addition, the FRB and CIBM Bank’s regulators have the authority to ~~submit~~prohibit CIB anMarine ~~acceptable~~and ~~plan~~its subsidiary bank from paying dividends, itdepending isupon ~~treated~~CIB asMarine’s and CIBM Bank’s financial condition, if itsuch payment is ~~significantly~~deemed ~~undercapitalized~~to constitute an unsafe or unsound practice. CIB Marine did not receive any dividend payments from its banking subsidiaries in 2011 or 2010 and, at December 31, 2011, CIBM Bank was restricted by the Consent Order from paying, and did not have any retained earnings available for the payment of dividends to CIB Marine, without first obtaining the consent of the regulators.

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

AAs ~~number~~a ofFDIC-insured ~~additional~~institution, ~~requirements~~CIBM ~~and~~Bank is ~~restrictions~~required ~~may~~to ~~apply~~pay deposit insurance premiums based on the risk posed to ~~significantly~~the ~~undercapitalized~~FDIC ~~depository~~insurance ~~institutions~~funds. The Dodd-Frank Act made permanent the $250,000 ~~including~~deposit ~~orders~~insurance limit for insured deposits. Amendments to ~~sell~~the ~~sufficient~~Federal ~~voting~~Deposit ~~stock~~Insurance Act also revised the assessment base against which an insured depository institution’s deposit insurance premiums paid to ~~become~~the ~~adequately~~FDIC’s ~~capitalized~~Deposit Insurance Fund (“DIF”) were calculated. On February 7, ~~requirements~~2011, the FDIC adopted its final rule which redefined the deposit insurance assessment base as required by the Dodd-Frank Act. The assessment base against which an insured depository institution’s deposit insurance premiums paid to ~~reduce~~the DIF are calculated was changed to no longer be based on the institution’s deposit base, but rather its average consolidated total assets ~~and~~less ~~cessation~~its average equity. Most smaller financial institutions, such as CIBM Bank which had its FDIC expense reduced by $0.7 million in 2011, paid smaller assessments in 2011 as a result of ~~receipt~~the issuance of the ~~deposits~~final rules. Additionally, the Dodd-Frank Act made changes to the minimum designated reserve ratio of the DIF, increasing the minimum from ~~correspondent~~1.15% ~~banks~~to 1.35% ~~Critically~~of ~~undercapitalized~~the estimated amount of total insured deposits, and eliminated the requirement that the FDIC pay dividends to depository institutions ~~may~~when bethe ~~restricted~~reserve ~~from~~ratio ~~making~~exceeds ~~payments~~certain ofthresholds. ~~principal~~Beginning December 31, 2010 and ~~interest~~continuing through onJanuary ~~subordinated~~1, ~~debt~~2013, all funds held in noninterest-bearing transaction accounts and Interest on Lawyer Trust Accounts (“IOLTAs”) are fully ~~subject~~guaranteed toby ~~appointment~~the ofFDIC afor ~~receiver~~the orfull ~~conservator~~amount of the account.

~~Effective~~The ~~April 2009, CIB Marine’s former Wisconsin state-chartered bank subsidiary, Marine Bank, stipulated to a Cease and Desist Order (“C&D”) with the~~ FDIC ~~and~~is ~~the~~authorized Wisconsin Department of Financial Institutions Division of Banking which resulted from the high level of nonperforming assets and the corresponding impact on its financial condition. The C&D required, among other things, Marine Bank to ~~take~~terminate certain corrective actions which focused on reducing exposure to nonaccrual loans, imposed restrictions on lending to credits with existing nonaccrual loans, a restriction on paying dividends without regulatory approval, a requirement to maintain a minimum Tier 1 leverage ratio of 10%, retaining qualified management, revising lending policies and procedures focused on documentation,an ~~maintaining~~institution’s andeposit ~~appropriate~~insurance ~~loan~~upon ~~review and grading system, and adopting~~ a ~~comprehensive~~finding ~~budget. The C&D was re-affirmed~~ by the FDIC ~~upon~~that the ~~merger of Marine Bank with and into Central Illinois Bank, CIB Marine~~institution’s ~~Illinois~~financial ~~state-chartered~~condition ~~bank~~is ~~subsidiary,~~unsafe ~~and~~or unsound ~~continued~~or tothat ~~be applicable to~~ the ~~combined~~ institution, ~~CIBM~~has ~~Bank.~~engaged When Marine Bank merged with and into Central Illinois Bank to form CIBM Bank, the IDFPR assumed state regulatory authority over the institution. CIBM Bank entered into a Consent Order with the FDIC and IDFPR in ~~the~~unsafe ~~second~~or ~~quarter~~unsound ofpractices ~~2010~~or ~~that~~has ~~was~~violated ~~similar~~any toapplicable ~~the order Marine Bank was subject to prior to its merger with Central Illinois Bank~~rule, ~~and included the following additional provisions: the development of a management plan and implementing its recommendations~~regulation, ~~the need for board compliance and monitoring of the provisions of the Consent Order, the maintenance of a minimum total risk-based capital ratio of 12%, and development of a plan for reducing and~~order ~~managing~~or ~~credit~~condition ~~concentrations.~~enacted ~~Also, CIBM Bank is restricted from issuing~~ or ~~renewing~~imposed ~~brokered~~by ~~deposits unless it obtains permission from~~ the ~~FDIC~~institution’s ~~to do so. Generally, enforcement actions such as the Consent Order can be lifted only after subsequent examinations and evaluations of the~~ regulatory ~~agencies~~agency.

AtRestrictions ~~December~~on ~~31,~~Affiliate 2010, CIBM Bank was in compliance with the minimum capital requirements as set forth in the Consent Order and was classified as “adequately capitalized.” During 2010 and 2009, CIB Marine provided $5.3 million and $4.0 million, respectively, of capital to support CIBM Bank in maintaining its capital position.Transactions

InTransactions ~~addition~~between toCIB ~~measures~~Marine, ~~taken~~CIBM ~~under~~Bank and ~~the~~their ~~prompt~~nonbank ~~corrective~~subsidiaries ~~action~~are ~~provisions,~~subject ~~banking~~to ~~organizations~~a ~~may~~number beof ~~subject~~restrictions. toFederal ~~potential~~law ~~enforcement~~imposes ~~actions~~restrictions byand ~~the~~limitations ~~federal~~on ~~banking~~CIBM Bank ~~agencies~~from ~~for~~making ~~unsafe~~extensions orof ~~unsound~~credit ~~practices~~to, inor ~~conducting~~the ~~their~~issuance ~~business,~~of ~~for~~a ~~violations~~guarantee or letter of ~~any~~credit ~~law,~~on ~~rule,~~behalf ~~regulation~~of, CIB Marine or ~~any~~other affiliates, ~~condition~~the ~~imposed~~purchase inof, ~~writing~~or byinvestment ~~the~~in, ~~agency~~stock or ~~any~~other ~~written~~securities ~~agreement~~thereof, ~~with~~ the ~~agency.~~taking ~~These~~of ~~enforcement~~such ~~actions~~securities ~~may~~as ~~include~~collateral for loans, and the ~~appointment~~purchase of aassets ~~conservator~~of CIB Marine or ~~receiver~~other ~~for~~affiliates. aSuch ~~bank,~~restrictions ~~the~~and ~~issuance~~limitations ofprevent aCIB ~~cease~~Marine ~~and~~or ~~desist~~other affiliates ~~order~~from ~~that~~borrowing ~~can~~from beCIBM ~~judicially~~Bank ~~enforced,~~unless the ~~termination~~loans ofare asecured ~~bank’s~~by ~~deposit~~marketable ~~insurance~~obligations of designated amounts. Further, such ~~the~~secured ~~imposition~~loans ofand ~~civil~~investments ~~money~~by ~~penalties,~~CIBM ~~the~~Bank ~~issuance~~to ofor ~~directives~~in CIB Marine or to ~~increase~~or ~~capital,~~in ~~the~~any ~~issuance~~other ofnon-banking ~~formal~~affiliate ~~and~~are ~~informal~~limited, ~~agreements~~individually, to ~~the~~10% ~~issuance~~ of ~~removal~~CIBM ~~and~~Bank’s ~~prohibition~~capital ~~orders~~and ~~against~~surplus ~~officers,~~and ~~directors~~such ~~and~~secured ~~other institution-affiliated~~loans ~~parties,~~are ~~and~~limited in the ~~enforcement~~aggregate to 20% of CIBM Bank’s capital and surplus. All such ~~actions~~transactions ~~through~~must ~~injunctions~~be oron ~~restraining~~terms ~~orders~~that ~~based~~are ~~upon~~no aless ~~judicial~~favorable ~~determination~~to ~~that~~CIBM ~~the~~Bank ~~agency~~than those that would be ~~harmed~~available from ifnonaffiliated ~~equitable~~third ~~relief~~parties. ~~was~~Moreover, ~~not~~some ~~granted.~~state ~~Finally~~banking laws, ~~pursuant~~like those in Illinois, impose restrictions on affiliate transactions similar to anthose ~~interagency~~imposed ~~agreement,~~by ~~the~~federal ~~FDIC~~law. ~~may~~FRB ~~examine~~policies ~~without~~also forbid the ~~express~~payment ~~permission~~by bank subsidiaries of ~~the~~management ~~institution’s~~fees ~~primary~~that ~~regulator,~~are unreasonable ~~any~~in ~~institution~~amount ~~that~~or ~~has~~exceed athe ~~substandard~~fair ~~regulatory~~market ~~examination~~value ~~score~~of the services rendered or, isif ~~considered~~no ~~undercapitalized~~market exists, actual costs plus a reasonable profit.

10The Dodd-Frank Act also includes the following provisions:

~~Dividend~~Transactions with Insiders. Insider transaction limitations are expanded through the strengthening on loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivative transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors.

The FRB’s policy regarding dividends is that a bank holding company should not declare or pay a cash dividend which would impose undue pressure on the capital of its subsidiary banks or would be funded only through borrowing or other arrangements that might adversely affect a bank holding company’s financial position. The FRB believes that a bank holding company should not initiate or continue cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition. Pursuant to the Written Agreement entered into with the Federal Reserve Bank, CIB Marine has agreed not to declare or pay dividends without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the FRB. CIB Marine is also prohibited from paying any dividends on its common stock unless the quarterly dividend on the CIB Marine Preferred has been paid in full for four consecutive quarters.9

~~CIB~~Enhanced ~~Marine’s~~Lending ~~ability~~Limits. toThe ~~pay~~Dodd-Frank Act ~~any~~strengthens ~~dividends~~the toexisting ~~its~~limits ~~shareholders depends in large part~~ on ~~the~~a ~~ability~~depository ofinstitution’s ~~CIBM~~credit ~~Bank~~exposure to ~~pay~~one ~~dividends to it~~borrower. Federal banking law ~~prohibits~~currently limits ~~the payment of any dividends that would cause~~ a bank’s ~~to become undercapitalized. The~~ ability ~~of state-chartered commercial banks~~ to ~~pay~~extend ~~dividends~~credit ~~is also subject~~ to ~~restrictions~~one ~~primarily~~person ~~under~~(or ~~the~~group ~~banking laws~~ of ~~the~~related ~~state~~persons) ~~under~~in ~~which~~an ~~the~~amount ~~bank~~exceeding iscertain ~~organized~~thresholds. The InDodd-Frank ~~the~~Act ~~case~~expands ~~of CIBM Bank,~~ the ~~laws~~scope of ~~Illinois~~these ~~are~~restrictions ~~applicable. In addition, the FRB and the Bank’s regulators have the authority~~ to ~~prohibit~~include ~~CIB~~credit ~~Marine~~exposure ~~and~~arising ~~its subsidiary bank~~ from ~~paying~~derivative ~~dividends~~transactions, ~~depending~~repurchase agreements, ~~upon~~and ~~CIB~~securities ~~Marine’s~~lending and ~~CIBM~~borrowing ~~Bank’s~~transactions. ~~financial condition~~Eventually, ifit ~~such~~will ~~payment~~also isprohibit ~~deemed~~state-chartered tobanks ~~constitute~~(such ~~an unsafe or unsound practice. CIB Marine did not receive any dividend payments~~as ~~from its banking subsidiaries in 2010 or 2009 and, at December 31, 2010,~~ CIBM Bank) ~~was restricted by the Consent Order~~ from ~~paying,~~engaging ~~and~~in ~~did~~derivative ~~not~~transactions ~~have~~unless ~~any retained earnings available for~~ the ~~payment~~state oflending ~~dividends~~limit tolaws ~~CIB~~take ~~Marine,~~into ~~without~~account ~~first~~credit ~~obtaining~~exposure ~~the~~to ~~consent of the regulators~~such transactions.

~~Federal~~At ~~Deposit~~December ~~Insurance~~31, 2011, CIBM Bank had nominal loans secured or partially secured by CIB Marine stock. No specific reserves were allocated to these loans. While these loans were secured by CIB Marine stock, the borrowers did not use the proceeds to acquire the stock.

AsThe arestrictions ~~FDIC-insured institution, CIBM Bank is required to pay deposit insurance premiums based~~ on ~~the~~loans ~~risk posed~~ to ~~the FDIC insurance funds. In December 2008~~directors, executive ~~the FDIC adopted a rule~~officers, ~~uniformly~~principal ~~increasing~~shareholders ~~the~~and ~~risk-based~~their ~~assessment~~related ~~rates~~interests by(collectively ~~seven~~referred ~~basis~~to ~~points,~~herein ~~annually,~~as ~~resulting~~“insiders”) contained in athe ~~range~~Federal ofReserve ~~risk-based~~Act ~~assessment~~and ~~rates~~Regulation ~~from~~O 12apply ~~basis points~~ to 50all ~~basis~~federally ~~points.~~insured ~~Additional changes to the risk-based assessment system included increased premiums for~~ institutions. ~~that~~These ~~rely~~restrictions include limits on ~~excessive~~loans ~~amounts~~to ofone ~~brokered~~borrower ~~deposits, increased premiums for excessive use of secured liabilities,~~ and ~~lowered~~conditions ~~premiums~~that ~~for~~must ~~smaller~~be ~~institutions~~met ~~with~~before ~~very~~such ~~high~~a ~~capital~~loan ~~levels.~~can ~~Risk~~be ~~assessment rates are determined at the end of each quarter~~made. AtThere ~~December~~is ~~31,~~also ~~2010,~~an ~~CIBM~~aggregate ~~Bank~~limitation on ~~was~~all ~~subject~~loans to ~~the~~insiders ~~highest~~and ~~risk-based~~their ~~assessment~~related ~~rate because it was under the Consent Order~~interests. ~~The~~These ~~Dodd-Frank~~loans ~~Act~~cannot ~~provided~~exceed the ~~FDIC~~institution’s ~~much~~total ~~greater~~unimpaired ~~discretion~~capital and ~~to manage its DIF. On February 7~~surplus, ~~2011,~~and the FDIC ~~adopted~~may ~~its~~determine ~~final~~that ~~rule~~a ~~which~~lesser ~~redefines~~amount ~~the~~is ~~deposit insurance assessment base as required by the Dodd-Frank Act~~appropriate. ~~The~~Insiders ~~assessment~~are ~~base~~subject ~~against which an insured depository institution’s deposit insurance premiums paid~~ to ~~the~~enforcement ~~DIF~~actions ~~are~~for ~~calculated~~knowingly accepting ~~will~~loans be no longer be the institution’s deposit base, but rather its average consolidated total assets less its average equity. Most smaller financial institutions such as CIBM Bank will pay smaller assessments in ~~the~~violation ~~future as a result~~ of ~~the~~applicable ~~issuance of the final FDIC rules~~restrictions. ~~Additionally,~~Institutions ~~the~~that ~~Dodd-Frank~~are ~~Act~~subject ~~makes changes~~ to ~~the~~Regulation ~~minimum~~O ~~designated~~are ~~reserve~~not ~~ratio~~subject ofto the ~~DIF, increasing the minimum from 1.15% to 1.35%~~ prohibitions of the ~~estimated~~Sarbanes-Oxley ~~amount~~Act of ~~total~~2002 ~~insured~~on ~~deposits,~~certain ~~and~~loans ~~eliminating the requirement that the FDIC pay dividends~~ to ~~depository institutions when the reserve ratio exceeds certain thresholds~~insiders.

~~The~~Interagency ~~FDIC~~Appraisal isand authorized to terminate an institution’s deposit insurance upon a finding by the FDIC that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution’s regulatory agency.Evaluation Guideline

11In December 2010, the federal banking agencies issued the Interagency Appraisal and Evaluation Guidelines. This guidance, which updated guidance originally issued in 1994, sets forth the minimum regulatory standards for appraisals. It incorporates previous regulatory issuances affecting appraisals, addresses advances in information technology used in collateral evaluation, and clarifies standards for use of analytical methods and technological tools in developing evaluations. This guidance also requires institutions to utilize strong internal controls to help ensure reliable appraisals and evaluations and to monitor and periodically update valuations of collateral for existing real estate loans and transactions.

OnCommunity ~~October~~Reinvestment ~~3, 2008, the Emergency Economic Stabilization~~ Act of 2008 (“EESA”) was signed into law. EESA included a provision for an increase in the amount of deposits insured by the FDIC to $250,000 until December 2009. Pursuant to the Helping Families Save Their Homes Act, the $250,000 limit has been extended to December 31, 2013. On October 14, 2008, the FDIC announced, the Temporary Liquidity Guarantee Program, which included the Transaction Account Guarantee program (“TAG”) that provided for institutions participating in the program an unlimited guarantee of funds in non-interest-bearing transaction deposit accounts otherwise covered by the existing deposit insurance limit of $250,000. CIBM Bank elected to participate in the TAG and ~~was assessed a 10 basis point surcharge for its~~Fair participation through December 31, 2010. Upon expiration of the TAG at December 31, 2010, a provision of the Dodd-Frank Act, which took effect on the same date, provided unlimited Federal insurance of the net amount of non-interest-bearing transaction accounts at all insured depository institutions through January 1, 2013. The unlimited FDIC coverage provided under the Dodd-Frank Act applies to a more narrowly defined set of non-interest-bearing transaction accounts than the TAG. Specifically, transaction accounts that earn de minimis interest and accounts on which institutions reserve a right to require advance notice of withdrawals (e.g., NOW Accounts) were covered by the unlimited Federal deposit insurance provided under the TAG, but will not continue to be covered by unlimited Federal deposit insurance under the Dodd-Frank Act.Lending

~~Restrictions~~CIBM onBank ~~Affiliate~~is ~~Transactions~~subject to the Community Reinvestment Act (“CRA”) and various fair lending requirements and reporting obligations. The CRA generally requires federal banking agencies to evaluate whether financial institutions are meeting the credit needs of their local communities, including low and moderate-income neighborhoods and to rate such institutions and publicly disclose such ratings. State and federal agencies also examine financial institutions’ compliance with fair lending laws. A bank may be subject to substantial penalties and corrective measures for a violation of certain fair lending laws. Federal banking agencies are also authorized to take compliance with such laws and a bank’s CRA rating into consideration when regulating and supervising other activities of a bank holding company and its banks, including expansionary activities. As of the date of its most recent examination, CIBM Bank had a CRA rating of “satisfactory.”

~~Transactions~~Compliance ~~between~~with ~~CIB~~Consumer Marine, CIBM Bank and their nonbank subsidiaries are subject to a number of restrictions. Federal law imposes restrictions and limitations on CIBM Bank from making extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, CIB Marine or other affiliates, the purchase of, or investment in, stock or other securities thereof, the taking of such securities as collateral for loans, and the purchase of assets of CIB Marine or other affiliates. Such restrictions and limitations prevent CIB Marine or other affiliates from borrowing from CIBM Bank unless the loans are secured by marketable obligations of designated amounts. Further, such secured loans and investments by CIBM Bank to or in CIB Marine or to or in any other non-banking affiliate are limited,Protection individually, to 10% of CIBM Bank’s capital and surplus and such secured loans are limited in the aggregate to 20% of CIBM Bank’s capital and surplus. All such transactions must be on terms that are no less favorable to CIBM Bank than those that would be available from nonaffiliated third parties. Moreover, some state banking laws, like those in Illinois, impose restrictions on affiliate transactions similar to those imposed by federal law. FRB policies also forbid the payment by bank subsidiaries of management fees that are unreasonable in amount or exceed the fair market value of the services rendered or, if no market exists, actual costs plus a reasonable profit.Laws

~~The~~CIBM Bank is subject to many federal consumer protection statutes and regulations including but not limited to the Dodd-Frank Act; ~~also~~the ~~includes~~Truth in Lending Act; the ~~following~~Truth ~~provisions~~in Savings Act; the Equal Credit Opportunity Act; the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003; the Fair Housing Act; the Real Estate Settlement Procedures Act; the Home Mortgage Disclosure Act and the Electronic Fund Transfer Act. Among other things, these acts:

~~Transactions~~· ~~with~~require ~~Affiliates.~~banks ~~The~~to ~~Dodd-Frank~~disclose ~~Act~~credit ~~enhances~~terms ~~the~~in ~~requirements~~meaningful ~~for certain transactions with affiliates under Section 23A~~ and ~~23B~~consistent of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and increasing the amount of time for which collateral requirements regarding covered transactions must be maintained.ways;

~~Transactions~~· ~~with~~prohibit ~~Insiders.~~discrimination ~~Insider~~against transaction limitations are expanded through the strengthening on loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivative transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an ~~insider~~applicant ~~to an institution, including requirements that such sales be on market terms and,~~ in ~~certain~~any ~~circumstances,~~consumer ~~approved~~or bybusiness ~~the~~credit ~~institution’s board of directors.~~transaction;

~~Enhanced~~· ~~Lending~~prohibit ~~Limits.~~discrimination ~~The~~in ~~Dodd~~housing-Frank Act strengthens the existing limits on a depository institution’s credit exposure to one borrower. Federal banking law currently limits a bank’s ability to extend credit to one person (or group of related persons) in an amount exceeding certain thresholds. The Dodd-Frank Act expands the scope of these restrictions to include credit exposure arising from derivative transactions, repurchase agreements, and securities lending and borrowing transactions. Eventually, it will also prohibit state-chartered banks (such as CIBM Bank) from engaging in derivative transactions unless the state lending limit laws take into account credit exposure to such transactions.activities;

At· ~~December~~regulate ~~31,~~the ~~2010,~~manner ~~CIBM~~in ~~Bank~~which ~~had~~banks ~~nominal~~must ~~loans~~deal ~~secured~~with orcustomers ~~partially~~and ~~secured~~certain byinformation ~~CIB~~about ~~Marine stock. No specific reserves were allocated to these loans. While these loans were secured by CIB Marine stock, the borrowers did not use the proceeds to acquire the stock.~~customers;

1210

~~The~~· ~~restrictions~~require onbanks ~~loans~~ to ~~directors,~~collect ~~executive officers, principal shareholders~~ and ~~their~~report ~~related~~applicant ~~interests (collectively referred to herein as “insiders”) contained in the Federal Reserve Act~~ and ~~Regulation O apply to all federally insured institutions. These restrictions include limits on loans to one~~ borrower ~~and~~data ~~conditions~~regarding ~~that must be met before such a loan can be made. There is also an aggregate limitation on all~~ loans to insiders and their related interests. These loans cannot exceed the institution’s total unimpaired capital and surplus, and the FDIC may determine that a lesser amount is appropriate. Insiders are subject to enforcement actions for ~~knowingly~~home ~~accepting~~purchases ~~loans~~or inimprovement ~~violation of applicable restrictions. Institutions that are subject to Regulation O are not subject to the prohibitions of the Sarbanes-Oxley Act of 2002 on certain loans to insiders.~~projects;

~~Interagency~~· ~~Appraisal~~require lenders to provide borrowers with information regarding the nature and ~~Evaluation~~cost ~~Guideline~~of real estate settlements;

In· ~~December~~prohibit ~~2010,~~certain ~~the~~lending ~~federal~~practices ~~banking agencies issued the Interagency Appraisal~~ and ~~Evaluation~~limit ~~Guidelines.~~escrow ~~This~~account ~~guidance,~~amounts ~~which~~with ~~updated~~respect guidance originally issued in 1994, sets forth the minimum regulatory standards for appraisals. It incorporates previous regulatory issuances affecting appraisals, addresses advances in information technology used in collateral evaluation, and clarifies standards for use of analytical methods and technological tools in developing evaluations. This guidance also requires institutions to ~~utilize strong internal controls to help ensure reliable appraisals and evaluations and to monitor and periodically update valuations of collateral for existing~~ real estate ~~loans and~~ transactions.;

~~Community~~· ~~Reinvestment~~prescribe ~~Act~~possible ~~and~~penalties ~~Fair~~for ~~Lending~~violations of the requirements of consumer protection statutes and regulations;

~~CIBM~~· ~~Bank~~limit isconsumer ~~subject~~liability to the Community Reinvestment Act (“CRA”) and various fair lending requirements and reporting obligations. The CRA generally requires federal banking agencies to evaluate whether financial institutions are meeting the credit needs of their local communities, including low and moderate-income neighborhoods and to rate such institutions and publicly disclose such ratings. State and federal agencies also examine financial institutions’ compliance with fair lending laws. A bank may be subject to substantial penalties and corrective measures for aunauthorized ~~violation~~transactions; ~~of certain fair lending laws. Federal banking agencies are also authorized to take compliance with such laws~~ and a bank’s CRA rating into consideration when regulating and supervising other activities of a bank holding company and its banks, including expansionary activities. As of the date of its most recent examination, CIBM Bank had a CRA rating of “satisfactory.”

~~Compliance~~· ~~with~~require ~~Consumer~~banks ~~Protection~~to ~~Laws~~disclose deposit account terms and electronic fund transfer terms in accordance with legal requirements.

~~CIBM~~The ~~Bank~~Dodd-Frank isAct ~~subject~~established a new independent regulator and supervisor, the Consumer Financial Protection Bureau (“CFPB”), as an executive agency within the FRB, empowered with broad authority to ~~many~~regulate ~~federal~~the offering and provision of consumer ~~protection~~financial ~~statutes~~products and ~~regulations~~services. ~~including~~On July 21, 2011, most of the ~~Truth~~consumer infinancial ~~Lending~~protection ~~Act;~~functions currently assigned to the ~~Truth~~federal inbanking ~~Savings~~and ~~Act;~~other designated agencies shifted to the ~~Equal~~CFPB. ~~Credit~~The ~~Opportunity~~CFPB ~~Act;~~has broad rulemaking authority over a wide range of consumer protection laws that apply to banks and thrifts and other providers of consumer financial services, including the ~~Fair~~authority ~~Credit~~to ~~Reporting~~prohibit ~~Act~~“unfair, asdeceptive ~~amended~~or abusive byacts ~~the~~and ~~Fair~~practices” to help ensure that all consumers have access to markets for consumer financial products and services, ~~Accurate~~and ~~Credit~~that ~~Transactions~~such ~~Act~~markets are fair, transparent and competitive. The new regulations are meant to help ensure through the promulgation of ~~2003;~~rules that U.S. consumers receive clear, accurate information to help them evaluate mortgages, credit cards, and other financial products, and to protect them from hidden fees, abusive terms and deceptive practices. In addition to consumer examination, supervisory and enforcement and rulemaking authority, the ~~Fair~~stated ~~Housing~~functions ~~Act;~~of the ~~Real~~CFPB ~~Estate~~include ~~Settlement~~responding ~~Procedures~~to ~~Act;~~consumer complaints, monitoring the ~~Home~~markets ~~Mortgage~~for ~~Disclosure~~consumer ~~Act~~products, and guidance governing all financial institutions offering consumer financial products and services. Also, the ~~Electronic~~CFPB ~~Fund~~has ~~Transfer~~the ~~Act~~authority over persons engaged in offering or providing financial products or services. State ~~Among~~attorneys general and other ~~things,~~state ~~these~~officials ~~acts:~~will be authorized to enforce consumer protection rules issued by the CFPB.

·Privacy ~~require banks to disclose credit terms in meaningful~~ and ~~consistent ways;~~Security

·The ~~prohibit~~Gramm-Leach-Bliley ~~discrimination~~Act ~~against~~(“GLBA”) establishes ana ~~applicant~~minimum infederal ~~any~~standard of financial privacy by, among other provisions, requiring banks to adopt and disclose privacy policies with respect to consumer orinformation ~~business~~and ~~credit~~setting ~~transaction;~~forth certain rules with respect to the disclosure to third parties of consumer information. CIB Marine has adopted and disseminated its privacy policies pursuant to the GLBA. Regulations adopted under the GLBA set standards for protecting the security, confidentiality and integrity of customer information, and require notice to regulators, and in some cases, to customers, in the event of security breaches. A number of states have adopted their own statutes requiring notification of security breaches. In addition, the GLBA requires the disclosure of agreements reached with community groups that relate to the CRA, and contains various other provisions designed to improve the delivery of financial services to consumers while maintaining an appropriate level of safety in the financial services industry.

·USA ~~prohibit~~PATRIOT ~~discrimination~~Act inof ~~housing-related lending activities;~~2001

·The ~~regulate~~USA PATRIOT Act of 2001 and its implementing regulations (“Patriot Act”) were enacted and implemented for the ~~manner~~purpose of strengthening the ability of the U.S. government to intercept and obstruct terrorism by, among other things, increasing the power of the U.S. government to obtain access to information and to investigate a broad range of criminal activities. The Patriot Act expanded the definition of money laundering to include terrorism, terrorism support and foreign corruption, and increased the civil and criminal penalties for money laundering offenses. The Patriot Act further applies certain anti-money laundering measures to U.S. bank accounts of foreign persons; prohibits financial institutions from establishing, maintaining, administering or managing a correspondent account with a foreign shell bank; provides for certain forfeitures of funds deposited in ~~which~~U.S. interbank accounts by foreign banks; ~~must~~provides ~~deal~~the United States Department of the Treasury with ~~customers~~regulatory ~~and~~authority to help ensure that certain ~~information~~accounts ~~about~~are not used to hide the identity of customers transferring funds and to impose additional reporting requirements with respect to money laundering activities; provides standards for verifying customer identification at account opening; and sets forth rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering. The impact of the Patriot Act on financial institutions of all kinds is significant and wide ranging. Regulatory authorities have increased compliance monitoring activities and have levied significant fines and sanctions on many firms in the financial industry. No fines or sanctions have been levied on CIB Marine.

~~· require banks to collect and report applicant and borrower data regarding loans for home purchases or improvement projects;~~11

·Sarbanes-Oxley ~~require~~Act ~~lenders to provide borrowers with information regarding the nature and cost~~ of ~~real estate settlements;~~2002

·The ~~prohibit~~Sarbanes-Oxley ~~certain~~Act ~~lending~~of ~~practices~~2002 (“SOX”) addresses corporate governance and ~~limit~~accounting ~~escrow~~oversight ~~account~~matters. ~~amounts~~SOX required the creation of a five-member oversight board appointed by the SEC that sets standards for accountants and has investigative and disciplinary powers; prohibits accounting firms from providing various forms of service to public audit clients, such as certain consulting services; requires accounting firms to rotate partners working with ~~respect~~public clients every five years; expands disclosure of corporate operations and internal controls; requires certification of financial statements by the CEO and the Chief Financial Officer (“CFO”) of public companies; increases penalties and forfeitures for financial crimes or failing to ~~real~~report ~~estate~~events ~~transactions~~having a material effect on the financial statements or operations of a public company; and enhances controls on and reporting of insider trading.

·Exchange ~~prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations;~~Act

·CIB ~~limit~~Marine’s ~~consumer~~common ~~liability~~stock ~~for~~is ~~unauthorized~~registered with ~~transactions;~~the SEC. Under the Securities Exchange Act of 1934, as amended (“Exchange Act”), CIB Marine is subject to the information, reporting, proxy solicitation, insider trading, corporate governance and other requirements and restrictions of the Exchange Act.

·Recent ~~require~~Regulatory ~~banks to disclose deposit account terms and electronic fund transfer terms in accordance with legal requirements.~~Developments

13The various federal agencies have issued new rules and over the course of time, will conduct more studies and issue new regulations as necessary to fully implement the Dodd-Frank Act provisions. The ultimate impact of such rules and studies on CIB Marine will not be known for many years.

