<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 SEPTEMBER 30, 1998
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) 832-3088
(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 September 30, 1998, the Registrant had 14,551,142 common shares, $0.05
par value, outstanding.
<PAGE> 2
CORUS BANKSHARES, Inc.
Index to Quarterly Report on Form 10-Q
September 30, 1998
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION. PAGE
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited) -
September 30, 1998, December 31, 1997 and September 30, 1997. 1
Condensed Consolidated Statements of Income (unaudited) -
Three and Nine Months Ended September 30, 1998 and 1997. 2
Condensed Consolidated Statements of Changes in Shareholders'
Equity (unaudited) - Nine Months Ended September 30, 1998 and 1997. 3
Condensed Consolidated Statements of Cash Flows (unaudited) -
Nine Months Ended September 30, 1998 and 1997. 4
Notes to Condensed Consolidated Financial Statements (unaudited). 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 6
PART II - OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K. 18
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30 December 31 September 30
(thousands) 1998 1997 1997
----------- ----------- ------------
<S> <C> <C> <C>
Assets
Cash and due from banks - noninterest bearing $ 57,006 $ 62,217 $ 64,039
Federal funds sold overnight 59,000 1,500 22,800
Federal funds sold term - 20,000 20,000
Interest-bearing deposits with banks 26,999 26,999 13,000
Securities:
Available for sale, at fair value 810,501 531,863 525,182
Held to maturity, at amortized cost 7,208 9,279 9,642
----------- ---------- ----------
Total Securities 817,709 541,142 534,824
Loans, net of unearned discount 1,503,072 1,545,975 1,543,278
Less: Allowance for possible loan losses 36,220 30,660 28,969
----------- ---------- ----------
Net Loans 1,466,852 1,515,315 1,514,309
Premises and equipment, net 33,844 30,950 29,671
Accrued interest receivable and other assets 46,699 44,767 45,592
Goodwill, net of accumulated amortization 11,015 9,037 9,758
----------- ---------- ----------
Total Assets $ 2,519,124 $2,251,927 $2,253,993
=========== ========== ==========
Liabilities & Shareholders' Equity
Deposits:
Noninterest-bearing $ 194,445 $ 190,739 $ 183,670
Interest-bearing 1,948,993 1,672,327 1,692,004
----------- ---------- ----------
Total Deposits 2,143,438 1,863,066 1,875,674
Short-term borrowings 4,423 9,264 4,616
Federal Home Loan Bank advances 40,000 40,000 40,000
Accrued interest payable and other liabilities 42,819 47,964 56,563
----------- ---------- ----------
Total Liabilities 2,230,680 1,960,294 1,976,853
Shareholders' Equity
Common stock, surplus and retained earnings 265,268 246,357 241,847
Accumulated other comprehensive income 23,176 45,276 35,293
----------- ---------- ----------
Total Shareholders' Equity 288,444 291,633 277,140
----------- ---------- ----------
Total Liabilities and Shareholders' Equity $ 2,519,124 $2,251,927 $2,253,993
=========== ========== ==========
</TABLE>
See accompanying notes.
1
<PAGE> 4
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
(thousands, except per share data) 1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest and Dividend Income $ 49,126 $ 45,829 $139,616 $138,556
Interest Expense 24,758 20,639 66,447 61,454
-------- -------- -------- --------
Net Interest Income 24,368 25,190 73,169 77,102
Provision for Possible Loan Losses 3,000 4,000 9,000 12,000
-------- -------- -------- --------
Net Interest Income after Provision
for Loan Losses 21,368 21,190 64,169 65,102
Noninterest Income:
Service charges on deposit accounts 2,199 2,034 6,418 6,521
Trust and investment management services 621 114 1,157 465
Gain on dispositions of student loans 3,107 2,579 6,405 8,862
Other income 618 413 1,603 1,349
Trading account losses, net (8) (27) (194) (221)
Securities and other financial
instruments gains, net 608 1,961 4,515 2,881
-------- -------- -------- --------
Total noninterest income 7,145 7,074 19,904 19,857
-------- -------- -------- --------
Noninterest Expense:
Salaries and employee benefits 7,262 6,919 21,760 20,561
Net occupancy 953 1,026 2,902 3,078
Data processing 575 471 1,734 1,509
Goodwill amortization 441 764 1,265 2,296
Other expenses 3,767 3,454 10,466 10,966
-------- -------- -------- --------
Total noninterest expense 12,998 12,634 38,127 38,410
-------- -------- -------- --------
Income before income taxes 15,515 15,630 45,946 46,549
Income tax expense 5,290 5,466 15,657 16,292
-------- -------- -------- --------
Net Income $ 10,225 $ 10,164 $ 30,289 $ 30,257
======== ======== ======== ========
Net Income per Common Share
Basic $ 0.70 $ 0.69 $ 2.08 $ 2.04
Diluted 0.69 0.68 2.05 2.02
Cash Dividends Declared Per Common Share $ 0.140 $ 0.135 $ 0.415 $ 0.395
======== ======== ======== ========
Weighted Average Common and Common
Equivalent Shares Outstanding 14,749 14,967 14,784 14,980
======== ======== ======== ========
</TABLE>
See accompanying notes.
