<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-6136
CORUS BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0823592
(State of incorporation of organization) (I.R.S. Employer Identification No.)
3959 N. Lincoln Ave., Chicago, Illinois 60613
(Address of principal executive offices) (Zip Code)
(773) 549-7100
(Registrant's telephone number)
Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
As of March 31, 1997, the Registrant had 14,820,242 common shares, $0.05 par
value, outstanding.
<PAGE> 2
CORUS BANKSHARES, Inc.
Index to Quarterly Report on Form 10-Q
March 31, 1997
PART I - FINANCIAL INFORMATION. Page
Item 1. Financial Statements
Condensed Consolidated Statements of Condition (unaudited) -
March 31, 1997, December 31, 1996 and March 31, 1996. 1
Condensed Consolidated Statements of Income (unaudited) -
Three Months Ended March 31, 1997 and 1996. 2
Condensed Consolidated Statements of Cash Flows (unaudited) -
Three Months Ended March 31, 1997 and 1996. 3
Notes to Condensed Consolidated Financial Statements
(unaudited). 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
PART II - OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K. 13
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31 March 31
(thousands) 1997 1996 1996
--------------- -------------- ---------------
<S> <C> <C> <C>
Assets
Cash and due from banks - noninterest bearing $ 55,591 $ 57,508 $ 132,907
Federal funds sold 170,500 98,500 20,010
Interest-bearing deposits with banks - - 25,000
Securities:
Available for sale, at fair value 318,159 379,029 335,213
Held to maturity, at amortized cost 10,808 11,254 13,972
--------------- -------------- ---------------
Total Securities 328,967 390,283 349,185
Loans, net of unearned discount 1,615,275 1,623,145 1,603,067
Less: Allowance for possible loan losses 30,329 32,668 29,525
--------------- -------------- ---------------
Net Loans 1,584,946 1,590,477 1,573,542
Premises and equipment, net 29,213 28,650 26,726
Accrued interest receivable and other assets 42,472 40,919 39,683
Goodwill, net of accumulated amortization 11,423 12,191 12,654
--------------- -------------- ---------------
Total Assets $ 2,223,112 $ 2,218,528 $ 2,179,707
=============== ============== ===============
Liabilities & Shareholders' Equity
Deposits:
Noninterest-bearing $ 179,055 $ 195,324 $ 198,384
Interest-bearing 1,709,171 1,705,355 1,739,305
--------------- -------------- ---------------
Total Deposits 1,888,226 1,900,679 1,937,689
Short-term borrowings 4,681 6,317 3,746
Federal Home Loan Bank advances 40,000 40,000 -
Accrued interest payable and other liabilities 43,840 35,942 36,334
--------------- -------------- ---------------
Total Liabilities 1,976,747 1,982,938 1,977,769
Minority Interest - - 1,156
Shareholders' Equity
Common Stock, Surplus & Retained Earnings 227,273 219,822 193,121
Net unrealized gains on available for sale securities 19,092 15,768 7,661
--------------- -------------- ---------------
Total Shareholders' Equity 246,365 235,590 200,782
--------------- -------------- ---------------
Total Liabilities and Shareholders' Equity $ 2,223,112 $ 2,218,528 $ 2,179,707
=============== ============== ===============
</TABLE>
See accompanying notes.
1
<PAGE> 4
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
Three Months Ended
March 31
----------------------
(thousands, except per share data) 1997 1996
---------- -----------
<S> <C> <C>
Interest Income $ 45,709 $ 49,221
Interest Expense 20,284 19,978
---------- -----------
Net Interest Income 25,425 29,243
Provision for Possible Loan Losses 4,000 4,000
---------- -----------
Net Interest Income after Provision
for Possible Loan Losses 21,425 25,243
Noninterest Income:
Service charges on deposit accounts 2,296 2,395
Trust services 167 121
Gain on dispositions of student loans 3,004 1,045
Other income 232 395
Trading account losses, net (89) -
Securities and other financial
instruments gains, net 116 1,420
---------- -----------
Total noninterest income 5,726 5,376
Noninterest Expense:
Salaries and employee benefits 6,781 6,807
Net occupancy 1,019 1,001
Data processing 515 635
Goodwill amortization 768 663
Other expenses 3,787 3,769
---------- -----------
Total noninterest expense 12,870 12,875
---------- -----------
Income before income taxes 14,281 17,744
Income tax expense 4,978 6,259
---------- -----------
Net Income $ 9,303 $ 11,485
========== ===========
Net Income per Common Share $ 0.62 $ 0.77
========== ===========
Cash Dividends Declared Per Common Share $ 0.125 $ 0.100
========== ===========
Weighted Average Common and Common
Equivalent Shares Outstanding 15,000 15,012
========== ===========
</TABLE>
See accompanying notes.