~~The~~Future Dodd-Frank Act will have wide-ranging impact on anyone providing retail financial services within the U.S. by creating the CFPB, which becomes a new independent regulator and supervisor. This act makes broad changes to U.S. mortgage origination, including prohibiting originators from receiving compensation that varies with respect to the terms and conditions of the loan; requiring an assessment that a borrower has the reasonable ability to repay the loan, and that credit decisions be based on verified financial resources; limiting pre-payment penalties; and adding new disclosures and limitations. On July 21, 2011, most of the consumer financial protection functions currently assigned to the federal banking and other designated agencies will shift to the CFPB. The CFPB will have broad rulemaking authority over a wide range of consumer protection laws that apply to banks and thrifts and other providers of consumer financial services, including the authority to prohibit “unfair, deceptive or abusive practices” to help ensure that all consumers have access to markets for consumer financial products and services, and that such markets are fair, transparent and competitive. The new regulations are meant to help ensure through the promulgation of rules that U.S. consumers receive clear, accurate information to help them evaluate mortgages, credit cards, and other financial products, and to protect them from hidden fees, abusive terms and deceptive practices. In addition to consumer examination, supervisory and enforcement and rulemaking authority, the stated functions of the CFPB include responding to consumer complaints, monitoring the markets for consumer products, and guidance governing all financial institutions offering consumer financial products and services. Also, the CFPB will have authority over persons engaged in offering or providing financial products or services. State attorneys general and other state officials will be authorized to enforce consumer protection rules issued by the CFPB. Most consumer provisions of the Dodd-Frank Act will become effective on the date that authority over consumer financial regulation is transferred to the CFPB, which will be on July 21, 2011.Legislation

~~The~~Various ~~various~~legislation ~~consumer~~is, ~~laws~~from ~~and~~time ~~regulations~~ to ~~which~~time, introduced ~~CIBM~~in ~~Bank~~Congress isand ~~subject~~state ~~will~~legislatures bewith ~~changed~~respect into the ~~future~~oversight toof ~~implement~~financial ~~the~~institutions, ~~provisions~~or issuance of new regulations as required by the Dodd-Frank Act,. ~~which~~Such ~~could~~legislation ~~affect~~or regulations may change the banking statutes and the operating environment of CIB Marine and CIBM Bank’s in substantial and unpredictable ways. CIB Marine’s cannot determine the ultimate effect that potential legislation, or implementing regulations, if enacted, would have upon the financial condition or results of operations of CIB Marine or CIBM Bank.

~~Privacy~~Additional ~~and Security~~Information

~~The Gramm-Leach-Bliley Act (“GLBA”) establishes a minimum federal standard~~ As of ~~financial~~April ~~privacy by~~30, ~~among other provisions~~2009, ~~requiring~~CIB ~~banks~~Marine towas ~~adopt~~in ~~and~~default ~~disclose~~on ~~privacy~~each ~~policies~~of ~~with~~its ~~respect~~Junior toSubordinated ~~consumer~~Debentures ~~information~~(“Debentures”) ~~and~~issued in ~~setting~~conjunction ~~forth certain rules~~ with ~~respect~~four totranches ~~the~~of ~~disclosure~~trust topreferred ~~third~~securities ~~parties~~(“TruPS”) offerings ofby ~~consumer information.~~ CIB Marine ~~has~~between ~~adopted~~March 2000 and ~~disseminated~~September ~~its~~2002. ~~privacy~~As ~~policies~~a ~~pursuant~~result, to the ~~GLBA.~~holders ~~Regulations~~of ~~adopted under~~ the ~~GLBA~~TruPS ~~set~~(“TruPS ~~standards~~Holders”) could ~~for protecting the security~~have, ~~confidentiality~~at ~~and~~their ~~integrity of customer information~~discretion, ~~and~~accelerated ~~require~~the ~~notice~~principal toon ~~regulators,~~the ~~and~~Debentures. inOn ~~some~~July ~~cases~~16, ~~to customers~~2009, inCIB ~~the~~Marine ~~event~~filed ofa ~~security~~Current Report ~~breaches.~~on AForm ~~number~~8-K ofregarding ~~states~~a ~~have~~pre-packaged ~~adopted~~Plan ~~their own statutes requiring notification~~ of ~~security~~Reorganization ~~breaches.~~(“Plan”) Inthat ~~addition,~~was ~~the~~presented ~~GLBA~~to ~~requires~~ the ~~disclosure~~TruPS ~~of agreements reached with~~Holders ~~community~~for ~~groups~~their ~~that~~approval ~~relate~~ to ~~the~~exchange ~~CRA,~~principal and ~~contains~~accrued ~~various~~interest ~~other~~on ~~provisions designed to improve~~ the ~~delivery~~Debentures offor ~~financial~~two ~~services~~series ~~to consumers while maintaining an appropriate level~~ of ~~safety~~preferred ~~in the financial services industry~~stock.

~~USA~~On ~~PATRIOT~~September 16, ~~Act~~2009, following receipt of ~~2001~~approval of the Plan by the requisite TruPS Holders, CIB Marine filed the Plan in the United States Bankruptcy Court (“Bankruptcy Court”) for the Eastern District of Wisconsin (Case No. 09-33318) under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”). The restructuring of CIB Marine pursuant to the Plan had no direct impact on the operations of CIBM Bank.

The USA PATRIOT Act of 2001 and its implementing regulations (“Patriot Act”) were enacted and implemented for the purpose of strengthening the ability of the U.S. government to intercept and obstruct terrorism by, among others, increasing the power of the U.S. government to obtain access to information and to investigate a broad range of criminal activities. The Patriot Act expanded the definition of money laundering to include terrorism, terrorism support and foreign corruption, and increased the civil and criminal penalties for money laundering offenses. The Patriot Act further applies certain anti-money laundering measures to U.S. bank accounts of foreign persons; prohibits financial institutions from establishing, maintaining, administering or managing a correspondent account with a foreign shell bank; provides for certain forfeitures of funds deposited in U.S. interbank accounts by foreign banks; provides the United States Department of the Treasury with regulatory authority to help ensure that certain accounts are not used to hide the identity of customers transferring funds and to impose additional reporting requirements with respect to money laundering activities; provides standards for verifying customer identification at account opening; and sets forth rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering. The impact of the Patriot Act on financial institutions of all kinds is significant and wide ranging. Regulatory authorities have increased compliance monitoring activities and have levied significant fines and sanctions on many firms in the financial industry. No fines or sanctions have been levied on CIB Marine.12

14On October 29, 2009, the Bankruptcy Court entered an order confirming the Plan (“Confirmation Order”). CIB Marine substantially completed its financial restructuring pursuant to the Plan on the effective date of December 30, 2009. Under the Plan, the former TruPS Holders exchanged $107.2 million of cumulative high-interest Debentures comprising $61.9 million principal and $45.3 million of accrued interest, for shares of two series of CIB Marine preferred stock with a carrying value of $51 million. In the exchange, 55,624 shares of Series A 7% fixed rate noncumulative perpetual preferred stock with a stated value of $1,000 per share (“Series A Preferred”) and 4,376 shares of Series B 7% fixed rate convertible noncumulative perpetual preferred stock with a stated value of $1,000 per share (“Series B Preferred” and together with Series A Preferred “CIB Marine Preferred”) were issued. See also Item 5 appearing in Part II of this Form 10-K for additional information on the preferred stock. On May 10, 2010, the Bankruptcy Court issued its final decree thereby closing the Chapter 11 bankruptcy case for CIB Marine.

~~Sarbanes-Oxley~~AVAILABLE ~~Act of 2002~~INFORMATION

~~The~~CIB ~~Sarbanes-Oxley~~Marine ~~Act~~files ofvarious ~~2002~~reports ~~(“SOX”)~~with ~~addresses~~the SEC. ~~corporate~~The ~~governance~~reports ~~and~~include ~~accounting~~annual ~~oversight~~reports ~~matters.~~on ~~SOX~~Form ~~required~~10-K, ~~the~~quarterly ~~creation~~reports ofon aForm ~~five~~10-~~member~~Q, ~~oversight~~current ~~board~~reports ~~appointed~~on byForm ~~the~~8-K ~~SEC that sets standards for accountants~~ and ~~has~~amendments to ~~investigative~~those ~~and~~reports ~~disciplinary~~filed ~~powers;~~or ~~prohibits~~furnished ~~accounting~~pursuant ~~firms~~to ~~from~~Section ~~providing~~13(a) ~~various~~or ~~forms~~15(d) of ~~service~~the toExchange ~~public~~Act. ~~audit~~CIB ~~clients,~~Marine ~~such~~makes asall ~~certain~~SEC ~~consulting~~filings ~~services;~~available without ~~requires~~charge ~~accounting firms~~ to ~~rotate~~the ~~partners working with~~ public ~~clients~~on ~~every~~its ~~five~~web ~~years;~~site ~~expands~~at ~~disclosure~~http://www.cibmarine.com ofas ~~corporate~~soon ~~operations~~as ~~and~~reasonably ~~internal~~practicable ~~controls;~~after ~~requires~~they ~~certification~~are offiled. The ~~financial~~public ~~statements~~may byread ~~the~~and ~~CEO~~copy ~~and~~any ~~the~~materials ~~Chief~~CIB ~~Financial~~Marine ~~Officer~~files ~~(“CFO”)~~with ofthe ~~public~~SEC ~~companies;~~at ~~increases~~the ~~penalties~~SEC’s ~~and~~Public ~~forfeitures~~Reference ~~for~~Room, ~~financial~~at ~~crimes~~100 orF ~~failing~~Street, NE, toWashington, ~~report~~DC ~~events~~20549, ~~having~~on aofficial ~~material~~business ~~effect~~days onduring the ~~financial statements~~hours ~~or operations~~ of a10:00 ~~public~~am ~~company;~~to ~~and~~3:00 ~~enhances controls on and reporting of insider trading~~pm. ~~CIB~~The ~~Marine~~public ismay ~~required~~obtain ~~to provide management’s report~~ information on ~~internal~~the ~~control~~Public ~~over~~Reference ~~financial~~Room ~~reporting~~by incalling ~~this~~the ~~report,~~SEC ~~pursuant~~at to1-800-SEC-0330. ~~Section~~The ~~404~~SEC ofmaintains ~~SOX.~~an ~~However,~~Internet ~~the~~site ~~Dodd-Frank~~that ~~Act~~contains ~~provides smaller companies~~reports, ~~such~~proxy and asinformation ~~CIB Marine~~statements, ~~with~~and aother ~~permanent~~information ~~exemption~~regarding ~~from~~issuers ~~SOX’ requirement~~ that ~~CIB~~file ~~Marine’s~~electronically ~~registered public accounting firm provide an attestation report~~ with ~~respect~~the toSEC ~~such~~at ~~internal controls~~http://www.sec.gov.

~~Exchange~~ITEM ~~Act~~1A. RISK FACTORS

~~CIB~~Forward-Looking Marine’s common stock is registered with the SEC. Under the Securities Exchange Act of 1934, as amended (“Exchange Act”), CIB Marine is subject to the information, reporting, proxy solicitation, insider trading, corporate governance and other requirements and restrictions of the Exchange Act.Statements

~~Recent~~CIB ~~Regulatory~~Marine ~~Developments~~has made statements in this Form 10-K 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,” “intend,” “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 that are subject to many uncertainties and factors relating to CIB Marine’s operations and the business environment, which could change at any time.

~~The~~Stockholders ~~various~~should note ~~federal~~that ~~agencies~~many ~~have~~factors, ~~begun~~some toof ~~issue~~which ~~new~~are ~~rules~~discussed elsewhere in this Form 10-K and ~~conduct~~in ~~more~~the ~~studies~~documents that are incorporated by reference, could ~~over~~affect the ~~course~~future financial results of ~~the~~CIB ~~next~~Marine ~~several~~and ~~years,~~could ~~are~~cause ~~necessary~~those results to ~~implement~~differ ~~the~~materially ~~Dodd~~from those expressed in forward-~~Frank~~looking ~~Act~~statements ~~provisions.~~contained ~~The~~or ~~ultimate~~incorporated ~~impact~~by ofreference ~~such~~in ~~rules~~this ~~and~~document. ~~studies~~These onfactors, many of which are beyond CIB Marine’s ~~will~~control, ~~not~~include bebut ~~known~~are ~~for~~not ~~many~~limited ~~years.~~to:

~~Future~~· ~~Legislation~~operating, legal, and regulatory risks;

~~Various~~· ~~legislation is~~economic, ~~from time to time~~political, ~~introduced in Congress~~ and ~~state~~competitive ~~legislatures~~forces ~~with~~affecting respect to the oversight of financial institutions, or issuance of new regulations as required by the Dodd-Frank Act. Such legislation or regulations may change the banking statutes and the operating environment of CIB Marine’s ~~and~~banking CIBM Bank in substantial and unpredictable ways. CIB Marine cannot determine the ultimate effect that potential legislation, or implementing regulations, if enacted, would have upon the financial condition or results of operations of CIB Marine or CIBM Bank.business;

~~AVAILABLE~~· ~~INFORMATION~~the impact on net interest income and securities values from changes in monetary policy and general economic conditions including without limitation the political and economic effects of the current economic crisis, delay of recovery from the current economic crisis, potential downgrade of ratings of U.S. sovereign debt and debt guaranteed by the U.S. and failure of the U.S. government to timely discharge its financial obligations;

~~CIB~~· ~~Marine files various reports with~~ the ~~SEC.~~risk ~~The~~that ~~reports~~CIB ~~include~~Marine’s ~~annual~~analyses ~~reports~~of onthese ~~Form~~risks ~~10-K, quarterly reports on Form 10-Q, current reports on Form 8-K~~ and ~~amendments~~forces tocould ~~those~~be ~~reports~~incorrect ~~filed~~ and/or ~~furnished~~that ~~pursuant to Section 13(a) or 15(d) of~~ the ~~Exchange~~strategies ~~Act.~~developed ~~CIB Marine makes all SEC filings available without charge~~ to ~~the~~address ~~public~~them oncould ~~its~~be ~~web~~unsuccessful; ~~site at http://www.cibmarine.com as soon as reasonably practicable after they are filed.~~and

~~ITEM~~· other factors discussed in this Item 1A., ~~RISK~~“Risk ~~FACTORS~~Factors,” below and elsewhere herein.

These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. Forward-~~Looking~~looking ~~Statements~~statements speak only as of the date they are made. CIB Marine undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to significant risks and uncertainties and CIB Marine’s actual results may differ materially from the results discussed in forward-looking statements.

CIB Marine has made statements in this Form 10-K 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”, “intend”, “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, that are subject to many uncertainties and factors relating to CIB Marine’s operations and the business environment, which could change at any time.13

15Risk Factors

~~Shareholders~~The ~~should~~following ~~note~~discussion ~~that~~sets ~~many~~forth ~~factors,~~certain risks ~~some~~that ofCIB ~~which~~Marine ~~are~~believes ~~discussed~~could ~~elsewhere~~have ina ~~this~~material ~~Form~~adverse ~~10-K~~impact ~~and~~on inits ~~the~~financial ~~documents~~condition ~~that~~and ~~are incorporated by reference, could affect the future financial~~ results of ~~CIB~~operations. ~~Marine~~Additional risks ~~and~~that ~~could~~are ~~cause~~not ~~those~~currently ~~results~~known to ~~differ~~CIB ~~materially~~Marine, ~~from those expressed in forward-looking statements contained~~ or ~~incorporated~~that byit ~~reference~~currently inbelieves ~~this~~to ~~document.~~be ~~These factors~~immaterial, ~~many~~may ofalso ~~which~~have ~~are~~a ~~beyond~~material ~~CIB~~adverse effect ~~Marine’s~~on ~~control,~~its ~~but~~financial ~~are~~condition ~~not~~and ~~limited~~results ~~to,~~of ~~these risk factors are set forth below:~~operations.

·Risks Related ~~operating,~~to ~~legal,~~CIB ~~and~~Marine’s ~~regulatory risks;~~Business

·CIB Marine ~~economic,~~has ~~political,~~a ~~and~~history ~~competitive~~of ~~forces~~unprofitable ~~affecting~~operations, ~~CIB~~which ~~Marine’s~~may ~~banking business;~~continue.

·CIB Marine ~~the~~has ~~impact~~experienced onlosses ~~net~~from ~~interest~~continuing ~~income~~operations ~~from~~since ~~changes~~2003. inGeneral ~~monetary~~economic ~~policy~~conditions continue to be tumultuous and the ~~general~~continued ~~economic~~slow ~~conditions;~~economy reflects a climate of tightened credit. There can be no assurance that CIB Marine will be able to achieve or sustain profitability on a quarterly or annual basis in the future.

·CIBM ~~the~~Bank ~~risk~~and ~~that~~ CIB Marine’s ~~analyses~~are ~~of these risks and forces could be incorrect and/or that the strategies developed~~ subject to ~~address~~formal ~~them~~enforcement ~~could~~actions bewith ~~unsuccessful;~~regulatory ~~and~~authorities.

·CIB ~~other~~Marine ~~factors~~is ~~discussed~~subject to a Written Agreement entered into with the Federal Reserve Bank in ~~this~~the ~~Item~~second 1Aquarter of 2004. The Written Agreement requires CIB Marine, ~~“Risk~~among ~~Factors~~other things,” ~~below~~to obtain Federal Reserve Bank approval before incurring additional borrowings or debt, and ~~elsewhere~~also ~~herein~~requires CIB Marine to maintain a sufficient capital position for the consolidated organization including the current and future capital requirements of CIBM Bank, nonbank subsidiaries and the consolidated organization.

~~These~~Under ~~factors~~applicable ~~should~~laws, bethe ~~considered~~FDIC, inas ~~evaluating~~CIBM Bank’s ~~the~~primary ~~forward-looking~~federal ~~statements~~regulator and deposit insurer, and ~~undue~~the ~~reliance~~IDFPR, ~~should~~as ~~not~~CIBM beBank’s ~~placed~~chartering authority, have the ability to impose additional sanctions, restrictions and requirements on ~~such~~CIBM ~~statements.~~Bank ~~Forward-looking~~if ~~statements~~they ~~speak~~determine, ~~only~~upon asexamination or otherwise, violations of ~~the~~laws ~~date~~with ~~they~~which ~~are~~CIBM ~~made.~~Bank ~~CIB~~must ~~Marine~~comply, ~~undertakes~~or noweaknesses ~~obligation~~or failures with respect to ~~update~~general orstandards ~~revise~~of ~~any~~safety ~~forward-looking~~and soundness. ~~statements~~Applicable law prohibits disclosure of specific examination findings by an institution, ~~whether~~although asformal enforcement actions are routinely disclosed by the regulatory authorities. CIBM Bank is under a ~~result~~Consent Order and certain of ~~new~~its ~~information,~~key ~~future~~provisions include ~~events,~~requirements orto ~~otherwise.~~maintain ~~Forward~~a minimum Tier 1 leverage ratio of 10% and a minimum total risk-~~looking~~based ~~statements~~capital ~~are~~ratio ~~subject~~of to12%; ~~significant~~retain qualified ~~risks~~management; develop a management plan and ~~uncertainties~~implement its recommendations; comply with and ~~CIB~~monitor ~~Marine’s~~the ~~actual~~provisions ~~results~~of ~~may~~the Consent ~~differ~~Order; ~~materially~~and ~~from~~prepare a plan for reducing and managing credit concentration. As of December 31, 2011, CIBM Bank is in general compliance with the ~~results~~Consent ~~discussed~~Order. Failure to adhere to the requirements of the actions mandated by the Consent Order can result in ~~forward-looking~~more ~~statements~~severe restrictions and civil monetary penalties.

~~Risk~~A failure ~~Factors~~by CIB Marine or CIBM Bank to maintain required levels of capital could have a material adverse effect on CIB Marine.

~~The~~Banking ~~following~~regulations ~~discussion~~require ~~sets forth certain risks that~~ CIB Marine to ~~believes~~maintain ~~could~~adequate ~~have~~levels aof ~~material~~capital ~~adverse~~in ~~impact~~order onto ~~its~~serve ~~financial~~as ~~condition~~a ~~and~~source ~~results~~ of ~~operations.~~strength ~~Additional~~to ~~risks~~CIBM ~~that~~Bank, ~~are~~and ~~not~~require ~~currently~~CIBM ~~known~~Bank to ~~CIB~~maintain certain ~~Marine,~~specified orminimum ~~that~~regulatory itcapital ~~currently~~ratios. ~~believes~~At tothe besame ~~immaterial~~time, ~~may~~the ~~also~~banking ~~have~~regulators aare ~~material~~increasingly ~~adverse~~emphasizing ~~effect~~the need onto ~~its~~increase ~~financial~~and ~~condition~~maintain capital levels and ~~results~~ratios well in excess of ~~operations~~regulatory minimums.

~~CIBM~~Among ~~Bank~~other things, continued operating losses due to elevated levels of provisions for loan losses, OREO holding costs and ~~CIB~~OTTI ~~Marine~~write ~~are~~downs ~~subject~~in toits ~~formal~~investment ~~enforcement~~portfolio, put ~~actions~~downward ~~with~~pressure on regulatory ~~authorities~~capital levels and ratios at CIBM Bank.

The principal ways in which CIB Marine could isseek ~~subject~~to improve its capital levels and ratios would be to areturn ~~Written~~its ~~Agreement~~operations ~~entered~~to ~~into~~profitability, ~~with~~raise ~~the~~capital ~~Federal~~from ~~Reserve~~third parties, ~~Bank~~or inreduce the ~~second~~total ~~quarter~~assets of ~~2004~~CIBM Bank. ~~The~~Continuing ~~Written~~problems ~~Agreement~~with ~~requires~~asset quality reduces the likelihood of a return to profitability in the near term, and it is uncertain whether CIB Marine could raise capital from third party sources on acceptable terms, ~~among~~if ~~other~~at ~~things~~all. Finally, tothere ~~obtain~~cannot ~~Federal~~be ~~Reserve~~assurance ~~Bank~~that ~~approval~~reducing ~~before~~the ~~incurring~~total ~~additional~~assets ~~borrowings~~of orCIBM ~~debt,~~Bank ~~and~~could ~~also~~be ~~requires~~accomplished ~~CIB~~sufficiently with ~~Marine~~respect to ~~maintain~~timing aand ~~sufficient~~magnitude ~~capital~~should ~~position~~it ~~for~~become ~~the~~necessary ~~consolidated~~to ~~organization~~do ~~including~~so, ~~the~~or ~~current~~that ~~and~~it ~~future~~would ~~capital~~be ~~requirements~~effective ofin enabling CIBM Bank, ~~nonbank~~and CIB ~~subsidiaries~~Marine ~~and~~to ~~the~~meet ~~consolidated~~minimum ~~organization~~regulatory requirements.

Under applicable laws, the FDIC, as CIBM Bank’s primary federal regulator and deposit insurer, and the IDFPR, as CIBM Bank’s chartering authority, have the ability to impose additional sanctions, restrictions and requirements on CIBM Bank if they determine, upon examination or otherwise, violations of laws with which CIBM Bank must comply, or weaknesses or failures with respect to general standards of safety and soundness. Applicable law prohibits disclosure of specific examination findings by an institution, although formal enforcement actions are routinely disclosed by the regulatory authorities. CIBM Bank is under a Consent Order and certain of its key provisions include requirements to maintain a minimum Tier 1 leverage ratio of 10% and a minimum total risk-based capital ratio of 12%; retain qualified management; develop a management plan and implement its recommendations; comply with and monitor the provisions of the Consent Order; and prepare a plan for reducing and managing credit concentration. As of December 31, 2010, CIBM Bank is in substantial compliance with the Consent Order. Failure to adhere to the requirements of the actions mandated by the Consent Order can result in more severe restrictions and civil monetary penalties.14

AAt ~~failure~~December by31, 2011, CIB Marine orhad ~~CIBM~~total stockholders' ~~Bank~~equity of $64.2 million, of which $60.0 million was represented by the aggregate liquidation preference of its outstanding preferred stock. Any change in CIB Marine's ability to ~~maintain~~fully ~~required~~count ~~levels~~the liquidation preference of its outstanding preferred stock in deriving its regulatory capital measures could ~~have~~reduce aor ~~material~~eliminate ~~adverse~~a ~~effect~~substantial onportion of CIB Marine's capital and cause CIB Marine to become undercapitalized.

~~Banking~~Failure ~~regulations require CIB Marine~~ to maintain ~~adequate~~requisite ~~levels of~~ capital inlevels and ~~order~~ratios tocould ~~serve~~result asin athe ~~source~~imposition of ~~strength~~directives ~~to CIBM Bank,~~ and ~~require~~other ~~CIBM~~sanctions ~~Bank~~against toCIB ~~maintain~~Marine ~~certain~~or ~~specified~~CIBM ~~minimum regulatory capital ratios. At the same time~~Bank, ~~the~~and ~~banking~~could ~~regulators~~have ~~are~~a ~~increasingly~~material adverse ~~emphasizing~~effect ~~the~~on ~~need~~CIB toMarine's ~~increase~~financial ~~and~~condition ~~maintain capital levels~~ and ~~ratios well in excess of regulatory minimums~~prospects.

16CIB Marine and CIBM Bank operate in a highly regulated environment and are subject to supervision and examination by various federal and state regulatory agencies which could impair its capital ratios and results of operations.

~~Among~~As ~~other~~a ~~things~~bank holding company, ~~continued~~CIB ~~operating~~Marine ~~losses~~is regulated ~~due~~by tothe ~~elevated~~FRB, ~~levels~~and ofCIBM ~~provisions~~Bank ~~for~~is ~~loan~~regulated ~~losses~~separately by the FDIC and ~~OTTI~~the ~~write~~IDFPR. ~~downs~~This inregulation ~~its~~is ~~investment~~primarily ~~portfolio~~intended to protect CIBM Bank’s customers and their deposits rather than CIB Marine’s stockholders. In addition, ~~put~~CIB ~~downward~~Marine’s common ~~pressure~~stock onis ~~regulatory~~registered ~~capital~~under ~~levels~~the Exchange Act and ~~ratios~~it atis ~~CIBM~~subject ~~Bank~~to regulation by the SEC and public reporting requirements.

~~The~~In ~~principal~~addition, ~~ways~~banking inregulators can take actions at any time which could have an adverse impact on CIB Marine. ~~could~~These ~~seek~~actions tocould ~~improve~~include ~~its~~raising minimum capital ~~levels~~amounts, restricting ~~and~~growth ~~ratios~~or ~~would~~other beactions. toContinued ~~return~~losses ~~its~~at ~~operations~~CIBM Bank may require CIB Marine to ~~profitability,~~provide ~~raise~~additional capital. ~~from~~CIB ~~third~~Marine’s capability ~~parties,~~to orprovide ~~reduce~~this ~~the~~capital ~~size~~is ofdependent on the ~~Bank.~~parent ~~Continuing~~company ~~problems~~and ~~with~~its ~~asset~~nonbank ~~quality~~subsidiaries’ ~~reduces~~cash resources and other assets. At December 31, 2011, the ~~likelihood~~parent ofcompany ahad ~~return~~$2.9 tomillion ~~profitability~~of incash ~~the~~and ~~near~~cash ~~term~~equivalents. Additionally, its nonbank subsidiaries have cash and itloans isheld ~~uncertain~~for ~~whether~~sale ~~CIB~~in ~~Marine~~the ~~could~~amount ~~raise~~of ~~capital~~$7.7 ~~from~~million ~~third~~to ~~party~~serve ~~sources~~as ona ~~acceptable~~potential ~~terms,~~source ifof atstrength ~~all~~to CIBM Bank. ~~Finally~~Other capital management strategies such as balance sheet management, ~~there~~investment ~~cannot~~portfolio beand ~~assurance~~loan ~~that~~sales, ~~reducing~~and ~~the~~sales ~~size~~of parts of ~~the~~its banking ~~Bank~~franchise ~~could~~can still be ~~accomplished~~employed ~~sufficiently~~by ~~with~~CIB ~~respect~~Marine and CIBM Bank to ~~timing~~enhance ~~and~~CIBM ~~magnitude~~Bank’s ~~should~~capital itratios ~~become~~if ~~necessary~~required. toDepending on dothe ~~so,~~extent orof ~~that~~continuing itlosses ~~would~~at beCIBM ~~effective~~Bank, inthe ~~enabling~~capital ratios of CIBM Bank ~~and~~may ~~CIB~~fall ~~Marine~~below tothe ~~meet~~amounts ~~minimum~~set ~~regulatory~~forth ~~requirements~~in the Consent Order.

AtBanking ~~December~~regulations affect 31lending practices, ~~2010~~capital structure, ~~CIB~~investment ~~Marine~~practices, ~~had~~dividend ~~total~~policy, ~~stockholders'~~and ~~equity~~growth, ofamong ~~$68~~other things.8 ~~million~~Congress and federal regulatory agencies continually review banking laws, ofregulations, ~~which~~and ~~$60~~policies for possible changes.0 ~~million~~Changes ~~was~~to ~~represented~~statutes, regulations, byor ~~the~~regulatory ~~aggregate~~policies, ~~liquidation~~including ~~preference~~changes in interpretation or implementation of ~~the~~statutes, ~~Company's~~regulations, ~~outstanding~~or ~~preferred~~policies, could ~~stock.~~affect ~~Any~~CIB ~~change~~Marine in substantial and unpredictable ways. Such changes could subject CIB Marine's ~~ability~~ to ~~fully~~additional ~~count~~costs, and limit the ~~liquidation~~types ~~preference~~ of ~~its~~financial ~~outstanding~~services ~~preferred~~and ~~stock~~products init ~~deriving~~may ~~its~~offer. ~~regulatory~~Failure ~~capital~~to ~~measures~~comply with laws, regulations, or policies could ~~reduce~~result in sanctions by regulatory agencies, civil money penalties, and/or ~~eliminate~~reputation damage, which could have a ~~substantial~~material ~~portion~~adverse ofeffect on CIB Marine'’s ~~capital~~business, financial condition, and ~~cause~~results ~~CIB~~of ~~Marine~~operations. While policies and procedures designed to ~~become~~prevent any ~~undercapitalized~~such violations are in place, there can be no assurance that such violations will not occur.

~~Failure~~The toDodd-Frank ~~maintain~~Act ~~requisite capital levels~~ and ~~ratios~~related ~~could~~regulations may ~~result~~affect ~~in the imposition of directives and other sanctions against~~ CIB Marine’s orand CIBM Bank,’s ~~and~~business ~~could~~activities, ~~have a material adverse effect on CIB Marine's~~ financial ~~condition~~position and ~~prospects~~profitability.

~~CIB~~The ~~Marine~~Dodd-Frank ~~and~~Act ~~CIBM~~made ~~Bank~~extensive ~~operate~~changes to inthe alaws ~~highly~~regulating ~~regulated~~financial ~~environment~~services firms and ~~are~~requires ~~subject~~significant torulemaking. ~~supervision~~In ~~and~~addition, ~~examination~~the bylegislation ~~various~~mandates ~~federal~~multiple studies, ~~and~~which ~~state~~could result in additional legislative or regulatory action. The legislation charged the federal banking agencies, including ~~which~~the ~~could~~FRB ~~impair~~and ~~its~~the FDIC, with drafting and implementing enhanced supervision, examination and capital ~~ratios~~standards for depository institutions and ~~results~~their ofholding ~~operations~~companies.

AsFuture achanges ~~bank~~resulting ~~holding~~from ~~company~~the Dodd-Frank Act, ~~CIB~~as ~~Marine~~well isas ~~regulated~~the regulations promulgated by ~~the~~federal ~~FRB~~agencies, may impact the profitability of CIB Marine’s and CIBM Bank’s business isactivities, ~~regulated~~may ~~separately~~require bychanges ~~the~~to ~~FDIC~~certain ~~and~~of ~~the~~their ~~IDFPR~~business practices or otherwise adversely affect their businesses. These ~~This~~changes ~~regulation~~may isalso ~~primarily~~require ~~intended~~CIB toMarine ~~protect~~and CIBM Bank’s ~~customers~~to ~~and~~invest ~~their~~significant ~~deposits~~management ~~rather~~attention ~~than~~and ~~CIB~~resources ~~Marine’s~~to ~~shareholders~~evaluate and make necessary changes. InWhile ~~addition,~~it ~~CIB~~is ~~Marine’s~~unclear ~~common~~as ~~stock~~to isthe ~~registered~~ultimate ~~under~~effect of the ~~Exchange~~Dodd-Frank Act, and other regulatory changes that will impact CIB Marine or CIBM Bank at this time, it is ~~subject~~expected tothat ~~regulation~~compliance bycosts ~~the~~will ~~SEC~~increase ~~and~~as ~~public~~a ~~reporting~~result ~~requirements~~of the legislation.

