Financial Problems Deepen at Corus Bankshares and Colonial BancGroup

Discussion in 'Wall St. News' started by ASusilovic, Aug 2, 2009.

  1. Corus Bankshares Inc., the Chicago lender battered by the condominium bust, warned it is "critically undercapitalized" and that it is "highly unlikely" it can raise capital without substantial aid from bank regulators.

    Corus disclosed a $487 million second-quarter loss in a filing with the Securities and Exchange Commission. Tier 1 capital, a measure of its cushion against bad loans, fell to negative $157 million at its banking unit at the end of June, a condition that usually triggers seizure.


    Of the five banks that have reported negative Tier 1 levels for the second quarter, four have been seized by regulators, according to Foresight Analytics. Corus has assets of $7.07 billion.

    In another indication of the troubles facing banks of all sizes across the U.S., Colonial BancGroup Inc., a Montgomery, Ala., bank-holding company with $25.5 billion in assets, said its management "has concluded that there is substantial doubt about Colonial's ability to continue as a going concern."

    Colonial on Friday reported a net loss of $606 million for the second quarter, saying plans to get a $300 million infusion from outside investors had collapsed. As a result, Colonial has "shifted our focus" to pursing a sale or merger, jettisoning problem assets and other options, said Chief Executive Lewis Beville.

    The regional bank has been battered by its exposure to real-estate lending, particularly in Florida. The state has been hammered by falling property values and rising foreclosures.

    The deteriorating financial condition of Colonial and Corus puts even more pressure on bank regulators, who have been shopping around assets of critically wounded financial institutions and trying to line up buyers for banks that can't be saved.

    Some analysts thought Corus would be taken over by regulators and its best assets sold after it failed to shore up its capital position ahead of a June deadline. Several private-equity and real-estate funds are looking at buying the bank's assets, which include 76 condo construction loans, including 12 for buildings that Corus is in the process of acquiring through foreclosure.

    That sales process has dragged on longer than many analysts expected, as would-be buyers look for a loss-sharing agreement with the Federal Deposit Insurance Corp. Potential bidders are heavily discounting the assets because of challenges in gauging the true value of the bank's nonperforming construction loans.

    "Anytime you have a situation like this where the equity hole is so deep and the loan loss is so severe...[buyers] will want protection and assistance from the FDIC in a fairly significant way," said Peyton Green, a senior analyst at Sterne, Agee & Leach Inc.

    Potential bidders for Corus include real-estate developer Related Cos., real-estate investor Lubert-Adler and private-equity firms Starwood Capital and Colony Capital.

    Corus concentrated heavily on condo-construction lending, and more than half of the $3.9 billion in condo-construction loans weren't generating payments or were in foreclosure at the end of March. Construction loans accounted for 88% of the bank's outstanding loans at the end of the first quarter, the largest share among any U.S. bank with more than $100 million in loans, according to Foresight Analytics.

    "If I were the FDIC, I would want to cut my losses and run," Mr. Green said.
  2. The next Depression is soon to be here.

    Banks are no better off in reality than they were last year. In fact, they're worse off.

    The only thing the government can and has been trying to do is bolster confidence by lying outright about the financial condition of banks, households, corporations and the government itself.

    The U.S. Government is complicit in out and out fraud.
  3. CORS
    Market Cap: 13.43M
  4. Have you considered buying a condominium in Chicago instead of NYC? :cool:
  5. Oh yes. It's about time to go back to the roots...
  6. You can co-locate into the CME and CBOE. :cool:

    Downtown building raided
    by FBI

    Updated: Monday, 03 Aug 2009, 2:41 PM EDT
    Published : Monday, 03 Aug 2009, 12:07 PM EDT

    ORANGE COUNTY, Fla. (WOFL FOX 35) - - FBI agents from the Washington, D.C. field office have raided a building in downtown Orlando. Federal and local law enforcement surrounded the Colonial Bank building on East Pine Street in Orlando just before noon.

    The FBI is working with the Office of the Special Inspector General for the Troubled Asset Relief Program which was established by the Emergency Economic Stabilization Act of 2008.

    Agents served search warrants and pulled out documents bringing them out a side entrance and placing them in to a Ryder truck.

    A spokeswoman with both the FBI and the Inspector General wouldn't give details about their investigation.

    They wouldn't say if anyone has been arrested or charged in this matter.
  8. ipatent


    ^ This ought be be interesting.