2
<PAGE> 5
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Comprehensive
(thousands, except per share data) Stock Surplus Earnings Income Total
------ ------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $734 $4,101 $241,522 $45,276 $291,633
Net income 30,289 30,289
Other comprehensive income (net of income taxes):
Net change in unrealized gains on available
for sale securities (22,100) (22,100)
----------
Comprehensive income 8,189
----------
Retirement of common shares (6) (36) (5,297) (5,339)
Cash dividends declared on common stock,
$0.415 per common share (6,039) (6,039)
------ ------- -------- ------------- ----------
Balance at September 30, 1998 $728 $4,065 $260,475 $23,176 $288,444
====== ======= ======== ============= ==========
</TABLE>
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Comprehensive
(thousands, except per share data) Stock Surplus Earnings Income Total
------ ------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $741 $4,140 $214,941 $15,768 $235,590
Net income 30,257 30,257
Other comprehensive income (net of income taxes):
Net change in unrealized gains on available
for sale securities 19,525 19,525
----------
Comprehensive income 49,782
----------
Retirement of common shares (3) (19) (2,365) (2,387)
Cash dividends declared on common stock,
$0.395 per common share (5,845) (5,845)
------ ------- -------- ------------- ----------
Balance at September 30, 1997 $738 $4,121 $236,988 $35,293 $277,140
====== ======= ======== ============= ==========
</TABLE>
3
<PAGE> 6
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-------------------------
(thousands) 1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,289 $ 30,257
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 9,000 12,000
Depreciation and amortization 2,394 2,237
Accretion of investment and loan discounts (10,479) (10,919)
Goodwill amortization 1,265 2,296
Gain on dispositions of student loans (6,405) (8,862)
Securities and other financial instruments gains, net (12,913) (4,224)
Decrease (increase) in accrued interest receivable and other assets 4,441 (4,673)
Increase in accrued interest payable and other liabilities 5,234 9,970
---------- ----------
Net cash provided by operating activities 22,826 28,082
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities held to maturity 2,017 1,620
Proceeds from maturities of available for sale securities 427,362 336,270
Proceeds from sales of available for sale securities 113,112 42,270
Proceeds from maturities of federal funds sold with greater than 90 day maturities 20,000 -
Purchases of available for sale securities (832,596) (482,998)
Purchases of federal funds sold with greater than 90 day maturities - (20,000)
Purchases of interest-bearing deposits with banks - (13,000)
Purchases of loans (827) (426)
Net decrease in loans 43,252 76,934
Additions to premises and equipment, net (5,288) (3,258)
Reduction in minority interest of and additional consideration for
bank subsidiaries - 137
Purchases of businesses (1,775) -
---------- ----------
Net cash used in investing activities (234,743) (62,451)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposit accounts 280,372 (25,005)
Decrease in short-term borrowings (4,841) (1,701)
Retirements of common shares (5,339) (2,387)
Cash dividends paid on common shares (5,986) (5,707)
---------- ----------
Net cash provided by (used in) financing activities 264,206 (34,800)
---------- ----------
Net increase in cash and cash equivalents 52,289 (69,169)
Cash and cash equivalents at January 1 63,717 156,008
---------- ----------
Cash and cash equivalents at September 30 $ 116,006 $ 86,839
========== ==========
</TABLE>
See accompanying notes.
4
<PAGE> 7
CORUS BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheets and Statements of Income, Changes
in Shareholders' Equity and Cash Flows are unaudited. The interim financial
statements reflect all adjustments (consisting only of normal recurring
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, 1997 included in CORUS' Annual Report and Form 10-K
for the year ended December 31, 1997. The results of operations for the
interim period should not be considered indicative of results to be expected
for the full year.
Certain reclassifications have been made in the 1997 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 (the "Department")
immediately upon discovery of the problem and the Department commenced an
investigation. The Department's investigation was expanded 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.
Shortly after notifying the Department of the problems in the student loan
servicing area, 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. A total of $13.5 million of loans subject to
the interim agreement were charged off against the allowance for loan losses
in 1996 and 1997. The ultimate collectibility of the loans is uncertain.
Although certain employees of CORUS may have acted illegally or violated
Department policy or regulations, management is unable to predict what
actions, if any, the Department will take following the completion of its
investigation, and cannot estimate the magnitude of the violations or the
amount or range of any liability that CORUS will ultimately incur. As such,
management is unable to quantify either the amount of student loans that may
lose their government guarantee or the amount of loans that it may be
required to repurchase and, therefore, the effect such amounts and any
related penalties will have on CORUS' financial condition or results of
operations. No legal proceedings have been commenced against CORUS as a
result of the investigation.