In addition, banking regulators can take actions at any time which could have an adverse impact on CIB Marine. These actions could include raising minimum capital amounts, restricting growth or other actions. Continued losses at CIBM Bank may require CIB Marine to provide additional capital. CIB Marine’s capability to provide this capital is dependent on the parent company and its nonbank subsidiaries’ cash resources and other assets. During 2010, CIB Marine contributed $5.3 million of capital to CIBM Bank. At December 31, 2010, the parent company had $3.6 million of cash and cash equivalents. Additionally, its nonbank subsidiaries have cash and loans held for sale in the amount of $6.8 million to serve as a potential source of strength to CIBM Bank. Other capital management strategies such as balance sheet management, investment portfolio and loan sales, and sales of parts of its banking franchise can still be employed by CIB Marine and CIBM Bank to enhance CIBM Bank’s capital ratios. Depending on the extent of continuing losses at CIBM Bank, the capital ratios of the Bank may fall below the amounts set forth in the Consent Order.15

~~Banking~~Among ~~regulations~~other ~~affect lending practices~~things, ~~capital~~the ~~structure,~~Dodd-Frank ~~investment~~Act requires ~~practices,~~various ~~dividend policy, and growth, among other things. Congress and~~ federal ~~regulatory~~ agencies ~~continually~~to ~~review~~adopt new banking ~~laws,~~ regulations, ~~and~~regarding ~~policies~~the ~~for~~establishment ~~possible~~of ~~changes.~~minimum ~~Changes~~leverage toand ~~statutes,~~risk-based capital ~~regulations,~~requirements orfor ~~regulatory~~bank ~~policies,~~holding ~~including~~companies ~~changes~~and inbanks. ~~interpretation~~These ~~or implementation of statutes,~~ regulations, orwhich ~~policies,~~are ~~could~~required ~~affect~~to usbe ineffective ~~substantial~~within ~~and~~18 ~~unpredictable~~months from ~~ways.~~the ~~Such~~enactment ~~changes~~of ~~could~~the ~~subject~~Dodd-Frank ~~us to additional costs~~Act, ~~and~~are ~~limit~~required ~~the~~to ~~types~~be ofno ~~financial~~less ~~services~~stringent ~~and~~than ~~products~~current wecapital ~~may~~requirements ~~offer.~~applied ~~Failure~~ to ~~comply~~insured depository ~~with~~institutions ~~laws,~~and ~~regulations~~may, orin ~~policies~~fact, ~~could~~be ~~result~~higher inwhen ~~sanctions~~established by ~~regulatory~~the agencies,. ~~civil~~The ~~money~~Dodd-Frank ~~penalties,~~Act ~~and/or~~also ~~reputation~~requires ~~damage,~~the ~~which~~regulatory agencies ~~could~~to ~~have~~seek ato ~~material~~make ~~adverse~~capital ~~effect~~requirements onfor ~~the~~bank ~~Company’s~~holding ~~business,~~companies ~~financial condition,~~ and ~~results~~insured ofinstitutions ~~operations.~~countercyclical, ~~While~~so ~~policies~~that ~~and~~capital requirements ~~procedures~~increase ~~designed~~in totimes ~~prevent~~of ~~any~~economic ~~such~~expansion ~~violations~~and ~~are~~decrease in ~~place,~~times ~~there~~of ~~can~~economic ~~be no assurance that such violations will not occur~~contraction.

17Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies, the full extent of the impact that its requirements will have on CIB Marine’s and CIBM Bank’s operations is unclear. However, its requirements may, individually or in the aggregate, have an adverse effect upon CIB Marine’s and CIBM Bank’s results of operations, cash flows and financial position.

~~The~~International ~~Dodd-Frank~~initiatives, ~~Act~~along with U.S. legislative and ~~related~~regulatory regulations ~~may~~regarding ~~affect~~bank ~~CIB~~capital ~~Marine’s~~requirements, ~~and~~may ~~CIBM~~require ~~Bank’s~~heightened ~~business~~capital ~~activities,~~levels ~~financial~~particularly with ~~position~~respect ~~and~~to ~~profitability~~common equity.

~~The~~In ~~Dodd-Frank~~December ~~Act,~~2010 ~~signed~~and ~~into~~January ~~law on July 21~~2011, ~~2010,~~the Basel ~~made~~Committee ~~extensive~~published ~~changes~~final totexts of the ~~laws~~reforms ~~regulating~~on ~~financial~~capital ~~services~~and ~~firms~~liquidity ~~and~~generally ~~requires~~referred ~~significant~~to ~~rulemaking.~~as In“Basel ~~addition~~III,” which ~~the~~contemplate ~~legislation~~changes ~~mandates~~to ~~multiple~~minimum ~~studies~~capital ratios, ~~which~~including ~~could~~heightened ~~result~~requirements inregarding ~~additional~~Tier ~~legislative~~1 orcommon ~~regulatory~~equity, ~~action.~~and ~~The~~alterations to ~~legislation~~bank ~~charged~~liquidity ~~the~~standards. The U.S. federal banking agencies, ~~including~~generally ~~the~~expressed ~~FRB~~support ~~and~~for the ~~FDIC,~~agreements ~~with~~set ~~drafting~~forth ~~and~~in ~~implementing~~Basel III. ~~enhanced~~Implementation ~~supervision,~~of ~~examination~~any ~~and~~final ~~capital~~provisions ~~standards~~of ~~for~~Basel ~~depository~~III ~~institutions~~in ~~and~~the ~~their holding companies~~U.S. ~~The~~will ~~Dodd-Frank~~require ~~Act~~implementing ~~also~~regulations ~~authorized~~and ~~various~~guidelines ~~new~~by ~~assessments~~U.S. banking ~~and fees~~regulators, ~~expanded~~which ~~supervision~~may ~~and~~differ ~~oversight~~in ~~authority~~significant ~~over~~ways ~~nonbank~~from ~~subsidiaries,~~the ~~increased~~recommendations ~~standards~~published ~~for~~by ~~certain~~the ~~covered~~Basel ~~transactions~~Committee. ~~with~~It ~~affiliates~~is ~~and~~unclear how ~~requires~~U.S. ~~the~~banking ~~establishment~~regulators ofwill ~~minimum~~define ~~leverage~~“well ~~and~~capitalized” ~~risk-based~~in ~~capital~~their ~~requirements~~implementation ~~for~~of ~~insured depository~~Basel ~~institutions~~III.

~~The~~CIB ~~changes~~Marine ~~resulting~~is ~~from~~not able to predict at this time the ~~Dodd-Frank~~content ~~Act,~~of ascapital ~~well~~and asliquidity ~~the~~guidelines or regulations ~~promulgated~~that may be adopted by ~~federal~~regulatory agencies, ~~may~~having ~~impact~~authority over the ~~profitability~~holding ofcompany ~~CIB~~or ~~Marine’s and~~ CIBM Bank’s ~~business~~or ~~activities,~~the ~~may~~impact ~~require~~that any changes toin ~~certain~~regulation ofwould ~~their~~have. ~~business~~Proposed ~~practices~~new orstandards ~~otherwise~~may ~~adversely~~require community ~~affect~~banks ~~their~~such ~~businesses.~~as ~~These~~CIBM ~~changes~~Bank ~~may~~or ~~also require~~ CIB Marine ~~and~~to ~~CIBM~~maintain ~~Bank~~more tocapital, ~~invest~~with ~~significant~~common ~~management~~equity ~~attention~~as a more predominant component, or manage the configuration of assets and ~~resources~~liabilities in order to ~~evaluate~~comply ~~and~~with ~~make~~formulaic ~~necessary~~liquidity ~~changes~~requirements. ~~While~~Banks itwith issignificant credit ~~unclear~~concentrations asincluding, but not limited to, ~~the~~commercial ~~ultimate~~real ~~effect~~estate ofloans should expect to maintain capital ratios above the ~~Dodd~~phased-~~Frank~~in ~~Act,~~minimum ~~and~~requirements. ~~other~~Implementation ~~regulatory~~of ~~changes~~Basel ~~that~~III for U.S. banks will ~~impact~~depend ~~CIB~~on ~~Marine~~the orfederal ~~CIBM~~banking ~~Bank~~agencies atand the ~~this~~issuance ~~time,~~of itsuch isregulations ~~expected~~could ~~that~~significantly ~~compliance~~impact ~~costs~~CIB ~~will~~Marine’s ~~increase~~and asCIBM aBank’s ~~result~~financial condition, results of ~~the~~operations, ~~legislation~~and capital position.

~~Among~~CIB ~~other~~Marine ~~things,~~is ~~the~~subject ~~Dodd-Frank Act requires various federal agencies~~ to ~~adopt~~credit ~~new banking regulations regarding the establishment of minimum leverage and~~ risk~~-based capital requirements for bank holding companies and banks~~. These regulations, which are required to be effective within 18 months from the enactment of the Dodd-Frank Act, are required to be no less stringent than current capital requirements applied to insured depository institutions and may, in fact, be higher when established by the agencies. The Dodd-Frank Act also requires the regulatory agencies to seek to make capital requirements for bank holding companies and insured institutions countercyclical, so that capital requirements increase in times of economic expansion and decrease in times of economic contraction.

~~Given~~CIB ~~the~~Marine ~~uncertainty~~is ~~associated~~exposed ~~with~~to the ~~manner~~risk inthat third ~~which~~parties ~~the~~that ~~provisions~~owe ofit ~~the~~money, ~~Dodd-Frank Act will be implemented by the various regulatory agencies~~securities, ~~the~~or ~~full~~other ~~extent~~assets ofwill ~~the~~not ~~impact~~repay ~~that~~their ~~its~~obligations. ~~requirements~~Credit ~~will~~risk ~~have~~arises onanytime ~~CIB~~CIBM Bank ~~Marine’s~~commits, ~~and~~invests ~~CIBM~~or ~~Bank’s~~otherwise ~~operations~~extends isfunds ~~unclear.~~through ~~However~~contractual agreements, ~~its~~whether ~~requirements~~reflected ~~may,~~on ~~individually~~ or inoff the ~~aggregate,~~balance ~~have~~sheet. These anparties ~~adverse~~may ~~effect~~default ~~upon~~on ~~CIB~~their ~~Marine’s~~obligations ~~and~~due ~~CIBM~~to ~~Bank’s~~bankruptcy, ~~results~~lack of ~~operations~~liquidity, ~~cash~~operational ~~flows~~failure ~~and~~or ~~financial~~other ~~position~~reasons.

~~International~~CIB ~~initiatives,~~Marine’s ~~along~~credit ~~with~~risk Uis concentrated in CIBM Bank’s loan portfolio.S. ~~legislative~~Credit risk is affected by a variety of factors including credit-worthiness of the borrower, the sufficiency of underlying collateral, the enforceability of third-party guarantees, changing economic and ~~regulatory~~industry ~~regulations~~conditions and ~~regarding~~concentrations ~~bank~~of ~~capital~~credit ~~requirements~~by loan type, ~~may~~terms ~~require~~or ~~heightened~~geographic ~~capital~~area, ~~levels~~changes ~~particularly~~in ~~with~~the ~~respect~~financial tocondition ~~common~~of ~~equity~~the borrower or other party, and by credit and underwriting policies.

InCIBM ~~December~~Bank ~~2009,~~has ~~the~~established ~~Basel~~an ~~Committee~~allowance for onloan ~~Banking~~losses ~~Supervision~~which ~~released~~represents ~~two~~management’s ~~consultative~~estimate ~~documents~~of ~~proposing~~probable ~~significant~~incurred ~~changes~~losses toin ~~bank~~its ~~capital,~~loan ~~leverage and liquidity requirements, commonly referred to as “Basel III~~portfolio.” InThe ~~July~~determination of ~~2010,~~ the ~~Basel~~appropriate ~~Committee~~level ~~issued~~of ~~agreements~~the ~~that~~allowance ~~contemplate~~involves ~~changes~~a tohigh ~~minimum~~degree ~~capital~~of ~~ratios,~~subjectivity. ~~including~~If ~~heightened~~CIBM ~~requirements~~Bank’s ~~regarding~~assumptions ~~Tier~~and 1judgments are ~~common equity~~incorrect, ~~and~~its ~~alterations~~allowance tomay ~~bank~~not ~~liquidity~~be ~~standards.~~sufficient ~~The~~and ~~U.S.~~additional ~~federal~~provisions ~~banking~~may ~~agencies~~need ~~expressed~~to ~~support~~be ~~for the agreements set forth in the announcement~~ made ~~in September 2010~~. OnIn ~~September 12~~addition, ~~2010,~~bank ~~the~~regulatory agencies ~~oversight~~periodically ~~body~~review of the ~~Basel~~adequacy ~~Committee announced a package~~ of ~~reforms which would substantially increase existing capital requirements over~~ the ~~next~~allowance ~~four~~and ~~years.~~may ~~Implementation~~require ofan ~~any~~increase ~~final provisions of Basel III~~ in the Uallowance.~~S. will~~ ~~require~~Increases ~~implementing regulations and guidelines by U.S. banking regulators, which may differ~~ in ~~significant ways from~~ the ~~recommendations~~allowance or ~~published~~charge-offs bycould ~~the~~have ~~Basel~~a ~~Committee.~~material Itadverse iseffect ~~unclear~~on ~~how~~CIB ~~U.S.~~Marine’s ~~banking~~financial ~~regulators~~condition ~~will~~and ~~define~~results ~~“well capitalized” in their implementation~~ of ~~Basel III~~operations.

CIB Marine is not able to predict at this time the content of capital and liquidity guidelines or regulations that may be adopted by regulatory agencies having authority over the holding company or CIBM Bank or the impact that any changes in regulation would have. Proposed new standards may require community banks such as CIBM Bank or CIB Marine to maintain more capital, with common equity as a more predominant component, or manage the configuration of assets and liabilities in order to comply with formulaic liquidity requirements. Banks with significant credit concentrations including, but not limited to, commercial real estate loans should expect to maintain capital ratios above the phased-in minimum requirements. Implementation of Basel III for U.S. banks will depend on the federal banking agencies, which are expected to issue a notice of proposed rulemaking in 2011. Such regulation could significantly impact CIB Marine’s and CIBM Bank’s financial condition, results of operations, and capital position.16

18Various factors may cause CIBM Bank’s allowance for loan losses to increase.

Management evaluates the allowance for loan losses each quarter to determine that it is adequate to absorb probable incurred losses in CIBM Bank’s loan portfolio. This evaluation is supported by a methodology that identifies estimated losses based on assessments of individual problem loans and historical loss patterns of homogeneous loan pools. In addition, environmental factors unique to each measurement date are also considered, including economic conditions in certain geographic or industry segments of the loan portfolio, economic trends, risk profile and portfolio composition. The determination of the appropriate level of the allowance for loan losses is highly subjective and requires management to make significant estimates of current credit risks and future trends, all of which may undergo material changes. If actual losses exceed the estimate, the excess losses could adversely affect CIB Marine’s profitability and capital. Such excess losses may ~~not~~require bean ~~able~~increase in the allowance for loan losses. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, many of which are outside of CIB Marine’s control, may also require an increase in the allowance for loan losses. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the adequacy of the allowance for loan losses. These agencies may require CIBM Bank to ~~consummate~~establish aadditional ~~business~~allowances ~~combination~~for ~~transaction~~loan ~~with~~losses abased ~~strategic~~on ~~partner~~their ~~within~~judgment of the information available at the time of their examinations. Any increase in the allowance for loan losses will result in a ~~reasonable~~decrease ~~timeframe~~in net income and capital, and would have a material adverse effect on CIB Marine’s financial condition and results of operations. CIBM Bank cannot provide any assurances that it will not sustain losses in excess of its allowance for loan losses or atthat ~~all~~it will not be required to increase such allowance.

~~Pursuant~~CIBM toBank’s ~~its~~loan ~~future~~portfolio ~~plans,~~contains concentrations ~~CIB~~of Marine intends to search for a strategic business combination partner at such time that market conditions and asset quality improves sufficiently. There can be no assurance that CIB Marine will be successful in consummating any such business combination on reasonable terms within a reasonable timeframecredit, orparticularly atcommercial ~~all.~~real Ifestate ~~asset~~which ~~quality~~creates ~~deteriorates~~special ~~further~~credit or significant operating losses continue into the future and if CIB Marine is unsuccessful in consummating such a business combination transaction within a reasonable timeframe, it may be unable to serve as a source of strength for CIBM Bankrisks.

~~Conversion~~Credit risk at CIBM Bank is primarily related to the risk that borrowers will not be able to repay some or all of ~~Series~~their Bobligations ~~Preferred~~to ~~into~~CIBM ~~common~~Bank. ~~stock~~Concentrations of credit risk occur when the aggregate amount owed by one borrower, a group of related borrowers, or borrowers within the same or related industries or groups represent a relatively large percentage of the total capital or total credit extended by a bank. Although each loan in a concentration may be of sound quality, concentration risks represent a risk not present when the same loan amounts are extended to borrowers that are not a part of a concentration. Loans concentrated in one borrower depend, to a large degree, upon ~~consummation~~the financial capability and character of the individual borrower. Loans made to a ~~merger~~group ~~transaction~~of related borrowers can be susceptible to financial problems experienced by one or a few members of that group. Loans made to borrowers that are part of the same or related industries or groups can be all adversely impacted with respect to their ability to repay some or all their obligations when adverse conditions prevail in the broader economy or even within just the respective industries or groups. Commercial credits are larger dollar loans than consumer loans. An increase in nonaccrual loans could result in ~~significant~~a ~~reduction~~loss of interest income from these loans, an increase in the ~~purchase~~provision ~~price~~for ~~allocated~~loan tolosses, ~~its~~and ~~current~~an ~~common~~increase ~~shareholders~~in loan charge-offs, all of which could have a material adverse effect on the financial condition and results of operations of CIB Marine.

~~Each~~The ~~share~~purchased ofhome ~~Series~~equity Bloan ~~Preferred~~pools creates isspecial ~~convertible~~risks ~~into~~which ~~4,000~~may ~~shares~~cause ofcharge-offs ~~CIB~~and ~~Marine common stock upon~~ the ~~consummation~~allowance offor aloan ~~merger~~losses ~~transaction where CIB Marine is not the surviving entity. If all Series B Preferred shareholders were~~ to convert their shares in connection with a merger, they would own 49% of the outstanding common stock and have a right to participate at that level in any merger consideration paid to acquire CIB Marine, which would result in a significantly lower merger price being allocated to current CIB Marine common shareholders than if such Series B Preferred were not convertedincrease.

~~CIB~~The ~~Marine~~determination of the level of the allowance for loan losses for the purchased home equity loan pools is ~~subject~~based on various factors including, but not limited to, historical charge-off for the pool of loans, the level of current delinquencies in the portfolio and their corresponding loss estimates, the qualitative factors regarding credit ~~risk~~risks, expected future pay downs and prepayments, and environmental factors. An estimate of losses within the home equity loan pools is included in the allowance for loan losses and monitored monthly to help ensure that the actual charge-offs are tracking against loss expectations. If necessary, and as with other loan assets, adjustments are made to the allowance for loan loss to account for further deterioration in credit quality. There can be no assurance that future losses will match the loss expectations, which could result in increased levels of loan loss provisions and charge-offs, negatively impacting the consolidated results of operations.

CIB Marine is exposed to the risk that third parties that owe the Company money, securities, or other assets will not repay their obligations. Credit risk arises anytime CIBM Bank commits, invests or otherwise extends funds through contractual agreements, whether reflected on or off the balance sheet. These parties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons.17

CIB Marine’s ~~credit~~depends ~~risk~~on ~~is concentrated in CIBM Bank’s loan portfolio. Credit risk is affected by a variety of factors including credit-worthiness of~~ the ~~borrower,~~accuracy ~~the sufficiency of underlying collateral, the enforceability of third-party guarantees, changing economic~~ and completeness ~~industry conditions and concentrations~~ of ~~credit~~information byabout ~~loan~~customers ~~type, terms or geographic area, changes in the financial condition of the borrower or other party,~~ and ~~by credit and underwriting policies~~counterparties.

~~CIBM~~In ~~Bank~~deciding ~~has~~whether ~~established~~to anextend ~~allowance~~credit ~~for~~or enter ~~loan~~into ~~losses~~other ~~which~~transactions, ~~represents~~CIBM ~~management’s~~Bank ~~estimate~~may ofrely ~~probable~~on ~~losses~~information ~~inherent~~furnished inby ~~its~~or ~~loan~~on ~~portfolio.~~behalf ~~The determination~~ of ~~the~~customers ~~appropriate~~and ~~level~~counterparties, ofincluding financial ~~the~~statements, ~~allowance~~credit ~~involves~~reports, aappraisals, ~~high~~and ~~degree~~other offinancial ~~subjectivity~~information. IfReliance ~~CIBM~~on ~~Bank’s~~inaccurate ~~assumptions~~or ~~and~~misleading ~~judgments~~financial statements, ~~are~~credit ~~incorrect~~reports, ~~its~~appraisals, ~~allowance~~or ~~may~~other ~~not~~financial beinformation ~~sufficient~~could ~~and~~cause ~~additional~~CIBM ~~provisions~~Bank ~~may need~~ to beenter ~~made.~~into Inunfavorable ~~addition~~transactions, which ~~bank regulatory agencies periodically review the adequacy of the allowance and may require an increase in the allowance. Increases in the allowance or charge-offs~~ could have a material adverse effect on ~~CIB~~the ~~Marine’s~~ financial condition and results of operations of CIB Marine.

~~Various~~CIB ~~factors~~Marine ~~may~~has ~~cause~~been ~~CIBM~~and ~~Bank~~could continue to be negatively affected by adverse economic conditions. The downgrade of the United States’ credit rating by Standard & Poor’s ~~allowance~~(“S&P”) ~~for~~and ~~loan~~the ~~losses~~possible todowngrade ~~increase~~by other rating agencies could have a material adverse effect on our business, financial condition, and results of operations.

~~Management~~The ~~evaluates~~United ~~the~~States ~~allowance~~and ~~for~~many ~~loan~~other ~~losses~~countries recently ~~each~~faced ~~quarter~~a tosevere ~~determine~~economic ~~that~~crisis, itincluding isa ~~adequate~~major torecession. ~~absorb~~These ~~inherent~~adverse ~~losses~~economic inconditions ~~CIBM~~have ~~Bank’s~~negatively ~~loan~~affected, and ~~portfolio.~~are ~~This~~likely ~~evaluation~~to iscontinue ~~supported~~for bysome atime ~~methodology~~to ~~that~~adversely ~~identifies~~affect, ~~estimated~~CIB ~~losses~~Marine’s ~~based~~assets, onincluding ~~assessments~~the ofmarket ~~individual~~value ~~problem~~of loans and securities ~~historical~~portfolios, ~~loss~~capital ~~patterns~~levels, results of ~~homogeneous~~operations, ~~loan~~and ~~pools~~financial condition. In ~~addition,~~response ~~environmental factors unique~~ to ~~each~~the ~~measurement~~economic ~~date are also considered~~crisis, ~~including~~the United ~~economic~~States ~~conditions~~and inother ~~certain~~governments ~~geographic~~established ora ~~industry~~variety ~~segments~~ of ~~the~~programs ~~loan portfolio, economic trends, risk profile~~ and ~~portfolio~~policies ~~composition.~~designed ~~The~~to ~~determination~~mitigate of the ~~appropriate~~effects ~~level~~ of the ~~allowance~~crisis. If ~~for~~these ~~loan~~programs ~~losses~~and ispolicies ~~highly~~are ~~subjective~~ineffective ~~and~~in ~~requires~~bringing ~~management~~about toa ~~make~~robust ~~significant~~economic ~~estimates~~recovery ofor ~~current~~result ~~credit~~in ~~risks~~substantial ~~and~~adverse ~~future trends~~developments, the ~~all~~economic ofconditions ~~which~~ may ~~undergo~~again ~~material~~become ~~changes.~~more ~~If actual~~severe, ~~losses~~or ~~exceed~~adverse ~~the~~economic ~~estimate,~~conditions ~~the~~may ~~excess~~continue ~~losses~~for ~~could~~a ~~adversely~~substantial ~~affect~~period ~~CIB~~of ~~Marine’s~~time. In ~~profitability~~addition, ~~and~~economic ~~capital.~~uncertainty ~~Such~~that ~~excess~~may ~~losses~~result ~~may~~from ~~require~~statements anby ~~increase~~rating inagencies regarding the ~~allowance~~downgrade ~~for~~of ~~loan losses~~U.S. ~~Changes~~sovereign debt inby ~~economic conditions affecting borrowers~~S&P, ~~new~~and ~~information~~fiscal ~~regarding~~imbalances ~~existing~~in ~~loans~~federal, ~~identification~~state, ~~of additional problem loans~~ and ~~other~~local ~~factors,~~municipal ~~many~~finances ofcombined ~~which~~with ~~are~~political ~~outside~~difficulties ofin resolving ~~CIB~~these ~~Marine’s control~~imbalances, may ~~also~~directly ~~require~~or anindirectly ~~increase~~adversely inimpact ~~the~~economic ~~allowance~~conditions ~~for~~faced ~~loan~~by ~~losses.~~CIB InMarine ~~addition,~~and ~~various~~its ~~regulatory~~customers. Any ~~agencies,~~credit asdowngrade an(whether ~~integral~~by ~~part~~S&P, ofMoody’s, ~~their~~or ~~examination process~~Fitch), ~~periodically~~and ~~review~~ the ~~adequacy~~attendant ofperceived risk that the ~~allowance~~United ~~for~~States ~~loan~~may not ~~losses.~~pay ~~These~~its ~~agencies~~debt ~~may~~obligations ~~require~~when ~~CIBM~~due, ~~Bank~~could tohave ~~establish~~a ~~additional~~material ~~allowances~~adverse ~~for~~effect ~~loan~~on ~~losses~~financial ~~based~~markets onand ~~their~~economic ~~judgment~~conditions ofin the United ~~information~~States ~~available~~and atthroughout the ~~time~~world. ofIn ~~their~~turn, ~~examinations.~~this ~~Any~~could ~~increase~~have ina ~~the~~material ~~allowance~~adverse ~~for~~effect ~~loan~~on ~~losses~~CIB ~~will~~Marine’s ~~result~~business, infinancial condition, aand ~~decrease~~results inof ~~net~~operations. ~~income~~In ~~and capital~~particular, ~~and~~these ~~would~~events could have a material adverse effect on the value and liquidity of CIB Marine’s financial ~~condition~~assets. ~~and results~~CIB ofMarine ~~operations.~~cannot ~~CIBM~~predict ~~Bank~~if, ~~cannot~~when ~~provide~~or ~~any~~how ~~assurances~~these ~~that~~changes itto the credit ratings will ~~not~~affect economic ~~sustain~~conditions. ~~losses~~As ina ~~excess~~result, ofit ~~its~~is ~~allowance~~possible ~~for~~that ~~loan~~these ~~losses~~changes orcould ~~that~~result itin ~~will~~a ~~not~~significant beadverse ~~required~~impact to ~~increase~~us, ~~such~~and ~~allowance~~could affect other risks to which we are subject.

19CIB Marine may be further adversely affected by current economic and market conditions, particularly in the states within which business is conducted.

~~CIBM~~Over ~~Bank’s~~the ~~loan~~past ~~portfolio~~years, ~~contains~~the ~~concentrations~~national and global economic downturn has resulted in significant financial market disruptions which depressed the overall market value of ~~credit~~financial institutions, limited access to capital, or had a material adverse effect on the financial condition or results of operations of banking companies in general, and CIB Marine and CIBM Bank in particular. CIB Marine has been particularly exposed to downturns in the U.S. housing and commercial real estate ~~which~~markets. ~~creates~~Dramatic ~~special~~declines in the housing market over the past years, with falling home prices and increasing foreclosures, unemployment and under-employment, have negatively impacted the credit ~~risks~~performance of mortgage loans and resulted in significant write downs of asset values by financial institutions. The resulting economic pressure on consumers and lack of confidence in the financial markets has adversely affected CIB Marine’s business, financial condition and results of operations. CIB Marine cannot be certain that the difficult conditions in the financial markets are likely to experience sustainable improvement in the near future. A worsening or prolonging of these conditions would likely exacerbate the adverse effects of these difficult market conditions on CIB Marine and others in the financial institutions industry.

~~Credit~~Local ~~risk~~economic atconditions ~~CIBM~~have ~~Bank~~a issignificant impact ~~primarily~~on ~~related to~~ the ~~risk~~demand ~~that~~for ~~borrowers will not be able to repay some or all of their obligations to~~ CIBM Bank.’s ~~Concentrations~~products ofand ~~credit risk occur when the aggregate amount owed by one borrower~~services, aas ~~group~~well ofas ~~related borrowers, or borrowers within~~ the ~~same~~stability ~~or related industries or groups represent a relatively large percentage~~ of ~~the~~customers ~~total~~to ~~capital~~repay ~~or total credit extended by a bank. Although each loan in a concentration may be of sound quality~~loans, ~~concentration risks represent a risk not present when~~ the ~~same loan amounts are extended to borrowers that are not a part~~ value of acollateral ~~concentration.~~securing ~~Loans concentrated in one borrower depend~~loans, toand ~~a large degree, upon~~ the ~~financial~~stability ~~capability and character~~ of ~~the~~funding ~~individual borrower~~sources. ~~Loans~~A ~~made~~significant todecline ain ~~group~~general ofeconomic ~~related~~conditions ~~borrowers can be susceptible to~~caused ~~financial problems experienced~~ by ~~one~~inflation, orrecession, aunemployment, ~~few~~changes ~~members~~in ofsecurities ~~that~~markets, ~~group.~~changes ~~Loans~~in ~~made~~housing toprocess ~~borrowers that are part of the same~~ or ~~related~~other ~~industries~~factors orthat ~~groups~~impact ~~can~~local economic ~~be all adversely impacted with respect to their ability to repay some or all their obligations when adverse~~ conditions ~~prevail in the broader economy or even within just the respective industries or groups. Commercial real estate credits are larger dollar loans than consumer loans. An increase in nonaccrual loans~~ could ~~result in a loss of interest income from these loans~~, ~~an increase~~ in ~~the provision for loan losses~~turn, ~~and an increase in loan charge-offs, all of which could~~ have a material adverse ~~effect~~impact on ~~the~~CIB Marine’s financial condition and results of operations ~~of CIB Marine~~.

~~The purchased home equity loan pools creates special risks which may cause charge-offs and the allowance for loan losses to increase.~~18

The determination of the level of the allowance for loan losses for the purchased home equity loan pools is based on various factors including, but not limited to, historical charge-off for the pool of loans, the level of current delinquencies in the portfolio and their corresponding loss estimates, the qualitative factors regarding credit risks, expected future pay downs and prepayments, and environmental factors. Since 2008, CIB Marine’s ~~has~~earnings ~~charged-off~~also ~~the~~are significantly ~~full~~affected ~~amount~~by ~~of outstanding individual loan balances in~~ the ~~home~~fiscal ~~equity~~and ~~loan~~monetary ~~pools~~policies ~~once the respective loan became 90 days past due. An estimate~~ of ~~losses within~~ the ~~home~~federal ~~equity~~government ~~loan pools is included in the allowance for loan losses~~ and ~~monitored~~its ~~monthly to help ensure that the actual charge-offs are tracking against loss expectations. If necessary~~agencies, and as with other loan assets, adjustments are made to the allowance for loan loss to account for further deterioration in credit quality. There can be no assurance that future losses will match the loss expectations, which could ~~result~~affect ~~in increased levels~~ repayment of ~~loan~~loans ~~loss provisions~~ and ~~charge-offs,~~thereby ~~negatively~~materially ~~impacting~~adversely ~~the~~affect ~~consolidated~~CIB ~~results of operations~~Marine.

The policies of the FRB impact CIB Marine significantly. ~~depends~~The FRB regulates the supply of money and credit in the U.S. Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the ~~accuracy~~value of financial instruments CIB Marine holds. Those policies determine to a significant extent CIBM Bank’s cost of funds for lending and investing. ~~completeness~~Changes in those policies are beyond CIB Marine’s control and are difficult to predict. FRB policies can affect CIBM Bank’s borrowers, potentially increasing the risk that they may fail to repay their loans. For example, a tightening of ~~information~~the ~~about~~money ~~customers~~supply by the FRB could reduce the demand for a borrower’s products and ~~counterparties~~services. This could adversely affect the borrower’s earnings and ability to repay their loan, which could materially adversely affect CIB Marine.

InCIB Marine ~~deciding~~operates ~~whether~~in to extend credit or enter into other transactions, CIBM Bank may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports, appraisals, and other financial information. Reliance on inaccurate or misleading financial statements, credit reports, appraisals, or other financial information could cause CIBM Bank to enter into unfavorable transactions, which could have a ~~material~~highly ~~adverse~~competitive ~~effect on the financial condition and results of operations of CIB Marine.~~industry

CIB Marine faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may behave ~~further~~more ~~adversely~~financial ~~affected~~resources. Such competitors primarily include national, regional and community banks within the various markets where CIBM Bank operates. CIB Marine also faces competition from many other types of financial institutions, including, without limitation, savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Also, technology and other changes have lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by ~~current~~banks. ~~economic~~For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or ~~market~~transferring ~~conditions~~funds directly without the assistance of banks. The process of eliminating banks as intermediaries, ~~particularly~~known as “disintermediation,” could result in the ~~states~~loss ~~within~~of ~~which~~fee ~~business~~income, isas ~~conducted~~well as the loss of customer deposits and the related income generated by those deposits. Further, many of CIB Marine’s competitors have fewer regulatory constraints and may have lower costs structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than CIB Marine can.