2
<PAGE> 5
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
(thousands) 1997 1996
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 9,303 $ 11,485
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 4,000 4,000
Depreciation and amortization 702 500
Accretion of investment and loan discounts (3,207) (4,483)
Goodwill amortization 768 663
Gain on dispositions of student loans (3,004) (1,045)
Securities and other financial instruments gains, net (116) (1,907)
(Increase) decrease in accrued interest receivable
and other assets (3,343) 2,208
Increase in accrued interest payable, other liabilities and
minority interest, net 7,898 8,835
-------- -----------
Net cash provided by operating activities 13,001 20,256
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities held to maturity 454 595
Proceeds from maturities of available for sale securities 149,100 40,805
Proceeds from sales of available for sale securities 539 1,489,157
Purchases of available for sale securities (81,837) (1,498,329)
Purchases of loans (272) (1,446)
Net (increase) decrease in loans 6,304 (38,110)
Purchases of premises and equipment, net (1,265) (432)
Purchases of minority interest of and additional consideration
for bank subsidiaries - (1,894)
-------- -----------
Net cash provided by (used in) investing activities 73,023 (9,654)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposit accounts (12,453) 39,149
Increase (decrease) in short-term borrowings (1,636) 1,918
Issuance of common shares under the stock option plan - 9
Retirements of common shares - (5,233)
Cash dividends paid on common shares (1,852) (1,503)
-------- -----------
Net cash provided by (used in) financing activities (15,941) 34,340
-------- -----------
Net increase in cash and cash equivalents 70,083 44,942
Cash and cash equivalents at December 31, 1996 and 1995 156,008 107,975
-------- -----------
Cash and cash equivalents at March 31, 1997 and 1996 $226,091 $ 152,917
======== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 6
CORUS BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Condensed Consolidated Financial Statements
-------------------------------------------
The Condensed Consolidated Statements of Condition, Income and Cash Flows
are unaudited. The interim financial statements reflect all adjustments
(consisting only of normal recurring accruals) which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods presented. The condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in CORUS BANKSHARES, Inc.'s consolidated financial
statements for the three years ended December 31, 1996 included in CORUS'
Annual Report and Form 10-K for the year ended December 31, 1996. The
results of operations for the interim period should not be considered
indicative of results to be expected for the full year.
Net income per common share is computed by dividing net income by the
weighted average number of common shares and common share equivalents
(dilutive stock options) outstanding during the respective periods.
Certain reclassifications have been made in the 1996 financial statements
to conform to current accounting classifications.
2. Student Loan Investigation
--------------------------
As disclosed previously, CORUS discovered that certain former employees in
the student loan servicing area had falsified some records of telephone
calls, from late 1993 to April 1994, to students whose loans were
delinquent. The telephone calls are a required action to maintain the
enforceability of a student loan's government guarantee. CORUS terminated
the employees involved and informed the U.S. Department of Education
immediately upon discovery of the problem and the Department commenced an
investigation.
CORUS believes that the Department's investigation expanded in 1996 to
include a review of whether CORUS' student loan division engaged in
improper practices from 1988 to April 1994, including whether information
contained on guarantee claim forms may have been falsified. If it is
ultimately determined that CORUS acted illegally or violated Department
policy or regulations, CORUS could (i) lose its government guarantees with
respect to certain student loans and (ii) be required to repurchase a
substantial amount of delinquent student loans for which CORUS previously
received guarantee payments. In addition, CORUS or individual employees
could be subject to substantial penalties.
Shortly after notifying the Department of the problem, CORUS entered into
an interim agreement with the Department pursuant to which it agreed,
pending the conclusion of the investigation, not to request payment from
any guarantor or the Department on any loans that CORUS is unable to state
with certainty were not affected by incorrect servicing history
documentation. As a result of this agreement, at March 31, 1997, there
were $3.6 million of nonaccrual student loans for which CORUS has agreed
not to seek guarantee payments during the investigation. In addition,
management charged off $4.0 million of student loans during the first
quarter of 1997 that were subject to the interim agreement. A total of
$8.0 million of loans subject to the interim agreement have been charged
off. The ultimate collectibility of the loans is uncertain.