If it is ultimately determined that CORUS acted illegally or violated
Department policy or regulations with respect to certain loans in a
significant number of instances or if a settlement is reached, 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. If
the Department were to bring an action, and be successful in proving
violations of law related to the student loan program, potential sanctions
could include significant fines, recovery of treble amounts of guarantee
payments incorrectly received by CORUS and the suspension of CORUS' continued
participation in the student loan program.
CORUS does not condone or permit such improper practices and is cooperating
fully with the Department's investigation.
5
<PAGE> 8
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
OPERATING RESULTS
For the three months ended September 30, 1998, net income was $10.2 million, or
$0.69 per share on a diluted basis, unchanged from net income of $10.2 million,
or $0.68 per share on a diluted basis, for the same period in 1997. For the
nine months ended September 30, 1998, net income was $30.3 million, or $2.05
per share on a diluted basis, unchanged from net income of $30.3 million, or
$2.02 per share on a diluted basis, for the 1997 period.
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 table on the following page sets forth
certain information relating to CORUS' consolidated average balance sheets and
reflects the average yield on assets and cost of liabilities for the nine month
period ended September 30, 1998. The yields and costs are adjusted for the
accretion and amortization of deferred fees. Interest income on nonaccrual
loans is reflected in the period that it is collected. Such amounts are not
material to net interest income or the net change in net interest income.
Nonaccrual loans are included in the average balances and do not have a
material effect on the average yield.
The following table represents a reconciliation of fully taxable
equivalent net interest income:
<TABLE>
<CAPTION>
(thousands)
<S> <C>
Fully taxable equivalent net interest income for the nine months ended September 30, 1997 $78,482
Change in interest and dividend income due to common stocks 947
Change due to average earning assets fluctuations (excluding common stocks) 3,216
Change due to interest rate fluctuations other than student loan discount accretion -
earning assets excluding common stocks (4,849)
Change due to student loan discount accretion (547)
Change due to interest rate fluctuations - funding sources (2,291)
Change due to rate/volume fluctuations (excluding common stocks) (326)
-------
Fully taxable equivalent net interest income for the nine months ended September 30, 1998 $74,632
=======
</TABLE>
The decline in the net interest margin in 1998 was partially due to lower
student loan discount accretion and an increase in the average balance of
common stock investments. During the three and nine months ended September 30,
1998, CORUS recognized $934,000 and $2.9 million of interest income from the
accretion of acquisition discount related to several groups of purchased,
previously nonperforming student loan pools, compared with $949,000 and $3.5
million for the same periods of 1997. In addition, the net interest margin was
adversely affected during the nine months ended September 30, 1998 by the
increase in the average balance of CORUS' bank stock portfolio which has a
relatively low yield, as compared to typical bank loans.
Please note that prior year fully taxable equivalent net interest income, and
related net interest margins, were restated to incorporate the taxable
equivalent impact of the 70% dividends received deduction on dividends earned
on the bank stock portfolio.
6
<PAGE> 9
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
Nine Months Ended September 30
--------------------------------------------------------------
1998 1997
--------------------------------------------------------------
Average Average
(Dollars in thousands) Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average Assets
Earning Assets:
Interest-bearing deposits with banks $ 26,999 $ 1,297 6.41% $ 2,952 $ 134 6.05%
Federal funds sold 87,219 3,647 5.58% 110,105 4,519 5.47%
Taxable securities other than common stocks 426,986 17,702 5.53% 298,271 12,327 5.51%
Common stocks (2) 165,250 3,569 2.88% 101,683 2,622 3.44%
Tax-advantaged securities (1) 3,441 197 7.63% 4,706 273 7.73%
Trading account securities 27,232 1,052 5.15% 18,465 759 5.48%
Loans, net of unearned discount (1) (3) (4) 1,531,978 113,615 9.89% 1,583,805 119,302 10.04%
------------------------------- ------------------------------
Total earning assets 2,269,105 141,079 8.29% 2,119,987 139,936 8.80%
Noninterest-earning assets:
Cash and due from banks--noninterest bearing 59,411 60,531
Allowance for loan losses (33,212) (31,454)
Premises and equipment, net 32,434 29,346
Other assets, including goodwill 58,787 51,575
---------- ----------
Total assets $2,386,525 $2,229,985
========== ==========
Average Liabilities and Shareholders' Equity
Deposits -- interest-bearing:
NOW and money market deposits $1,002,371 $34,645 4.61% $1,035,923 $36,049 4.64%
Savings deposits 175,384 3,463 2.63% 190,040 3,723 2.61%
Time deposits 614,010 26,306 5.71% 470,326 19,448 5.51%
------------------------------- ------------------------------
Total interest-bearing deposits 1,791,765 64,414 4.79% 1,696,289 59,220 4.65%
Short-term borrowings 5,882 310 7.03% 6,531 505 10.31%
Federal Home Loan Bank advances 40,000 1,723 5.74% 40,000 1,729 5.76%
------------------------------- ------------------------------
Total interest-bearing liabilities 1,837,647 66,447 4.82% 1,742,820 61,454 4.70%
Noninterest-bearing liabilities and shareholders' equity:
Noninterest-bearing deposits 196,158 192,307
Other liabilities 58,310 38,493
Shareholders' equity 294,410 256,365
---------- ----------
Total liabilities and shareholders' equity $2,386,525 $2,229,985
========== ==========
Interest income/average earning assets $2,269,105 $141,079 8.29% $2,119,987 $139,936 8.80%
Interest expense/average interest-bearing liabilities 1,837,647 66,447 4.82% 1,742,820 61,454 4.70%
---------------- ------------------
Net interest spread $74,632 3.47% $78,482 4.10%
================ ==================
Net interest margin 4.39% 4.94%
====== ======
</TABLE>
(1) Interest income on tax-advantaged loans and securities reflects a taxable
equivalent adjustment based on a 35% income tax rate.