~~Over~~CIB Marine’s ~~the~~ability ~~past~~to ~~years,~~compete ~~the~~successfully ~~national~~depends ~~and~~on ~~global~~a ~~economic~~number ~~downturn~~of ~~has~~factors, ~~resulted~~including, inamong ~~significant~~other ~~financial~~things: ~~market~~(i) ~~disruptions~~the ~~which~~ability ~~depressed~~to develop, ~~the~~maintain ~~overall~~and ~~market~~build ~~value~~long-term ofcustomer ~~financial~~relationships ~~institutions,~~based ~~limited~~on ~~access~~top toquality ~~capital~~service, orhigh ~~had~~ethical astandards ~~material~~and ~~adverse~~safe, ~~effect~~sound assets; on(ii) the ~~financial~~ability ~~condition~~to orexpand ~~results~~its ofmarket ~~operations~~position; of(iii) ~~banking~~the ~~companies in general~~scope, ~~and~~relevance ~~CIB Marine~~ and ~~CIBM~~pricing ~~Bank~~of inproducts ~~particular.~~and ~~CIB~~services ~~Marine has been particularly exposed~~ offered to ~~downturns~~meet incustomer ~~the~~needs ~~U.S. housing~~ and ~~commercial~~demands; ~~real~~(iv) ~~estate markets. Dramatic declines in~~ the ~~housing~~rate ~~market~~at ~~over~~which ~~the~~it ~~past~~introduces ~~years,~~new ~~with~~products ~~falling home prices~~ and ~~increasing~~services ~~foreclosures,~~relative ~~unemployment~~to ~~and~~its ~~under-employment,~~competitors; (v) ~~have~~customer ~~negatively~~satisfaction ~~impacted~~with ~~the~~its ~~credit~~level ~~performance~~ of ~~mortgage~~service; ~~loans~~ and ~~resulted~~(vi) inindustry ~~significant~~and ~~write~~general ~~downs~~economic ~~of asset values by financial institutions~~trends. ~~The~~Failure ~~resulting~~to ~~economic~~perform ~~pressure~~in ~~on consumers~~any ~~and lack~~ of these ~~confidence~~areas incould ~~the~~significantly ~~financial~~weaken ~~markets has adversely affected~~ CIB Marine’s ~~business~~competitive position, ~~financial~~which ~~condition~~could ~~and~~adversely ~~results~~affect ofits ~~operations.~~growth ~~CIB~~and ~~Marine~~profitability, which, ~~cannot be certain that the difficult conditions~~ in ~~the~~turn, ~~financial~~could ~~markets~~have ~~are~~a ~~likely~~material ~~to experience sustainable improvement in the near future. A worsening or prolonging of these conditions would likely exacerbate the~~ adverse ~~effects~~effect ~~of these difficult market conditions~~ on ~~CIB~~its ~~Marine~~financial condition and ~~others~~results inof ~~the financial institutions industry~~operations.

20The recent repeal of federal prohibitions on payment of interest on demand deposits could increase CIBM Bank’s interest expense.

~~Local~~All federal ~~economic~~prohibitions ~~conditions~~on ~~have~~the aability ~~significant~~of ~~impact~~financial institutions to pay interest on demand deposit accounts were repealed as part of the ~~demand~~Dodd-Frank ~~for~~Act ~~CIBM~~beginning ~~Bank’s~~on ~~products~~July ~~and~~21, ~~services~~2011. As a result, assome ~~well~~financial asinstitutions ~~the~~have ~~stability~~commenced ofoffering ~~customers~~interest on demand deposits to ~~repay~~compete ~~loans,~~for ~~the~~customers. ~~value~~CIB ofMarine ~~collateral~~does ~~securing~~not ~~loans,~~yet ~~and~~know ~~the~~what ~~stability~~interest ofrates ~~funding~~other ~~sources.~~institutions Amay ~~significant~~offer ~~decline~~as inmarket interest ~~general~~rates ~~economic~~begin ~~conditions~~to ~~caused~~increase. byCIBM ~~inflation,~~Bank’s ~~recession,~~interest ~~unemployment,~~expense ~~changes~~will inincrease ~~securities~~and ~~markets,~~its ~~changes~~net ininterest ~~housing~~margin ~~process~~will ordecrease ~~other~~if it ~~factors~~begins ~~that~~offering ~~impact~~interest ~~local~~on ~~economic~~demand ~~conditions~~deposits ~~could,~~to inattract ~~turn~~additional customers or retain current customers, which could have a material adverse ~~impact~~effect on CIB Marine’s business, financial condition and results of operations.

CIB Marine’s earnings also are significantly affected by the fiscal and monetary policies of the federal government and its agencies, which could affect repayment of loans and thereby materially adversely affect CIB Marine.19

~~The~~Further ~~policies~~declines ~~of the FRB impact CIB Marine significantly. The FRB regulates the supply of money and credit~~ in the ~~U.S. Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the~~ value of ~~financial~~certain securities ~~instruments~~held ~~CIB Marine holds. Those policies determine to a significant extent CIBM Bank’s cost of funds for lending and investing. Changes~~ in ~~those policies are beyond CIB Marine’s control and are difficult to predict. FRB policies can affect CIBM Bank’s borrowers, potentially increasing~~ the ~~risk~~investment ~~that~~portfolio ~~they~~or ~~may~~additional ~~fail~~impairment towrite ~~repay~~downs ~~their loans. For example, a tightening~~ of ~~the~~other ~~money~~real ~~supply~~estate byowned ~~the~~may ~~FRB~~negatively ~~could reduce the demand for a borrower’s products and services. This could adversely~~ affect ~~the~~ ~~borrower’s earnings and ability to repay their loan, which could materially adversely affect~~ CIB Marine.

~~Further~~The carrying value of an investment in CIB Marine’s securities portfolio and OREO could decrease due to changes in market factors. The market value of certain investment securities are volatile and future carrying value declines, particularly if determined to be other-than-temporary impairments, could adversely affect future results of operations and regulatory capital. Continued volatility in the market value of certain investment securities, ~~held~~whether caused by changes in market perceptions of credit risk as reflected in the ~~investment~~expected market yield of the security, or actual defaults in the portfolio, ~~may~~could ~~negatively~~result ~~affect~~in significant fluctuations in the value of the securities. During future periods, CIB Marine may experience additional OTTI write downs in its investment portfolio.

~~The carrying value of an investment in~~ CIB Marine’s ~~securities~~OREO portfolio ~~could~~consists of ~~decrease~~properties ~~due~~that toit ~~changes~~obtained inthrough ~~market~~foreclosure ~~factors.~~in ~~The~~satisfaction ~~market value~~ of ~~certain~~loans. ~~investment~~OREO ~~securities~~properties are ~~volatile~~recorded ~~and~~at ~~future~~the ~~carrying~~lower ~~value~~of ~~declines,~~the ~~particularly~~recorded investment ifin ~~determined~~the toloans befor ~~other-than-temporary~~which ~~impairments,~~the ~~could~~properties ~~adversely~~served ~~affect~~as ~~future~~collateral ~~results~~or ofestimated ~~operations~~fair ~~and~~value, ~~regulatory~~less ~~capital.~~estimated ~~Continued~~selling ~~volatility~~costs. Generally, in ~~the~~determining ~~market~~fair value ofan ~~certain~~orderly ~~investment~~disposition ~~securities, whether caused by changes in market perceptions~~ of ~~credit risk as reflected in~~ the ~~expected~~property ~~market~~is ~~yield of the security~~assumed, orexcept ~~actual~~where ~~defaults~~a indifferent ~~the~~disposition ~~portfolio,~~strategy ~~could~~is ~~result~~expected. Significant injudgment ~~significant~~is ~~fluctuations~~required in estimating the fair value of ~~the~~OREO ~~securities. During future periods~~property, ~~CIB~~and ~~Marine~~the ~~may~~period ~~experience~~of ~~additional~~time ~~OTTI~~within ~~write~~which ~~downs~~such inestimates can ~~its~~be ~~investment~~considered ~~portfolio~~current ~~which~~is ~~would~~significantly ~~further~~shortened ~~reduce~~during ~~the~~periods ~~level~~ of ~~its~~ ~~capital~~real ~~and~~estate ~~have~~market avolatility, ~~material~~as ~~adverse~~experienced ~~impact~~during on2008 through ~~its future results of operations and liquidity~~2011.

IfIn response to market conditions and other economic factors, CIB Marine’s ~~investment~~may utilize alternative sale strategies other than orderly dispositions as part of its OREO disposition strategy, such as immediate liquidation sales. In this event, as a result of the significant judgments required in estimating fair value and the ~~common~~variables ~~stock~~involved in different methods of disposition, the ~~Federal~~net ~~Home~~proceeds ~~Loan~~realized ~~Bank~~from such sales transactions could differ significantly from estimates used to determine the fair value of ~~Chicago~~the ~~becomes~~Company’s ~~other~~OREO ~~than~~properties. ~~temporarily~~Such ~~impaired,~~adjustments to fair value would further reduce the level of CIB Marine’s ~~financial~~capital ~~condition~~ and ~~results~~have ofa ~~operations~~material ~~could~~adverse beimpact ~~materially~~on ~~impaired~~its future results of operations and liquidity.

~~CIBM~~The ~~Bank~~creditworthiness ~~owns common stock~~ of ~~the~~other ~~Federal~~financial institutions ~~Home~~could ~~Loan~~adversely ~~Bank~~affect ofCIB ~~Chicago~~Marine ~~(“FHLBC”) with a carrying value of $11.6 million. The common stock is held to qualify for membership in the Federal Home Loan Bank System (“FHLB”)~~ and toadversely beaffect ~~eligible~~financial tomarkets ~~borrow funds under the FHLBC’s advance program~~generally. ~~There is no market for the FHLBC common stock.~~

InCIB ~~October~~Marine’s ability ~~2007,~~to ~~the~~engage ~~FHLBC~~in ~~entered~~funding ~~into~~transactions acould ~~consensual~~be ~~Cease~~adversely ~~and~~affected ~~Desist~~by ~~Order~~the ~~(“FHLBC~~actions ~~C&D”)~~and ~~with~~failure ~~its~~of ~~regulator,~~other ~~the~~financial ~~Federal~~institutions. The ~~Housing~~commercial ~~Finance~~soundness ~~Board,~~of ~~now~~many ~~known~~financial asinstitutions ~~the~~may ~~Federal~~be ~~Housing~~closely ~~Finance~~interrelated ~~Agency~~as ~~(“FHFA”).~~a ~~Under~~result ~~the terms~~ of ~~the FHLBC C&D~~credit, trading, ~~capital stock repurchases and redemptions~~clearing, ~~including redemptions upon membership withdrawal~~ or other ~~termination,~~relationships ~~are~~between ~~prohibited unless~~ the ~~FHLBC receives the prior approval of the Director of the Office of Supervision of the FHFA~~institutions. ~~CIBM~~As ~~Bank’s~~a ~~FHLBC~~result, ~~common~~concerns ~~stock~~about, isor ~~accounted~~a ~~for~~default inor ~~accordance~~threatened ~~with~~default by, ~~the~~one ~~authoritative~~institution ~~accounting~~could ~~guidance~~lead ~~for~~to ~~financial~~significant ~~services~~market-~~depository~~wide liquidity and ~~lending.~~credit ~~This guidance provides that~~problems, ~~for impairment testing purposes~~losses, ~~the~~or ~~value~~defaults ~~of long-term investments, such as FHLBC common stock, is based on the “ultimate recoverability” of the par value of the security rather than impacted~~ by ~~temporary~~other ~~declines in value~~institutions. This ~~Consequently,~~is ifsometimes ~~events~~referred ~~occur that give rise~~ to ~~substantial~~as ~~doubt~~“systemic ~~about~~risk” ~~the~~and ~~ultimate~~may ~~recoverability~~adversely ofaffect ~~the~~financial ~~par~~intermediaries, ~~value~~such ofas ~~CIB~~clearing agencies, ~~Marine’s~~clearing ~~FHLBC~~houses, ~~common stock~~banks, ~~this~~securities ~~investment~~firms ~~could~~and ~~be deemed to be OTTI~~exchanges, ~~and~~with ~~the~~which ~~impairment loss that~~ CIB Marine ~~would~~interacts beon ~~required~~a todaily ~~record~~basis, ~~would~~and ~~cause~~therefore could ~~its~~adversely ~~earnings~~affect ~~to decrease by the amount of the impairment loss~~it.

21CIB Marine’s ability to engage in routine funding transactions could be adversely impacted by the actions and commercial soundness of other banks and financial institutions. Banks are interrelated as a result of lending, clearing, counterparty and other relationships. As a result, defaults by, or even rumors or questions about, one or more banks or the general banking industry have led to market-wide liquidity problems and could lead to losses or defaults by CIB Marine or by other financial institutions. Many of the transactions engaged in by CIB Marine and CIBM Bank in the ordinary course of business expose CIB Marine to credit risk in the event of default of its counterparty or customer. In such instances, the collateral held by CIB Marine may be insufficient to mitigate its losses, as it may be unable to realize upon or liquidate at prices sufficient to recover the full amount of the exposure due it. Such losses could have a material and adverse affect on CIB Marine’s result of operations.

~~The~~CIB ~~creditworthiness~~Marine ofis ~~other~~exposed ~~financial~~to ~~institutions~~risk ~~could adversely~~of ~~affect~~environmental liability ~~CIB~~when ~~Marine~~CIBM ~~and~~Bank ~~adversely~~takes ~~affect~~title ~~financial~~to ~~markets generally~~property.

~~The~~In ~~Company’s~~the ~~ability~~course toof ~~engage~~its inbusiness, ~~funding~~CIBM ~~transactions~~Bank may ~~could~~foreclose beon ~~adversely affected by the actions~~ and ~~failure~~take oftitle ~~other~~to ~~financial~~real ~~institutions~~estate. ~~The~~As ~~commercial~~a ~~soundness~~result, ofCIB ~~many~~Marine ~~financial institutions~~ may be ~~closely~~subject ~~interrelated~~to asenvironmental aliabilities ~~result~~with ofrespect to ~~credit,~~those ~~trading,~~properties. ~~clearing,~~CIB orMarine ~~other~~may ~~relationships~~be ~~between~~held ~~the~~liable ~~institutions.~~to As a ~~result,~~governmental ~~concerns~~entity ~~about,~~ or ato ~~default~~third orparties ~~threatened~~for ~~default~~property bydamage, ~~one~~personal ~~institution~~injury, investigation ~~could~~and ~~lead to significant market~~clean-~~wide~~up ~~liquidity~~costs ~~and~~incurred ~~credit~~by ~~problems,~~such ~~losses,~~parties orin ~~defaults~~connection bywith ~~other~~environmental ~~institutions.~~contamination ~~This~~or ismay ~~sometimes~~be ~~referred~~required to investigate asor ~~“systemic~~clean-up ~~risk”~~hazardous ~~and~~or ~~may~~toxic ~~adversely~~substances ~~affect~~or ~~financial~~chemical ~~intermediaries,~~releases ~~such~~at asproperties. ~~clearing~~The ~~agencies,~~costs ~~clearing~~associated ~~houses,~~with ~~banks,~~investigation or ~~securities~~remediation ~~firms~~activities ~~and~~could ~~exchanges,~~be ~~with~~substantial. ~~which~~If CIB Marine ~~interacts~~becomes onsubject ato ~~daily~~significant ~~basis~~environmental liabilities, its financial condition and ~~therefore~~results ~~could~~of ~~adversely~~operations ~~affect~~could ~~the~~be ~~Company~~adversely affected.

CIB Marine’s ability to engage in routine funding transactions could be adversely impacted by the actions and commercial soundness of other banks and financial institutions. Banks are interrelated as a result of lending, clearing, counterparty and other relationships. As a result, defaults by, or even rumors or questions about, one or more banks or the general banking industry have led to market-wide liquidity problems and could lead to losses or defaults by CIB Marine or by other financial institutions. Many of the transactions engaged in by CIB Marine and CIBM Bank in the ordinary course of business expose CIB Marine to credit risk in the event of default of its counterparty or customer. In such instances, the collateral held by CIB Marine may be insufficient to mitigate its losses, as it may be unable to realize upon or liquidate at prices sufficient to recover the full amount of the exposure due it. Such losses could have a material and adverse affect on CIB Marine’s result of operations.20

~~CIB~~Terrorism, ~~Marine~~acts isof ~~exposed~~war, tointernational conflicts ~~risk~~and ofnatural ~~environmental~~disasters ~~liability~~could ~~when~~negatively ~~CIBM~~affect ~~Bank~~CIB ~~takes~~Marine’s ~~title~~business toand ~~property~~financial condition.

InActs ~~the~~or ~~course~~threats of ~~its~~war ~~business~~or terrorism, ~~CIBM~~international conflicts, ~~Bank~~natural ~~may~~disasters, ~~foreclose on~~ and ~~take~~the ~~title~~actions totaken ~~real~~by ~~estate~~the U.S. Asand aother ~~result~~governments in response to such events, ~~CIB~~could ~~Marine~~disrupt business ~~may~~operations beand ~~subject~~negatively toimpact ~~environmental~~general ~~liabilities~~business ~~with~~and ~~respect~~economic toconditions ~~those~~in ~~properties~~the U.S. ~~CIB~~If ~~Marine~~terrorist ~~may~~activity, beacts ~~held~~of ~~liable~~war, other tointernational ahostilities ~~governmental~~or ~~entity~~natural ordisasters todisrupt ~~third~~business ~~parties~~operations, ~~for~~trigger ~~property~~technology ~~damage,~~delays ~~personal~~or ~~injury~~failures, ~~investigation~~or ~~and~~damage physical ~~clean-up~~facilities ~~costs~~of ~~incurred~~CIBM byBank, ~~such~~its ~~parties~~customers inor ~~connection~~service ~~with~~providers, ~~environmental~~or ~~contamination~~cause oran ~~may~~overall beeconomic ~~required~~decline, tothe ~~investigate~~financial orcondition and ~~clean-up~~operating ~~hazardous~~results orof ~~toxic~~CIB ~~substances~~Marine orcould ~~chemical~~be ~~releases~~materially atadversely ~~properties~~affected. The ~~costs~~potential ~~associated~~for ~~with~~future ~~investigation~~occurrences orof ~~remediation~~these ~~activities~~events has ~~could~~created bemany ~~substantial.~~economic Ifand ~~CIB~~political ~~Marine~~uncertainties ~~becomes~~that ~~subject~~could toseriously ~~significant~~harm ~~environmental~~CIB ~~liabilities,~~Marine’s ~~its~~business ~~financial condition~~ and results of operations in ~~could~~ways bethat ~~adversely~~cannot ~~affected~~presently be predicted.

~~Terrorism, acts of war, international conflicts and natural disasters could negatively affect~~ CIB Marine’s ~~business~~is ~~and~~subject ~~financial~~to ~~condition~~liquidity risk.

~~Acts~~Liquidity orrisk ~~threats~~is ~~of war or terrorism, international conflicts, natural disasters, and~~ the ~~actions~~risk ~~taken~~that byCIB ~~the~~Marine will ~~U.S.~~be ~~and~~unable ~~other governments in response~~ to ~~such~~meet ~~events,~~its ~~could~~obligations ~~disrupt~~as ~~business~~they ~~operations~~come ~~and~~due ~~negatively~~or ~~impact~~capitalize ~~general~~on ~~business~~growth ~~and~~opportunities ~~economic~~as ~~conditions~~they inarise ~~the~~because ~~U.S. If terrorist activity, acts~~ of ~~war,~~an ~~other~~inability to ~~international~~liquidate ~~hostilities~~assets or ~~natural~~obtain ~~disasters~~funding ~~disrupt~~on ~~business~~a ~~operations~~timely basis, ~~trigger~~at ~~technology~~a ~~delays~~reasonable orcost ~~failures,~~ or ~~damage~~within ~~physical~~acceptable ~~facilities~~risk oftolerances. ~~CIBM~~Liquidity ~~Bank,~~is required ~~its~~to ~~customers~~fund orcredit ~~service~~obligations ~~providers~~to borrowers, orwithdrawals ~~cause~~by ~~an overall economic decline~~depositors, ~~the~~repayment ~~financial condition and operating results~~ of ~~CIB~~debt ~~Marine~~when ~~could~~due beor ~~materially~~called, ~~adversely~~operating ~~affected. The potential for future occurrences of these events has created many economic~~ expenses and ~~political~~capital ~~uncertainties~~expenditures, ~~that~~among ~~could~~other ~~seriously harm CIB Marine’s business and results of operations in ways that cannot presently be predicted~~things.

~~CIB~~Funding ~~Marine~~sources isof ~~subject~~CIBM Bank are derived primarily from bank-issued deposits; payments on loans; sale, maturity and prepayment of investment securities; net cash provided from operations; and access to ~~liquidity~~other ~~risk~~funding sources, including secured and unsecured borrowings.

~~Liquidity risk is the risk that~~ CIB Marine’s ~~will~~liquidity can be ~~unable~~affected by toa ~~meet~~variety ~~its~~of ~~obligations~~factors, asincluding ~~they~~general ~~come~~economic ~~due~~conditions, ormarket ~~capitalize~~disruption, onoperational ~~growth~~problems ~~opportunities~~affecting asthird ~~they arise because of an inability to liquidate assets~~ parties or ~~obtain~~CIB ~~funding~~Marine, onunfavorable apricing, ~~timely basis~~competition, atCIB aMarine’s ~~reasonable~~credit ~~cost~~quality orand ~~within~~any ~~acceptable~~regulatory ~~risk tolerances~~restrictions. ~~Liquidity~~In isaddition, some ~~required~~of tothe ~~fund~~borrowing ~~credit~~sources ~~obligations~~customarily toutilized ~~borrowers,~~by ~~withdrawals~~CIB byMarine ~~depositors,~~have ~~repayment~~been ofrestricted ~~debt~~or ~~when~~are unavailable due orto ~~called,~~CIB Marine’s operating ~~expenses~~performance and ~~capital~~financial ~~expenditures,~~condition ~~among~~and ~~other~~could ~~things~~be further restricted.

22CIB Marine’s profitability is dependent upon CIBM Bank’s ability to manage net interest income.

~~Funding~~CIBM ~~sources~~Bank’s primary source of ~~CIBM~~income is ~~Bank~~net ~~are~~interest ~~derived~~income, ~~primarily~~which ~~from~~is ~~bank-issued~~the ~~deposits;~~difference ~~payments~~between the interest income earned on interest-earnings assets (consisting primarily of loans; ~~sale,~~and ~~maturity~~securities) and ~~prepayment~~the interest expense paid on interest-bearing liabilities (consisting primarily of ~~investment~~deposits ~~securities;~~and other borrowings). The level of net ~~cash~~interest ~~provided~~income ~~from~~is ~~operations;~~a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities, and ~~access~~the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by CIBM Bank’s ability to attract loans and core deposits and the pricing and mix of these and other ~~funding~~interest-earning assets ~~sources~~and interest-bearing liabilities which, ~~including~~in ~~secured~~turn, are impacted by such external factors as the local economy, competition for loans and ~~unsecured~~deposits, ~~borrowings~~monetary policy, and market interest rates.

~~CIB~~The ~~Marine’s~~level ~~liquidity~~of ~~can~~net beinterest ~~affected~~income is influenced by amovements ~~variety~~in such rates of ~~factors~~interest, ~~including~~and ~~general~~the ~~economic~~pace ~~conditions,~~at ~~market~~which ~~disruption,~~such ~~operational~~movements ~~problems~~occur. ~~affecting~~If ~~third~~the ~~parties~~interest orrates ~~CIB~~on ~~Marine,~~interest-bearing ~~unfavorable~~liabilities increase ~~pricing~~at a faster pace than the interest rates on interest-earning assets, ~~competition~~the result could be a reduction in net interest income and with it, ~~CIB~~a ~~Marine~~reduction in earnings. CIBM Bank’s ~~credit~~net ~~quality~~interest income and ~~any~~earnings ~~regulatory~~would ~~restrictions.~~be Insimilarly ~~addition,~~impacted ~~some~~if ofthe interest rates on interest-earning assets decline more quickly than the ~~borrowing~~interest ~~sources~~rates ~~customarily~~on ~~utilized~~interest-bearing byliabilities. ~~CIB~~In ~~Marine~~addition, ~~have~~such changes ~~been~~in ~~restricted~~interest orrates ~~are~~could ~~unavailable~~have ~~due~~an effect on the ability to ~~CIB~~originate ~~Marine’s~~loans ~~operating~~and ~~performance~~attract and retain deposits; the fair value of financial ~~condition~~assets and ~~could~~liabilities; beand ~~further~~the ~~restricted~~average life of loan and securities portfolios.

~~CIB Marine’s profitability is dependent upon CIBM Bank’s ability to manage net interest income.~~21

~~CIBM~~An ~~Bank’s~~interruption ~~primary~~in ~~source~~or ofbreach ~~income~~in ~~is net interest income, which is the difference between the interest income earned on interest-earnings assets (consisting primarily~~ security of ~~loans~~CIB and securities) and the interest expense paid on interest-bearing liabilities (consisting primarily of deposits and other borrowings). The level of net interest income is a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by CIBM BankMarine’s ~~ability~~or toits ~~attract~~third ~~loans~~party ~~and~~service ~~core~~providers’ ~~deposits~~information ~~and~~systems ~~the~~may ~~pricing~~result ~~and mix of these and other interest-earning assets and interest-bearing liabilities which,~~ in ~~turn,~~a ~~are~~loss ~~impacted~~of bycustomer ~~such external factors as the local economy, competition for loans and deposits, monetary policy, and market interest rates~~business.

~~The~~CIB ~~level~~Marine ofrelies heavily ~~net~~on ~~interest~~communications ~~income is influenced by movements in such rates of interest,~~ and ~~the~~information ~~pace~~systems atto ~~which~~conduct ~~such~~its ~~movements occur~~business. IfAny ~~the~~failure ~~interest~~or ~~rates~~interruptions onor ~~interest-bearing~~breach ~~liabilities~~in ~~increase~~security atof these asystems ~~faster~~could ~~pace than the interest rates on interest-earning assets, the~~ result ~~could~~in befailures aor ~~reduction~~disruptions in ~~net~~its ~~interest~~customer ~~income~~relationship ~~and~~management, ~~with~~general itledger, adeposits, ~~reduction~~servicing, or inloan ~~earnings~~origination systems. ~~CIBM~~The ~~Bank’s~~occurrence ~~net~~of ~~interest~~any ~~income~~failures ~~and~~or ~~earnings~~interruptions ~~would~~or bebreach ~~similarly~~in ~~impacted~~security ifcould ~~the~~result ~~interest~~in ~~rates~~a onloss ~~interest-earning~~of ~~assets~~customer business, ~~decline~~costly ~~more~~remedial ~~quickly~~actions, ~~than~~or ~~the~~legal ~~interest rates on interest-bearing~~ liabilities. Inand ~~addition,~~have ~~such~~a ~~changes~~material inadverse ~~interest rates could have an~~ effect on ~~the~~CIB ~~ability~~Marine’s toresults ~~originate~~of ~~loans~~ operations and ~~attract and retain deposits; the fair value of~~ financial ~~assets and liabilities; and the average life of loan and securities portfolios~~condition.

~~CIB~~Management ~~Marine’s~~regularly reviews ~~accounting~~and updates its internal controls, disclosure controls and procedures, and corporate governance policies and ~~methods~~procedures. Any ~~are~~system ~~critical~~of tocontrols, ~~how~~however itwell ~~reports~~designed ~~its~~and ~~financial~~operated, ~~condition~~is based in part on certain assumptions and ~~results~~can provide only reasonable, not absolute, assurances that the objectives of ~~operations~~the system are met. Any failure or circumvention of CIB Marine’s controls and ~~require~~procedures ~~management~~or failure to ~~make~~comply ~~estimates~~with ~~about~~regulations ~~matters~~related ~~that~~to ~~are~~controls ~~uncertain~~and procedures could have a material adverse effect on its business, results of operations, cash flows and financial condition.

~~Accounting~~While CIB Marine has policies and ~~methods~~procedures ~~are~~designed ~~fundamental~~to prevent or limit the effect of the failure, interruption or security breach of CIB Marine’s information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. Additionally, CIB Marine outsources a portion of its data processing to a ~~how~~third party. If CIB Marine’s ~~records~~third ~~and~~party ~~reports~~provider encounters difficulties or if CIB Marine has difficulty in communicating with such third party, it will significantly affect its ~~financial~~ability ~~condition~~to adequately process and ~~results~~account offor customer transactions, which would significantly affect its business operations. ~~Management~~Furthermore, ~~must~~breaches ~~exercise~~of ~~judgment~~such inthird ~~selecting~~party’s technology may also cause reimbursable loss to its consumer and ~~applying~~business ~~many~~customers, through no fault of ~~these~~CIB ~~accounting~~Marine. ~~policies~~The ~~and~~occurrence ~~methods~~of soany ~~they~~failures, ~~comply~~interruptions or ~~with~~security ~~accounting~~breaches ~~principles~~of ~~generally~~information ~~accepted~~systems ~~(“GAAP”)~~used to process customer transactions could damage CIB Marine’s reputation, result in ~~the~~a ~~United~~loss ~~States~~of customer business, subject it to additional regulatory scrutiny, or expose it to civil litigation and possible financial liability, any of which could have a material adverse effect on its financial condition, results of operations and cash flows.

Management has identified certain accounting policies as being critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments and contingencies. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, or reducing a liability. CIB Marine has established detailed policies and control procedures that are intended to help ensure these critical accounting estimates and judgments are well controlled and applied consistently. In addition, the policies and procedures are intended to help ensure that the process for changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding CIB Marine’s ~~judgments~~controls and ~~the estimates pertaining to these~~procedures ~~matters,~~may ~~CIB Marine cannot guarantee that it will~~ not beprevent ~~required~~or todetect ~~adjust~~all ~~accounting~~errors ~~policies~~ or ~~restate~~acts ~~prior period financial statements. See the “Critical Accounting Policies” in the Management’s Discussion and Analysis Section and Item 8, Note 2, in Part II~~ of ~~this Form 10-K~~fraud.

~~Changes~~CIB inMarine ~~accounting~~regularly reviews ~~standards~~and ~~could~~updates ~~adversely~~its ~~affect~~internal controls, disclosure controls and procedures and corporate governance policies and procedures. CIB Marine’s ~~reported~~believes ~~financial~~that ~~results~~any system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

~~The~~These ~~bodies~~inherent ~~that~~limitations ~~set~~include ~~accounting~~the realities ~~standards~~that ~~for~~judgments ~~public~~in ~~companies,~~decision ~~including~~making ~~the~~can ~~Financial~~be ~~Accounting~~faulty, ~~Standards~~that ~~Board~~alternative ~~(“FASB”),~~reasoned ~~the~~judgments ~~SEC~~can ~~and~~be ~~others~~drawn, ~~periodically change~~ or ~~revise existing interpretations of the accounting and reporting standards~~ that ~~govern~~breakdowns can ~~the~~occur ~~way~~because ~~that~~of ~~CIB~~simple ~~Marine~~error ~~reports~~or ~~its financial condition and results of operations~~mistake. ~~These~~Additionally, ~~changes~~controls can be ~~difficult~~circumvented toby ~~predict~~the ~~and~~individual ~~can~~acts ~~materially~~of ~~impact~~some ~~CIB~~persons, by ~~Marine’s~~collusion ~~reported~~of ~~financial~~two ~~results.~~or Inmore ~~some~~people ~~cases,~~or ~~CIB~~by ~~Marine~~an ~~could~~unauthorized beoverride ~~required~~of tothe ~~apply~~controls. aAny failure ~~new~~ or ~~revised~~circumvention ~~accounting~~of ~~standard,~~CIB orMarine’s acontrols ~~new~~and procedures or ~~revised~~failure ~~interpretation~~to ofcomply anwith ~~accounting~~regulations ~~standard,~~related ~~retroactively,~~to ~~which~~controls and procedures could have a ~~negative~~material ~~impact~~adverse effect on ~~reported results of~~ CIB Marine’s ~~financial~~business, ~~statements~~results ~~for~~of ~~prior~~operations ~~periods~~and financial condition.

23Significant legal actions could subject CIB Marine to substantial uninsured liabilities.

AnCIB ~~interruption~~Marine inis orfrom ~~breach~~time into ~~security~~time ofsubject to claims and legal actions related to its operations. These claims and legal actions, including supervisory actions by regulators, could involve large monetary claims and significant defense costs. Substantial legal liability or significant regulatory action against CIB Marine’s could have material adverse financial effects or ~~its~~cause ~~third~~significant ~~party~~reputational ~~service~~harm ~~providers’~~to ~~information~~it, ~~systems~~which in turn, could seriously harm its business prospects. CIB Marine may ~~result~~be inexposed ato ~~loss~~substantial uninsured liabilities, which could affect its results of ~~customer~~operations ~~business~~and financial condition.