Management is unable to predict what actions, if any, the Department will
take following the completion of its investigation, and therefore cannot
estimate the amount or range of any liability that CORUS will ultimately
incur.
CORUS does not condone or permit such improper practices and is cooperating
fully with the Department's investigation.
4
<PAGE> 7
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
OPERATING RESULTS
For the three months ended March 31, 1997, net income was $9.3 million, or
$0.62 per share, a decline of 19% from net income of $11.5 million, or $0.77
per share, for the same period in 1996. The following table summarizes the
after-tax impact of certain significant and/or nonrecurring items that affect
the comparability of the periods:
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------------------
(thousands) 1997 1996
------------------ ------------------
<S> <C> <C>
Net income $ 9,303 $ 11,485
After-tax impact of significant and/or nonrecurring items:
Discount accretion in interest income from purchased student loan pools 973 2,662
Loan fees from prepayment of a commercial real estate loan - 350
Gain on dispositions of student loans 1,953 679
Gains from securities and other financial instruments activities, net 17 923
------------------ ------------------
Earnings excluding significant and/or nonrecurring items $ 6,360 $ 6,871
================== ==================
</TABLE>
Excluding the significant and/or nonrecurring items from the table above,
earnings for the first quarter of 1997 were $6.4 million, a 7% decline from
earnings of $6.9 million for the same period in 1996. This decline was
primarily attributable to lower net interest income in the first quarter of
1997.
Net Interest Income
- -------------------
The major source of earnings for CORUS is net interest income. The related net
interest margin represents the net interest income as a percentage of average
earning assets during the period. The following table represents a summary of
CORUS' net interest income and related net interest margin, as calculated on a
fully taxable equivalent basis.
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------------
(thousands) 1997 1996
-------------- --------------
<C> <C>
Net interest income $ 25,425 $ 29,243
Taxable equivalent adjustment 231 279
-------------- --------------
Taxable equivalent net interest income $ 25,656 $ 29,522
============== ==============
Average earning assets $2,113,340 $2,039,586
============== ==============
Net interest margin (annualized) 4.86% 5.79%
============== ==============
</TABLE>
5
<PAGE> 8
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
The following represents the impact the significant and/or nonrecurring items
in the table above had on net interest income during the first quarter of 1997
and 1996:
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------------
(thousands) 1997 1996
------------------ ------------------
<S> <C> <C>
Taxable equivalent net interest income $ 25,656 $ 29,522
Significant and/or nonrecurring items:
Discount accretion from purchased student loan pools 1,497 4,096
Loan fees from prepayment of a commercial real estate loan - 538
------------------ ------------------
Taxable equivalent net interest income excluding significant and/or
nonrecurring items $ 24,159 $ 24,888
================== ==================
Net interest margin excluding significant and/or nonrecurring items
(annualized) 4.57% 4.88%
================== ==================
</TABLE>
The decline in annualized net interest margin after excluding significant
and/or nonrecurring items for the first quarter of 1997, compared with the
first quarter of 1996, was primarily due to lower rates charged and earned on
loans and investments.
The following table represents a reconciliation of fully tax equivalent net
interest income:
<TABLE>
<S> <C>
(thousands)
Fully tax equivalent net interest income for the three months ended March 31, 1996 $ 29,522
Change due to average earning assets fluctuations 1,068
Change due to interest rate fluctuations (2,143)
Change due to student loan discount accretion (2,599)
Change due to rate/volume fluctuations (192)
------------------
Fully tax equivalent net interest income for the three months ended March 31, 1997 $ 25,656
==================
</TABLE>
Noninterest Income
- ------------------
For the first quarter of 1997, noninterest income increased $350,000 to $5.7
million, compared with $5.4 million for the first quarter of 1996. Gains on
the dispositions of student loans increased $2.0 million in 1997. These gains
are the result of payments made by guarantee agencies for student loan
borrowers that defaulted on student loans with discounts. In the first quarter
of 1996, security and other financial instrument gains included a gain of $1.3
million from interest rate swaps that did not qualify for hedge accounting
treatment. These swap agreements were terminated in the first quarter of 1996.
