<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, 1999
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 March 31, 1999, the Registrant had 14,507,390 common shares, $0.05 par
value, outstanding.
<PAGE> 2
CORUS BANKSHARES, Inc.
Index to Quarterly Report on Form 10-Q
March 31, 1999
TABLE OF CONTENTS
PART I. -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM 1. Financial Statements.__________________________________________ 1-7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. _______________________________________ 8-18
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk ____ 19
PART II. -- OTHER INFORMATION
ITEM 1. Legal Proceedings. ____________________________________________ 20
ITEM 2. Changes in Securities. ________________________________________ 20
ITEM 3. Defaults Upon Senior Securities. ______________________________ 20
ITEM 4. Submission of Matters to a Vote of Security Holders.___________ 20
ITEM 5. Other Information. ____________________________________________ 20
ITEM 6. Exhibits and Reports on Form 8-K. _____________________________ 20
Signatures ____________________________________________________ 21
Exhibit 11 - Computation of Net Income Share___________________ 22
Exhibit 27 - Summary Financial Data Schedule___________________ 23
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31 March 31
(thousands) 1999 1998 1998
---------- ----------- ----------
<S> <C> <C> <C>
Assets
Cash and due from banks - noninterest bearing $ 57,394 $ 72,050 $ 52,810
Federal funds sold overnight 2,300 2,000 11,600
Federal funds sold term - - 20,000
Interest-bearing deposits with banks - 13,000 26,999
Securities:
Trading, at fair value - - 153,479
Available for sale, at fair value 787,293 897,668 407,100
Held to maturity, at amortized cost 6,307 6,610 8,455
---------- ---------- ----------
Total Securities 793,600 904,278 569,034
Loans, net of unearned discount 1,631,612 1,551,587 1,573,451
Less: Allowance for loan losses 35,258 35,773 32,056
---------- ---------- ----------
Net Loans 1,596,354 1,515,814 1,541,395
Premises and equipment, net 33,714 34,105 32,085
Accrued interest receivable and other assets 93,439 37,804 59,018
Goodwill, net of accumulated amortization 9,939 10,364 11,406
---------- ---------- ----------
Total Assets $2,586,740 $2,589,415 $2,324,347
========== ========== ==========
Liabilities & Shareholders' Equity
Deposits:
Noninterest-bearing $ 199,596 $ 212,616 $ 184,987
Interest-bearing 1,917,794 1,942,060 1,727,254
---------- ---------- ----------
Total Deposits 2,117,390 2,154,676 1,912,241
Short-term borrowings 969 24,933 1,803
Federal Home Loan Bank advances 40,000 40,000 40,000
Accrued interest payable and other liabilities 103,170 51,676 71,937
---------- ---------- ----------
Total Liabilities 2,261,529 2,271,285 2,025,981
Shareholders' Equity
Common Stock, Surplus & Retained Earnings 280,487 273,569 248,955
Accumulated other comprehensive income 44,724 44,561 49,411
---------- ---------- ----------
Total Shareholders' Equity 325,211 318,130 298,366
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $2,586,740 $2,589,415 $2,324,347
========== ========== ==========
</TABLE>
See accompanying notes.
1
<PAGE> 4
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
(thousands, except per share data) 1999 1998
-------- --------
<S> <C> <C>
Interest and Dividend Income $ 47,895 $ 44,734
Interest Expense 22,328 20,498
-------- --------
Net Interest Income 25,567 24,236
Provision for Loan Losses 1,000 3,000
-------- --------
Net Interest Income after Provision
for Loan Losses 24,567 21,236
Noninterest Income:
Service charges on deposit accounts 2,538 2,072
Trust services 539 137
Gain on dispositions of student loans 1,580 1,776
Other income 705 433
Trading account losses, net (67) (52)
Securities and other financial
instruments gains, net (26) 1,857
-------- --------
Total noninterest income 5,269 6,223
Noninterest Expense:
Salaries and employee benefits 8,202 7,161
Net occupancy 1,038 1,004
Data processing 651 619
Goodwill amortization 441 389
Furniture and equipment depreciation 589 439
Other expenses 3,074 2,801
-------- --------
Total noninterest expense 13,995 12,413
-------- --------
Income before income taxes 15,841 15,046
Income tax expense 5,463 5,144
-------- --------
Net Income 10,378 9,902
======== ========
Net Income per Share:
Basic $ 0.71 $ 0.68
Diluted 0.71 0.67
Cash Dividends Declared Per Common Share 0.140 0.135
</TABLE>
See accompanying notes.