CIB Marine relies heavily on communications and information systems to conduct its business. Any failure or interruptions or breach in security of these systems could result in failures or disruptions in its customer relationship management, general ledger, deposits, servicing, or loan origination systems. The occurrence of any failures or interruptions or breach in security could result in a loss of customer business, costly remedial actions, or legal liabilities and have a material adverse effect on CIB Marine’s results of operations and financial condition.22

~~Management~~In ~~regularly~~the ~~reviews~~normal ~~and~~course of ~~updates~~business, ~~its~~CIB ~~internal~~Marine ~~controls,~~is ~~disclosure~~subject ~~controls~~to various legal proceedings and ~~procedures~~claims. Accordingly, ~~and~~although ~~corporate~~CIB ~~governance~~Marine ~~policies~~believes it has made adequate provisions for all current and ~~procedures.~~threatened ~~Any~~legal ~~system~~disputes, ofit ~~controls~~may, ~~however~~in ~~well~~the ~~designed~~future become involved in legal disputes arising from its relationships with its stockholders, business partners and ~~operated~~creditors, isor ~~based~~from inother ~~part~~sources. onSuch ~~certain~~legal ~~assumptions~~disputes could result in large settlements and/or ~~can~~judgments ~~provide~~which ~~only~~could ~~reasonable,~~materially ~~not~~impair ~~absolute,~~CIB ~~assurances~~Marine’s ~~that~~financial condition. In addition, the ~~objectives~~defense of such proceedings could result in significant expense and the ~~system~~diversion ~~are~~of ~~met.~~management’s ~~Any~~time ~~failure~~and orattention from ~~circumvention~~the operation of the business, which could impede CIB Marine’s ~~controls~~ability ~~and~~to ~~procedures~~achieve its business objectives. Some or ~~failure~~all of tothe ~~comply~~amount ~~with~~CIB ~~regulations~~Marine ~~related~~may be required to ~~controls~~pay ~~and~~to ~~procedures~~defend ~~could~~or ~~have~~to satisfy a ~~material~~judgment ~~adverse~~or ~~effect~~settlement onof ~~its~~any ~~business,~~or ~~results~~all ofsuch ~~operations,~~proceedings may ~~cash~~not ~~flows~~be ~~and~~covered ~~financial~~by ~~condition~~insurance.

~~While~~Risks Associated CIB Marine has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of CIB Marine’s information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. Additionally, CIB Marine outsources a portion of its data processing to a third party. If CIB Marine’s third party provider encounters difficulties or if CIB Marine has difficulty in communicating with such third party, it will significantly affect its ability to adequately process and account for customer transactions, which would significantly affect its business operations. Furthermore, breaches of such third party’s technology may also cause reimbursable loss to its consumer and business customers, through no fault of CIB Marine~~. The occurrence of any failures, interruptions or security breaches of information systems used to process customer transactions could damage CIB Marine~~’s ~~reputation,~~Common result in a loss of customer business, subject it to additional regulatory scrutiny, or expose it to civil litigation and possible financial liability, any of which could have a material adverse effect on its financial condition, results of operations and cash flows.Stock

~~CIB~~Conversion of ~~Marine’s~~Series ~~disclosure~~B ~~controls~~Preferred ~~and~~into ~~procedures~~common ~~may~~stock ~~not~~upon ~~prevent~~consummation orof ~~detect~~a ~~all~~merger ~~errors~~transaction orcould ~~acts~~result ofin ~~fraud~~significant reduction in the purchase price allocated to its current common stockholders.

~~CIB~~Each share ~~Marine’s~~of ~~disclosure~~Series ~~controls~~B ~~and~~Preferred ~~procedures~~is ~~are~~convertible ~~designed~~into to4,000 ~~reasonably~~shares ~~assure~~of ~~that~~CIB ~~information~~Marine ~~required~~common tostock beupon ~~disclosed~~the inconsummation ~~reports~~of ~~filed~~a ormerger ~~submitted~~transaction where ~~under~~CIB Marine is not the ~~Exchange~~surviving ~~Act~~entity. isIf ~~accumulated~~all ~~and~~Series ~~communicated~~B toPreferred ~~management,~~stockholders ~~and~~were ~~recorded,~~to ~~processed,~~convert ~~summarized,~~their ~~and~~shares ~~reported~~in ~~within~~connection with ~~the~~a ~~time~~merger, ~~periods~~they ~~specified~~would inown 49% of the ~~SEC’s~~outstanding ~~rules~~common stock and ~~forms.~~have ~~CIB~~a ~~Marine~~right ~~believes~~to ~~that~~participate ~~any~~at ~~disclosure~~that ~~controls~~level ~~and~~in ~~procedures~~any ormerger ~~internal~~consideration paid ~~controls~~to ~~and~~acquire ~~procedures~~CIB Marine, nowhich ~~matter~~would ~~how~~result ~~well~~in ~~conceived~~a ~~and~~significantly ~~operated,~~lower ~~can~~merger ~~provide~~price ~~only~~being ~~reasonable,~~allocated ~~not~~to ~~absolute,~~current ~~assurance~~CIB ~~that~~Marine ~~the~~common stockholders ~~objectives~~than ofif ~~the~~such ~~control~~Series ~~system~~B ~~are~~Preferred ~~met~~were not converted.

~~These~~CIB Marine ~~inherent~~has ~~limitations~~not ~~include~~paid ~~the~~cash ~~realities~~dividends ~~that~~to ~~judgments~~its instockholders ~~decision~~and ~~making~~its ~~can~~ability beto ~~faulty,~~do ~~that~~so ~~alternative~~in ~~reasoned judgments can be drawn, or that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by~~ the ~~individual~~future ~~acts~~is of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in CIB Marine’s control system, misstatements due to error or fraud may occur and not ~~be detected~~guaranteed.

~~Significant~~CIB Marine’s ~~legal~~lack ~~actions~~of ~~could~~profitability ~~subject~~and regulatory restrictions limit or prevent it from paying dividends on its preferred stock and as a result on its common stock as well. There is no guarantee that CIB Marine will be able to ~~substantial~~restore ~~uninsured~~profitability ~~liabilities~~sufficiently and remove regulatory restrictions to be able to pay dividends to any stockholders in the future.

Shares of CIB Marine iscommon ~~from~~stock ~~time~~are tonot ~~time~~an ~~subject~~insured todeposit ~~claims~~ and legal actions related to its operations. These claims and legal actions, including supervisory actions by regulators, could involve large monetary claims and significant defense costs. Substantial legal liability or significant regulatory action against CIB Marine could have material adverse financial effects or cause significant reputational harm to it, which in turn, could seriously harm its business prospects. CIB Marine may belose ~~exposed to substantial uninsured liabilities, which could affect its results of operations and financial condition~~value.

24The shares of CIB Marine’s common stock are not a bank deposit and will not be insured or guaranteed by the FDIC or any other government agency. Stockholders are subject to investment risk, and must be capable of affording the loss of their entire investment.

InITEM ~~the normal course of business, CIB Marine is subject to various legal proceedings and claims~~1B. ~~Accordingly,~~UNRESOLVED ~~although~~STAFF CIB Marine believes it has made adequate provisions for all current and threatened legal disputes, it may, in the future become involved in legal disputes arising from its relationships with its shareholders, business partners and creditors, or from other sources. Such legal disputes could result in large settlements and/or judgments which could materially impair CIB Marine’s financial condition. In addition, the defense of such proceedings could result in significant expense and the diversion of management’s time and attention from the operation of the business, which could impede CIB Marine’s ability to achieve its business objectives. Some or all of the amount CIB Marine may be required to pay to defend or to satisfy a judgment or settlement of any or all such proceedings may not be covered by insurance.COMMENTS

~~ITEM 1B~~None. ~~UNRESOLVED STAFF COMMENTS~~

~~None~~ITEM 2. PROPERTIES

~~ITEM~~The 2.following ~~PROPERTIES~~table provides information relating to the material real properties owned or leased by CIB Marine as of December 31, 2011.

The following table provides information relating to the material real properties owned or leased by CIB Marine as of December 31, 2010.

Location	Owned or Leased	Date Opened or Acquired
Sidney, Illinois	Owned	09/87
Champaign, Illinois	Owned	09/88
Urbana, Illinois	Owned	03/90
Champaign, Illinois (Midtown)	Owned	04/94
Monticello, Illinois	Leased	05/95
Danville, Illinois	Owned	08/95
Peoria, Illinois	Leased	06/10
East Peoria, Illinois	Leased	10/97
Bloomington, Illinois	Owned	10/00
Waukesha, Wisconsin	Leased	06/10
Wauwatosa, Wisconsin	Leased	05/98
Franklin, Wisconsin	Leased	08/00
Indianapolis, Indiana	Leased	09/98
Naperville, Illinois	Leased	02/06

Location	Owned or Leased	Date Opened or Acquired
Sidney, Illinois	Owned		09/87
Champaign, Illinois	Owned		09/88
Urbana, Illinois	Owned		03/90
Arrowsmith, Illinois	Owned		10/91
Champaign, Illinois (Midtown)	Owned		04/94
Monticello, Illinois	Leased		05/95
Danville, Illinois	Owned		08/95
Peoria, Illinois	Leased		06/10
East Peoria, Illinois	Leased		10/97
Bloomington, Illinois	Owned		10/00
Waukesha, Wisconsin	Leased		06/10
Wauwatosa, Wisconsin	Leased		05/98
Franklin, Wisconsin	Leased		08/00
Indianapolis, Indiana	Leased		09/98
Scottsdale, Arizona	Leased		10/01
Naperville, Illinois	Leased		02/06

None of the properties owned by CIB Marine or CIBM Bank are subject to encumbrances material to the operations of CIB Marine and CIBM Bank. CIB Marine considers the conditions of its properties to be generally good and adequate for the current needs of its and CIBM Bank’s businesses. During ~~2010~~2011, CIBM Bank closed ~~two~~one ~~branches~~branch in Illinois and one in Arizona.

ITEM 3. LEGAL PROCEEDINGS

CIB Marine and CIBM Bank engage in legal actions and proceedings, both as plaintiffs and defendants, from time to time in the ordinary course of business. In some instances, such actions and proceedings involve substantial claims for compensatory or punitive damages or involve claims for an unspecified amount of damages. There are, however, presently no proceedings pending or contemplated which, in CIB Marine’s opinion, would have a material adverse effect on its consolidated financial position.

~~Supplemental Item~~ITEM 4. ~~Executive~~MINE ~~Officers~~SAFETY ~~of Registrant.~~DISCLOSURES

The following table sets forth the names, ages and positions of all executive officers of CIB Marine at March 1, 2011, the period that each has held positions with CIB Marine and CIBM Bank, and a brief account of each officer’s business experience during at least the past five yearsNot applicable. Under CIB Marine’s by-laws, executive officers are elected annually by the Board of Directors, and each executive officer holds office until his/her successor has been duly elected and qualified or until the earlier of his/her death, resignation or removal.

25Supplemental Item. Executive Officers of Registrant.

Name and Age		Office and Experience
John P. Hickey, Jr. (63)		Mr. Hickey has served as Chairman of CIB Marine since February 2009; Director of CIB Marine since May 2007; CEO of CIB Marine from March 2007 to January 2011; President of CIB Marine from March 2007 to August, 2010; Chairman of CIBM Bank since February 2009; Director of CIBM Bank since February 2008; President of CIBM Bank from June 2009 to August 2010; CEO of CIBM Bank from June 2006 to January 2011. Director, President and CEO of Marine Bank from April 2006 until its merger with Central Illinois Bank (n/k/a CIBM Bank) in June 2009. Prior to joining CIB Marine, Mr. Hickey was Senior Vice President of Business Banking at Guaranty Bank in 2006.
Charles J. Ponicki (60)		Mr. Ponicki has served as CEO of CIB Marine since January 2011; President of CIB Marine and CIBM Bank since August 2010; Chief Credit Officer (“CCO”) of CIB Marine and CIBM Bank since January 2008; Director of CIBM Bank since August 2010; CCO of Marine Bank from January 2008 until its merger with Central Illinois Bank in June 2009; Executive Vice President of CIB Marine, CIBM Bank and Marine Bank from January 2008 to August 2010, and was Wisconsin Market President of Marine Bank from September 2007 to December 2007. From 2006 to September 2007, Mr. Ponicki provided acquisition sourcing and due diligence, credit policy and governance, and de novo formation consulting services to banks.
Daniel J. Rasmussen (45)		Mr. Rasmussen has served as Executive Vice President, General Counsel and Secretary of CIB Marine CIBM Bank and Marine Bank (until its merger into Central Illinois Bank in June 2010) since April 2005. Mr. Rasmussen was appointed a non-employee Executive Vice President, General Counsel and Secretary of CIB Marine and CIBM Bank through a company owned by him, effective January 1, 2010.
Patrick J. Straka (44)		Mr. Straka has served as CFO of CIB Marine and CIBM Bank since August 2010 and was Executive Vice President, Chief Investment Officer and Economist of CIB Marine CIBM Bank and Marine Bank (until its merger into Central Illinois Bank in June 2010) from February 1999 to August 2010.

The following table sets forth the names, ages and positions of all executive officers of CIB Marine at March 1, 2012, the period that each has held positions with CIB Marine and CIBM Bank, and a brief account of each officer’s business experience during at least the past five years. Under CIB Marine’s by-laws, executive officers are elected annually by the Board of Directors, and each executive officer holds office until his/her successor has been duly elected and qualified or until the earlier of his/her death, resignation or removal.

PART II

Name and Age		Office and Experience
John P. Hickey, Jr. (64)		Mr. Hickey has served as Chairman of CIB Marine since February 2009; Director of CIB Marine since May 2007; CEO of CIB Marine from March 2007 to January 2011; President of CIB Marine from March 2007 to August 2010; Chairman of CIBM Bank since February 2009; Director of CIBM Bank since February 2008; President of CIBM Bank from June 2009 to August 2010; CEO of CIBM Bank from June 2006 to January 2011. Director, President and CEO of Marine Bank from April 2006 until its merger with Central Illinois Bank (n/k/a CIBM Bank) in June 2009.

Paul C. Melnick (55)		Mr. Melnick has served as Chief Credit Officer (“CCO”) of CIB Marine and CIBM Bank since August 2011; Senior Vice President and Senior Lender of CIBM Bank from June 2009 to May 2010; and Marine Bank from February 2005 until its merger with Central Illinois Bank (n/k/a CIBM Bank) in June 2009.

Charles J. Ponicki (61)		Mr. Ponicki has served as CEO of CIB Marine since January 2011; President of CIB Marine and CIBM Bank since August 2010; CCO of CIB Marine from January 2008 to August 2011; CCO of Marine Bank from January 2008 until its merger with Central Illinois Bank (n/k/a CIBM Bank) in June 2009, and then of Central Illinois Bank/CIBM Bank from June 2009 to August 2011; Director of CIBM Bank since August 2010; Executive Vice President of CIB Marine, CIBM Bank and Marine Bank from January 2008 to August 2010, and Wisconsin Market President of Marine Bank from September 2007 to December 2007. From 2006 to September 2007, Mr. Ponicki provided acquisition sourcing and due diligence, credit policy and governance, and de novo formation consulting services to banks.

~~ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~24

Although there is currently no active trading market for shares of CIB Marine’s common stock, the common stock is quoted on the Pink Sheets under the trading symbol “CIBH.PK.” Pink Sheet quotations reflect inter dealer prices without retail mark-up, mark-down or commission and may not necessarily reflect actual transactions. The following table sets forth the high and low sales prices for CIB Marine common stock for the past two years as quoted on the Pink Sheets.

Name and Age		Office and Experience
Daniel J. Rasmussen (46)		Mr. Rasmussen has served as Executive Vice President, General Counsel and Secretary of CIB Marine CIBM Bank and Marine Bank (until its merger into Central Illinois Bank n/k/a CIBM Bank, in June 2010) since April 2005. Mr. Rasmussen was appointed a non-employee Executive Vice President, General Counsel and Secretary of CIB Marine and CIBM Bank, through a company owned by him, effective January 1, 2010.

Patrick J. Straka (45)		Mr. Straka has served as CFO of CIB Marine and CIBM Bank since August 2010 and was Executive Vice President, Chief Investment Officer and Economist of CIB Marine, CIBM Bank and Marine Bank (until its merger into Central Illinois Bank n/k/a CIBM Bank, in June 2010) from February 1999 to August 2010.

	2010				2009
Fiscal Quarter Ended	High		Low		High		Low
December 31	$	0.25	$	0.08	$	0.03	$	0.0050
September 30		0.40		0.05		0.03		0.0002
June 30		0.63		0.12		0.10		0.0010
March 31		0.50		0.05		0.30		0.0050

PART II

~~CIB~~Although ~~Marine~~there ~~has~~is ~~not~~currently ~~paid~~no ~~cash~~active ~~dividends~~trading market onfor ~~its~~shares ~~common stock. As a result~~ of ~~its financial position,~~ CIB Marine’s ~~does~~common ~~not currently have any intentions to pay cash dividends in the foreseeable future. Pursuant to the Written Agreement~~stock, ~~CIB Marine cannot declare or pay dividends without first obtaining~~ the ~~consent~~common ofstock ~~the Federal Reserve Bank. CIB Marine~~ is ~~also~~quoted ~~prohibited from paying any dividends~~ on ~~its common stock unless~~ the ~~quarterly~~Pink ~~dividend~~Sheets onunder the ~~CIB~~trading ~~Marine~~symbol ~~Preferred~~“CIBH.PK.” Pink ~~has~~Sheet ~~been~~quotations ~~paid~~reflect ininter ~~full~~dealer ~~for~~prices ~~four~~without ~~consecutive~~retail ~~quarters. Moreover~~mark-up, ~~under~~mark-down ~~the~~or ~~Consent~~commission ~~Order,~~and ~~CIBM Bank~~ may not ~~declare~~necessarily orreflect actual ~~pay~~transactions. ~~any~~The ~~dividends~~following totable ~~CIB~~sets ~~Marine~~forth ~~without~~the ~~prior~~high ~~regulatory~~and ~~approval.~~low ~~CIB~~sales ~~Marine~~prices ~~will~~for ~~periodically~~CIB ~~evaluate~~Marine ~~its~~common ~~financial~~stock ~~position~~for tothe ~~determine~~past ~~whether~~two years toas ~~pay~~quoted ~~cash~~on ~~dividends in~~ the ~~future~~Pink Sheets.

	2011				2010
Fiscal Quarter Ended	High		Low		High		Low
December 31	$	0.20	$	0.10	$	0.25	$	0.08
September 30		0.19		0.08		0.40		0.05
June 30		0.15		0.07		0.63		0.12
March 31		0.19		0.08		0.50		0.05

~~Except~~As asof ~~described~~March ~~below~~12, ~~with respect to CIB Marine Preferred~~2012, ~~CIB~~there ~~Marine did not sell any of its securities within the past three years which~~ were ~~not~~approximately 1,154 ~~registered~~holders ~~under the Securities Act~~ of ~~1933,~~record ~~as amended (“Securities Act”), or repurchase any~~ of ~~its~~CIB ~~securities~~Marine ~~during~~common ~~the fourth quarter of 2010~~stock.

~~On December 30, 2009, in accordance with~~ CIB Marine’s ~~Plan~~has ofnot ~~Reorganization~~paid ~~under~~cash ~~Chapter~~dividends on 11its ofcommon ~~the~~stock. ~~Bankruptcy~~As ~~Code,~~a ~~approximately~~result ~~$107.2 million~~ of ~~high-interest~~its ~~cumulative~~financial ~~indebtedness~~position, ~~was~~CIB ~~exchanged~~Marine ~~for~~does ~~55,624~~not ~~shares~~currently ofhave ~~Series~~any Aintentions ~~Preferred~~to ~~and~~pay ~~4,376~~cash ~~shares~~dividends in ofthe ~~Series~~foreseeable ~~B Preferred~~future. ~~Each~~Pursuant ~~share~~to of the ~~Series~~Written ~~B Preferred is convertible into 4~~Agreement,~~000~~ ~~shares of~~ CIB Marine’s ~~common~~cannot ~~stock~~declare ~~only~~or ~~upon~~pay ~~the~~dividends ~~consummation~~without offirst ~~a merger transaction involving~~ obtaining the ~~Company.~~consent Ifof the ~~Series~~Federal BReserve ~~Preferred~~Bank. ~~were~~CIB ~~converted~~Marine tois ~~common~~also atprohibited ~~December~~from ~~31,~~paying ~~2010,~~any andividends ~~additional~~on ~~17,504,000~~its common ~~shares~~stock ~~would~~unless bethe quarterly ~~issued.~~dividend Onon ~~a pro forma basis, such amount would have represented 49% of~~ the ~~total common shares outstanding. The~~ CIB Marine Preferred has nobeen ~~stated~~paid ~~redemption~~in ~~date~~full ~~and~~for ~~the~~four ~~holders~~consecutive ofquarters. ~~CIB~~Moreover, ~~Marine~~under ~~Preferred do not have~~ the ~~right~~Consent Order, toCIBM ~~compel the~~Bank ~~redemption~~may ofnot ~~any~~declare or ~~all~~pay ofany ~~the shares. Further,~~ dividends ~~are noncumulative and are only~~ to ~~be paid at such time as a dividend is declared by~~ CIB Marine, atwithout ~~its~~prior ~~discretion, subject to~~ regulatory approval. ~~The issuance of the~~ CIB Marine ~~Preferred~~will ~~was~~periodically evaluate ~~exempt~~its ~~from~~financial ~~registration~~position ~~under~~to ~~the~~determine ~~Securities~~whether ~~Act pursuant~~ to ~~Section~~pay ~~1145~~cash ofdividends ~~the~~in ~~Bankruptcy Code and/or Section 4(2) of~~ the ~~Securities Act~~future.

~~ITEM~~Except 6.as ~~SELECTED~~described ~~FINANCIAL~~below ~~DATA~~with respect to CIB Marine Preferred, CIB Marine did not sell any of its securities within the past three years which were not registered under the Securities Act of 1933, as amended (“Securities Act”), or repurchase any of its securities during the fourth quarter of 2011.

~~The~~On ~~following~~December ~~table~~30, ~~sets~~2009, ~~forth~~in accordance with CIB Marine’s ~~selected~~Plan ~~consolidated~~of ~~financial~~Reorganization ~~data.~~under ~~The~~Chapter ~~following~~11 ~~information~~of ~~should~~the beBankruptcy ~~read~~Code, inapproximately ~~conjunction~~$107.2 ~~with~~million ~~Item~~of 8high-~~Financial~~interest cumulative ~~Statements~~indebtedness ~~and~~was ~~Supplementary~~exchanged ~~Data~~for ~~and~~two ~~Item~~series ~~7-Management’s~~of ~~Discussion~~CIB Marine preferred stock: the Series A Preferred and ~~Analysis~~the Series B Preferred. The Series A Preferred is not convertible, however, each share of ~~Financial~~Series B ~~Condition~~Preferred is convertible into 4,000 shares of CIB Marine common stock only upon the consummation of a merger transaction involving CIB Marine where CIB Marine is not the surviving entity. The CIB Marine Preferred has no stated redemption date and ~~Results~~holders have no right to compel the redemption of ~~Operations~~any ~~presented~~or all of the shares. Further, dividends are noncumulative, and payable only to the extent CIB Marine declares a dividend, at its discretion and subject to regulatory approval (see Note 13 to the consolidated financial statements appearing in Item 8 of Part II ofto this Form 10-K). Under the Plan, the ownership interests of holders of CIB Marine common stock survived the emergence from Chapter 11 bankruptcy. If the Series B Preferred were converted to common at December 31, 2011, an additional 17,504,000 common shares would be issued. On a pro forma basis, such amount would have represented 49% of the total common shares outstanding at the date. The issuance of the CIB Marine Preferred was exempt from registration under the Securities Act pursuant to Section 1145 of the Bankruptcy Code and/or Section 4(2) of the Securities Act.

	At or for the Years Ended December 31,
	2010			2009			2008			2007			2006
	(Dollars in thousands, except share and per share data)
Selected Statements of Operations Data
Interest and dividend income	$	30,290		$	39,409		$	56,141		$	62,694		$	61,509
Interest expense		9,269			23,926			34,501			40,067			38,242
Net interest income		21,021			15,483			21,640			22,627			23,267
Provision for (reversal of) loan losses		15,345			27,373			22,063			6,413			(4,384	)
Net interest income (loss) after provision for (reversal of) loan losses		5,676			(11,890	)		(423	)		16,214			27,651
Noninterest income (1)		1,069			1,500			4,366			3,050			3,408
Noninterest expense		23,998			30,994			39,856			34,472			40,997
Loss from continuing operations before income taxes		(17,253	)		(41,384	)		(35,913	)		(15,208	)		(9,938	)
Income tax expense (benefit)		—			99			320			3			(99	)
Net loss from continuing operations		(17,253	)		(41,483	)		(36,233	)		(15,211	)		(9,839	)
Discontinued operations:
Income from discontinued operations before income taxes		—			711			493			417			660
Income tax expense (benefit)		—			—			(1,341	)		(1,023	)		99
Net income from discontinued operations		—			711			1,834			1,440			561
Net loss before extraordinary net gain		(17,253	)		(40,772	)		(34,399	)		(13,771	)		(9,278	)
Extraordinary gain on extinguishment of junior subordinated debentures, net of amortization and reorganization costs		—			54,497			—			—			—
Net income (loss)	$	(17,253	)	$	13,725		$	(34,399	)	$	(13,771	)	$	(9,278	)
Common Share Data
Basic and diluted-loss from continuing operations	$	(0.95	)	$	(2.28	)	$	(1.98	)	$	(0.83	)	$	(0.54	)
Net income (loss)		(0.95	)		0.75			(1.88	)		(0.75	)		(0.51	)
Dividends		—			—			—			—			—
Book value per share		0.48			1.36			0.81			3.29			3.91
Weighted average shares outstanding-basic		18,127,892			18,217,608			18,333,779			18,333,779			18,333,779
Weighted average shares outstanding-diluted		18,127,892			18,313,520			18,333,779			18,333,779			18,333,779
Financial Condition Data
Total assets excluding assets of company held for disposal	$	587,943		$	708,686		$	905,408		$	1,003,936		$	993,472
Loans		415,778			470,668			555,207			595,259			522,624
Allowance for loan losses		(14,645	)		(16,240	)		(19,242	)		(20,706	)		(20,906	)
Securities available for sale		126,878			182,971			280,452			316,321			345,602
Deposits		493,527			589,450			694,632			745,590			739,784
Deposits of branches held for sale		—			—			—			—			55,365
Borrowings, including junior subordinated debentures		22,761			30,572			151,663			159,473			91,510
Stockholders’ equity		68,753			84,695			14,802			60,306			71,613

27ITEM 6. SELECTED FINANCIAL DATA

	At or for the Years Ended December 31,
	2010			2009			2008			2007			2006
	(Dollars in thousands, except share and per share data)
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (2)		3.21	%		1.90	%		2.19	%		2.39	%		2.29	%
Net interest spread (3)		2.86			1.49			1.64			1.57			1.59
Noninterest income to average assets (4)		0.14			0.12			0.43			0.31			0.32
Noninterest expense to average assets		3.62			3.77			3.97			3.54			3.90
Efficiency ratio (5)		109.40			188.62			153.26			134.25			153.69
Loss on average assets (6)		(2.60	)		(5.04	)		(3.61	)		(1.56	)		(0.94	)
Loss on average equity (7)		(21.34	)		(2,016.67	)		(84.32	)		(22.21	)		(13.56	)
Asset Quality Ratios:
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (8)		9.37	%		10.97	%		2.90	%		3.18	%		4.24	%
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total asset (8)		7.53			7.40			1.89			2.02			2.24
Allowance for loan losses to total loans		3.52			3.45			3.47			3.48			4.00
Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (8)		37.58			31.45			119.43			109.37			94.37
Net charge-offs (recoveries) to average loans		3.90			5.82			3.90			1.14			(0.08	)
Capital Ratios:
Total equity to total continuing assets		11.69	%		11.95	%		1.63	%		6.01	%		7.21	%
Total risk-based capital ratio		15.47			16.51			10.04			17.26			20.95
Tier 1 risk-based capital ratio		14.20			15.24			5.02			10.62			14.32
Leverage capital ratio		11.80			12.08			3.58			7.92			9.51
Other Data:
Number of employees (full-time equivalent)		145			165			197			258			301
Number of banking facilities		15			17			18			25			30

The following table sets forth CIB Marine’s selected consolidated financial data. The following information should be read in conjunction with Item 8-Financial Statements and Supplementary Data and Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in Part II of this Form 10-K.

(1) Noninterest income from continuing operations includes pretax gains on investment securities of $0.2 million and $0.6 million for the years ended December 31, 2010 and 2009, respectively. There were no pretax gains on investment securities in 2008, 2007 and 2006.

	At or for the Years Ended December 31,
	2011			2010			2009			2008			2007
	(Dollars in thousands, except share and per share data)
Selected Statements of Operations Data
Interest and dividend income	$	25,694		$	30,290		$	39,409		$	56,141		$	62,694
Interest expense		5,469			9,269			23,926			34,501			40,067
Net interest income		20,225			21,021			15,483			21,640			22,627
Provision for loan losses		6,381			15,345			27,373			22,063			6,413
Net interest income (loss) after provision for loan losses		13,844			5,676			(11,890	)		(423	)		16,214
Noninterest income (1)		1,650			1,069			1,500			4,366			3,050
Noninterest expense		21,699			23,998			30,994			39,856			34,472
Loss from continuing operations before income taxes		(6,205	)		(17,253	)		(41,384	)		(35,913	)		(15,208	)
Income tax expense		—			—			99			320			3
Net loss from continuing operations		(6,205	)		(17,253	)		(41,483	)		(36,233	)		(15,211	)
Discontinued operations:
Income from discontinued operations before income taxes		781			—			711			493			417
Income tax expense (benefit)		—			—			—			(1,341	)		(1,023	)
Net income from discontinued operations		781			—			711			1,834			1,440
Net loss before extraordinary net gain		(5,424	)		(17,253	)		(40,772	)		(34,399	)		(13,771	)
Extraordinary gain on extinguishment of junior subordinated debentures, net of amortization and reorganization costs		—			—			54,497			—			—
Net income (loss)	$	(5,424	)	$	(17,253	)	$	13,725		$	(34,399	)	$	(13,771	)
Common Share Data
Basic and diluted-loss from continuing operations	$	(0.34	)	$	(0.95	)	$	(2.28	)	$	(1.98	)	$	(0.83	)
Net income (loss)		(0.30	)		(0.95	)		0.75			(1.88	)		(0.75	)
Dividends		—			—			—			—			—
Book value per share		0.23			0.48			1.36			0.81			3.29
Weighted average shares outstanding-basic		18,127,892			18,127,892			18,217,608			18,333,779			18,333,779
Weighted average shares outstanding-diluted		18,127,892			18,127,892			18,313,520			18,333,779			18,333,779
Financial Condition Data
Total assets excluding assets of company held for disposal	$	503,976		$	587,943		$	708,686		$	905,408		$	1,003,936
Loans		357,632			415,778			470,668			555,207			595,259
Allowance for loan losses		(16,128	)		(14,645	)		(16,240	)		(19,242	)		(20,706	)
Securities available for sale		89,009			126,878			182,971			280,452			316,321
Deposits		422,586			493,527			589,450			694,632			745,590
Borrowings, including junior subordinated debentures		14,784			22,761			30,572			151,663			159,473
Stockholders’ equity		64,222			68,753			84,695			14,802			60,306
Financial Ratios and Other Data
Performance Ratios:
Net interest margin (2)		3.72	%		3.21	%		1.90	%		2.19	%		2.39	%
Net interest spread (3)		3.44			2.86			1.49			1.64			1.57
Noninterest income to average assets (4)		0.30			0.14			0.12			0.43			0.31
Noninterest expense to average assets		3.94			3.62			3.77			3.97			3.54
Efficiency ratio (5)		99.20			109.40			188.62			153.26			134.25
Loss on average assets (6)		(1.13	)		(2.60	)		(5.04	)		(3.61	)		(1.56	)
Loss on average equity (7)		(9.15	)		(21.34	)		(2,016.67	)		(84.32	)		(22.21	)
Asset Quality Ratios:
Nonaccrual loans to total loans (8)		5.48	%		8.04	%		10.80	%		2.71	%		3.17	%
Nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing to total loans (8)		8.47			9.37			10.97			2.90			3.18
Nonperforming assets, restructured loans and loans 90 days or more past due and still accruing to total asset (8)		7.42			7.53			7.40			1.89			2.02
Allowance for loan losses to total loans		4.51			3.52			3.45			3.47			3.48
Allowance for loan losses to nonaccrual loans, restructured loans and loans 90 days or more past due and still accruing (8)		53.23			37.58			31.45			119.43			109.37
Net charge-offs to average loans		1.28			3.90			5.82			3.90			1.14
Capital Ratios:

(2) Net interest margin is the ratio of net interest income, on a tax-equivalent basis, to average interest-earning assets. In the future, CIB Marine does not expect to realize all the tax benefits associated with tax-exempt assets due to substantial losses it has incurred and, for all years presented, no U.S. federal or state loss carryback potential remains. Accordingly, interest income on tax-exempt earning assets has not been adjusted to reflect the tax-equivalent basis. If 2010, 2009, 2008, 2007 and 2006 had been shown on a tax-equivalent basis at an effective rate of 35%, the net interest margin would have been 3.21%, 1.95%, 2.20%, 2.43% and 2.34%, respectively.26

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

	At or for the Years Ended December 31,
	2011			2010			2009			2008			2007
	(Dollars in thousands, except share and per share data)
Total equity to total continuing assets		12.74	%		11.69	%		11.95	%		1.63	%		6.01	%
Total risk-based capital ratio		16.93			15.47			16.51			10.04			17.26
Tier 1 risk-based capital ratio		15.64			14.20			15.24			5.02			10.62
Leverage capital ratio		13.15			11.80			12.08			3.58			7.92
Other Data:
Number of employees (full-time equivalent)		127			145			165			197			258
Number of banking facilities		13			15			17			18			25

(41) Noninterest income tofrom ~~average~~continuing ~~assets~~operations ~~excludes~~includes pretax gains on investment securities of $0.2 million and ~~losses~~$0.6 million for the years ended December 31, 2010 and 2009, respectively. There were no pretax gains on investment securities in 2011, 2008 and 2007.

