Corus Feels Effects of Condo Slump
Its portfolio ripe with nonperforming condominium construction loans, Corus Bankshares Inc. in Chicago is coming off its worst quarterly performance in years.
The $9 billion-asset company had made an average of $22 million a quarter over the last decade, but in the fourth quarter its earnings fell 95% from a year earlier, to just $1.9 million.
Full-year profits fell 44%, to $106.2 million, Corus said Friday. In 2006 it had earned a record $189.4 million.
In a press release, Robert J. Glickman, Corus' president and chief executive, blamed the decline on "continued weakness in the housing and mortgage markets, combined with a general slowdown in the economy."
Corus has established itself this decade as one of the nation's most active lenders to condo developers. Construction and conversion loans made up roughly 95% of its loan portfolio at yearend, but with supply outpacing demand, particularly in south Florida, full-year nonperforming assets more than doubled, to $319.6 million.
Chargeoffs of real estate loans secured by condos totaled $40 million last year.
Ronald Peterson, senior analyst with Sterne, Agee & Leach Inc. in Chicago, said the steep drop in earnings was not surprising, given the weakness in the condo market. "We anticipated that nonperformers would be going up."
Mr. Peterson expects Corus to encounter more problems in its condo portfolio in the coming quarters.
Corus' shares fell 1.3% Friday, to $10.58.
Mr. Glickman said in the release that Corus is still originating loans, despite the market's downturn; it expects to write $1 billion this quarter. Many of the loans will be for condos, he said, but some will be for office developments.
"I am confident we can 'weather this storm,' " he said.