CHICAGO, Jan. 30 /PRNewswire-FirstCall/ -- Corus Bankshares, Inc. ("Corus" or the "Company") reported a preliminary net loss for the 2008 fourth quarter of $260.7 million, or $4.85 per diluted share, down from net income of $1.9 million, or $0.03 per diluted share, in the fourth quarter of 2007. For the year ended December 31, 2008, the preliminary net loss totaled $400.4 million, or $7.38 per diluted share compared to net income of $106.2 million, or $1.85 per diluted share in 2007.
The preliminary results do not include potential entries that could arise from subsequent adjustments relating to our commercial real estate loan portfolio. While we have completed internal assessments on the bulk of our portfolio, we have ordered, but not yet received, several appraisals. The appraisals are used as a basis for determining the value of the underlying collateral of our loans and significant variations between our internal assessments and the appraisals could have a material impact on our financial results. Additionally, to the extent that prior to filing our Annual Report on Form 10-K, a borrower's condition deteriorates such that the associated loan becomes impaired, under Generally Accepted Accounting Principles, Corus may be required to recognize the impairment as of December 31, 2008.
Any subsequent adjustments could impact 1) the provision for credit losses 2) the amount of interest income reported (if we determine that additional loans should be placed on nonaccrual), 3) loans charged off, and 4) the resulting balance in loans outstanding and the Allowance for Credit Losses.
The information contained in this press release is limited to a balance sheet and income statement for Corus Bankshares, Inc. Additional details, however, can be found in the Call Report filed today by Corus' subsidiary bank, Corus Bank, N.A. (the "Bank"). Please go to http://www.corusbank.com/acrobat/Dec08CallReport.pdf for a copy of the Call Report or visit either the investor relations section of Corus' Web site at http://www.corusbank.com/ or the FDIC's Web site at http://www.fdic.gov/. Corus is a one-bank holding company so consolidated results are primarily attributable to the results of the Bank. Corus expects to release earnings in its more traditional format by March 16, 2009, in tandem with the filing of the Annual Report of Form 10-K.
Overview
Corus is suffering from the extraordinary effects of what may ultimately be the worst economic downturn since the Great Depression. The effects of the current environment are being felt across many industries with financial services and residential real estate being particularly hard hit. The effects of the downturn have been particularly acute during the last 90-180 days of 2008. Corus, with a portfolio consisting primarily of condominium construction loans, many in the hard hit areas of Arizona, Nevada, south Florida and southern California, has seen a rapid and precipitous decline in the value of the collateral securing our loan portfolio.
Capital
In spite of the current year losses, with total capital of $758 million, Corus Bank's capital ratios (as shown in the Call Report mentioned above) were above the numerical calculations of "well-capitalized" as of December 31, 2008. Nevertheless, bank regulators have broad authority to either reduce a bank's capital classification below what the numerical ratios would otherwise indicate or simply set higher capital thresholds. Based on recent discussions with the Bank's regulators, management believes it is likely that the Bank will be held to higher capital standards in the near future and, as such, may no longer be considered well-capitalized and may be required to identify additional sources of capital.
Corus had always recognized that a severe downturn in the residential real estate markets was a possible, if not likely, occurrence and we attempted to position ourselves accordingly. While we had planned for the possibility of such a downturn, and the associated nonaccrual loans and provisions for credit losses, in our corporate planning, the current housing calamity is worse than even the "severe downturn" for which we had planned.
Nonaccrual Loans & Credit Loss Reserves
Nonaccrual loans have grown to $1.5 billion, more than one-third of total loan balances outstanding at December 31, 2008. Combined with other real estate owned ("OREO") of over $400 million at year end, most of which was foreclosed on during the last quarter of 2008, Corus' nonperforming assets at December 31, 2008 totaled $2.0 billion. This extraordinary level of nonperforming assets put such negative pressure on Corus' net interest income that it fell below zero for the quarter ended December 31, 2008.
The decline in value associated with the collateral supporting Corus' commercial real estate loans resulted in a significant provision for credit losses and high levels of charge-offs. For the three and twelve months ended December 31, 2008, Corus recorded a provision for credit losses of $310 million and $588 million, respectively. Charge-offs during same periods totaled $224 million and $371 million, respectively. The Allowance for Credit Losses (reserves available for future charge-offs) increased from $77 million at December 31, 2007 to nearly $294 million at the end of 2008 (includes both the allowance for loan losses and the liability for credit commitment losses).
TARP Funds
In an attempt to address the issues many banks are facing, the U.S. Treasury Department has made funds available to certain banks under its Troubled Asset Relief Program Capital Purchase Program (the "Program"). As previously disclosed, the Company submitted its application for funds under the Program on November 14, 2008. The Company has received a preliminary response from the Treasury Department indicating that they intend to reject our application, but the final action has not been taken and Corus continues to pursue the TARP application and other capital raising options.
Corus Bankshares, Inc. ("Corus" or the "Company") is a bank holding company headquartered in Chicago, Illinois. Corus conducts its banking operations through its wholly-owned banking subsidiary Corus Bank, N.A. (the "Bank"). The Bank is a nationwide construction lender, specializing in condominium, office, hotel, and apartment projects. Its outstanding commercial real estate loans and unfunded construction commitments total approximately $5.8 billion. Corus' common stock trades on the NASDAQ Global Select Market tier of The NASDAQ Stock Market under the symbol: CORS.