2
<PAGE> 5
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31
----------------------
1999 1998
(thousands) ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,378 $ 9,902
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 1,000 3,000
Depreciation and amortization 809 737
Accretion of investment and loan discounts (6,086) (1,875)
Goodwill amortization 441 389
Gain on dispositions of students loans (1,580) (1,776)
Securities and other financial instruments
gains, net (1,538) (1,550)
Increase in trading account securities - (153,479)
Increase in accrued interest receivable and
other assets (53,980) (11,465)
Increase in accrued interest payable and other
liabilities, net 51,753 12,826
--------- ---------
Net cash provided by (used in)
operating activities 1,197 (143,291)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities held
to maturity 303 823
Proceeds from maturities of available for sale
securities 308,553 113,246
Proceeds from sales of available for sale
securities 12,186 91,119
Purchases of available for sale securities (203,814) (64,026)
Maturities of interest-bearing deposits with banks 13,000 -
Purchases of loans (86,818) (73)
Net (increase) decrease in loans 6,529 (28,624)
Purchases of premises and equipment, net (418) (1,872)
Purchases of businesses (358) (1,000)
--------- ---------
Net cash provided by investing
activities 49,163 109,593
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposit accounts (37,288) 49,175
Decrease in short-term borrowings (23,964) (7,461)
Retirements of common shares (1,428) (5,339)
Cash dividends paid on common shares (2,037) (1,984)
--------- ---------
Net cash provided by (used in)
financing activities (64,717) 34,391
--------- ---------
Net increase in cash and cash equivalents (14,357) 693
Cash and cash equivalents at January 1 74,051 63,717
--------- ---------
Cash and cash equivalents at March 31 $ 59,694 $ 64,410
========= =========
See accompanying notes.
3
<PAGE> 6
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1999
(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, 1998 $727 $4,065 $268,777 $44,561 $318,130
Net income 10,378 10,378
Other comprehensive income (net of income taxes):
Net change in unrealized gains on available
for sale securities 163 163
--------
Comprehensive income 10,541
--------
Retirement of common shares (2) (12) (1,413) (1,427)
Cash dividends declared on common stock,
$0.140 per common share (2,033) (2,033)
------- ------ -------- ------- --------
Balance at March 31, 1999 $725 $4,053 $275,709 $44,724 $325,211
======= ====== ======== ======= ========
</TABLE>
CORUS BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 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 9,902 9,902
Other comprehensive income (net of income taxes):
Net change in unrealized gains on available
for sale securities 4,135 4,135
--------
Comprehensive income 14,037
--------
Retirement of common shares (7) (36) (5,297) (5,340)
Cash dividends declared on common stock,
$0.135 per common share (1,964) (1,964)
------- ------ -------- ------- --------
Balance at March 31, 1998 $727 $4,065 $244,163 $49,411 $298,366
======= ====== ======== ======= ========
</TABLE>
4
<PAGE> 7
CORUS BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheets, Statements of Income, Statements
of Cash Flows and Changes in Shareholders' Equity 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, 1998 included in Corus' Annual Report
and Form 10-K for the year ended December 31, 1998. 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 1998 financial statements
to conform to current accounting classifications.
2. Student Loan Investigation
In 1994, Corus discovered that certain former employees in the student loan
servicing area had recorded in Corus' records the making of telephone calls
to borrowers whose student loans were delinquent when in fact some of those
calls had not been made. Immediately upon discovery of the issue, Corus
self-reported its findings to the Department of Education. Shortly
thereafter, the Department of Education commenced an investigation into
Corus' student loan servicing practices.
