Corus Bankshares Reports Record Earnings
Monday April 17, 8:37 am ET
CHICAGO, April 17 /PRNewswire-FirstCall/ -- Corus Bankshares Inc. (Nasdaq: CORS - News) -- Corus reports 2006 first quarter earnings of $43.4 million, or $1.50 per diluted share, up 54% from $28.1 million, or $0.97 per diluted share, in the first quarter of 2005.
"It is all the more gratifying that these results come on the heels of our best year ever," said Robert J. Glickman, President and Chief Executive Officer. Some highlights related to the current quarter's results include:
-- Total assets crossed $9.2 billion, up $3.6 billion or 65% compared to
one year ago;
-- The commercial real estate loan portfolio, which includes unfunded
commitments, reached $9.0 billion, a new record. Additionally, our
"pipeline" of pending loans (detailed further in the report), stands
at over $5.8 billion;
-- Commercial real estate loan originations in the first quarter totaled
$1.3 billion and $5.6 billion over the last 12 months;
-- Deposits hit $8.0 billion, an increase of $3.4 billion, or 73%, since
March 31, 2005; and
-- Net interest income of $83.8 million, an increase of 63% compared to
the first quarter of 2005.
I am also extremely pleased to report that this quarter marks the 25th quarter in a row without a single commercial real estate loan charge-off. The last time Corus experienced a commercial real estate loan charge-off was over 6 years ago in 1999.
Finally, as always, we watch our costs very closely. Our first quarter efficiency ratio was just 19.5%, among the best in the industry."
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 an active commercial real estate lender nationwide, specializing in condominium, hotel, office and apartment loans. The Bank holds loans of up to $150 million for its own account and also syndicates larger transactions.
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," "anticipates," "estimates," "projects," "targets," "forecasts," "seeks," 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 results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that might cause Corus' actual results to differ materially include, but are not limited to, the following:
-- The general state of the economy, particularly continued strength in
the residential real estate sector. Weakness in the residential real
estate sector, which may be caused by, among many other things, higher
interest rates, could adversely affect: 1) Corus' ability to maintain
its current level of loan originations, and/or 2) the credit quality
of loans;
-- The impact of competitors' pricing initiatives on loan and deposit
products;
-- The timing of drawdowns on unfunded loan commitments and paydowns of
existing loans;
-- Corus' ability to attract and retain sufficient cost-effective funding
to support marginal loan growth;
-- Corus' ability to access the capital markets, particularly for the
issuance of Trust Preferred securities;
-- Corus' ability to maintain and access any line(s) of credit;
-- The extent of defaults and losses given default and how those results
compare to Corus' estimates;
-- Changes in management's estimate of the adequacy of the allowance for
credit losses;
-- Restrictions that may be imposed by any of the various regulatory
agencies that have authority over the Company or any of its
subsidiaries;
-- The occurrence of one or more catastrophic events, such as an
earthquake, hurricane, or acts of terrorism that affect properties
securing the loans; and
-- Changes in the accounting policies, laws, regulations, and policies
governing financial services companies.
Corus undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this release. Additional information that could affect the Company's financial results is included in the Company's 2005 Annual Report, Forms 10-K, 10-Q and 8-K on file with the Securities and Exchange Commission.
Commercial Real Estate Risk Analysis
The following disclosure is not computed in accordance with generally accepted accounting principles ("GAAP") and is considered a non-GAAP disclosure. Management believes that this presentation, while not in accordance with GAAP, provides useful insight into how management analyzes and quantifies risk and determines the appropriate level of capital.
Management has made a concerted effort to distill the numerous objective, as well as subjective, risks inherent in the commercial real estate ("CRE") loans the Bank originates into a rigorous system to analyze and quantify risk. At its core, this system takes the form of management and loan officers estimating a loan's Probability of Default ("POD") and its Loss Given Default ("LGD") if a serious recession should occur. The POD is our estimate of how likely it is, given a serious recession, a loan would go into default while the LGD is our estimate, given such a default, of what percentage of the loan would have to be charged off. This point bears repeating -- the POD and LGD estimates are not based on today's market conditions; they are instead arrived at by "stressing" all major assumptions regarding the cash flow and/or values of the underlying real estate down to levels that could manifest themselves during a serious recession. Management believes that assessing the impact that a severe recession would have on the portfolio is the best method to truly stress the portfolio.
As a proxy for the potential cash flow and/or values of the underlying real estate, management uses, among other things, the severe declines in CRE property values experienced in California and New England during the late 1980's and early 1990's. The analysis assumes, based on information collected from various regulatory and industry sources, that condominiums will be worth 60% to 80% of cost (not appraised value). Keep in mind that while these are the typical discounts, each loan is analyzed individually and may have discounts larger or smaller than mentioned above. Additionally, while this system of analysis is based on a serious recession, it is certainly possible that the Company could experience meaningful nonperforming loans and charge- offs even in the absence of such a recession.
While Corus has attempted to be conservative in its assessment of potential defaults and losses, it is conceivable that actual defaults and/or losses may be greater, perhaps materially, than estimated. Note that this analysis is not predicated upon when, or how often, serious recessions may occur, but rather upon the anticipation of such events.
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