(2) Dividend income on common stocks reflects a taxable equivalent adjustment
based on a 35% income tax rate related to the 70% dividends received
deduction.
(3) Unremitted interest on nonaccrual loans is not included in the amounts.
(4) Includes net interest income derived from interest rate swap contracts.
7
<PAGE> 10
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
The following table represents the impact these items had on net interest
margin for the three and nine month periods ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
-----------------------------------------------
<S> <C> <C> <C> <C>
Net interest margin 4.05% 4.82% 4.39% 4.94%
Impact of student loan discount accretion (0.15) (0.18) (0.17) (0.22)
-----------------------------------------------
Net interest margin without student loan discount accretion 3.90 4.64 4.22 4.72
Impact of bank stock portfolio 0.11 0.10 0.10 0.06
-----------------------------------------------
Net interest margin without student loan discount
accretion and bank stock portfolio 4.01% 4.74% 4.32% 4.78%
===============================================
</TABLE>
Noninterest Income
Noninterest income for the third quarter of 1998 was $7.1 million, unchanged
from the 1997 period. Gains on dispositions of student loans increased
$528,000 to $3.1 million. Securities and other financial instruments gains
declined $1.4 million to $608,000. Trust and investment services income
increased $507,000 due principally to the reasons cited below.
Noninterest income for the nine months ended September 30, 1998 was $19.9
million, also unchanged from the 1997 period. Gains on dispositions of student
loans declined $2.4 million while securities and other financial instrument
gains increased by $1.6 million. Securities and other financial instrument
gains included $13 million of net gains related to the sales of bank stocks in
CORUS' portfolio, offset partially by $8.4 million of losses associated with
the derivative instruments entered into by CORUS to hedge the market risk
associated with the bank stock portfolio.
In March, 1998, CORUS acquired an investment management business. CORUS'
assets under management more than tripled as a result of the acquisition. The
increases in trust and management services income for the third quarter and
nine months ended September 30, 1998 are attributable to fees earned from the
additional assets under management. The acquisition resulted in additional
goodwill of $3.2 million being recorded, which will be amortized over 15 years.
In the past few years nonperforming student loans were purchased at a
substantial discount to the face value of the loans. CORUS attempts to convert
the loans to performing status and reinstate their government guarantees.
CORUS refers to this process as "curing" and it has represented a significant
source of income to the Company over the past several years. Virtually all of
the curable loans that CORUS currently holds will lose their eligibility to
become cured on May 31, 1999. This issue is not unique to CORUS; it applies to
all student loans that lost their guarantee prior to May 31, 1996. At
September 30, 1998, CORUS had cured $10 to $12 million of student loans, but
the income from these cures has not yet been recognized in its income
statement. This unrecognized income plus an additional $2 million to $4
million of loans that CORUS anticipates it can cure prior to May 31, 1999 will
be reported in income as follows: (1) between $2 million and $3 million of
income in the fourth quarter of 1998, and (2) between $9 and $11 million during
1999. The income from these curing operations will decline substantially in
2000, likely to less than $1 million for the year.
8
<PAGE> 11
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Noninterest Expense
Noninterest expense for the third quarter of 1998 was $13 million, an increase
of $364,000 from the 1997 period. Increases in salaries and benefits expense
of $343,000 and in other expenses of $313,000 were partially offset by a
decline in goodwill amortization of $323,000.
Noninterest expense for the nine months ended September 30, 1998 was $38.1
million, $283,000 less than the 1997 period. An increase in salaries and
employee benefits expense of $1.2 million was fully offset by declines in
goodwill amortization of $1 million and in other expenses of $500,000.
The effective income tax rate for the third quarter of 1998 was 34.1% as
compared to 35% in 1997. For the nine months ended September 30, 1998 and
1997, the effective income tax rates were 34.1% and 35%, respectively. The
decline in the effective income tax rates was primarily due to lower goodwill
amortization in the 1998 periods.
