Central Illinois Bank's parent announces losses for 2003

Central Illinois Bank's parent announces losses for 2003

CHAMPAIGN – It's tough times for CIB Marine Bancshares, the parent company of Central Illinois Bank.

The Pewaukee, Wis.-based company sent a letter to shareholders Friday announcing its president's retirement, a loss for the year 2003 and the likelihood that banking regulators will restrict more of its operations.

In the meantime, the company plans to reduce executive salaries, curtail the hiring of new employees and suspend contributions to employees' 401(k) plans.

The company – which has about 55 banking offices in Illinois, Wisconsin, Indiana, Florida, Nebraska, Florida and Arizona – got its start in Champaign County, and many of its large shareholders are from this area.

Central Illinois Bank has about 18 offices in downstate Illinois, including offices in Champaign, Urbana, Rantoul, Sidney, Danville, Monticello and Arthur.

In the letter to shareholders, the CIB Marine board of directors reported that J. Michael Straka had retired as president and chief executive officer. Straka, 65, has been named the company's vice chairman, and his duties include "maintaining relationships with shareholders and major customers." A successor is being sought, the letter said.

In the meantime, Michael J. Miller has joined the company as executive vice president and chief lending officer. He has 27 years of banking experience at U.S Bank and Bank One.

The letter to shareholders said CIB Marine will show a net loss for 2003, though the full extent of the loss won't be known until a review is completed.

"In addition, the company now believes that banking regulators will place restrictions on certain of the operations of the organization," the letter said. "These restrictions will be in addition to those imposed on CIB Bank-Chicago under the memorandum of understanding now in effect."

Regulators are requiring CIB Bank-Chicago to maintain a certain capital level, limit loan growth and restrict payment of any dividend by the bank, said Edward Nebb, spokesman for a New York public relations firm that has been retained by CIB Marine.

CIB Bank-Chicago is one of several subsidiary banks under the CIB Marine umbrella. Other subsidiary banks include Central Illinois Bank, CIB Bank-Indiana, Marine Bank-Milwaukee, Florida-based Citrus Bank, and Arizona-based Marine Bank FSB.

Nebb said Monday it's too early to say what any new restrictions against CIB Marine may include.

"Because regulatory examinations are not complete, it's not possible to speculate on what future restrictions might be," he said.

Friday's letter wasn't the first sign of problems at CIB Marine. The company reported Nov. 18 that it expected a net loss – and a significant increase in its allowance for loan losses – for both the quarter and the nine-month period that ended Sept. 30. The company said it would review the situation.

In its latest letter, the board said the review "resulted from regular examinations at certain of the company's subsidiary banks by banking regulators and a deterioration in the credit quality of the company's loan portfolio, including a significant increase in nonperforming loans."

Nebb would not specify the principal causes of the company's 2003 loss, other than to cite "deterioration in credit quality."

In other changes, the board announced that former chief credit officer Stephen C. Bonnell has been assigned new responsibilities in the credit department. The board also said the senior lender at CIB Bank-Chicago – who was not identified by name – had been placed on administrative leave and would be replaced.

Attempts were made to reach Donald J. Straka – Michael Straka's son and the company's senior vice president, chief legal officer and secretary – and local officials of Central Illinois Bank for comment. However, Nebb said he would be acting as spokesman for the company.

CIB Marine Bancshares was originally incorporated in 1985 as Sidney Bancorporation, a single-bank holding company headquartered in Sidney, Ill. In 1987, a group of investors led by Michael Straka acquired the company and changed its name to Central Illinois Bank. The company reincorporated in Wisconsin as CIB Marine Bancshares on Aug. 27, 1999.

You can reach Don Dodson at (217) 351-5227 or via e-mail at dodson@news-gazette.com.

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