CIBC executives faced disappointed shareholders at its annual meeting today in Toronto, after announcing a $1.46 billion loss for the fist quarter.

An expressionless Gerry McCaughey, president and CEO at the beleaguered bank, called the results a “significant disappointment” in a speech to shareholders.

CIBC has been hit hard by charges related to subprime mortgage exposure in the U.S. The quarterly results were hurt by a slew of pre-tax charges including $2.28 billion on credit protection purchased from U.S. bond insurer ACA Financial Guaranty Corp, $626 million for credit protection bought from other financial guarantors and $473 million in mark-to-market losses on securities tied to the U.S. residential mortgage market. After tax, these three items amounted to $6.68 per share.

Results were also affected by a $108 million pretax loss on the sale of some U.S. businesses to Oppenheimer Holdings Inc.

“At the business level, we believed that Triple AAA with hedged counterparties meant very low risk,” said McCaughey. “And, because of the perception of low risk, the portfolio grew too large for a bank of our size.”

The November to January loss per share was $4.39, and the $1.46 billion loss compares with a net income of $770 last year.

“We clearly underestimated the potential for extreme mortgage defaults, and in particular did not foresee the questionable lending practices in this market,” said Tom Woods, senior executive vp and chief risk officer for the bank.

Woods, formerly the bank’s CFO, replaced Ken Kilgour in the risk officer’s role during a management shake-up in early January. At the same time, CIBC World Markets CEO Brian Shaw was replaced with TSX Group CEO Richard Nesbitt, who will fill his office tomorrow. As well, David Williamson, former CFO at Clarica Life Insurance, was brought in as CFO.

The beefed up management team is just one of the measures that CIBC is hinging its turnaround on. The major push is to continue to de-risk the bank. Woods said he has enlisted the help of outside advisors to assess risk exposures and begin to enhance stress testing.

In mid-January, CIBC announced US$2.46 billion in subprime writedowns for just the first two months of the quarter. Today it added nearly another billion to that for the first month of 2008. “The market and the creditworthiness of the monoline insurers continued to deteriorate in January, resulting in US$929 million of additional writedowns,” Woods told shareholders today. A full $624 million of that is a reserve against potential insuror failures in the future, he added.

CIBC has US$1.59 billion in subprime exposure that is not hedged with counterparties, plus another US$7.9 billion that is hedged with monoline insurers, which Woods said is “of greater concern.” Due to credit quality uncertainty, he said, CIBC has taken $2.8 billion in reserves of this amount, which leaves the bank’s exposure and therefore maximum future losses at $5.1 billion. “But this would occur only if the value of all the subprime exposure fell to zero, and all the monoline insurers went bankrupt,” said Woods.

CIBC raised $2.75 billion from a private placement in which Manulife Financial Corp., Caisse de depot et placement du Quebec, Cheung Kong Holdings Ltd. and OMERS Administration Corp. coughed up $1.5 billion to buy shares priced to go at $65.26. At the same time a public offering of shares at $67.05 raised $1.43 billion.

Revenue for the bank’s retail business was up $87 million, or 15%, from the same quarter last year, while revenue at CIBC World Markets fell $2.2 billion, due to the subprime related charges.

McCaughey pointed to the fact that the bank’s earnings reached a record high of $3.3 billion in 2007, a 24% gain from last year and called it “all the more impressive” because it includes $777 million in writedowns. “This shows the power of our core franchise and that our core results can be even more powerful if we avoid costly errors,” he said. “I recognizes performance in 2007 has been overshadowed by our writedowns,” he added.

And the bank is bracing for more. “Market and economic conditions relating to the financial guarantors may change in the future, which could result in significant future losses,” it said.

“My focus and the focus of my management team is to get CIBC back on the strategic track we set for ourselves two years ago,” said McCaughey.

@page_break@Voting results

As well, shareholders voted down all 14 of the shareholder proposals that were put forth. However, one proposal brought about a very close vote and prompted Etherington to comment on the “great deal of interest in this area” and the “diversity of views on the merits of say-on-pay.” Nearly half of voters (44.96%) voted in favour of the proposal supporting advisory votes on executive compensation.