FINANCIAL CONDITION
Earning Assets
The following table details the composition of CORUS' earning assets:
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997 September 30, 1997
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
--------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Loans:
Commercial real estate:
Mortgage $523,990 22% $554,545 26% $562,835 26%
Construction 202,504 8 156,950 7 125,100 6
Student 423,438 18 412,926 19 409,510 19
Residential first mortgage 156,459 6 209,669 10 228,023 11
Home equity 96,194 4 131,868 6 147,393 7
Commercial 73,996 3 55,062 3 45,500 2
Medical finance 24,128 1 21,440 1 20,588 1
Consumer 2,363 - 3,515 - 4,329 -
--------------------- ---------------------- ----------------------
Total loans 1,503,072 62 1,545,975 72 1,543,278 72
Securities other than common stocks 665,960 28 382,482 18 401,891 19
Common stocks 151,749 6 158,660 8 132,933 6
Federal funds sold 59,000 3 21,500 1 42,800 2
Interest-bearing deposits with banks 26,999 1 26,999 1 13,000 1
--------------------- ---------------------- ----------------------
Total $2,406,780 100% $2,135,616 100% $2,133,902 100%
===================== ====================== ======================
</TABLE>
9
<PAGE> 12
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Loans
Total loans at September 30, 1998 were $1.5 billion, a decline of $42.9
million, or 2.7%, from December 31, 1997. Commercial real estate mortgage
loans declined $30.6 million, or 5.5%, from December 31, 1997. Commercial real
estate construction loans increased $45.6 million, or 29%, from December 31,
1997. At September 30, 1998, net unfunded construction loan commitments
totaled $187.5 million.
The composition of the commercial real estate loan portfolio by type of
collateral securing the loan was as follows at September 30, 1998 (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Rental apartments $170,523
Nursing homes 129,048
Hotel/Motel 128,875
Retail 73,447
Industrial 66,928
Office 61,064
Condo/Loft conversion and other residential for sale 55,407
Other 41,202
--------
Total $726,494
========
</TABLE>
At September 30, 1998, approximately 67% of the outstanding balances of
commercial real estate loans were secured by collateral located in the six
county Chicago metropolitan area. The largest single concentration of
outstanding balances outside of this area, 6%, is secured by collateral located
in Indiana.
Student loans increased $10.5 million, or 2.5%, from December 31, 1997. Please
refer to the Legislative Developments section elsewhere in this document for
information relating to the changes in interest rates earned on student loans
originated after June 30, 1998.
At September 30, 1998 residential first mortgage and home equity loans declined
$53.2 and $35.7 million, or 25.4% and 27.1%, respectively, compared with
December 31, 1997. Please refer to the Allowance for Loan Losses section
elsewhere in this document for additional comments relating to these
portfolios.
Securities Other Than Bank Stocks
At September 30, 1998 total securities other than the bank stock portfolio were
$666 million, an increase of $283.5 million, or 74.1%, compared with $382.5
million at December 31, 1997. U.S. Treasury and agency securities increased by
$231.8 million. Mortgage-backed obligations increased $104.5 million while
other securities and state and municipal securities declined $49.4 million and
$1.6 million, respectively.
Bank Stocks
At September 30, 1998 investments in the stocks of financial industry companies
were $151.7 million, a decline of $7 million, or 4.4%, compared with $158.7
million at December 31, 1997. It should be noted, however, that the market
value of the portfolio increased to $168.6 million at October 31, 1998, an
11.1% increase over the value at September 30, 1998. The fluctuations in
market value are regrettable but inevitable.
10
<PAGE> 13
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
At September 30, 1998, CORUS held investments in 45 equity securities of
publicly-traded financial industry companies with total unrealized gains of
$35.2 million, which were included in the available for sale securities
classification. At September 30, 1998, the holdings by market capitalization
were as follows:
<TABLE>
<CAPTION>
Percentage of
Market Capitalization (dollars in thousands): Amount of Holdings Portfolio
----------------------------------------
<S> <C> <C>
Over $10 billion $71,282 47%
Between $5 and $10 billion 25,695 17
Between $1 and $5 billion 31,950 21
Between $500 million and $1 billion 15,820 10
Under $500 million 7,002 5
----------------------------------------
Total $151,749 100%
========================================
</TABLE>
At October 31, 1998 the total unrealized gains had increased to $52 million.
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.