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by, among other things, the use of forward-looking terms such as "likely," "typically," "may," "intends," "expects," "believes," "anticipates," "estimates," "projects," "targets," "forecasts," "seeks," "potential," "hopeful," or "attempts" or the negative of such terms or other variations on such terms or comparable terminology. By their nature, these statements are subject to risks, uncertainties and other factors, which could cause actual future results to differ materially from those results expressed or implied by such forward-looking statements.
Do not unduly rely on forward-looking statements. They give Corus' expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and, except as required by law, Corus does not intend to update them to reflect changes that occur after that date. For a discussion of factors that may cause actual results to differ from expectations, refer to Corus' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2007 and subsequent quarterly reports on Form 10-Q. Any factor described in this press release or in any document referred to in this press release could, by itself or together with one or more other factors, adversely affect the Company's business, earnings and/or financial condition.
Condensed Consolidated Balance Sheets (Unaudited) December 31 December 31 (Dollars in thousands) 2008* 2007 Assets Cash and due from banks - noninterest-bearing $67,633 $76,707 Interest-bearing deposits with the Federal Reserve 141,036 - Federal funds sold 100,000 586,500 Cash and Cash Equivalents 308,669 663,207 Time deposits with banks 1,930,918 - Securities: Available-for-sale, at fair value: U.S. Government agencies 1,634,014 3,618,265 Equity securities - 135,981 Other securities 2,839 4,492 Total Securities 1,636,853 3,758,738 Loans, net of unearned income 4,094,273 4,409,387 Less: Allowance for loan losses 258,097 70,992 Loans, net 3,836,176 4,338,395 Other real estate owned 408,987 36,951 Accrued interest receivable 34,706 34,550 Premises and equipment, net 33,284 26,875 Other assets 219,974 67,861 Total Assets $8,409,567 $8,926,577 Liabilities and Shareholders' Equity Liabilities: Deposits: Interest-bearing $7,384,427 $7,365,205 Noninterest-bearing 208,033 254,477 Total Deposits 7,592,460 7,619,682 Subordinated debentures relating to Trust Preferred Securities 409,414 404,647 Other borrowings 725 54,945 Accrued interest payable 12,892 17,257 Dividends payable - 13,761 Other liabilities 55,432 26,888 Total Liabilities 8,070,923 8,137,180 Shareholders' Equity: Common stock, surplus, and retained earnings 339,350 768,984 Accumulated other comprehensive income / (loss) (706) 20,413 Total Shareholders' Equity 338,644 789,397 Total Liabilities and Shareholders' Equity $8,409,567 $8,926,577 * Preliminary Condensed Consolidated Statements of Income (Unaudited) Three Months Ended Twelve Months Ended (In thousands, except per-share December 31 December 31 data) 2008* 2007 2008* 2007 Interest, Points and Fees, and Dividend Income: Interest, points and fees on loans $49,934 $107,239 $308,623 $446,221 Federal funds sold 160 3,107 7,868 15,479 Interest-bearing deposits with the Federal Reserve 300 - 300 - Time deposits with banks 17,713 - 46,580 - Securities: Interest 10,220 52,001 74,875 247,866 Dividends - 1,855 1,320 6,891 Total Interest, Points and Fees, and Dividend Income 78,327 164,202 439,566 716,457 Interest Expense: Deposits 73,280 93,845 315,052 394,896 Subordinated debentures relating to Trust Preferred Securities 5,510 8,068 23,106 30,941 Other borrowings 1 959 1,487 4,163 Total Interest Expense 78,791 102,872 339,645 430,000 Net Interest Income/(Loss) (464) 61,330 99,921 286,457 Provision for credit losses 310,000 33,500 587,500 66,000 Net Interest Income/(Loss) after Provision for Credit Losses (310,464) 27,830 (487,579) 220,457 Noninterest Income: Securities gains/(losses), net - (4,082) 26,087 4,673 Service charges on deposit accounts 2,223 2,458 9,200 10,114 Other income 863 961 3,611 3,851 Total Noninterest Income 3,086 (663) 38,898 18,638 Noninterest Expense: Employee compensation and benefits 4,298 11,065 23,254 44,508 Other real estate owned and protective advances 8,970 698 15,507 2,652 Insurance - FDIC 2,121 1,498 7,337 3,389 Net occupancy 1,506 1,131 5,697 4,463 Depreciation - furniture and equipment 726 575 2,237 2,010 Data processing 442 603 1,827 2,373 Goodwill impairment - 4,523 - 4,523 Other expenses 4,592 2,913 14,739 11,656 Total Noninterest Expense 22,655 23,006 70,598 75,574 Income/(Loss) Before Income Taxes (330,033) 4,161 (519,279) 163,521 Income tax expense/(benefit) (69,327) 2,237 (118,895) 57,317 Net Income/(Loss) $(260,706) $1,924 $(400,384) $106,204 Net Income/(Loss) Per Common Share: Basic $(4.85) $0.03 $(7.38) $1.89 Diluted $(4.85) $0.03 $(7.38) $1.85 Weighted Average Common and Common Equivalent Shares Outstanding 53,711 56,471 54,261 57,265 * Preliminary