On April 8, 1999, the Department of Justice filed a civil lawsuit against
Corus Bankshares, Inc. and Corus Bank, N.A. alleging, among other things,
that Corus violated the federal False Claims Act by submitting fraudulent
insurance claims for defaulted student loans. The government alleges that
some insurance claims filed were false because certain of Corus' supporting
records were not retained or because certain Corus records do not exactly
match the insurance claims submitted or because certain claimed due
diligence was not performed. The lawsuit seeks triple damages and a civil
penalty of $10,000 for each false claim submitted by Corus. The lawsuit
does not specify the amount of the damages, although the Department of
Justice alleges that the aggregate amount of the false claims was more than
$11.8 million. The lawsuit conspicuously does not identify the specific
loans at issue or attempt to quantify the number of loans at issue more
precisely than to state "thousands." Corus has received some information
from the Department of Justice to indicate that the Department of Justice
thinks that there were at least 2,800 false claims. Corus will contest the
lawsuit and has substantial defenses to the lawsuit.
While the lawsuit filed was a civil action, it is possible that individual
employees, ex-employees or the company may also be sued criminally.
Shortly after notifying the Department of Education in 1994 of the student
loan servicing issue, Corus entered into an interim agreement with the
Department of Education 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 $15
million of loans subject to the interim agreement were charged off against
the allowance for loan losses between 1996 and 1999. The ultimate
collectibility of these loans is uncertain. Corus may have a right to
recover some or all of the $15 million in student loans it voluntarily
withheld from submission for claim payment and intends to seek such a
determination.
5
<PAGE> 8
CORUS BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Segment Reporting
The following reflects the disclosure requirements set forth by Statement
of Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information". For purposes of this statement,
Management has determined that Corus, Corus Bank and Bancorp Operations
Company (BOC) are primary operating segments within Corus. Corus Bank
derives a significant portion of its total revenues from interest income
offering commercial, mortgage, home equity, student and personal loans. It
also provides general banking services such as checking, savings, money
market and time deposit accounts; trust and investment management and a
variety of other services. BOC provides item processing, bookkeeping and
other ancillary bank support services to Corus Bank. Substantially all
revenues of BOC are intersegment and eliminated from consolidated total
revenues. Both Corus Bank and BOC are wholly owned subsidiaries of Corus.
Transactions between the reportable segments are recorded on the reportable
segments' financial statements and significant inter-segment accounts and
transactions have been eliminated in the preparation of the consolidated
financial statements. The inter-segment eliminations include revenues and
dividends from Corus' subsidiaries and certain interest income for bank
accounts of the parent company held at the bank subsidiary. In addition,
inter-segment elimations include other income and expense for transactions
between BOC and Corus Bank.
On the following page is a summary of significant segment information as
required by SFAS No. 131:
6
<PAGE> 9
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
For the Three Months ended March 31, 1999 CORUS Inter-segment
(in thousands) Corus BANK BOC Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest and dividend income $ 1,161 $ 46,810 $ 4 ($78) $ 47,896
Interest expense 1 22,406 0 (78) 22,329
Provision for loan loss 0 1,000 0 0 1,000
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,160 23,404 4 0 24,567
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Other income (1) 9,737 5,295 1,927 (11,664) 5,295
Net securitites and other financial instruments
gains, net 2 (28) 0 0 (26)
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 9,739 5,267 1,927 (11,664) 5,269
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Goodwill amortization 0 441 0 0 441
Depreciation 9 688 113 0 809
Other expense 575 12,563 1,533 (1,927) 12,745
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 584 13,691 1,646 (1,927) 13,994
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 10,315 14,979 285 (9,737) 15,842
Income tax expense (63) 5,428 99 0 5,464
- ------------------------------------------------------------------------------------------------------------------------------
Net income $ 10,378 $ 9,552 $ 186 ($9,737) $ 10,378
- ------------------------------------------------------------------------------------------------------------------------------
Segment Assets $356,089 $2,397,673 $1,867 ($168,889) $2,586,740
Expenditures to acquire long-lived assets 1 339 78 0 418
==============================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
For the Three Months ended March 31, 1998 CORUS Inter-segment
(in thousands) Corus BANK BOC Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest and dividend income (2) $ 7,000 $ 43,844 $ 4 ($6,114) $ 44,734
Interest expense 56 20,557 0 (114) 20,499
Provision for loan loss 0 3,000 0 3,000
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income 6,945 20,287 4 (6,000) 21,235
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Other income (1) 2,082 4,365 1,646 (3,728) 4,365
Net securitites and other financial instruments
gains, net 1,886 (29) 0 0 1,857
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 3,968 4,336 1,646 (3,728) 6,222
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Goodwill amortization 0 389 0 0 389
Depreciation 10 609 118 0 737
Other expense 324 11,158 1,453 (1,646) 11,289
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 334 12,156 1,571 (1,646) 12,415
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 10,579 12,467 79 (8,082) 15,043
Income tax expense 680 4,437 27 0 5,144
- ------------------------------------------------------------------------------------------------------------------------------
Net income $ 9,899 $ 8,030 $ 52 ($8,082) $ 9,899
- ------------------------------------------------------------------------------------------------------------------------------
Segment Assets $346,485 $2,140,545 $1,365 ($164,048) $2,324,347
Expenditures to acquire long-lived assets 3 1,586 283 0 1,872
==============================================================================================================================
</TABLE>
(1) Other income for Corus includes equity in undistributed (distributed) net
income of susbsidiaries totaling $9.7 and $2.1 million in 1999 and 1998
respectively.