<TABLE>
<CAPTION>
(thousands) September 30 December 31 September 30
1998 1997 1997
------------ ----------- ------------
<S> <C> <C> <C>
Nonperforming loans:
Residential first mortgage $13,394 $17,451 $21,482
Commercial real estate 5,393 4,678 4,741
Commercial 8 80 134
Home equity 2,275 3,706 3,694
Student 356 453 469
Medical finance 1,075 684 498
Consumer 135 119 210
------------ ----------- ------------
Total nonperforming loans 22,636 27,171 31,228
Other real estate owned 5,370 5,673 5,828
------------ ----------- ------------
Total nonperforming assets $28,006 $32,844 $37,056
============ =========== ============
Nonaccrual loans included in
non-performing loans above $ 7,591 $ 8,641 $ 7,984
============ =========== ============
Nonperforming loans/Total loans 1.51% 1.76% 2.02%
Nonperforming assets/Total assets 1.11% 1.46% 1.64%
Allowance for loan losses/
nonperforming loans 160.01% 112.84% 92.77%
</TABLE>
11
<PAGE> 14
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Nonperforming residential first mortgage loans are secured by first mortgages
on primarily owner-occupied, residential property. At September 30, 1998,
other real estate owned was comprised of two commercial real estate properties
with aggregate book values of $106,000 and forty-six residential properties
with aggregate book values of $5.3 million. During the third quarter of 1998
twelve residential properties and one commercial property with aggregate book
values of $1.4 million were sold for a net gain of $135,000. These gains were
partially offset by writedowns of properties not sold. For the third quarter
of 1998, writedowns of residential real estate properties not yet sold totaled
$25,000.
Excluded from the preceding 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 $17.3, $14.1 and $13.3 million
at September 30, 1998, December 31, 1997 and September 30, 1997, respectively.
Allowance for Loan Losses
The allowance for loan losses is based on management's analysis of individual
loans, prior loss experience, overall growth in the portfolio, delinquency
levels, current economic conditions and other factors. A reconciliation of the
activity in CORUS' allowance for loan losses is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------------------
(thousands) 1998 1997 1998 1997
----------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period $34,214 $27,750 $30,660 $32,668
Provision for loan losses 3,000 4,000 9,000 12,000
Less charge-offs:
Commercial real estate loans 18 1 18 350
Student loans 436 1,572 553 9,628
Residential first mortgage loans 121 134 284 374
Home equity loans 930 1,436 4,148 6,037
Commercial loans 1 2 2 18
Consumer loans 2 8 2 81
----------------------------------------------
Total charge-offs 1,508 3,153 5,007 16,488
----------------------------------------------
Add recoveries:
Commercial real estate loans 19 77 125 134
Student loans 8 - 107 -
Residential first mortgage loans - 3 - 3
Home equity loans 457 267 1,265 570
Commercial loans 9 7 9 17
Consumer loans 21 18 61 65
----------------------------------------------
Total recoveries 514 372 1,567 789
----------------------------------------------
Net charge-offs (994) (2,781) (3,440) (15,699)
----------------------------------------------
Balance at September 30 $36,220 $28,969 $36,220 $28,969
==============================================
Loans at September 30 $1,503,072 $1,543,278 $1,503,072 $1,543,278
==============================================
Allowance as a percentage of loans 2.41% 1.88% 2.41% 1.88%
==============================================
</TABLE>
12
<PAGE> 15
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Home equity loans that were originated at up to 100% of the underlying
property's value, Ultimate Home Equity loans, are charged off when they become
120 days past due. For the quarter and nine months ended September 30, 1998,
these loans represented $460,000 and $2.8 million of the home equity net
charge-offs. Ultimate Home Equity loan net charge-offs for the three and nine
months ended September 30, 1997 were $1.2 million and $5.4 million,
respectively. Management anticipates that there will continue to be net
charge-offs of Ultimate Home Equity loans during the remainder of 1998,
although at significantly lower levels than experienced in 1997. At September
30, 1998, Ultimate Home Equity loans totaled $61.5 million. Of this total,
$975,000 was classified as nonperforming loans. The following represents an
aging schedule of Ultimate Home Equity loans at September 30, 1998 (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Current $57,228
30 to 59 days past due 2,266
60 to 89 days past due 1,043
>89 days past due 975
-------
Total $61,512
=======
</TABLE>
During 1996 the origination of residential first mortgage and home equity loans
was suspended to allow management to monitor the delinquency experience,
collection efforts and charge-off experience related to the loans in the
portfolio at that time. Since that time, the amount of residential first
mortgage and home equity loan originations has been minimal.
At September 30, 1998 the allowance for loan losses as a percentage of total
loans increased to 2.41% of total loans from 1.98% of total loans at December
31, 1997. In addition, the allowance as a percentage of nonperforming loans
increased to 160.01%, compared with 112.84% at December 31, 1997. Management
believes that the level of the allowance for loan losses was adequate at
September 30, 1998.
Student Loan Investigation
Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements on
page 5 for further information.
Liabilities
The following table details the composition of deposit products by type:
<TABLE>
<CAPTION>
September 30 December 31 September 30
1998 1997 1997
------------ ----------- ------------
<S> <C> <C> <C>
Demand 9% 10% 10%
Savings 8 10 10
NOW 4 5 4
Money Market 43 48 50
Certificates of Deposit 36 27 26
------------ ----------- ------------
Total 100% 100% 100%
============ =========== ============
</TABLE>
At September 30, 1998, December 31, 1997 and September 30, 1997, CORUS had
retail certificates of deposit obtained from brokers of $427.2, $260.4 and
$235.7 million, respectively.
