Magazine article American Banker

Corus Told to Find Capital or a Buyer

Magazine article American Banker

Corus Told to Find Capital or a Buyer

Article excerpt

Byline: Robert Barba

Corus Bankshares Inc. of Chicago must come up with a plan to bolster its capital or face a forced sale.

The $8.4 billion-asset company, once an aggressive nationwide condominium lender now crippled by bad loans, said late Wednesday that it signed strict regulatory agreements with the Federal Reserve Bank of Chicago and the Office of the Comptroller of the Currency.

The agreements give the company 60 days to submit its capital plan and 120 days to get its Corus Bank to the elevated capital levels the regulators imposed. Failing to do either would trigger a new order requiring the company to sell or liquidate the bank, according to the agreements.

Corus, which halted lending in the third quarter, said late last month that nonaccruals have soared to nearly 40% of its total loans. It has mostly condo construction loans in places hard hit by the real estate meltdown, including Arizona, Nevada, Florida, and California.

It also warned that its bank, which was well capitalized at yearend under the usual regulatory guidelines, might be held to higher capital standards in the near future.

The bank had a leverage ratio of 7.87% and a Tier 1 risk-based capital ratio of 10.99% as of Dec. 31, according to its call report. The agreement with the OCC requires the leverage ratio to be at least 9% and the Tier 1 risk-based capital ratio to be at least 12%.

Analysts have said that Corus is unlikely to attract investors, and that its survival is doubtful. …

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