Noninterest Expense
- -------------------
In the first quarter of 1997, noninterest expense decreased $5,000, compared
with the first quarter of 1996. Data processing expense decreased $120,000
primarily due to expenses related to the merger of the subsidiary banks
incurred in the first quarter of 1996. Goodwill amortization increased
$105,000 due to additional goodwill that was recorded in the
6
<PAGE> 9
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
second quarter of 1996 for the 1993 acquisition of Belmont National Bank and in
the first and second quarters of 1996 for the purchase of the minority
interests in CORUS' subsidiary banks.
The effective tax rate for the first quarter of 1997 was 34.9% versus 35.3% in
1996.
FINANCIAL CONDITION
Earning Assets
- --------------
The following table details the composition of CORUS' earning assets:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996 March 31, 1996
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans:
Commercial real estate $ 676,316 32% $ 655,793 31% $ 626,947 31%
Student 412,218 19 402,859 19 393,327 20
Residential first mortgage 269,505 13 286,042 14 310,720 16
Home equity 177,106 8 188,755 9 185,698 9
Commercial 53,473 3 61,852 3 58,698 3
Consumer 26,657 1 27,844 1 27,677 1
------------------------- -------------------------- -------------------------
Total Loans 1,615,275 76 1,623,145 77 1,603,067 80
Securities other than common stocks 218,299 11 297,672 14 303,877 16
Common stocks 110,668 5 92,611 4 45,308 2
Federal funds sold and time deposits 170,500 8 98,500 5 45,010 2
------------------------- -------------------------- -------------------------
Total $ 2,114,742 100% $ 2,111,928 100% $ 1,997,262 100%
========================= ========================== =========================
</TABLE>
Total loans at March 31, 1997 were $1.62 billion, a decrease of $7.8 million,
or 0.5%, from December 31, 1996. Commercial real estate loans increased $20.5
million, or 3.1%, from December 31, 1996. At March 31, 1997, December 31, 1996
and March 31, 1996, the commercial real estate loan portfolio was comprised of
the following:
<TABLE>
<CAPTION>
March 31 December 31 March 31
(thousands) 1997 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Commercial real estate mortgage loans $ 611,989 $ 614,506 $ 591,845
Construction loans 64,327 41,287 35,102
------------ ------------ ------------
Total commercial real estate loans $ 676,316 $ 655,793 $ 626,947
============ ============ ============
</TABLE>
At March 31, 1997, unfunded construction loan commitments totaled $124.1
million.
7
<PAGE> 10
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
The composition of the commercial real estate loan portfolio by type of
collateral securing the loan was as follows at March 31, 1997:
Investor-owned residential real estate $ 236,420
Healthcare/Nursing 100,508
Retail 88,904
Office 74,889
Industrial 59,224
Condo/Loft conversion 38,383
Hotel/Motel 34,340
Other 43,648
---------------
Total $ 676,316
===============
From time to time, CORUS has purchased nonperforming student loans at
substantial discounts to the face value of the loans. CORUS attempts to
convert these loans to performing status and have their guarantees reinstated.
The excess of the amount of performing loans converted over the cost of the
loans is accreted into income over the estimated lives of the loans using the
level-yield method. The total discount to be accreted into income in future
periods totaled $18.6 million at March 31, 1997.
At March 31, 1997, residential first mortgage and home equity loans decreased
$16.5 and $11.6 million, or 5.8% and 6.2%, respectively, compared with December
31, 1996. During 1996, management strengthened the underwriting guidelines for
both residential first mortgage and home equity loans, which led to a
significant reduction in loan originations.
At March 31, 1997, total securities were $329.0 million, a decrease of $61.3
million, or 15.7%, from $390.3 million at December 31, 1996. The decrease in
the securities balance was offset by a $72.0 million increase in federal funds
sold. At March 31, 1997, CORUS held $110.7 million of investments in equity
securities of publicly-traded bank holding companies, which were included in
the available for sale securities classification. These securities represented
minority investments in 42 companies with unrealized gains of $29.5 million.
Gains of $113,000 and $405,000 were recognized on sales of these securities
during the first quarter of 1997 and 1996, respectively.
8
<PAGE> 11
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Allowance for Possible Loan Losses
A reconciliation of the activity in CORUS' allowance for possible loan losses
is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------------
(thousands) 1997 1996
------------ -------------
<S> <C> <C>
Balance at beginning of period $ 32,668 $ 25,640
Provision for possible loan losses 4,000 4,000
Charge-offs (6,538) (931)
Recoveries 199 816
------------ -------------
Balance at March 31 $ 30,329 $ 29,525
============ =============
Total loans at March 31 $ 1,615,275 $ 1,603,067
============ =============
Allowance as a percentage of loans 1.88% 1.84%
============ =============
</TABLE>
In the first quarter of 1997, student loans totaling $4.0 million were charged
off. These loans represent a portion of the loans that CORUS has agreed not to
seek guarantee payments until the conclusion of the U.S. Department of
Education's investigation under an interim agreement with the Department.