13
<PAGE> 16
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Capital
CORUS' consolidated leverage ratio (Tier 1 capital/total average quarterly
assets) was 9.9% at September 30, 1998, well in excess of the minimum
regulatory level of 5%. The consolidated Tier 1 and total risk-based capital
ratios were 15.5% and 17.7%, respectively, exceeding the minimum
well-capitalized Tier 1 and total risk-based capital ratios of 6.00% and
10.00%, respectively.
It should be noted that, pursuant to a joint final rule relating to risk-based
capital that was issued on September 1, 1998 by the federal regulatory
agencies, CORUS has included 45 percent of pretax net unrealized holding gains
on available-for-sale equity securities in Tier 2 capital at September 30,
1998.
During the first three months of 1998, CORUS repurchased and retired 130,300
shares at an average price of $40.98 per share. No shares were repurchased
during the second or third quarters of 1998. A total of 269,100 shares have
been repurchased under the 750,000 common share repurchase program approved by
the Board of Directors in 1997. This program provides a means to return some
of CORUS' excess capital to all shareholders.
Operating, Investing and Financing Activities
Net cash provided by operating activities totaled $22.8 million for the first
nine months of 1998, compared with $28.1 million of net cash provided by
operating activities for the same period in 1997. The decline was primarily
the result of increased securities and other financial instruments gains, net
of lower gains on dispositions of student loans.
Net cash used in investing activities totaled $234.7 million for the first nine
months of 1998, compared with $62.5 million in the 1997 period. The increase
was due primarily to increased purchases of available for sale securities net
of increased maturities of such securities.
Net cash provided by financing activities totaled $264.2 million for the first
nine months of 1998, compared with $34.8 million of net cash used in financing
activities in 1997. This change was primarily attributable to an increase in
the balances of retail certificate of deposit accounts obtained from brokers.
ACQUISITION OF LASALLE NATIONAL BANK CURRENCY EXCHANGE RELATED BUSINESS
During the third quarter of 1998 CORUS announced that it would acquire the
currency exchange related business of LaSalle National Bank. The transaction
has received the necessary regulatory approvals and is expected to close during
the fourth quarter of 1998. CORUS has enjoyed the dominant position of banking
for the currency exchange industry in Chicago for decades and will benefit
substantially from acquiring the servicing rights from the number two servicer
in this area.
The transaction should result in additional net revenues of approximately $2
million per year with minimal additional operating expenses.
14
<PAGE> 17
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
LEGISLATIVE DEVELOPMENTS
Provisions of the Higher Education Act (the "Act") adopted in 1993 included
increased costs and reduced interest payments to lenders participating in the
Federal Family Education Loan ("FFEL") program and the introduction of a
competitor program, the Federal Direct Student Loan program. Specifically,
those provisions would have changed the interest rate on most new FFEL program
disbursements made on or after July 1, 1998 to the 10-year Treasury Bill plus
1%, adjusting annually.
Significant concerns about the provisions were raised by both student lenders
and by the higher education community. In response to those concerns,
President Clinton and Congress agreed on temporary revised interest rate
provisions for student loans originated from July 1, 1998 through September 30,
1998. The legislation provided for borrower-paid interest rates based on the
91-day Treasury Bill, plus 1.7% during in-school periods and plus 2.3% during
repayment. The legislation also provided for lender returns based on the
91-day Treasury bill, plus 2.2% during in-school periods and plus 2.8% during
repayment.
The revised provisions resulted in an interest rate reduction of 0.8% for
student loan borrowers with lenders bearing 0.3% of the reduction and the
Federal government providing a subsidy for the remaining 0.5%.
Legislation making the temporary revised interest rate provisions permanent was
passed by Congress and signed by President Clinton in October, 1998.
The interest rate reductions passed by Congress are regrettable and will result
in a lower yield on the Company's future student loan originations.
Nevertheless, management believes that the revised interest rate provisions
provide an acceptable rate of return and CORUS intends to continue to
aggressively solicit applications for student loans.
ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. The Statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.
Statement 133 is effective for fiscal years beginning after June 15, 1999.
CORUS may also implement the Statement as of the beginning of any fiscal
quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and
thereafter). Statement 133 cannot be applied retroactively. Statement 133
must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired or
substantively modified after December 31, 1997 (and, at CORUS' election, those
issued or acquired before January 1, 1998).
CORUS has not yet quantified the impacts of adopting Statement 133 on its
financial statements and has not determined the timing of or method of its
adoption of Statement 133. However, the Statement could increase volatility in
earnings and other comprehensive income.