(52) ~~The~~Net ~~efficiency~~interest ~~ratio~~margin is ~~noninterest expense divided by~~ the ~~sum~~ratio of net interest income, onto aaverage ~~tax~~interest-~~equivalent~~earning ~~basis, plus noninterest income, excluding gains and losses on securities~~assets.

(63) ~~Loss~~Net oninterest ~~average~~spread ~~assets~~ is ~~net~~the ~~loss~~yield ~~from~~on ~~continuing~~average ~~operations~~interest-earning ~~divided~~assets byless the rate on average ~~total~~interest-bearing ~~assets~~liabilities.

(74) ~~Loss~~Noninterest onincome to average ~~equity~~assets isexcludes ~~net~~gains ~~loss~~and ~~from~~losses ~~continuing~~on ~~operations divided by average common equity~~securities.

(85) ~~Excludes~~The ~~loans~~efficiency ~~held~~ratio ~~for~~is ~~sale~~noninterest ~~from~~expense ~~nonaccrual~~divided ~~loans,~~by ~~nonperforming~~the ~~assets~~sum ~~and~~of 90net ~~days~~interest orincome ~~more~~plus ~~past~~noninterest ~~due~~income, excluding gains and ~~still~~losses ~~accruing~~on ~~loans~~securities.

~~ITEM~~(6) 7.Loss ~~MANAGEMENT’S~~on ~~DISCUSSION~~average ~~AND~~assets ~~ANALYSIS~~is OFnet ~~FINANCIAL~~loss ~~CONDITION~~from ~~AND~~continuing ~~RESULTS~~operations OFdivided ~~OPERATIONS~~by average total assets.

~~CRITICAL~~(7) ~~ACCOUNTING~~Loss ~~POLICIES~~on average equity is net loss from continuing operations divided by average common equity.

~~The~~(8) ~~financial~~Excludes ~~condition~~loans ~~and~~held ~~results~~for ofsale ~~operations~~from ~~presented~~nonaccrual ~~in the consolidated financial statements~~loans, ~~accompanying~~nonperforming ~~notes~~assets ~~to the consolidated financial statements, selected financial data appearing elsewhere within this report,~~ and ~~management’s~~90 ~~discussion~~days ~~and~~or ~~analysis~~more ~~are~~past ~~dependent~~due ~~upon CIB Marine’s accounting policies. The selection~~ and ~~application~~still ofaccruing ~~these accounting policies involve judgments about matters that affect the amounts reported in the financial statements and accompanying notes~~loans.

~~Presented~~ITEM ~~below~~7. ~~are discussions of those accounting policies that management believes are the most important (“Critical Accounting Policies”) to the portrayal and understanding of CIB Marine~~MANAGEMENT’sS ~~financial~~DISCUSSION ~~condition~~AND ~~and~~ANALYSIS ~~results~~OF ofFINANCIAL ~~operations.~~CONDITION ~~These~~AND ~~Critical~~RESULTS ~~Accounting~~OF Policies require difficult, subjective and complex judgments about matters that are inherently uncertain. These estimates are based on information available as of the date of the financial statements. Accordingly, as this information changes, the financial statements could reflect different estimates or judgments. Certain policies inherently have a greater reliance on the use of estimates and as such have a greater possibility of producing results that could be materially different than originally reported. See Note 2 to the consolidated financial statements appearing in Item 8 of Part II of this Form 10-K.OPERATIONS

28CRITICAL ACCOUNTING POLICIES

~~Allowance~~The ~~for~~financial ~~Loan~~condition ~~Losses~~and results of operations presented in the consolidated financial statements, accompanying notes to the consolidated financial statements, selected financial data appearing elsewhere within this report, and management’s discussion and analysis are dependent upon CIB Marine’s accounting policies. The selection and application of these accounting policies involve judgments about matters that affect the amounts reported in the financial statements and accompanying notes.

~~CIB~~Presented ~~Marine~~below ~~monitors~~are ~~and~~discussions ~~maintains~~of anthose accounting ~~allowance~~policies ~~for~~that ~~loan~~management ~~losses~~believes are the most important (“Critical Accounting Policies”) to ~~absorb~~the anportrayal and ~~estimate~~understanding of ~~probable~~CIB ~~incurred~~Marine’s ~~losses~~financial ~~inherent~~condition inand ~~the~~results ~~loan~~of ~~portfolio~~operations. ~~CIB~~These ~~Marine~~Critical ~~maintains~~Accounting ~~policies~~Policies require difficult, subjective and ~~procedures~~complex judgments about matters that ~~address~~are ~~the~~inherently ~~systems~~uncertain. ofThese ~~controls~~estimates ~~over~~are ~~the~~based ~~following~~on ~~areas~~information available as of the ~~allowance:~~date of the ~~systematic~~financial ~~methodology~~statements. ~~used~~Accordingly, toas ~~determine~~this ~~the~~information ~~appropriate~~changes, ~~level~~the offinancial ~~the~~statements ~~allowance~~could reflect todifferent ~~provide~~estimates ~~assurances~~or ~~that~~judgments. itCertain ispolicies ~~maintained~~inherently inhave ~~accordance~~a ~~with~~greater ~~GAAP;~~reliance on the ~~accounting~~use ~~policies~~of ~~for~~estimates ~~loan~~and ~~charge-offs~~as ~~and~~such have ~~recoveries;~~a ~~the~~greater ~~assessment~~possibility ~~and~~of ~~measurement~~producing results that could be materially different than originally reported. See Note 1 of ~~impairment~~the consolidated financial statements appearing in ~~the~~Item ~~loan~~8 ~~portfolio;~~of ~~and~~Part ~~the~~II ~~loan~~to ~~grading~~this ~~system~~Form 10-K.

~~CIB~~Allowance ~~Marine evaluates certain commercial, commercial real estate and construction and development loans individually~~ for ~~impairment~~Loan as required by the FASB. Loans evaluated individually for impairment include nonaccrual loans, loans past due 90 days or more and still accruing, restructured loans and other loans identified by management as being impaired. Impairment is measured on a loan-by-loan basis for commercial, commercial real estate and construction and development loans over $350,000 and all troubled debt restructured loans (“TDR”) by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. If the evaluation shows that a loan is individually impaired, then a specific reserve is established for the amount of impairment. The specific reserve is determined as the excess, if any, of the carrying value of the loan over the amount determined using the measurement alternative employed at the measurement date. The carrying value of the loan reflects reductions, if any, from prior charge-offs. The purchased home equity pool loans are evaluated based on historical charge-off data, past due information, and other environmental factors concerning the real estate market. CIB Marine’s policy is to charge-off these loans once they become 90 days or more past due. Loans, including all other residential real estate, home equity and consumer loans which are not evaluated individually are assessed for impairment with groups of loans that have similar characteristics.Losses

~~For loans which are not individually evaluated,~~ CIB Marine ~~makes~~monitors ~~estimates~~and ofmaintains ~~losses~~an allowance for ~~groups~~loan oflosses ~~loans.~~to ~~Loans~~absorb ~~are~~an ~~grouped~~estimate ~~by similar characteristics, including the type~~ of ~~loan,~~probable ~~the~~incurred ~~assigned credit risk grade and the general collateral type. A loss rate reflecting the expected~~ losses inherent in athe ~~group~~loan ofportfolio. ~~loans~~CIB isMarine ~~derived~~maintains ~~based upon estimates of expected default~~ policies and ~~loss~~procedures ~~rates~~that ~~for~~address the ~~group~~systems of ~~loans~~controls inover ~~part~~the ~~based~~following ~~upon~~areas ~~CIB~~of ~~Marine’s~~the ~~loss~~allowance: ~~history~~the ~~and~~systematic ~~related~~methodology ~~migration~~used to ~~analysis.~~determine ~~The~~the ~~resulting~~appropriate ~~estimate~~level of ~~losses~~the ~~for~~allowance ~~groups~~to ofprovide ~~loans~~assurances ~~are~~that ~~adjusted~~it ~~for~~is ~~relevant~~maintained ~~environmental~~in ~~factors~~accordance ~~and~~with ~~other conditions, including: borrower and industry concentrations~~GAAP; ~~levels~~the ~~and~~accounting policies ~~trends~~for inloan ~~delinquencies,~~ charge-offs and recoveries; ~~changes~~the inassessment ~~underwriting standards~~ and ~~risk~~measurement ~~selection; level~~ of ~~experience~~impairment ~~and~~in ~~ability~~the ofloan ~~lending management~~portfolio; ~~national~~the ~~and~~identification of ~~local~~troubled ~~economic~~debt ~~conditions~~restructuring; and ~~off-balance~~the ~~sheet~~loan ~~positions~~grading system.

~~The~~CIB ~~amount~~Marine ofevaluates ~~estimated~~certain ~~impairment~~loans ~~for~~in the Commercial Segments individually ~~evaluated~~for ~~loans~~impairment ~~and~~as required by the ~~estimate~~FASB. ofLoans ~~losses~~evaluated individually for ~~groups~~impairment ofinclude nonaccrual loans, ~~collectively~~loans ~~evaluated~~past ~~for~~due ~~impairment~~90 ~~are~~days ~~added~~or ~~together~~more ~~for~~and astill ~~total~~accruing, ~~estimate~~restructured ofloans ~~loan~~and ~~losses~~other loans identified by management as being impaired. ~~The~~Impairment ~~estimate~~is ofmeasured ~~losses~~on ~~for~~a ~~groups~~loan-by-loan ofbasis ~~loans~~for ~~includes~~commercial, ancommercial ~~assessment~~real ofestate aand ~~range~~construction ofand ~~likely~~development loans ~~loss~~over ~~outcomes~~$350,000 and ~~the~~all ~~most~~troubled ~~likely~~debt ~~outcome~~restructured isloans ~~used.~~(“TDR”) ~~This~~by ~~total~~either ~~estimate~~the present value of ~~loan~~expected ~~losses~~future cash isflows ~~compared~~discounted toat the ~~allowance~~loan’s ~~for~~effective interest rate, the loan’s ~~losses~~obtainable ofmarket ~~CIBM~~price, ~~Bank~~or asthe fair value of the ~~evaluation~~collateral ~~date~~if the loan is collateral dependent. If the ~~estimate~~evaluation ofshows ~~losses~~that isa ~~greater~~loan ~~than~~is ~~the~~individually ~~allowance~~impaired, anthen ~~additional~~a ~~provision~~specific reserve tois ~~the~~established ~~allowance~~for ~~would~~the beamount ~~made~~of impairment. IfThe specific reserve is determined as the ~~estimate~~excess, ofif ~~losses~~any, isof ~~less~~the ~~than~~carrying value of the ~~allowance,~~loan over the ~~allowance~~amount ~~would~~determined beusing ~~reduced.~~the ~~CIB~~measurement ~~Marine~~alternative ~~recognizes~~employed at the ~~inherent~~measurement ~~imprecision~~date. inThe ~~estimates~~carrying value of ~~losses~~the ~~due~~loan toreflects ~~various~~reductions, ~~uncertainties~~if ~~and~~any, ~~variability~~from ~~related~~prior tocharge-offs. ~~the~~The ~~factors~~purchased ~~used~~home toequity ~~estimate loan~~pool ~~losses.~~loans Ifare ~~different~~evaluated ~~assumptions~~based oron ~~conditions~~historical charge-off ~~were~~data, topast ~~prevail~~due information, and itother isenvironmental ~~determined~~factors ~~that~~concerning the ~~allowance~~real isestate ~~not~~market. ~~adequate~~CIB Marine’s policy is to ~~absorb~~charge-off ~~the~~these ~~new~~pool ~~estimate~~loans ofonce ~~probable~~they ~~losses,~~become an90 ~~additional~~days ~~provision~~or ~~for~~more ~~loan~~past ~~losses~~due. ~~would~~Loans, beincluding ~~made~~all other residential real estate, home equity and consumer loans which ~~may~~are benot ~~material~~evaluated toindividually ~~the~~are ~~consolidated~~assessed ~~financial~~for ~~statements~~impairment with groups of loans that have similar characteristics.

~~Measurement of Fair Value~~27

AFor ~~portion~~loans ofwhich ~~CIB~~are ~~Marine’s~~not ~~assets~~individually ~~and~~evaluated, CIB ~~liabilities~~Marine ~~are~~makes ~~carried~~estimates atof ~~fair~~losses ~~value~~for ongroups ~~the~~of ~~consolidated~~loans. ~~balance~~Loans ~~sheets,~~are ~~with~~grouped ~~changes~~by insimilar ~~fair~~characteristics, ~~value~~including ~~recorded~~the ~~either~~type ~~through~~of ~~earnings~~loan, the orassigned ~~other~~credit ~~comprehensive~~risk ~~income~~grade inand ~~accordance~~the ~~with~~general ~~applicable~~collateral ~~GAAP~~type. ~~These~~A ~~include~~loss ~~CIB~~rate ~~Marine’s~~reflecting ~~available~~the ~~for~~probable ~~sale~~incurred ~~securities~~losses ~~and~~in ~~other~~a ~~equity~~group of ~~securities.~~loans ~~The~~is ~~estimation~~derived ofbased ~~fair~~upon ~~value~~estimates ~~also~~of ~~affects~~expected ~~certain~~default ~~other~~and ~~loans~~loss ~~held~~rates for ~~sale,~~the ~~which~~group ~~are~~of ~~not~~loans ~~recorded~~in atpart ~~fair~~based ~~value~~upon ~~but~~CIB atMarine’s loss ~~the~~history ~~lower~~and ofrelated ~~cost~~migration ~~or market~~analysis. The ~~determination~~resulting estimate of ~~fair~~losses ~~value~~for isgroups ~~important~~of loans are adjusted for ~~certain~~relevant environmental factors and other ~~assets~~conditions, including: ~~impaired~~borrower ~~loans~~and industry concentrations; levels and trends in delinquencies, charge-offs and ~~other~~recoveries; ~~real~~changes ~~estate~~in ~~owned~~underwriting ~~that~~standards ~~are~~and ~~periodically~~risk ~~evaluated~~selection; ~~for~~level ~~impairment~~of ~~using~~experience ~~fair~~and ~~value~~ability ~~estimates~~of lending management; national and local economic conditions; and off-balance sheet positions.

29The amount of estimated impairment for individually evaluated loans and the estimate of losses for groups of loans collectively evaluated for impairment are added together for a total estimate of loan losses. The estimate of losses for groups of loans includes an assessment of a range of likely loss outcomes and the most likely outcome is used. This total estimate of loan losses is compared to the allowance for loan losses of CIBM Bank as of the evaluation date. If the estimate of losses is greater than the allowance, an additional provision to the allowance would be made. If the estimate of losses is less than the allowance, the allowance would be reduced. CIB Marine recognizes the inherent imprecision in estimates of losses due to various uncertainties and variability related to the factors used to estimate loan losses. If different assumptions or conditions were to prevail and it is determined that the allowance is not adequate to absorb the new estimate of probable incurred losses, an additional provision for loan losses would be made, which may be material to the consolidated financial statements.

~~Fair~~Measurement ~~value~~of ~~is generally defined as the amount at which an asset or liability could be exchanged in a current transaction between willing, unrelated parties, other than in a forced or liquidation sale.~~ Fair value is based on quoted market prices in an active market, or if market prices are not available, is estimated using models employing techniques such as matrix pricing or discounting expected cash flows. The significant assumptions used in the models, which include assumptions for interest rates, discount rates, prepayments and credit losses, are independently verified against observable market data where possible. Where observable market data is not available, the estimate of fair value becomes more subjective and involves a high degree of judgment. In this circumstance, fair value is estimated based on management’s judgment regarding the value that market participants would assign to the asset or liability. This valuation process takes into consideration factors such as market illiquidity. Imprecision in estimating these factors can impact the amount recorded on the balance sheet for a particular asset or liability with related impacts to earnings or other comprehensive income. See Note 21 to the consolidated financial statements appearing in Item 8 of Part II of this Form 10-K.Value

~~Securities~~A ~~Available~~portion of CIB Marine’s assets and liabilities are carried at fair value on the consolidated balance sheets, with changes in fair value recorded either through earnings or other comprehensive income in accordance with applicable GAAP. These include CIB Marine’s available for ~~Sale~~sale securities and other equity securities. The estimation of fair value also affects certain other loans held for sale, which are not recorded at fair value but at the lower of cost or market. The determination of fair value is important for certain other assets, including impaired loans, and OREO that are periodically evaluated for impairment using fair value estimates.

~~Available~~Fair ~~for~~value ~~sale~~is ~~securities~~generally ~~are~~defined ~~carried~~as the amount at ~~fair~~which ~~value~~an ~~with~~asset ~~unrealized~~or ~~net~~liability ~~gains~~could ~~and~~be ~~losses~~exchanged ~~reported~~ in ~~other~~a ~~comprehensive~~current ~~income~~transaction ~~(loss)~~between willing, unrelated parties, other than in ~~stockholders’~~a ~~equity.~~forced ~~Management~~or ~~evaluates~~liquidation ~~securities~~sale. ~~for~~Fair ~~OTTI~~value atis ~~least~~based on aquoted ~~quarterly~~market ~~basis~~prices ~~and~~in ~~more~~an ~~frequently~~active ~~when~~market, ~~economic~~ or if market ~~conditions~~prices ~~warrant.~~are ~~Declines~~not inavailable, is ~~the~~estimated ~~fair~~using ~~value~~models ofemploying ~~securities~~techniques ~~available~~such ~~for~~as ~~sale~~matrix ~~that~~pricing ~~are~~or ~~deemed~~discounting toexpected becash ~~other-than-temporary~~flows. ~~are~~The ~~charged~~significant toassumptions used ~~earnings~~in asthe amodels, ~~realized~~which ~~loss~~include assumptions for interest rates, discount rates, prepayments and acredit ~~new~~losses, ~~cost~~are ~~basis~~independently verified ~~for~~against ~~the~~observable ~~securities~~market isdata ~~established~~where possible. InWhere ~~evaluating~~observable ~~OTTI,~~market ~~CIB~~data ~~Marine’s~~is ~~management~~not ~~considers~~available, the ~~length~~estimate of ~~time~~fair ~~and~~value becomes ~~extent~~more tosubjective ~~which~~and ~~the~~involves ~~fair~~a ~~value~~high ~~has~~degree ~~been~~of ~~less~~judgment. ~~than~~In ~~cost~~this circumstance, ~~the~~fair ~~financial~~value ~~condition~~is ~~and~~estimated ~~near-term~~based ~~prospects~~on ofmanagement’s judgment regarding the ~~issuer,~~value ~~whether~~that ormarket ~~not~~participants ~~CIB~~would ~~Marine~~assign ~~intends~~ to ~~sell~~the asset or itliability. isThis ~~more~~valuation ~~likely~~process ~~than~~takes ~~not~~into consideration ~~CIB~~factors ~~Marine~~such ~~will~~as bemarket ~~required~~illiquidity. toImprecision ~~sell~~in ~~the security~~estimating ~~prior~~these tofactors acan ~~period~~impact ofthe ~~time~~amount ~~sufficient~~recorded toon ~~allow~~the balance sheet for ~~any~~a ~~anticipated~~particular ~~recovery~~asset ofor ~~fair~~liability ~~value,~~with ~~and~~related ~~other~~impacts ~~factors~~to asearnings ~~detailed~~or inother ~~Note~~comprehensive 4income. toSee Note 20 of the consolidated financial statements appearing in Item 8 of Part II ofto this Form 10-K.

~~Income~~Securities ~~Taxes~~Available for Sale

~~CIB~~Available ~~Marine recognizes expense~~ for ~~federal~~sale ~~and~~securities ~~state~~are ~~income~~carried at ~~taxes~~fair ~~currently~~value ~~payable~~with asunrealized ~~well~~net asgains ~~for deferred federal~~ and ~~state~~losses ~~taxes for estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts~~ reported in ~~the~~other ~~consolidated~~comprehensive ~~balance~~income ~~sheets, as well as~~ (loss) ~~carryforwards~~in ~~and~~stockholders’ ~~tax credit carryforwards~~equity. Management ~~Realization~~evaluates ofsecurities ~~deferred~~for ~~tax~~OTTI ~~assets~~at isleast ~~dependent~~on ~~upon~~a ~~CIB~~quarterly ~~Marine~~basis ~~generating~~and ~~sufficient~~more ~~taxable~~frequently ~~income~~when ineconomic ~~either the carryforward~~ or ~~carryback~~market ~~periods~~conditions towarrant. Declines ~~cover~~in ~~net operating losses generated by~~ the ~~reversal~~fair ofvalue ~~temporary differences. A valuation allowance is provided by way~~ of asecurities ~~charge~~available tofor ~~income~~sale ~~tax expense if it is determined~~ that itare isdeemed ~~not~~to ~~more~~be ~~likely~~ other-than-temporary ~~not~~are ~~that~~charged ~~some~~to ~~portion~~earnings as ora ~~all of the deferred tax asset will be~~ realized. Ifloss ~~different~~and ~~assumptions~~a ~~and~~new ~~conditions were~~cost tobasis ~~prevail,~~for the ~~valuation~~securities ~~allowance~~is ~~may~~established. ~~not~~In beevaluating ~~adequate~~OTTI, toCIB ~~absorb~~Marine’s ~~unrealized~~management ~~deferred taxes and~~ considers the ~~amount~~length of ~~income~~time ~~taxes~~and ~~payable~~extent ~~may need~~ to bewhich ~~adjusted~~the byfair ~~way~~value ofhas abeen ~~charge~~less orthan ~~credit to expense. Furthermore~~cost, ~~income~~the ~~tax~~financial ~~returns~~condition ~~are~~and ~~subject~~near-term toprospects of ~~audit by~~ the ~~Internal Revenue Service (“IRS”)~~issuer, ~~state~~whether ~~taxing~~or ~~authorities,~~not ~~and~~CIB ~~foreign~~Marine ~~government~~intends ~~taxing~~to ~~authorities.~~sell ~~Income~~or ~~tax~~it ~~expense for current and prior periods~~ is ~~subject~~more tolikely ~~adjustment~~than ~~based~~not ~~upon the outcome of such audits.~~ CIB Marine ~~believes~~will itbe ~~has~~required ~~adequately~~to ~~accrued~~sell ~~for~~the security ~~all~~prior ~~probable~~to ~~income~~a ~~taxes~~period ~~payable~~of ~~and~~time ~~provided~~sufficient ~~valuation~~to ~~allowances~~allow for ~~deferred~~any ~~tax~~anticipated ~~assets~~recovery ~~where~~of itfair ~~has~~value, ~~been~~and ~~determined~~other tofactors beas ~~not~~detailed in ~~more~~Note ~~likely~~3 ~~than not that such assets are realizable. Accrual~~ of ~~income~~the ~~taxes~~consolidated ~~payable~~financial ~~and~~statements ~~valuation~~appearing ~~allowances~~in ~~against~~Item ~~deferred~~8 ~~tax~~of ~~assets~~Part ~~are~~II ~~estimates subject~~ to ~~change~~this ~~based~~Form ~~upon the outcome of future events~~10-K.

CIB Marine has entered into tax allocation agreements with its subsidiary entities included in the consolidated U.S. federal and unitary and combined state income tax returns, including U.S. operations of companies held for sale or disposal. These agreements govern the timing and amount of income tax payments required by the various entities.28

Due to the significant losses from continuing operations incurred in 2006 through 2010, management has determined that it is not more likely than not that the entire net deferred tax asset of $74.0 million at December 31, 2010, which includes the entire net deferred tax asset of companies held for sale or disposal of $3.4 million, will be realized. Therefore, a valuation allowance for the entire amount has been established, including net deferred tax assets of companies held for sale or disposal.INTRODUCTION

30The following is a discussion and analysis of CIB Marine’s consolidated financial condition as of December 31, 2011 and 2010, and its changes in financial condition and results of operations for the three years ended December 31, 2011, 2010 and 2009. 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 II, Item 8 of this Form 10-K.

~~INTRODUCTION~~RESULTS OF OPERATIONS

~~The~~Operating following is a discussion and analysis of CIB Marine’s consolidated financial condition as of December 31, 2010 and 2009, and its changes in financial condition and results of operations for the three years ended December 31, 2010, 2009 and 2008. 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 II, Item 8 of this Form 10-K.Results

~~RESULTS~~CIB OFMarine ~~OPERATIONS~~recorded improved results in 2011 with a net loss of $5.4 million compared to a net loss of $17.3 million in 2010 and net income of $13.7 million in 2009. The $13.7 million net income reported in 2009 included a $54.5 million extraordinary gain, net of amortization and reorganization costs, on the extinguishment of its Debentures. Excluding this extraordinary net gain, CIB Marine would have reported a net loss of $40.8 million for 2009. Net loss from continuing operations was $6.2 million, $17.3 million and $41.5 million for 2011, 2010 and 2009, respectively. Net income from discontinued operations was $0.8 million in 2011 and $0.7 million in 2009. There was no net income or loss from discontinued operations in 2010.

~~Operating~~2011 Compared With 2010 Operating Results

In2011 ~~2010~~highlights CIB Marine reported a net loss of $17.3 million compared to net income of $13.7 million in 2009 and a net loss of $34.4 million in 2008. The $13.7 million net income reported in 2009 included a $54.5 million extraordinary gain, net of amortization and reorganization costs, on the extinguishment of its Debentures. Excluding this extraordinary net gain, CIB Marine would have reported a net loss of $40.8 million for 2009. Net loss from continuing operations was $17.3 million, $41.5 million and $36.2 million for 2010, 2009 and 2008, respectively. Net income from discontinued operations was $0.7 million in 2009 and $1.8 million in 2008. There was no net income from discontinued operations in 2010.include:

~~2010~~· ~~Compared~~Net ~~With~~interest ~~2009~~margin ~~Operating~~percentage ~~Results~~in 2011 improved 51 basis points to 3.72% from 3.21% in 2010.

~~Net~~· ~~loss~~Provision from continuing operations decreased $24.2 million during 2010 compared to 2009. The decrease was primarily due to a $5.5 million increase in net interest income, a $12.0 million decrease in the provision for loan losses, ~~and~~in a2011 declined $79.0 million ~~decrease~~or in58% ~~noninterest~~compared ~~expense. The increase in net interest income between the periods is primarily attributable~~ to the ~~elimination of interest expense on the Debentures. The~~ 2010 ~~reduction in the~~ provision for loan losses ~~was driven by a $13~~.4 million decrease in net charge-offs during 2010 compared to 2009. The $7.0 million decrease in noninterest expense between 2010 and 2009 was primarily the result of decreased compensation and employee benefits, lower professional services costs and reduced write down and losses on assets.

~~2009~~· ~~Compared~~Noninterest ~~With~~expense ~~2008~~in ~~Operating~~2011 ~~Results~~declined $2.3 million or 10% compared to 2010 noninterest expense.

~~Excluding~~Net ~~the~~loss ~~2009~~from ~~extraordinary~~continuing ~~net~~operations ~~gain, the~~ decreased $511.30 million ~~increase~~during in2011 ~~net~~compared ~~loss~~to ~~from~~2010. ~~continuing~~The ~~operations~~decrease was primarily due to a $69.10 ~~million~~decrease ~~reduction~~ in ~~net interest income, a $5.3 million increase in~~ the provision for loan losses , and a $2.93 million decrease in noninterest ~~income~~expense. ~~reflecting~~The ~~the~~2011 ~~impact~~reduction ofin the ~~2008~~provision ~~gain~~for ~~recognized~~loan onlosses ~~the~~was ~~sale of~~ the ~~deposits~~result of ~~CIB~~improved asset ~~Marine’s~~quality ~~Florida~~and ~~banking~~a ~~subsidiary,~~decline ~~offset~~of ~~by a~~ $812.90 million ~~reduction~~ in ~~noninterest~~net ~~expense.~~charge-offs, ~~The~~partially ~~reduction~~attributable into ~~net~~approximately ~~interest~~$5.2 ~~income~~million ~~between~~of ~~the~~recoveries on ~~periods~~purchased ishome ~~primarily~~equity ~~attributable~~loans toduring a2011 ~~reduction~~compared into ~~interest-earning assets~~2010. The ~~change~~$2.3 million decrease in ~~the~~noninterest ~~provision~~expense ~~for~~between ~~loan~~2011 ~~losses~~and 2010 was ~~driven~~primarily bythe aresult ~~$6.7~~of ~~million~~decreases ~~increase~~ in ~~net~~compensation ~~charge-offs~~and ~~during~~employee ~~2009~~benefits ~~compared~~as tothe ~~2008.~~number ~~The~~of ~~$8.9~~full-time ~~million~~equivalent ~~decrease~~employees were inreduced ~~noninterest~~by 18; occupancy expense, ~~reflected~~as the ~~impact~~number ~~in 2008~~ of ~~$3.4~~banking ~~million in~~facilities ~~litigation~~were ~~expense,~~reduced afrom ~~$3.4~~15 ~~million~~to ~~reduction~~13; inFDIC ~~compensation~~assessments, ~~and~~as ~~employee~~deposit balances ~~benefit~~declined ~~expense~~and ~~during~~the ~~2009~~assessment ~~due~~methodology tochanged; ~~fewer~~professional ~~full-time~~services ~~employees,~~costs ~~offset~~and byother ~~additional FDIC~~ expense ~~of $1~~.~~1 million.~~

~~Net~~2010 ~~Interest~~Compared ~~Income~~With 2009 Operating Results

Net ~~interest~~loss ~~income~~from iscontinuing ~~the~~operations ~~most~~decreased $24.2 ~~significant~~million ~~component~~during of2010 ~~CIB~~compared ~~Marine’s~~to ~~earnings~~2009. ~~Net~~The ~~interest~~decrease ~~income~~was isprimarily ~~the~~due ~~difference~~to ~~between~~a ~~interest~~$5.5 ~~earned~~million onincrease in net interest~~-earning~~ ~~assets~~income, ~~and~~a $12.0 ~~interest~~million ~~paid~~decrease onin ~~deposits~~the ~~and~~provision ~~other~~for ~~borrowed~~loan ~~funds~~losses, and a $7.0 ~~Net~~million ~~interest~~decrease ~~margin~~in isnoninterest ~~this~~expense. ~~difference~~The ~~expressed~~increase asin anet interest ~~percentage~~income ofbetween ~~average~~the ~~interest-earning~~periods ~~assets.~~is ~~The~~primarily ~~amount~~attributable ofto ~~CIB~~the ~~Marine’s~~elimination ~~net~~of interest ~~income~~expense ison ~~affected~~the byDebentures. ~~several~~The ~~factors,~~2010 reduction ~~including~~in ~~interest~~the ~~rates~~provision ~~and~~for ~~the~~loan ~~volume~~losses ~~and~~were ~~relative~~driven ~~mix~~by ofa ~~interest-earning~~$13.4 ~~assets~~million ~~and~~decrease ~~interest~~in net charge-~~bearing~~offs ~~liabilities~~during 2010 compared to 2009. The ~~Although~~$7.0 ~~CIB~~million ~~Marine~~decrease ~~can~~in ~~control~~noninterest ~~certain~~expense ofbetween ~~these~~2010 ~~factors,~~and ~~others,~~2009 ~~such~~was asprimarily the ~~general~~result ~~level~~ of ~~credit~~decreased ~~demand~~compensation and employee benefits, ~~fiscal~~lower ~~policy~~professional ~~and~~services ~~FRB~~costs ~~monetary~~and ~~policy,~~reduced ~~are~~write ~~beyond~~down ~~CIB~~and ~~Marine’s~~losses ~~control~~on assets.