(2) Interest income for Corus includes dividends received from Corus Bank of $6
million in 1998.
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, 1999 AND 1998
OPERATING RESULTS
For the three months ended March 31, 1999, net income was $10.4 million, or
$0.71 per share on a diluted basis, an increase of 5% from net income of $9.9
million, or $0.67 per share on a diluted basis, for the same period in 1998.
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 three
months ended March 31, 1999. 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: (thousands)
<TABLE>
<CAPTION>
<S> <C>
Fully taxable equivalent net interest income for the three months ended March 31, 1998 $24,726
Change in interest and dividend income due to common stocks 397
Change due to average earning assets fluctuations (excluding common stocks) 3,356
Change due to interest rate fluctuations other than student loan discount
accretion - earning assets excluding common stocks (3,296)
Change due to student loan discount accretion 253
Change due to interest rate fluctuations - funding sources 946
Change due to rate/volume fluctuations (excluding common stocks) (298)
-------
Fully taxable equivalent net interest income for the three months ended March 31, 1999 $26,084
=======
</TABLE>
The decline in the net interest margin is primarily the result of three factors:
1) the decrease in the yields on the Bank's investment portfolio, which is the
result of both much lower short term interest rates and longer term investments
having matured during the past year, 2) the changing mix of the Bank's loan
portfolio, and 3) the additional funding the Bank is carrying on its balance
sheet, virtually all in the form of certificates of deposit, for the first
quarter of 1999 as compared to the first quarter of 1998. In taking on this
additional funding, Corus has positioned itself for future loan growth.
Please note that prior year fully taxable equivalent net interest income, and
related net interest margins, were restated to incorporate the taxable
equivalent of the 70% dividend received deduction on dividends earned on the
bank stock portfolio.
The following table represents the impact these items had on net interest margin
for the three-month periods ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended
March 31
1999 1998
---- ----
<S> <C> <C>
Net interest margin 4.25% 4.61%
Impact of student loan discount accretion 0.21 0.20
---- ----
Net interest margin without student loan discount accretion 4.04% 4.41%
---- ----
</TABLE>
8
<PAGE> 11
Average Balance Sheets and Net Interest Margin (Unaudited)
<TABLE>
<CAPTION>
================================================================================================================================
THREE MONTHS ENDED MARCH 31
----------------------------------------------------------------------
1999 1998
================================================================================================================================
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
(Dollars In Thousands) BALANCE INTEREST COST BALANCE INTEREST COST
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Interest-bearing deposits with banks $ 4,044 $ 60 5.93% $ 26,999 $ 400 5.93%
Federal funds sold 37,486 434 4.63% 57,305 797 5.56%
Taxable securities other than common stocks 592,485 7,553 5.10% 291,975 4,236 5.80%
Common stocks (1) 184,992 1,490 3.22% 159,892 1,093 2.73%
Tax-advantaged securities (2) 2,062 37 7.18% 3,839 74 7.71%
Trading account securities 3,260 37 4.54% 46,624 613 5.26%
Loans, net of unearned discount (2) (3) (4) 1,630,205 38,802 9.52% 1,560,628 38,011 9.74%
- --------------------------------------------------------------------------------------------------------------------------------
Total earning assets 2,454,534 48,413 7.89% 2,147,262 45,224 8.42%
Noninterest-earning assets:
Cash and due from banks--noninterest bearing 76,343 58,728
Allowance for loan losses (36,248) (31,339)
Premises and equipment, net 34,119 31,418
Other assets, including goodwill 52,589 54,981
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 2,581,337 $2,261,050
================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits -- interest-bearing:
NOW and money market deposits $ 1,009,543 $ 10,253 4.06% $1,000,147 $ 11,542 4.62%
Savings deposits 169,388 1,103 2.60% 178,016 1,165 2.62%
Time deposits 749,144 10,367 5.54% 507,029 7,128 5.62%
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 1,928,075 21,723 4.51% 1,685,192 19,835 4.71%
