Chicago bank's condo woes grow - Business First of Columbus:

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billion in assets. Corus (NASDAQ: has nearly $4.4 billion in loans, with 90 perceny of them due for maturity or repricing in three monthsor less, according to fourt quarter data reported to the Corus is countingh on payments from some of the most prominent condko projects in South Jade Ocean Condominiums in Miami, the Trump Internationall Hotel and Tower in Fort Lauderdale and Edge Condominium in West Palm Corus could be under heavy regulatory scrutiny for investing so much of its portfolio into the condok market in one geographic area, said Tony managing partner of Miami-based accounting and consultinv firm .
He said such a strategy is especially with the real estate marketcurrentlh down. "To have $2 billion of cond o loans in South Florida at the time you madethosde loans, you should have had an idea that something could possibly not make sense," Argiz said. Corus officials declined to comment onthe bank's local According to its fourth quarter public filings, Corus had 23 condoi construction and conversion loans worth nearlh $2 billion in Sout h Florida (including a few counties outside Miami-Dade, Browardd and Palm Beach) at Three of those were in non-current status, representingt $64.2 million. It had $282.8 million in non-current loans (6.
46 percent of its total loans) as of Dec. 31, up from $199.9i million (4.93 percent of totalo loans) on Sept. 30. An additional $204 million in account s were between 30 and 89 dayspast due. Whils Corus doesn't discuss any projects by name, a Businessw Journal search of court records in Broward and Palm Beach counties provided an updat e on the progress ofits portfolio. It found $2.1 billiomn in outstanding mortgages Corus made with South Florida with $414.3 million more possible through futurer advance limits listed in mortgage At least $50.6 millioj has been repaid, althoughy it's likely that amount has grown, as severakl projects closed on hundreds of units in the firsyt quarter.
Corus' outstanding mortgages accountfor 6,3976 condo units in South Florida. Of the 2,449 that have been 735 were sold asof Feb. 26, according to couryt records. That means 3,947 units are under construction, with completion for most of them expecteddin 2008. "Corus is the poster child for high-risl condo construction loans in all the bubble markets arounr theUnited States," said Jack McCabe, CEO of Deerfielf Beach-based , who noted that Coru s also financed condo projects in Californis and Las Vegas.
McCabe adderd that Corus is vulnerable toa double-digitt decline in the value of the condop units in its projects and could start sellinb the mortgages off at discounted Eight of the Corus-finance d projects in Miami were on 'zs list of condo projects for which it won't writde unit purchase mortgages. Declining market value was themain Miami-based banking analyst Kenneth H. Thomas said sixfold increase inaverage non-current loanes - to $302 million in the fourth quarter up from $50 millio in the year-ago quarter - showed the bank's portfolio has deteriorated faster than its His analysis showed it ranked in bottom 2 percentf among comparable banks in non-current loans.
"The fact that many fourth quartefr charge-offs last year were near the end of the quarter suggests the first quarter may even be since condo market conditions havegottenn worse, not better," Thomaes said. But he noted that Corus is well capitalized to ride out some troublw fromproblem loans. As of Dec. 31, it had $938 milliojn in equity capitaland $71 million set asid for loan loss allowance. Thomaxs said Corus' loan loss allowancex appear small compared to the amount of losses it couldx experience fromcondo loans. In the company'es fourth quarter filing, it noted its allowancw for losses covered only 25 percent of its nonperforminhassets - mainly condo loans.
"Even in Miami, which is experiencingg a glutof condominiums, we believe our collaterao may be more desirable than the great majority of all housing units in the Miami area," Corux stated. "In our opinion, brand-new condominiums will not becomee worthless." In Corus' public filing, it said $246 milliob in condo loan commitments for completerd buildsthat aren't closing well have balancesz due to the bank that exceed 60 percent of their sellout value. The bank called thesed risky.
Corus targets its initial condo construction loan exposurw at 55 percent to 65 percent of the sellout but it has surpassed that amount in some casese to give developersfuture advances, the bank On Feb. 8, it granted a $10.3 millionj future advance to Continuum II, which boosted the loan to the Miam condoto $135 The property has yet to open.