The following table sets forth information regarding average balances, interest income, or interest expense, and the average rates earned or paid for each of CIB Marine’s major asset, liability and stockholders’ equity categories. Interest income on tax-exempt securities has not been adjusted to reflect the tax equivalent basis, since CIB Marine does not expect to realize all of the tax benefits associated with these securities due to substantial losses incurred. There were no tax-exempt loans in 2010, 2009 or 2008. See Note 20 to the consolidated financial statements appearing in Item 8 of Part II of this Form 10-K for additional information.29

31Net Interest Income

	Years Ended December 31,
	2010								2009								2008
	Average Balance			Interest Earned/Paid		Average Yield/Cost			Average Balance			Interest Earned/Paid		Average Yield/Cost			Average Balance			Interest Earned/Paid		Average Yield/Cost
	(Dollars in thousands)
Assets
Interest-earning assets:
Securities available for sale:
Taxable (1)	$	156,804		$	7,854		5.01	%	$	223,066		$	11,950		5.36	%	$	310,096		$	16,128		5.20	%
Tax-exempt (2)		218			11		5.05			299			15		5.02			785			41		5.22
Total securities available for sale		157,022			7,865		5.01			223,365			11,965		5.36			310,881			16,169		5.20
Loans held for sale (1)		9,098			410		4.51			5,019			30		0.60			1,406			19		1.35
Loans (1)(3):
Commercial		58,468			2,868		4.91			77,068			3,916		5.08			77,938			4,503		5.78
Commercial real estate (4)		288,080			13,321		4.62			335,283			16,517		4.93			402,029			25,307		6.29
Consumer		87,957			5,722		6.51			109,367			6,728		6.15			126,506			8,801		6.96
Total loans		434,505			21,911		5.04			521,718			27,161		5.21			606,473			38,611		6.37
Federal funds sold, reverse repo and interest-bearing due from banks		42,926			104		0.24			54,446			253		0.46			57,090			1,312		2.30
Federal Home Loan Bank stock		11,555			—		—			11,555			—		—			12,047			30		0.25
Total interest-earning assets		655,106			30,290		4.62			816,103			39,409		4.83			987,897			56,141		5.68
Noninterest-earning assets:
Cash and due from banks		9,389								9,750								15,918
Premises and equipment (5)		5,137								5,409								7,590
Allowance for loan losses (5)		(15,207	)							(18,244	)							(21,426	)
Receivables from sale of stock		—								(13	)							(68	)
Accrued interest receivable and other assets (5)		8,535								9,587								14,759
Total noninterest-earning assets		7,854								6,489								16,773
Total assets	$	662,960							$	822,592							$	1,004,670
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand deposits	$	32,480		$	101		0.31	%	$	32,010		$	109		0.34	%	$	36,981		$	266		0.72	%
Money market		118,410			1,139		0.96			113,909			1,404		1.23			143,149			3,276		2.29
Other savings deposits		9,552			19		0.20			8,465			18		0.21			12,112			99		0.82
Time deposits (4)		343,751			7,433		2.16			459,013			15,071		3.28			473,707			19,102		4.03
Total interest-bearing deposits(5)		504,193			8,692		1.72			613,397			16,602		2.71			665,949			22,743		3.42
Borrowings-short-term		9,652			30		0.31			19,892			123		0.62			108,054			2,097		1.94
Borrowings-long-term		13,071			547		4.18			22,307			917		4.11			17,738			774		4.36
Junior subordinated debentures		—			—		—			61,518			6,284		10.21			61,857			8,887		14.37
Total borrowed funds		22,723			577		2.54			103,717			7,324		7.06			187,649			11,758		6.27
Total interest-bearing liabilities		526,916			9,269		1.76			717,114			23,926		3.34			853,598			34,501		4.04
Noninterest-bearing demand deposits(5)		51,046								55,133								65,374
Accrued interest and other liabilities (5)		4,142								48,288								42,725
Stockholders’ equity		80,856								2,057								42,973
Total liabilities and stockholders’ equity	$	662,960							$	822,592							$	1,004,670
Net interest income and net interest spread (1)(6)				$	21,021		2.86	%				$	15,483		1.49	%				$	21,640		1.64	%
Net interest-earning assets	$	128,190							$	98,989							$	134,299
Net interest margin (1)(7)							3.21	%							1.90	%							2.19	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.24								1.14								1.16

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

~~(1)~~The ~~Balance~~following ~~totals~~table ~~include~~sets ~~respective~~forth ~~nonaccrual~~information regarding ~~assets~~average balances, interest income, or interest expense, and the average rates earned or paid for each of CIB Marine’s major asset, liability and stockholders’ equity categories. Interest income on tax-exempt securities has not been adjusted to reflect the tax equivalent basis, since CIB Marine does not expect to realize all of the tax benefits associated with these securities due to substantial losses incurred.

(2) In the future, CIB Marine does not expect to realize all of the tax benefits associated with tax-exempt assets due to substantial losses it has incurred, and at December 31, 2010, 2009 and 2008 no U.S. federal or state loss carryback potential remains. Accordingly, 2010, 2009 and 2008 are not presented on a tax-equivalent basis. If 2010, 2009 and 2008 had been shown on a tax-equivalent basis at an effective rate of 35%, the net interest margin would have been 3.21%, 1.95% and 2.20%, respectively.

	Years Ended December 31,
	2011								2010								2009
	Average Balance			Interest Earned/Paid		Average Yield/Cost			Average Balance			Interest Earned/Paid		Average Yield/Cost			Average Balance			Interest Earned/Paid		Average Yield/Cost
	(Dollars in thousands)
Assets
Interest-earning assets:
Securities available for sale:
Taxable (1)	$	104,014		$	5,001		4.81	%	$	156,804		$	7,854		5.01	%	$	223,066		$	11,950		5.36	%
Tax-exempt		141			7		4.96			218			11		5.05			299			15		5.02
Total securities available for sale		104,155			5,008		4.81			157,022			7,865		5.01			223,365			11,965		5.36
Loans held for sale (1)		5,194			377		7.26			9,098			410		4.51			5,019			30		0.60
Loans (1)(2):
Commercial		48,054			2,306		4.80			58,468			2,868		4.91			77,068			3,916		5.08
Commercial real estate		258,748			12,392		4.79			288,080			13,321		4.62			335,283			16,517		4.93
Consumer		76,448			5,503		7.20			87,957			5,722		6.51			109,367			6,728		6.15
Total loans		383,250			20,201		5.27			434,505			21,911		5.04			521,718			27,161		5.21
Federal funds sold, reverse repo and interest-bearing due from banks		39,201			94		0.24			42,926			104		0.24			54,446			253		0.46
Federal Home Loan Bank stock		11,555			14		0.12			11,555			—		—			11,555			—		—
Total interest-earning assets		543,355			25,694		4.73			655,106			30,290		4.62			816,103			39,409		4.83

Noninterest-earning assets:
Cash and due from banks		7,080								9,389								9,750
Premises and equipment		4,852								5,137								5,409
Allowance for loan losses		(14,980	)							(15,207	)							(18,244	)
Accrued interest receivable and other assets		10,771								8,535								9,574
Total noninterest-earning assets		7,723								7,854								6,489
Total assets	$	551,078							$	662,960							$	822,592

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand deposits	$	30,631		$	79		0.26	%	$	32,480		$	101		0.31	%	$	32,010		$	109		0.34	%
Money market		145,317			953		0.66			118,410			1,139		0.96			113,909			1,404		1.23
Other savings deposits		12,879			41		0.32			9,552			19		0.20			8,465			18		0.21
Time deposits		220,252			4,043		1.84			343,751			7,433		2.16			459,013			15,071		3.28
Total interest-bearing deposits		409,079			5,116		1.25			504,193			8,692		1.72			613,397			16,602		2.71
Borrowings-short-term		8,368			16		0.19			9,652			30		0.31			19,892			123		0.62
Borrowings-long-term		8,096			337		4.16			13,071			547		4.18			22,307			917		4.11
Junior subordinated debentures		—			—		—			—			—		—			61,518			6,284		10.21
Total borrowed funds		16,464			353		2.14			22,723			577		2.54			103,717			7,324		7.06
Total interest-bearing liabilities		425,543			5,469		1.29			526,916			9,269		1.76			717,114			23,926		3.34
Noninterest-bearing demand deposits		54,563								51,046								55,133
Accrued interest and other liabilities		3,187								4,142								48,288
Stockholders’ equity		67,785								80,856								2,057
Total liabilities and stockholders’ equity	$	551,078							$	662,960							$	822,592
Net interest income and net interest spread (1)(3)				$	20,225		3.44	%				$	21,021		2.86	%				$	15,483		1.49	%
Net interest-earning assets	$	117,812							$	128,190							$	98,989
Net interest margin (1)(4)							3.72	%							3.21	%							1.90	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.28								1.24								1.14

~~(3) Interest earned on loans includes amortized loan fees of $(0.06) million, $0.02 million and $0.4 million for the years ended December 31, 2010, 2009 and 2008, respectively.~~30

(41) ~~Interest~~Balance ~~rates~~totals ~~and amounts~~ include ~~the~~respective ~~effects~~nonaccrual ~~of derivatives entered into for interest rate risk management and accounted for as fair value hedges~~assets.

(52) ~~2008~~Interest ~~includes~~earned ~~fixed~~on ~~assets~~loans ~~and~~includes ~~deposits~~amortized loan fees of ~~branches~~$(0.02) ~~held~~million, $(0.06) million and $0.02 million for ~~sale~~the oryears ~~sold~~ended ~~during~~December ~~2008~~31, 2011, 2010 and 2009, respectively.

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

(74) Net interest margin is the ratio of net interest income, ~~on a tax-equivalent basis,~~ to average interest-earning assets.

32Net interest income decreased $0.8 million, or 3.8%, from $21.0 million in 2010 to $20.2 million in 2011. The decrease for 2011 was mainly attributable to the continued decline in the volume of earning assets.

Net interest income increased $5.5 million from $15.5 million in 2009 to $21.0 million in 2010. The increase was the result of the elimination of interest expense on the Debentures at the end of 2009. In addition, although average earning assets declined during 2010, CIB Marine was able to reduce average balances of interest-bearing deposits and reduce the cost of those deposits substantially.

~~Net~~CIB ~~interest~~Marine ~~income~~employs ~~decreased~~various ~~$6.1~~strategies ~~million~~designed to ~~from~~maintain ~~$21.6~~and ~~million~~improve innet ~~2008~~interest toincome, ~~$15.5~~including ~~million~~attracting innew ~~2009.~~commercial ~~The~~and ~~decrease~~retail inbanking ~~net~~relationships, ~~interest~~reducing ~~income~~nonperforming assets, ~~was~~reducing ~~primarily~~interest ~~driven~~costs by animproving ~~overall~~the ~~reduction~~composition inof ~~earning~~funding ~~assets~~liabilities, ~~and~~managing ~~rising~~investments ~~nonperforming~~to ~~assets.~~improve ~~The volumes~~ performance of ~~interest-earning~~the ~~assets~~portfolio, ~~declined~~using ~~$171.8~~collateralized ~~million~~borrowings ~~while~~such ~~interest-bearing~~as ~~liabilities~~FHLB ~~declined~~advances ~~$136.5 million,~~ and ~~nonperforming~~repurchase ~~assets~~agreements ~~increased~~when ~~from~~they ~~$18.1~~have ~~million~~a torelative ~~$58.7~~cost advantage ~~million~~over ~~between~~other ~~December~~bank ~~31,~~funding ~~2008~~sources and ~~December~~it ~~31,~~is ~~2009.~~consistent Inwith ~~addition,~~CIB ~~for~~Marine’s ~~the~~liquidity ~~year~~strategy ~~ended~~to ~~December~~do 31so, ~~2009~~and ~~compared~~adjusting deposit tointerest ~~2008~~rates, ~~lower~~which ~~yielding~~often ~~federal~~lag ~~funds~~key ~~sold~~banking ~~and~~indices ~~interest-bearing~~when ~~bank~~those ~~deposits~~indices ~~increased~~change ~~as a proportion of interest-earning assets~~rapidly.

~~CIB~~The ~~Marine~~following ~~has~~table ~~developed~~presents ~~various~~an ~~strategies~~analysis of tochanges ~~improve~~in net interest income, ~~including~~resulting ~~attracting~~from ~~new~~changes ~~commercial~~in ~~banking~~average ~~relationships,~~volumes ~~reducing~~of ~~nonperforming~~interest-earning assets, ~~reducing~~and interest-bearing ~~costs by improving the compositions of funding~~ liabilities, ~~managing investments to improve performance of the portfolio, using collateralized borrowings such as FHLB advances~~ and ~~repurchase~~average ~~agreements~~rates ~~when~~earned ~~they have a relative cost advantage over other bank funding sources~~ and ~~it is consistent with CIB Marine’s liquidity strategy to do so, and adjusting deposit interest rates, which often lag key banking indices when those indices change rapidly~~paid.

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

	Year Ended December 31, 2011 Compared to Year Ended December 31, 2010 (1)												Year Ended December 31, 2010 Compared to Year Ended December 31, 2009 (1)
	Volume			Rate			Total			% Change			Volume			Rate			Total			% Change
	(Dollars in thousands)
Interest Income
Securities-taxable	$	(2,549	)	$	(304	)	$	(2,853	)		(36.3	)%	$	(3,361	)	$	(735	)	$	(4,096	)		(34.3	)%
Securities-tax-exempt		(4	)		—			(4	)		(36.4	)		(4	)		—			(4	)		(26.7	)
Total securities		(2,553	)		(304	)		(2,857	)		(36.3	)		(3,365	)		(735	)		(4,100	)		(34.3	)
Loans held for sale		(220	)		187			(33	)		(8.0	)		42			338			380			1,266.7
Commercial		(501	)		(61	)		(562	)		(19.6	)		(916	)		(132	)		(1,048	)		(26.8	)
Commercial real estate		(1,392	)		463			(929	)		(7.0	)		(2,226	)		(970	)		(3,196	)		(19.3	)
Consumer		(793	)		574			(219	)		(3.8	)		(1,376	)		370			(1,006	)		(15.0	)
Total loans (including fees)		(2,686	)		976			(1,710	)		(7.8	)		(4,518	)		(732	)		(5,250	)		(19.3	)
Federal funds sold, reverse repo and interest-bearing due from banks		(9	)		(1	)		(10	)		(9.6	)		(46	)		(103	)		(149	)		(58.9	)
Federal Home Loan Bank stock		—			14			14			—			—			—			—			—
Total interest income		(5,468	)		872			(4,596	)		(15.2	)		(7,887	)		(1,232	)		(9,119	)		(23.1	)
Interest Expense
Interest-bearing demand deposits		(6	)		(16	)		(22	)		(21.8	)		2			(10	)		(8	)		(7.3	)
Money market		225			(411	)		(186	)		(16.3	)		53			(318	)		(265	)		(18.9	)
Other savings deposits		8			14			22			115.8			2			(1	)		1			5.6
Time deposits		(2,386	)		(1,004	)		(3,390	)		(45.6	)		(3,236	)		(4,402	)		(7,638	)		(50.7	)
Total deposits		(2,159	)		(1,417	)		(3,576	)		(41.1	)		(3,179	)		(4,731	)		(7,910	)		(47.6	)
Borrowings-short-term		(4	)		(10	)		(14	)		(46.7	)		(47	)		(46	)		(93	)		(75.6	)
Borrowings-long-term		(207	)		(3	)		(210	)		(38.4	)		(387	)		17			(370	)		(40.3	)
Junior subordinated debentures		—			—			—			—			(6,284	)		—			(6,284	)		(100.0	)
Total borrowed funds		(211	)		(13	)		(224	)		(38.8	)		(6,718	)		(29	)		(6,747	)		(92.1	)
Total interest expense		(2,370	)		(1,430	)		(3,800	)		(41.0	)		(9,897	)		(4,760	)		(14,657	)		(61.3	)
Net interest income	$	(3,098	)	$	2,302		$	(796	)		(3.8	)%	$	2,010		$	3,528		$	5,538			(35.8	)%

	Year Ended December 31, 2010 Compared to Year Ended December 31, 2009 (2)												Year Ended December 31, 2009 Compared to Year Ended December 31, 2008 (2)
	Volume			Rate			Total			% Change			Volume			Rate			Total			% Change
	(Dollars in thousands)
Interest Income
Securities-taxable	$	(3,361	)	$	(735	)	$	(4,096	)		(34.3	)%	$	(4,649	)	$	471		$	(4,178	)		(25.9	)%
Securities-tax-exempt (1)		(4	)		—			(4	)		(26.7	)		(24	)		(2	)		(26	)		(63.4	)
Total securities		(3,365	)		(735	)		(4,100	)		(34.3	)		(4,673	)		469			(4,204	)		(26.0	)
Loans held for sale		42			338			380			1,266.7			27			(16	)		11			57.9
Commercial		(916	)		(132	)		(1,048	)		(26.8	)		(49	)		(538	)		(587	)		(13.0	)
Commercial real estate		(2,226	)		(970	)		(3,196	)		(19.3	)		(3,806	)		(4,984	)		(8,790	)		(34.7	)
Consumer		(1,376	)		370			(1,006	)		(15.0	)		(1,118	)		(955	)		(2,073	)		(23.6	)
Total loans (including fees)		(4,518	)		(732	)		(5,250	)		(19.3	)		(4,973	)		(6,477	)		(11,450	)		(29.7	)
Federal funds sold, reverse repo and interest-bearing due from banks		(46	)		(103	)		(149	)		(58.9	)		(58	)		(1,001	)		(1,059	)		(80.7	)
Federal Home Loan Bank stock		—			—			—			—			—			(30	)		(30	)		(100.0	)
Total interest income (1)		(7,887	)		(1,232	)		(9,119	)		(23.1	)		(9,677	)		(7,055	)		(16,732	)		(29.8	)
Interest Expense
Interest-bearing demand deposits		2			(10	)		(8	)		(7.3	)		(32	)		(125	)		(157	)		(59.0	)
Money market		53			(318	)		(265	)		(18.9	)		(574	)		(1,298	)		(1,872	)		(57.1	)
Other savings deposits		2			(1	)		1			5.6			(24	)		(57	)		(81	)		(81.8	)
Time deposits		(3,236	)		(4,402	)		(7,638	)		(50.7	)		(577	)		(3,454	)		(4,031	)		(21.1	)
Total deposits		(3,179	)		(4,731	)		(7,910	)		(47.6	)		(1,207	)		(4,934	)		(6,141	)		(27.0	)
Borrowings-short-term		(47	)		(46	)		(93	)		(75.6	)		(1,076	)		(898	)		(1,974	)		(94.1	)
Borrowings-long-term		(387	)		17			(370	)		(40.3	)		190			(47	)		143			18.5
Junior subordinated debentures		(6,284	)		—			(6,284	)		(100.0	)		(49	)		(2,554	)		(2,603	)		(29.3	)
Total borrowed funds		(6,718	)		(29	)		(6,747	)		(92.1	)		(935	)		(3,499	)		(4,434	)		(37.7	)
Total interest expense		(9,897	)		(4,760	)		(14,657	)		(61.3	)		(2,142	)		(8,433	)		(10,575	)		(30.7	)
Net interest income (1)	$	2,010		$	3,528		$	5,538			(35.8	)%	$	(7,535	)	$	1,378		$	(6,157	)		(28.5	)%

(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.

~~(1)~~Interest In the future, CIB Marine does not expect to realize all of the tax benefits associated with tax-exempt assets due to substantial losses it has incurred, and at December 31, 2010, 2009 and 2008 no U.S. federal or state loss carryback potential remains. Accordingly, 2010, 2009 and 2008 are not presented on a tax-equivalent basis.Income

(Total interest income decreased $4.6 million, or 15.2)%, ~~Variances~~from ~~which~~$30.3 ~~were~~million ~~not~~in ~~specifically~~2010 ~~attributable~~to $25.7 million in 2011. The decrease was due to ~~volume~~a or$2.9 ~~rate~~million, ~~have~~or ~~been~~36.3%, ~~allocated~~decrease ~~proportionally~~in ~~between~~interest income ~~volume~~on securities and ~~rate~~a ~~using~~$1.7 ~~absolute~~million, ~~values~~or as7.8%, decrease in interest income on loans during 2011 compared to 2010. The decrease in interest income on the securities resulted primarily from a $52.9 million strategic reduction in average balances and a 20 basis point ~~for~~reduction ~~the~~in ~~allocation~~yields. ~~Nonaccruing~~The decrease in interest income on loans ~~were~~resulted ~~included~~primarily infrom ~~the~~a $51.3 million reduction in average loan balances, ~~used~~partially offset by a 23 basis point improvement in ~~determining~~loan yields due in part to declining nonaccrual loan balances and one-time recoveries of interest on previously charged-off purchased home equity loans of $0.4 million.

~~Interest Income~~31

Total interest income decreased $9.1 million, or 23.1%, from $39.4 million in 2009 to $30.3 million in 2010. The decline in interest-earning assets volume caused a $7.9 million decrease in interest income, with $4.5 million and $3.4 million from declines in loan and investment volumes, respectively. In addition, $1.2 million of the reduction in interest income was attributable to lower average yields in interest-earning assets, the result of an extended low interest rate environment and elevated nonaccrual loans.

33Interest Expense

Total interest ~~income~~expense decreased $163.78 million, or 2941.80%, from $569.13 million in ~~2008~~2010 to $395.45 million in ~~2009~~2011. The ~~decline~~decrease inwas ~~interest-earning~~primarily ~~assets~~due ~~volume~~to ~~caused~~ a $93.74 million ~~decrease in interest income~~, ~~with~~or $545.06%, ~~million and $4.7 million~~ decrease ~~from a decline~~ in ~~loans~~interest ~~and~~expense ~~investment~~on ~~security~~time ~~volumes, respectively~~deposits. InThis ~~addition, $7.1 million of the~~ decrease ~~in interest income~~ was ~~attributable~~due to ~~lower~~a ~~average~~32 ~~yields~~basis onpoint ~~loans,~~decline ~~the~~in ~~result~~average ~~of a lower~~ interest ~~rate~~costs ~~environment,~~paid anon ~~increase~~time deposits inand ~~nonaccrual~~a ~~loans~~$123.5 ~~and~~million anstrategic ~~increase~~reduction in ~~the~~average ~~proportion of lower yielding federal funds sold, reverse repurchase agreement transactions and interest-bearing due from~~ balances tofor ~~total~~time ~~interest-earning assets~~deposits.

~~Interest~~Total ~~Expense~~interest expense decreased $14.7 million from $23.9 million in 2009 to $9.2 million in 2010. A decline of $7.9 million in interest expense was attributable to the reduction in interest cost of deposits, with $4.7 million attributable to a 99 basis point decrease in the average cost of interest-bearing deposits and $3.2 million due to a reduction in time deposit volumes. In addition, $6.3 million of the reduction in interest expense was attributable to the elimination of interest on the Debentures.

~~Total~~Net ~~interest~~Interest ~~expense~~Margin/Net ~~decreased~~Interest $14.7 million from $23.9 million in 2009 to $9.2 million in 2010. A decline of $7.9 million in interest expense was attributable to the reduction in interest cost of deposits, with $4.7 million attributable to a 99 basis point decrease in the average cost of interest-bearing deposits and $3.2 million due to a reduction in time deposit volumes. In addition, $6.3 million of the reduction in interest expense was attributable to the elimination of interest on the Debentures.Spread

~~Total~~Net interest ~~expense~~margin ~~decreased~~is ~~$10.6~~the ~~million~~ratio ~~from~~of ~~$34.5~~net interest ~~million~~income ~~in 2008~~ to ~~$23.9~~average ~~million~~interest-earning inassets ~~2009.~~and Anet ~~decline~~interest ofspread ~~$8.4~~is ~~million~~the indifference ~~interest~~between ~~expense~~the ~~was~~rate ~~attributable~~earned toon ~~the~~average interest-earning 70assets ~~basis~~and ~~point~~the ~~decrease~~rate inpaid ~~the~~on average ~~cost of~~ interest-bearing liabilities. ~~resulting~~The ~~from~~net ainterest 70margin ~~basis~~increased ~~point~~significantly by ~~decline~~51 inbasis ~~the~~points ~~average~~from ~~cost~~3.21% ofduring ~~interest-bearing~~2010 ~~deposits,~~to ~~reflecting~~3.72% ~~the~~during ~~repricing~~2011 ofand ~~deposits~~net ininterest aspread ~~lower~~increased ~~rate~~58 ~~environment.~~basis ~~The~~points ~~remaining~~during $22011.1 ~~million~~The net ~~of the decline in~~ interest ~~expense~~margin increase was primarily due to athe ~~decline~~improved incost ~~average~~and composition of interest-bearing liabilities., ~~Interest~~with ~~expense~~an onincreased percent ~~the~~comprising ~~Debentures~~lower ~~declined~~cost ~~$2.6~~non-time ~~million~~deposits ~~from~~and ~~$8.9~~an ~~million~~improvement in ~~2008~~yields toon $6earning assets.3 ~~million~~Average inyield ~~2009~~of ~~due~~interest-earning assets toincreased ~~the~~11 ~~restructuring~~basis points and ~~represented~~average ~~26.3%~~cost ~~and~~of ~~25.8%~~interest-bearing ofliabilities ~~total~~decreased ~~interest~~47 ~~expense~~basis ~~during~~points ~~2009~~for ~~and~~2011 ~~2008,~~compared ~~respectively~~to 2010.

~~Net~~CIB ~~Interest~~Marine’s ~~Margin/Net~~net ~~Interest~~interest ~~Spread~~margin increased 131 basis points to 3.21% during 2010 from 1.90% during 2009, and its net interest spread increased 137 basis points during the same period. The net interest margin for 2009 would have been 2.67% if the interest expense on Debentures was excluded, showing the improvement in net interest margin absent the improvement related to the elimination of the Debentures. The improvements are largely attributable to higher total interest-earning assets relative to interest-bearing liabilities caused primarily by a reduction in time deposits and the elimination of the Debentures, improving the mix of liabilities towards low average interest cost liabilities. The average yield on earning assets declined by 21 basis points and the average cost of deposits declined by 99 basis points over the twelve months. The net interest margin continues to be adversely affected by the elevated levels of both nonaccrual loans and highly liquid asset holdings in the category federal funds sold, reverse repo and interest-bearing due from banks comprised primarily of balances held at the Federal Reserve Bank.

~~CIB~~Provision Marine’s net interest margin increased 131 basis points to 3.21% during 2010 from 1.90% during 2009, and its net interest spread increased 137 basis points during the same period. The net interest margin for ~~2009~~Loan would have been 2.67% if the interest expense on Debentures was excluded, showing the improvement in net interest margin absent the improvement related to the elimination of the Debentures. The improvements are largely attributable to higher total interest-earning assets relative to interest-bearing liabilities caused primarily by a reduction in time deposits and the elimination of the Debentures, improving the mix of liabilities towards low average interest cost liabilities. The average yield on earning assets declined by 21 basis points and the average cost of deposits declined by 99 basis points over the twelve months. The net interest margin continues to be adversely affected by the elevated levels of both nonaccrual loans and highly liquid asset holdings in the category federal funds sold, reverse repo and interest-bearing due from banks comprised primarily of balances held at the Federal Reserve Bank and paying 0.25%.Losses

~~CIB~~The ~~Marine’s~~provision for ~~net~~loan ~~interest~~losses ~~margin~~is ~~declined~~predominantly bya 29function ~~basis~~of ~~points~~CIB ~~during~~Marine’s ~~2009~~allowance ~~compared~~for toloan ~~2008,~~losses methodology and ~~its~~judgments ~~net~~as ~~interest~~to ~~spread~~other qualitative ~~declined~~and byquantitative 15factors ~~basis~~used ~~points~~to ~~during~~determine the ~~same~~appropriate ~~period.~~level ~~The~~of ~~average~~the ~~yield~~allowance onfor ~~interest-earning~~loan ~~assets~~losses, ~~declined~~which byfocuses 85on changes ~~basis~~in ~~points~~the size and ~~the~~character ~~average~~of ~~cost~~the ofloan ~~deposits~~portfolio, ~~declined~~changes byin 71levels ~~basis~~of ~~points~~impaired ~~over~~and ~~the~~other ~~twelve~~nonaccrual ~~months.~~loans, ~~The~~historical ~~declines~~losses and ~~are~~delinquencies ~~largely~~on ~~attributable~~each toportfolio ~~(1)~~category, ~~lower~~the ~~total~~risk ~~interest-earning~~inherent ~~assets~~in ~~relative~~specific toloans, ~~interest-bearing~~concentrations ~~liabilities~~of ~~caused~~loans ~~primarily~~to byspecific aborrowers or ~~reduction~~industries, inexisting ~~total~~economic ~~loan~~conditions, ~~and~~the ~~total~~fair ~~securities~~value ~~average~~of ~~volumes;~~underlying ~~(2)~~collateral, ~~the~~and ~~increase~~other infactors ~~nonaccrual~~which ~~loans,~~could ~~(3)~~affect ~~the~~potential credit ~~increase~~losses. inThe ~~average~~provision ~~volumes~~for ofloan ~~federal~~losses ~~funds~~was ~~sold~~down ~~and~~substantially ~~interest-bearing~~from ~~bank~~$15.3 ~~deposits~~million ~~relative~~in 2010 to ~~interest-earning~~$6.4 ~~assets,~~million ~~and~~during ~~(4)~~2011. See ~~the~~additional ~~increase~~discussion inwithin ~~the~~this ~~high~~Management’s ~~cost~~Discussion ~~Debentures~~and asAnalysis aunder ~~proportion~~sections, of“Loans,” “Credit ~~total~~Procedures ~~interest-bearing~~and ~~liabilities.~~Review,” ~~The~~“Allowance ~~net interest~~for ~~margin~~Loan ~~declined~~Losses,” by“Nonperforming ~~more~~Assets, ~~than~~Restructured Loans ~~the~~and ~~net~~Loans ~~interest~~90 ~~spread~~Days ~~due~~or toMore ~~lower~~Past ~~earning~~Due ~~asset~~and ~~yields~~Still ~~funded~~Accruing,” by“Potential ~~noninterest-bearing~~Problem ~~liabilities~~Loans” and ~~capital~~“Other Real Estate Owned.”

~~Provision for Loan Losses~~32

~~The~~Although ~~provision~~several ~~for~~ loan ~~losses~~segments ~~represents~~have ashown improvement ~~charge~~in toprovisions ~~earnings~~in ~~taken~~2011 relative to ~~maintain~~last ~~the~~year, ~~adequacy~~(see Note 4 of the ~~allowance~~consolidated ~~for~~financial statements appearing in Item 8 of Part II to this Form 10-K), classified and impaired loan ~~losses~~volumes continue to be elevated and the deteriorated real estate markets and tepid jobs recovery continues to adversely affect CIBM Bank’s borrowers. ~~The~~In particular, the commercial real estate loan segment continues to have elevated levels of provision for loan losses ~~was~~of $157.36 million ~~during~~in 2011 compared to $4.7 million recorded in 2010. Although substantially reduced from the prior year due to reduced volumes and improved composition in the remaining portfolio, construction and development loans continued to require additional provisions in the amount of $1.2 million during 2011 compared to $276.8 million in 2010. Due to erosion of borrower conditions, home equity loans required additional provision in the amount of $1.4 million ~~and~~during 2011 compared to $220.7 million in 2010. Offsetting these additional provisions were reversals in the provision for the purchased home equity pools of $2.5 million due to the level of recoveries received, and in the commercial loan segment of $1.4 million ~~during~~due ~~2009~~to improved classifications and ~~2008~~reduced volume. There can be no certainty as to whether CIB Marine will experience improved credit quality or recoveries during future quarters so as to permit it to record further reversals of the provision, ~~respectively~~or whether additional provisions may be required.

34Noninterest Income

~~The~~Noninterest ~~provision~~income ~~for~~increased ~~loan~~$0.5 ~~losses~~million from ~~continues~~$1.1 tomillion ~~be adversely affected by the deteriorated conditions~~ for ~~real estate and in particular for~~ the ~~following~~year ~~loan~~ended ~~portfolio~~December ~~segments: construction and development loans~~31, ~~commercial real estate loans and purchased home equity loan pools. During~~ 2010, ~~commercial real estate markets continued~~ to ~~show signs of stress and deterioration contributing to elevated levels of charge-offs and provisions~~$1.6 ~~The~~million ~~provision~~ for ~~construction~~the ~~and~~year ~~development~~ended ~~loans~~December ~~was $6.8 million~~31, ~~or an increase of $0~~2011.6 ~~million over the 2009 level.~~ The ~~provision~~increase for ~~loan~~2011 compared ~~losses related~~ to ~~the~~2010 ~~commercial real estate portfolio~~ was ~~$4.7~~primarily ~~million~~due into ~~2010,~~gains orfrom ~~$2.5~~sales ~~million~~of ~~lower~~loans ~~than~~held infor ~~2009~~sale.