Refer to Note 2 to the condensed consolidated financial statements for further
information.
In the first quarter of 1997, net charge-offs of home equity loans were $2.0
million. Management anticipates that there will continue to be significant
charge-offs of home equity loans in 1997. Home equity loans that were
originated at up to 100% of a property's value are charged off when they become
delinquent 120 days past the due date. The underwriting guidelines for home
equity loans were strengthened in 1996 resulting in a significant decrease in
loan originations.
9
<PAGE> 12
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Nonperforming Assets
The following table presents a summary of nonperforming assets' book value.
Nonperforming loans are nonaccrual loans, restructured loans and 90 days or
more past due loans still accruing interest. Excluded from the table are
student loans that CORUS has no reason to believe have lost their guarantee.
Guaranteed student loans more than 90 days past due and not included in the
table totaled $12.7, $15.2 and $12.4 million at March 31, 1997, December 31,
1996 and March 31, 1996, respectively.
<TABLE>
<CAPTION>
(thousands) March 31 December 31 March 31
1997 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Nonperforming loans:
Residential first mortgage $ 23,006 $ 22,687 $ 8,248
Commercial real estate 7,421 1,139 8,566
Commercial 2 12 149
Home equity 3,834 2,844 1,539
Student 3,988 7,114 8,894
Consumer 1,020 1,409 736
------------ ------------ ------------
Total nonperforming loans 39,271 35,205 28,132
Other real estate owned 2,099 2,691 1,887
------------ ------------ ------------
Total nonperforming assets $ 41,370 $ 37,896 $ 30,019
============ ============ ============
Nonaccrual loans included in non-
performing loans above $ 10,133 $ 7,427 $ 10,199
============ ============ ============
Nonperforming loans/Total loans 2.43% 2.17% 1.75%
Nonperforming assets/Total assets 1.86% 1.71% 1.38%
Allowance for loan losses/
nonperforming loans 77.23% 92.79% 104.95%
</TABLE>
Nonperforming residential first mortgage loans are secured by first mortgages
on primarily owner-occupied, residential property. The increase in commercial
real estate nonperforming loans was primarily due to the placement of $5.6
million of loans relating to a residential subdivision on nonaccrual status.
Management believes that any losses on these residential subdivision loans will
not be material.
Student Loan Investigation
Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements on
page 4 for further information.
10
<PAGE> 13
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Liabilities
The following table details the composition of deposit products by type:
<TABLE>
<CAPTION>
March 31 December 31 March 31
1997 1996 1996
---------- ----------- -----------
<S> <C> <C> <C>
Demand 9% 10% 10%
NOW 5 5 5
Money Market 50 49 48
Savings 10 10 11
Certificates of Deposit 26 26 26
---------- ----------- -----------
Total 100% 100% 100%
========== =========== ===========
</TABLE>
At March 31, 1997, December 31, 1996 and March 31, 1996, CORUS had retail
certificates of deposit obtained from brokers of $231.8, $227.3 and $219.8
million, respectively.
Capital
CORUS' consolidated leverage ratio (Tier 1 capital/total average quarterly
assets) was 9.7% at March 31, 1997, well in excess of the minimum regulatory
level of 5%. The consolidated Tier 1 and total risk-based capital ratios were
13.9% and 15.2%, respectively, exceeding the well-capitalized Tier 1 and total
risk-based capital ratios of 6.00% and 10.00%, respectively.
Operating, Investing and Financing Activities
Net cash provided by operating activities totaled $13.0 million for the first
quarter of 1997, compared with $20.3 million for the same period in 1996. The
decrease was primarily due to an increase in accrued interest receivable and
other assets.
Net cash provided by investing activities totaled $73.0 million for the first
quarter of 1997, compared with net cash used in investing activities of $9.7
million in 1996. This change occurred primarily due to the investment of
proceeds from maturities of available for sale securities in federal funds
sold.
Net cash used in financing activities totaled $15.9 million for the first
quarter of 1997, compared with net cash provided by financing activities of
$34.3 million in 1996. The decrease in 1997 was primarily due to a reduction
in deposits.