15
<PAGE> 18
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
YEAR 2000 READINESS
CORUS is highly dependent upon computer-based systems for processing related to
all of its lines of business, including loan, deposit and trust and investment
management accounts. CORUS outsources all of its significant data processing
applications. Many computer systems currently process transactions based on
two rather than four digits representing the year of the transaction. As such,
"00" is currently recognized as the Year 1900 rather than the Year 2000.
Management has communicated with its data processing servicers, other third
party vendors and suppliers and major borrowing customers to ascertain their
efforts with respect to Year 2000 readiness.
CORUS' has two major data processing servicers. The servicer that processes its
loan and deposit accounts and general ledger transactions, with the exception
of student loans, installed Year 2000 code changes during the third quarter of
1998. CORUS personnel will participate in a formal proxy test process during
the first quarter of 1999 to verify that transactions with dates beyond
December 31, 1999 post properly to their related accounts.
The servicer that processes CORUS' student loan portfolio uses a data
processing program that was certified as being Year 2000 compliant when CORUS
converted its student loan portfolio to the program in 1997. CORUS personnel
will conduct tests of this data processing program through the first quarter of
1999 as well.
Problem identification and testing processes related to other third party
vendors and suppliers are ongoing and will continue into 1999.
Management does not currently anticipate that Year 2000 compliance will have a
material impact on CORUS' results of operations, financial condition or cash
flows. The single largest capital expenditure related to Year 2000 matters
will be approximately $500,000 for Year 2000 compliant check processing
equipment and software which is expected to be purchased and installed by the
end of the first quarter of 1999. Other Year 2000 expenditures to date have
been expensed as incurred.
FORWARD-LOOKING STATEMENTS
Statements made in this document 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. Such statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. 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 loan
losses;
- - Changes in the level and direction of loan delinquencies and charge-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;
- - The impact of the changes in student loan pricing that took effect on
July 1, 1998;
16
<PAGE> 19
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- - CORUS' ability to adapt successfully to technological changes to meet
customers' needs and developments in the marketplace;
- - CORUS' ability to complete and successfully integrate its acquired
investment management and currency exchange related businesses;
- - CORUS' ability to "cure" student loans prior to May 31, 1999;
- - The impact of the Year 2000 on CORUS' data processing servicers, customers
and other vendors;
- - CORUS' ability to access cost-effective funding; and
- - Economic conditions.
CORUS undertakes no obligation to revise or update these forward-looking
statements to reflect events or circumstances after the date of this filing.
17
<PAGE> 20
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 19.
(b) Reports on Form 8-K.
None.
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)
November 6, 1998 By: /s/ Timothy H. Taylor
----------------------
Timothy H. Taylor
Senior Vice President and
Chief Financial Officer
(Principal Accounting Officer and
duly authorized Officer of Registrant)
18
<PAGE> 1
EXHIBIT 11 - CORUS BANKSHARES, INC.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Nine Months Ended
September 30
(thousands, except per share amounts) 1998 1997
------------ ----------
<S> <C> <C>
Denominator for basic earnings per share - average
common shares outstanding 14,567 14,807
Dilutive common stock options 217 173
------------ ----------
Denominator for diluted earnings per share 14,784 14,980
============ ==========
Numerator: Net income attributable to common shares $30,289 $30,257
============ ==========
Net income per share:
Basic $2.08 $2.04
Diluted 2.05 2.02
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 57,006
<INT-BEARING-DEPOSITS> 26,999
<FED-FUNDS-SOLD> 59,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 810,501
<INVESTMENTS-CARRYING> 7,208
<INVESTMENTS-MARKET> 0
<LOANS> 1,503,072
<ALLOWANCE> 36,220
<TOTAL-ASSETS> 2,519,124
<DEPOSITS> 2,143,438
<SHORT-TERM> 4,423
<LIABILITIES-OTHER> 42,819
<LONG-TERM> 40,000
0
0
<COMMON> 728
<OTHER-SE> 287,716
<TOTAL-LIABILITIES-AND-EQUITY> 2,519,124
<INTEREST-LOAN> 113,195
<INTEREST-INVEST> 21,477
<INTEREST-OTHER> 4,944
<INTEREST-TOTAL> 139,616
<INTEREST-DEPOSIT> 64,414
<INTEREST-EXPENSE> 66,447
<INTEREST-INCOME-NET> 73,169
<LOAN-LOSSES> 9,000
<SECURITIES-GAINS> 4,515
<EXPENSE-OTHER> 38,127
<INCOME-PRETAX> 45,946
<INCOME-PRE-EXTRAORDINARY> 45,946
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,289
<EPS-PRIMARY> 2.08
<EPS-DILUTED> 2.05
<YIELD-ACTUAL> 4.39
<LOANS-NON> 7,591
<LOANS-PAST> 14,478
<LOANS-TROUBLED> 567
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 30,660
<CHARGE-OFFS> 5,007
<RECOVERIES> 1,567
<ALLOWANCE-CLOSE> 36,220
<ALLOWANCE-DOMESTIC> 36,220
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