~~Provisions~~Noninterest ~~for~~income ~~purchased~~decreased ~~home~~$0.4 ~~equity~~million from ~~loan~~$1.5 ~~pools~~million ~~recorded~~for ~~during~~the ~~2010,~~year ~~2009~~ended ~~and~~December ~~2008~~31, ~~were~~2009 to $21.71 million, ~~$10.8~~for ~~million~~the ~~and~~year ~~$11.3~~ended ~~million~~December 31, ~~respectively~~2010. ~~During~~The ~~2010,~~decrease was primarily due to a $40.24 million ofdecrease ~~these~~in ~~loans~~gain ~~were~~on ~~net~~sale ~~charge-offs~~of ~~compared~~securities, to $110.52 million increase in OTTI expense and $120.1 million ~~during~~decrease ~~2009~~in deposit ~~and~~service ~~2008~~charges, ~~respectively~~all offset by a $0.3 million increase in gain on sale of assets.

~~The~~Noninterest provision for loan losses is predominantly a function of CIB Marine’s reserving methodology and judgments as to other qualitative and quantitative factors used to determine the appropriate level of the allowance for loan losses which include, but are not limited to, volume and character of loans outstanding, changes in levels and trends of impaired loans, other nonaccrual loans and delinquencies, historical losses and related migration analysis on each portfolio segment, the risk inherent in specific loans, expected loan repayments, concentrations of loans to specific borrowers or industries, existing national and local economic conditions, the fair value of underlying collateral on individual loans, and other relevant environmental or other factors which could affect potential credit losses. See additional discussion within this Management’s Discussion and Analysis under sections, “Loans,” “Credit Procedures and Review,” “Allowance for Loan Losses,” “Nonperforming Assets, Restructured Loans and Loans 90 Days or More Past Due and Still Accruing,” “Potential Problem Loans” and “Other Real Estate Owned.”Expense

~~Noninterest~~Total ~~Income~~noninterest expense decreased $2.3 million from $24.0 million in 2010 to $21.7 million in 2011. The decrease was due to reductions in: compensation and employee benefits resulting from a reduction in full-time equivalent employees at the Company from 145 in 2010 to 127 in 2011; occupancy and premises expense resulting from lease write-offs for closed offices taken during 2010; FDIC insurance assessments resulting from lower deposit balances and a change made by the FDIC for banks in the assessment base and rate; professional services; and other expense. These were partially offset by an increase in write downs and losses on assets.

~~Noninterest~~During ~~income~~2011, ~~decreased~~write downs and losses on assets was $02.41 million ~~from~~and primarily the result of $1.58 million ~~for~~in ~~the~~impairment ~~year~~write ~~ended~~downs ~~December~~on ~~31,~~OREO ~~2009~~and to $10.13 million ~~for~~write ~~the~~down of ~~year~~fixed ~~ended December 31~~assets, ~~2010.~~loans ~~The~~held ~~decrease~~for ~~was~~sale ~~primarily~~and ~~due~~other toinvestments. aOREO ~~$0.4~~write-downs ~~million~~were ~~decrease~~related into ~~gain~~losses on sale of ~~securities~~properties and reduced appraised values. During 2010, write down and losses on assets was $01.28 million ~~increase~~and inprimarily ~~OTTI~~resulted ~~expense~~from ~~and~~a $0.4 million write down of OREO, a $1.2 million ~~decrease~~write indown ~~deposit~~of ~~service~~loans ~~charges,~~held ~~all~~for ~~offset~~sale, byand a $0.32 million ~~increase~~write indown ~~gain~~of onfixed ~~sale~~assets ofrelated ~~assets~~to branch closures.

~~Noninterest~~Total ~~income~~noninterest expense decreased $27.9 0 million, or 22.6%, from $431.40 million ~~for~~in ~~the year ended December 31~~2009, ~~2008~~ to $124.50 million ~~for~~in ~~the year ended December 31, 2009~~2010. The decrease was primarily ~~due to a $4.1 million gain CIB Marine recognized during 2008 related primarily to~~ the ~~sale~~result of ~~all of~~ the branches and substantially all of the loans and deposits of its Florida banking subsidiary, with no comparable gain recognized in 2009. This was offset by a decrease of $1.4 million in OTTI from December 31, 2008 to December 31, 2009.following:

~~Noninterest~~· ~~Expense~~Compensation and employee benefits decreased $2.8 million, or 21.4%, during 2010 compared to 2009, primarily due to decreased payroll expense, bonuses, group health insurance and a reversal of stock option expense. The total number of full-time equivalent employees decreased from 165 at December 31, 2009 to 145 at December 31, 2010.

~~Total~~· ~~noninterest~~Professional ~~expense~~services costs decreased $71.08 million, or 2246.61%, ~~from~~during ~~$31.0~~2010 ~~million~~compared into 2009, primarily due to ~~$24.0~~the ~~million~~completion inof ~~2010.~~the ~~The~~debt ~~decrease~~restructuring ~~was~~during ~~primarily~~2009, ~~the~~which ~~result~~resulted ofin ~~the~~lower ~~following:~~legal and accounting costs during 2010.

· ~~Compensation~~Write ~~and~~down ~~employee~~of ~~benefits~~assets ~~decreased~~was $21.86 million, orlower ~~21.4%,~~in ~~during~~ 2010 ~~compared~~than toin 2009, primarily ~~due~~the toresult ~~decreased payroll expense, bonuses, group health insurance and a reversal~~ of ~~stock~~lower ~~option~~write ~~expense.~~down ~~The total number~~ of ~~full-time~~OREO, ~~equivalent~~loans ~~employees~~held ~~decreased~~for ~~from~~sale, ~~165~~and atfixed ~~December~~assets ~~31,~~related ~~2009~~ to ~~145~~branch ~~at December 31, 2010~~closures.

· Professional services costs decreased $1.8 million, or 46.1%, during 2010 compared to 2009 primarily due to the completion of the restructuring during 2009, which resulted in lower legal and accounting costs during 2010.33

·Income Write down of assets was $1.8 million for 2010, primarily the result of a $0.4 million write down of OREO, a $1.2 million write down of loans held for sale, and a $0.2 million write down of fixed assets related to branch closures.Taxes

~~Total~~The ~~noninterest~~2009 ~~expense~~through ~~decreased~~2011 ~~$8.9~~financial ~~million,~~statements recognize orno ~~22.2%,~~tax ~~from~~benefit ~~$39.9~~on ~~million~~the inconsolidated ~~2008,~~net operating losses for continuing operations due to ~~$31.0~~significant ~~million~~federal inand ~~2009.~~state net ~~The~~operating ~~decrease~~loss ~~was~~carryforwards ~~primarily~~on which the ~~result~~realization of ~~the~~related ~~following:~~tax benefits is not more likely than not.

35In connection with CIB Marine’s emergence from Chapter 11 bankruptcy at the end of 2009 the then available tax attributes, including federal and state carryforwards, were reduced by the amount of the cancellation of indebtedness income realized. The realization of the remaining federal tax attributes, including net operating loss carryforwards is limited under Internal Revenue Code sections 382 and 383 to approximately $2.3 million annually and $46 million in total, and generally expire in 2029. The applicable state taxing authorities generally follow the federal rules, while the available specific state carryforwards and expiration dates vary by jurisdiction. CIB Marine incurred additional federal and state net operating losses of approximately $7 million and $17 million for the years ended December 31, 2011 and 2010, respectively. These federal losses expire in 2031 and 2030, respectively, and are available to offset future taxable income without limitation.

·CIB ~~Compensation~~Marine ~~and~~files ~~employee~~income ~~benefits~~tax ~~decreased~~returns ~~$3.4~~in the ~~million, or 20~~U.~~9%,~~S. ~~during~~federal ~~2009~~and ~~compared~~various tostate ~~2008,~~jurisdictions. ~~primarily~~CIB ~~due~~Marine tois ~~staff~~no ~~reductions~~longer ~~due~~subject to ~~the~~income ~~sale~~tax ofexaminations by ~~CIB~~U.S. ~~Marine’s~~federal ~~Florida~~tax ~~banking~~authorities ~~subsidiary~~for ~~during~~years ~~the~~before ~~third quarter of~~ 2008, and astate ~~reduction~~tax inauthorities ~~force~~for inyears ~~the~~before ~~first quarter of 2009~~2007. ~~The total number of full-time equivalent employees decreased from 197 at December 31, 2008 to 165 at December 31, 2009.~~

·FINANCIAL Equipment and occupancy expense together decreased $1.0 million, or 22.3%, during 2009 compared to 2008, primarily due to the sale of CIB Marine’s Florida banking subsidiary during the third quarter of 2008.CONDITION

~~· A litigation reserve of $3.4 million was recorded and paid in 2008. There was no litigation reserve in 2009.~~Overview

·In ~~FDIC~~2011, ~~deposit~~CIB ~~insurance~~Marine ~~expense~~showed ~~was~~improvement in ~~$1.8~~certain ~~million~~key ~~for~~asset ~~2009~~quality ~~compared~~measures toas $0nonaccrual loans and net charge-offs declined 39% and 71%, respectively over the related 2010 levels.7 ~~million~~During ~~for~~2011, ~~2008~~CIB Marine and CIBM Bank reduced their total assets to improve capital ratios. The ~~FDIC~~reductions ~~changed~~in ~~its~~assets were ~~rate~~used ~~structure~~to offset strategic declines in time deposits of $80.8 million. The December ~~2008~~31, to2011 ~~generally~~Tier ~~increase~~1 ~~premiums~~leverage ~~effective~~to ~~for~~average ~~assessments~~assets ratio infor ~~the~~CIB ~~first~~Marine ~~quarter~~improved offrom ~~2009~~11.80%% ~~Further~~at December 31, ~~the~~2010 ~~FDIC~~to ~~imposed~~13.15%. aThe ~~special~~related ~~one-time~~ratio ~~assessment~~for ~~against~~CIBM ~~all~~Bank ~~financial~~at ~~institutions~~December 31, ~~payable~~2011 improved infrom ~~the~~10.04% ~~third~~at ~~quarter~~December of31, ~~2009~~2010 ofto $010.~~4 million~~93%.

·Securities ~~Write~~Available ~~down of assets was $3.4 million~~ for ~~2009 primarily as a result of a $0.6 million write down of OREO during 2009, the write down of $1.8 million of loans held for sale, and a $0.3 million write down of fixed assets.~~Sale

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

The ~~2008~~amortized ~~through~~cost, ~~2010~~fair ~~financial~~value ~~statements recognize no tax benefit on the consolidated net operating losses for continuing operations due to significant federal~~ adjustment and ~~state~~yield ~~net operating loss carryforwards on which the realization~~ of ~~related~~CIB ~~tax~~Marine’s ~~benefits~~securities isare ~~not~~set ~~more~~forth ~~likely~~in ~~than~~the ~~not.~~following ~~In 2009, $0~~table.1 The ~~million~~yield ofon ~~state~~ tax-exempt ~~expense~~securities ~~was~~has ~~recognized~~not inbeen ~~connection~~adjusted to ~~with~~reflect the ~~resolution of various state~~ tax ~~disputes.~~equivalent ~~The~~basis, ~~continuing~~since ~~operations~~CIB ~~income~~Marine ~~tax~~does ~~benefits~~not ~~for~~expect ~~2008~~to ~~consisted~~realize ~~primarily~~all of the ~~allocation of taxes in accordance with~~ tax ~~sharing~~benefits ~~agreements~~associated with ~~companies~~these securities ~~included~~due into ~~discontinued~~substantial ~~operations that would have been payable had it not been for the~~ losses ~~from continuing operations included in CIB Marine’s consolidated returns~~incurred.

In connection with the Company’s emergence from Chapter 11 bankruptcy, the then available tax attributes, including federal and state carryforwards, were reduced by the amount of the cancellation of indebtedness income realized. The remaining unutilized federal and state capital loss carryforwards expired at December 31, 2009. The realization of the remaining tax attributes, including net operating loss carryforwards is further limited under Internal Revenue Code sections 382 and 383 to approximately $2.3 million annually, with the applicable state taxing authorities generally following the federal rules. Together these factors reduced the federal carryforwards available to CIB Marine at December 31, 2009 to approximately $44 million, while the available state carryforwards and expiration dates vary by jurisdiction. The net operating loss carryforwards will expire in varying amounts through 2029. In addition, CIB Marine incurred federal and state net operating losses of approximately $17 million for the year ended December 31, 2010. These federal losses expire in 2030 and are available to offset future taxable income without limitation.

	At December 31,
	2011						2010						2009
	Amount			Yield to Maturity			Amount			Yield to Maturity			Amount			Yield to Maturity
	(Dollars in thousands)
U.S. government agencies	$	7,006			4.59	%	$	12,527			4.72	%	$	18,588			4.70	%
States and political subdivisions		28,611			5.27			29,306			5.27			30,126			5.26
Trust preferred collateralized debt obligations		8,295			1.17			8,359			0.93			8,535			0.88
Other debt obligations		150			1.00			150			1.00			150			1.21
Residential mortgage-backed securities (agencies)		25,075			4.31			43,106			4.50			67,697			4.86
Residential mortgage-backed securities (non-agencies (1))		23,649			5.16			38,078			5.19			63,103			5.64
Total securities before market value adjustment		92,786			4.56	%		131,526			4.66	%		188,199			4.99	%
Equity security		—			—			—			—			955			—
Available for sale unrealized loss		(3,777	)					(4,648	)					(6,183	)
Total securities available for sale	$	89,009					$	126,878					$	182,971

In December 2008, CIB Marine reached a settlement agreement with the Illinois Department of Revenue (“ILDOR”) regarding its tax exposure related to CIB Marine’s investment in a Real Estate Investment Trust (“REIT”). Under the agreement, ILDOR agreed to accept a $0.5 million payment from CIB Marine as settlement in full of any and all open issues, including without limitation, all issues pertaining to the formation and operation of the REIT, causing or contributing to any alleged deficiencies, including all applicable taxes, penalties and interest. As a result of this agreement, CIB Marine reversed in 2008 the remaining $3.0 million tax liability related to the REIT through a credit to discontinued operations tax expense.34

In(1) ~~February~~Residential ~~2010,~~mortgage-backed ~~the~~securities ~~Wisconsin Department of Revenue~~ (~~“WDOR”~~non-agencies) ~~agreed~~comprise tonon-agency ~~accept~~issued amortgage-backed ~~$0.2~~securities ~~million~~and ~~payment~~collateralized inmortgage ~~full~~obligations ~~settlement~~secured ~~of all open issues of CIB Marine’s Wisconsin subsidiary bank, thereby settling the last known tax exposure as identified~~ by ~~CIB~~residential ~~Marine.~~real Atestate ~~December~~mortgage ~~31, 2010, the Company had no unrecognized tax benefits recorded~~loans.

~~CIB~~Total ~~Marine~~securities ~~files~~available ~~income~~for ~~tax~~sale ~~returns~~at December in31, ~~the~~2011 Uwere $89.S0 million, a decrease of $37.9 ~~federal~~million, or 29.8%, from $126.9 million at December 31, 2010. The decrease was primarily due to prepayments, repayments and ~~various~~maturities ~~state~~from ~~jurisdictions~~the existing portfolio. At December 31, 2011, CIB Marine ishad noresidential mortgage-backed ~~longer~~securities ~~subject~~(non-agencies) to(“Non-agency ~~income~~MBS”) ~~tax~~holdings ~~examinations~~of by$24.8 Umillion par value with a fair value of $22.S.1 ~~federal~~million, ~~tax~~down ~~authorities~~from ~~for~~holdings ~~years~~at ~~before~~December ~~2007~~31, ~~and~~2010 ~~state~~of ~~tax~~$39.3 ~~authorities~~million ~~for~~par ~~years~~value ~~before~~with ~~2006~~a fair value of $36.2 million. The decline of $14.5 million in par value was primarily due to the repayment of principal.

36The net unrealized loss on securities available for sale was $3.8 million at December 31, 2011 compared to $4.6 million at December 31, 2010. The net unrealized losses are mainly in trust preferred collateralized debt obligations (“TPCDOs”) and Non-agency MBS, resulting from adverse credit quality and decreased liquidity for these securities.

At December 31, 2011, 7.9% of the securities ~~FINANCIAL~~portfolio ~~CONDITION~~consisted of U.S. government agency securities, 54.6% of mortgage-backed securities and 33.6% of obligations of states and political subdivisions compared to 10.2%, 64.1% and 23.2% at December 31, 2010, respectively. The ratio of total securities to total assets was 17.7% and 21.5% at December 31, 2011 and 2010, respectively.

~~Overview~~Securities available for sale with a carrying value of $47.1 million and $74.1 million at December 31, 2011 and 2010, respectively, were pledged to secure public deposits, Federal Home Loan Bank of Chicago (“FHLBC”) advances, repurchase agreements, federal reserve discount window, a federal funds and letter of credit guidance facility at a correspondent bank, and for other purposes as required or permitted by law.

InManagement ~~2010~~evaluates securities for OTTI at least on a quarterly basis and more frequently when economic or market conditions warrant. For those securities with fair value less than cost at December 31, 2011, because CIB Marine does not intend to sell the investment and ~~CIBM~~it ~~Bank~~is ~~employed~~not ~~various~~more ~~strategies~~likely than not that CIB Marine will be required to ~~reduce~~sell ~~and~~the ~~deleverage~~investments ~~its~~before ~~balance~~recovery ~~sheet~~of ~~and~~their ~~maintain~~respective ~~its~~amortized ~~regulatory~~cost ~~capital~~bases, ~~ratios.~~which Inmay ~~addition~~be maturity, toCIB Marine does not consider those securities ~~available~~to have been OTTI at year end or prior, except for ~~sale~~the ~~being~~following: ~~reduced~~(1) byseven residential Non-agency MBS with $560.13 million ~~during~~credit-related ~~2010,~~OTTI ~~total~~recognized ~~loans~~during ~~also~~2011 ~~decreased~~ and $540.95 million recognized during ~~the~~2010, ~~year.~~and ~~Total~~(2) ~~liabilities~~two ~~declined~~TPCDOs bywith no credit-related OTTI recognized during 2011 and $~~104~~0.91 million recognized during 2010. Additional OTTI may be recognized in the future if performance of the underlying collateral deteriorates more or for a longer period than currently projected, ~~primarily~~or ~~due~~if CIB Marine decides that it intends to sell, sells or determines that it is more likely than not that it will become required to sell the ~~reductions~~securities inprior ~~time~~to ~~deposits~~full recovery of ~~$125~~their respective amortized cost bases.8 For ~~million~~more ~~partially~~information ~~offset~~regarding bysecurities ~~increased~~and ~~balances~~OTTI see Note 3 to the consolidated financial statements appearing in ~~non~~Item 8 of Part II of this Form 10-~~maturing~~K ~~deposits~~for additional information.

OnThe ~~December~~following ~~30,~~table ~~2009,~~presents ~~pursuant to~~ the ~~terms of the Confirmation Order~~ maturities and ~~the~~weighted ~~Plan,~~average ~~the~~yields ~~former TruPS Holders exchanged $107.2 million~~ of ~~cumulative~~securities ~~high-interest~~at ~~indebtedness~~December ~~comprising $61.9 million principal and $45.3 million of accrued interest~~31, ~~for shares of CIB Marine Preferred valued at $51 million~~2011.

Securities Available for Sale

	At December 31, 2011
	1 Year and Less					1 to 5 Years					5 to 10 Years					Over 10 Years					Total
	Balance		Yield to Maturity			Balance		Yield to Maturity			Balance		Yield to Maturity			Balance		Yield to Maturity			Balance			Yield to Maturity
	(Dollars in thousands)
U.S. government agencies	$	7,006		4.59	%	$	—		—	%	$	—		—	%	$	—		—	%	$	7,006			4.59	%
States and political subdivisions		70		5.00			10,338		5.00			14,043		5.33			4,160		5.79			28,611			5.27
Trust preferred collateralized debt obligations		—		—			—		—			—		—			8,295		1.17			8,295			1.17
Other debt obligations		150		1.00			—		—			—		—			—		—			150			1.00
Residential mortgage-backed securities (agencies)		—		—			1,159		4.58			7,178		4.46			16,738		4.23			25,075			4.31
Residential mortgage-backed securities (non-agencies)		—		—			—		—			5,493		4.78			18,156		5.28			23,649			5.16
Total securities before market value adjustment	$	7,226		4.52	%	$	11,497		4.96	%	$	26,714		4.98	%	$	47,349		4.23	%	$	92,786			4.56	%
Available for sale unrealized loss																						(3,777	)
Total securities available for sale																					$	89,009

CIB Marine seeks to manage its investment portfolio in a manner that promotes the achievement of its liquidity goals, optimizes after-tax net income, provides collateral to secure borrowings, assists CIB Marine in meeting various regulatory requirements, and is consistent with its market risk policies. CIB Marine manages the maturity structure of its investment portfolio to provide a stream of cash flows to complement liquidity risk management, market risk management and to promote long-term earnings.35

~~The~~Loans ~~amortized~~Held ~~cost,~~for ~~fair value adjustment and yield of CIB Marine’s securities are set forth in the following table.~~Sale

	At December 31, (1)
	2010						2009						2008
	Amount			Yield to Maturity			Amount			Yield to Maturity			Amount			Yield to Maturity
	(Dollars in thousands)
U.S. government agencies	$	12,527			4.72	%	$	18,588			4.70	%	$	44,835			4.62	%
States and political subdivisions		29,306			5.27			30,126			5.26			30,236			5.26
Trust preferred collateralized debt obligations		8,359			0.93			8,535			0.88			8,662			2.63
Other debt obligations		150			1.00			150			1.21			350			3.07
Corporate commercial paper		—			—			—			—			4,800			1.25
Residential mortgage-backed securities (agencies)		43,106			4.50			67,697			4.86			107,194			5.37
Residential mortgage-backed securities (non-agencies (2))		38,078			5.19			63,103			5.64			93,428			5.76
Total securities before market value adjustment		131,526			4.66	%		188,199			4.99	%		289,505			5.22	%
Equity security		—			—			955			—			955			—
Available for sale unrealized loss		(4,648	)					(6,183	)					(10,008	)
Total securities available for sale	$	126,878					$	182,971					$	280,452

At December 31, 2011 and 2010, loans held for sale were $2.1 million and $6.6 million, respectively. Loan sales of $4.5 million occurred during 2011 and resulted in recognized gains on sale of $0.8 million. At December 31, 2011, loans held for sale totaling $1.4 million were on nonaccrual status compared to $1.1 million at December 31, 2010.

(1) In the future, CIB Marine does not expect to realize all of the tax benefits associated with tax-exempt assets due to substantial losses it has incurred. Accordingly, 2010, 2009 and 2008 are not presented on a tax-equivalent basis.Loans

~~(2) Residential mortgage-backed securities (non-agencies) comprise non-agency mortgage-backed securities and collateralized mortgage obligations secured by residential real estate.~~General

~~Total~~CIB ~~securities~~Marine ~~available~~offers ~~for~~a ~~sale~~broad atrange ~~December~~of 31loan products, ~~2010~~including ~~were~~commercial ~~$126.9~~loans, ~~million~~commercial real estate loans, aconstruction ~~decrease~~and ofdevelopment ~~$56.1~~loans, ~~million~~residential real estate loans, orand 30various types of consumer loans.7% CIB Marine’s underwriting standards, ~~from~~as ~~$183.0~~contained ~~million~~within atits ~~December~~loan 31policy, ~~2009.~~are based ~~The~~on ~~decrease~~the ~~was~~general ~~primarily~~assumption ~~due~~that tothe ~~prepayments,~~primary ~~repayments,~~source ~~maturities~~of ~~and~~repayment ~~sales~~should ~~from~~be the ~~existing~~regular ~~portfolio~~operating cash flows of the borrower, the secondary source should be the ~~proceeds~~global cash flow of ~~which~~the ~~were~~guarantor(s), ~~used~~if ~~predominantly~~applicable, toand ~~pay~~the ~~down~~tertiary ~~borrowings~~source should be the liquidation and ~~time~~disposition ~~deposits~~of collateral. InUnder ~~addition,~~the atcurrent ~~the~~policies of CIB Marine, ~~parent~~exceptions ~~company,~~to ~~marketable~~this ~~equity~~policy ~~securities~~are permitted with athe ~~cost~~approval of ~~basis~~the Executive Loan Committee, the CCO or certain credit administration officers depending on the level of $1credit authority granted to such individuals.0 ~~million~~Exceptions ~~were~~to ~~sold~~the ~~during~~policy ~~2010~~have, ~~for~~in athe ~~gain~~past, been approved by the loan committee of ~~$0.2~~CIBM ~~million~~Bank.

~~At December 31~~Loans, ~~2010,~~net ~~10.2%~~ of the ~~securities~~allowance ~~portfolio~~for ~~consisted~~loan oflosses, were U$341.S.5 ~~government~~million ~~agency~~at ~~securities~~December 31, ~~64.1%~~2011, a decrease of ~~mortgage-backed~~$59.6 ~~securities~~million, ~~and~~or 2314.29%, offrom ~~obligations~~$401.1 ofmillion ~~states~~at ~~and~~December ~~political~~31, ~~subdivisions~~2010, ~~compared~~and represented ~~to 10~~67.78%, ~~69.9%~~ and 1668.81% of CIB Marine’s total assets at December 31, ~~2009~~2011 and 2010, respectively. The ~~ratio~~decrease ofin ~~total~~loans from ~~securities~~December 31, 2010 to ~~total~~December ~~assets~~31, 2011 was ~~21.5%~~across ~~and~~all ~~25.8%~~segments atexcept ~~December~~residential 31real estate, ~~2010~~but primarily in the commercial real estate and ~~2009~~construction and development loans, ~~respectively~~predominantly reflecting repayments, collections and the impact of charge-offs.

37CIB Marine has no agreements to acquire any loan pools or portfolios, home equity or other, from other parties at this time. As a community bank in the markets it serves, CIB Marine may buy or participate in (or sell in whole or part) individual loans from (or to) other lenders, but only on a loan-by-loan basis where CIB Marine determines compliance with CIB Marine’s loan and acquisition policies prior to acquiring such loans.

~~Securities~~The ~~available~~following ~~for~~table ~~sale~~sets ~~with~~forth a ~~carrying value~~ summary of ~~$74.1~~CIB ~~million~~Marine’s ~~and~~loan ~~$132.3~~portfolio ~~million~~by atcategory ~~December~~for ~~31,~~each ~~2010~~of ~~and~~the ~~2009,~~periods ~~respectively,~~indicated. ~~were~~The ~~pledged~~data tofor ~~secure~~each ~~public~~category ~~deposits,~~is ~~FHLBC~~presented ~~advances,~~in terms ~~repurchase~~of ~~agreements,~~total ~~federal~~dollars ~~reserve~~outstanding ~~discount~~and ~~window,~~as a ~~federal~~percentage ~~funds and letter~~ of ~~credit~~the ~~guidance~~total ~~facility~~loans ~~at a correspondent bank, and for other purposes as required or permitted by law~~outstanding.

For those securities with fair value less than cost at December 31, 2010, because CIB Marine does not intend to sell the investment and it is not more likely than not that CIB Marine will be required to sell the investments before recovery of their respective amortized cost bases, which may be maturity, CIB Marine does not consider those securities to be OTTI, except for the following: (1) six residential mortgage-backed securities (non-agencies) (“Non-agency MBS”) with $0.3 million credit-related OTTI recognized during 2009 and $0.5 million recognized during 2010, and (2) two trust preferred collateralized debt obligations with $0.1 million credit-related OTTI recognized during 2009 and $0.1 million recognized during 2010.

	At December 31,
	2011						2010						2009						2008						2007
	Balance			%			Balance			%			Balance			%			Balance			%			Balance			%
	(Dollars in thousands)
Commercial	$	44,385			12.4	%	$	53,971			13.0	%	$	71,921			15.3	%	$	75,289			13.6	%	$	63,046			10.6	%
Commercial real estate		221,420			62.1			240,491			58.0			243,811			51.9			258,881			46.8			258,265			43.5
Construction and development		17,260			4.8			35,816			8.6			49,795			10.7			86,909			15.7			139,663			23.5
Residential real estate		16,593			4.7			16,005			3.9			19,322			4.1			26,110			4.7			20,938			3.5
Home equity		31,831			8.9			38,896			9.4			46,778			9.9			51,099			9.3			35,470			6.0
Purchased home equity pools		22,646			6.4			26,975			6.5			35,054			7.5			52,154			9.4			73,016			12.3
Other consumer		2,542			0.7			2,620			0.6			2,701			0.6			2,990			0.5			3,241			0.6
Receivables from sale of stock		—			—			—			—			—			—			(51	)		(0.0	)		(121	)		(0.0	)
Gross loans		356,677			100.0	%		414,774			100.0	%		469,382			100.0	%		553,381			100.0	%		593,518			100.0	%
Deferred loan costs		955						1,004						1,286						1,826						1,741
Total loans		357,632						415,778						470,668						555,207						595,259
Allowance for loan losses		(16,128	)					(14,645	)					(16,240	)					(19,242	)					(20,706	)
Net loans	$	341,504					$	401,133					$	454,428					$	535,965					$	574,553

~~For~~During ~~more~~the ~~information~~second ~~regarding~~quarter ~~securities~~of ~~and~~2011, ~~OTTI~~CIBM Bank ~~see~~closed ~~Note~~its 4Arizona office but continued to service loans generated by the ~~consolidated~~branch. ~~financial~~At ~~statements~~December ~~appearing~~31, in2011, ~~Item~~total loans from the prior Arizona office were $46 million including $2.3 million rated special mention, and $9.8 ofmillion ~~Part~~and II$3.5 ofmillion ~~this~~rated ~~Form~~substandard accrual ~~10-K~~and ~~for~~substandard ~~additional~~nonaccrual, ~~information~~respectively.

~~The following table presents the maturities and weighted average yields of securities at December 31, 2010.~~36

	At December 31, 2010 (1)
	1 Year and Less					1 to 5 Years					5 to 10 Years					Over 10 Years					Total
	Balance		Yield to Maturity			Balance		Yield to Maturity			Balance		Yield to Maturity			Balance		Yield to Maturity			Balance			Yield to Maturity
	(Dollars in thousands)
U.S. government agencies	$	5,496		4.89	%	$	7,031		4.59	%	$	—		—	%	$	—		—	%	$	12,527			4.72	%
States and political subdivisions		82		4.96			9,201		4.98			15,545		5.28			4,478		5.80			29,306			5.27
Trust preferred collateralized debt obligations		—		—			—		—			—		—			8,359		0.93			8,359			0.93
Other debt obligations		—		—			150		1.00			—		—			—		—			150			1.00
Residential mortgage-backed securities (agencies)		—		—			2,047		4.62			12,088		4.59			28,971		4.46			43,106			4.50
Residential mortgage-backed securities (non-agencies)		—		—			—		—			8,168		4.71			29,910		5.32			38,078			5.19
Total securities before market value adjustment	$	5,578		4.89	%	$	18,429		4.76	%	$	35,801		4.92	%	$	71,718		4.49	%	$	131,526			4.66	%
Available for sale unrealized loss																						(4,648	)
Total securities available for sale																					$	126,878

Commercial Loans

~~(1)~~These Inrepresent ~~the~~loans ~~future,~~to ~~CIB~~commercial ~~Marine~~customers for ~~does~~use ~~not~~in ~~expect~~normal business operations to ~~realize~~finance ~~all~~working capital needs, equipment purchases, or other projects. The majority of these borrowers are commercial customers doing business within the ~~tax~~Bank’s ~~benefits~~geographic ~~associated~~regions and are generally underwritten individually and secured with ~~tax-exempt~~the assets ~~due~~of the company, excluding commercial real estate, and/or the personal guarantee of the business owners. The underwriting process focuses primarily on the cash flow from operations and liquidity to ~~substantial~~repay ~~losses~~the itdebt, ~~has~~but also ~~incurred~~considers degree of leverage, the type and amount of collateral and the strength of the guarantors. ~~Accordingly~~At December 31, ~~2010~~2011, commercial isloans ~~not~~totaled ~~presented~~$44.4 onmillion and represented 12.4% of gross loans, a ~~tax-equivalent~~decrease of $9.6 million, or 17.8%, from the prior year end. When warranted by the overall financial condition of the borrower, loans may also be made on an unsecured basis. Commercial loans generally have floating interest rates.

Loans Held for Sale

Commercial	December 31, 2011									December 31, 2010
	Balances			% of Balances			% of Loans			Balances		% of Balances			% of Loans
				(Dollars in thousands)
Loans	$	44,385			100.0	%		12.4	%	$	53,971		100.0	%		13.0	%
Nonaccrual		323			0.7			0.1			2,568		4.8			0.6
Restructured accruing		13			0.0			0.0			—		—			—
Allowance for loan losses		1,417			3.2			0.4			2,691		5.0			0.6
Net charge-offs (recoveries) year-to-date		(159	)

Filing Compare · CIB MARINE BANCSHARES INC