ACCOUNTING DEVELOPMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No.
128 requires the presentation of both basic earnings per share and diluted
earnings per share. Basic earnings per share will be computed by dividing net
income by the weighted-average number of common shares outstanding. Diluted
earnings per share will be computed in the same manner as currently used by
CORUS in computing earnings per share. SFAS No. 128 will be effective for
CORUS' 1997 annual report. If SFAS No. 128 had been in effect during the first
quarter of 1997, basic earnings per share would have been $0.63 per share and
diluted earnings per share would have been $0.62 per share.
11
<PAGE> 14
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
FORWARD-LOOKING STATEMENTS
Statements made about CORUS' future economic performance, strategic plans or
objectives, revenue or earnings projections, or other financial items and
similar statements are not guarantees of future performance, but are
forward-looking statements. By their nature, these statements are subject to
numerous uncertainties that could cause actual results to differ materially
from those in the statements. Important factors that might cause CORUS' actual
results to differ materially include, but are not limited to, the following:
- - Federal and state legislative and regulatory developments, including
the ultimate resolution of the student loan investigation by the U.S.
Department of Education;
- - Changes in management's estimate of the adequacy of the allowance
for possible loan losses;
- - Changes in the level and direction of loan delinquencies and write-offs;
- - Interest rate movements and their impact on customer behavior and CORUS'
net interest margin;
- - Changes in the overall mix of CORUS' loan and deposit products;
- - The impact of repricing and competitors' pricing initiatives on loan and
deposit products;
- - CORUS' ability to adapt successfully to technological changes to meet
customers' needs and developments in the marketplace;
- - CORUS' ability to access cost-effective funding; and
- - Economic conditions.
12
<PAGE> 15
CORUS BANKSHARES, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11 - Computation of Net Income per Common Share is on
page 14.
(b) Reports on Form 8-K.
Registrant filed Current Report dated February 12, 1997
(Items 4 and 5).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORUS BANKSHARES, INC.
(Registrant)
April 17, 1997 By: /s/ Michael J. McClure
-------------------------------------
Michael J. McClure
First Vice President and Chief
Accounting Officer
(Principal Accounting Officer and duly
authorized Officer of Registrant)
13
<PAGE> 1
EXHIBIT 11 - CORUS BANKSHARES, INC.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31
(thousands) 1997 1996
-------------- -------------
<S> <C> <C>
Net Income (A) $ 9,303 $ 11,485
============== =============
Weighted Average Common Shares Outstanding 14,820 14,859
Weighted Average Common Share Equivalents (1) 180 153
-------------- -------------
Weighted Average Common Shares and
Common Stock Equivalents (B) 15,000 15,012
============== =============
Net Income per Common Share (A/B) $ 0.62 $ 0.77
============== =============
</TABLE>
(1) Common share equivalents result from stock options being treated as if they
had been exercised and are computed by application of the treasury stock
method.
14
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 55,591
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 170,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 318,159
<INVESTMENTS-CARRYING> 10,808
<INVESTMENTS-MARKET> 11,041
<LOANS> 1,615,275
<ALLOWANCE> 30,329
<TOTAL-ASSETS> 2,223,112
<DEPOSITS> 1,888,226
<SHORT-TERM> 4,681
<LIABILITIES-OTHER> 43,840
<LONG-TERM> 40,000
0
0
<COMMON> 741
<OTHER-SE> 245,624
<TOTAL-LIABILITIES-AND-EQUITY> 2,223,112
<INTEREST-LOAN> 39,749
<INTEREST-INVEST> 4,497
<INTEREST-OTHER> 1,463
<INTEREST-TOTAL> 45,709
<INTEREST-DEPOSIT> 19,555
<INTEREST-EXPENSE> 20,284
<INTEREST-INCOME-NET> 25,425
<LOAN-LOSSES> 4,000
<SECURITIES-GAINS> 116
<EXPENSE-OTHER> 12,870
<INCOME-PRETAX> 14,281
<INCOME-PRE-EXTRAORDINARY> 14,281
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,303
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
<YIELD-ACTUAL> 4.81
<LOANS-NON> 10,133
<LOANS-PAST> 29,138
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 32,668
<CHARGE-OFFS> 6,538
<RECOVERIES> 199
<ALLOWANCE-CLOSE> 30,329
<ALLOWANCE-DOMESTIC> 30,329
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