Short-term borrowings 7,984 98 4.91% 4,616 93 8.06%
Federal Home Loan Bank advances 40,000 508 5.08% 40,000 570 5.70%
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 1,976,059 22,329 4.52% 1,729,808 20,498 4.74%
Noninterest-bearing liabilities and shareholders' equity:
Noninterest-bearing deposits 214,416 191,656
Other liabilities 71,646 48,602
Shareholders' equity 319,216 290,984
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,581,337 $2,261,050
================================================================================================================================
Interest income/average earning assets $ 2,454,534 $ 48,413 7.89% $2,147,262 $ 45,224 8.42%
Interest expense/average interest-bearing liabilities 1,976,059 22,329 4.52% 1,729,808 20,498 4.74%
- --------------------------------------------------------------------------------------------------------------------------------
Net interest spread $ 26,084 3.37% $ 24,726 3.68%
================================================================================================================================
Net interest margin 4.25% 4.61%
================================================================================================================================
</TABLE>
(1) Dividends on the bank stock portfolio reflects a tax equivalent adjustment
for the 70% dividend received deduction.
(2) Interest income on tax-advantaged loans and securities reflects a tax
equivalent adjustment based on an income tax rate of 35%.
(3) Unremitted interest on nonaccrual loans is not included in the amounts.
(4) Includes net interest income derived from interest rate swap contracts.
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, 1999 AND 1998
Noninterest Income
Noninterest income for the first quarter of 1999 was $5.3 million, a decrease of
$954,000 from the 1998 period. Gains on dispositions of student loans declined
$196,000 to $1.6 million. Securities and other financial instrument gains
declined $1.9 million to a net loss of $26,000. Service charges on deposit
accounts climbed $466,000 to $2.5 million. Trust and investment management
services income increased $402,000 resulting principally from the increased
assets under management from Corus' acquisition of the assets of an investment
management business on March 31, 1998. Other Income increased $272,000,
primarily due to greater OREO gains in the 1999 first quarter.
Income from "Curing" of Student Loans
In past years, nonperforming student loans were purchased at a substantial
discount to the face value of the loans. Corus converts a substantial amount of
these loans to performing status and reinstates their government guarantees.
Corus refers to this process as "curing," and it has represented a significant
source of income to Corus over the past several years. As a result of federal
legislation, virtually all curable loans will lose their eligibility to become
cured on June 30, 1999.
During the quarter end March 31, 1999, Corus recognized $2.9 million of "curing"
income -- $1.6 million of which was reported in other income, in the line
labeled "Gain on disposition of loans," with the remaining $1.3 million reported
in interest income (as described further under the Net Interest Income section).
At March 31, 1999, Corus had cured approximately $9 million of student loans for
which the income from these cures has not yet been recognized in its income
statement. Corus anticipates that it can cure an additional $1 million of
student loans between now and June 30, 1999. Corus anticipates that it will
recognize approximately $9.5 million of the $10 million during the last three
quarters of 1999, yielding total curing income in 1999 of approximately $12.5
million. The income from these curing operations will drop to approximately
$500,000 in the year 2000 and be immaterial thereafter.
Noninterest Expense
In the first quarter of 1999, noninterest expense increased $1.6 million to
$14.0 million, compared with $12.4 million in 1998. Salaries and employee
benefits expense increased $1.0 million to $8.2 million. The increase in
salaries and benefits is primarily the result of the following three factors 1)
the acquisition of the investment management company on March 31, 1998, 2) the
acquisition of LaSalle National Bank's currency exchange related business during
the fourth quarter of 1998, and 3) an unusually large health insurance expense
related to Corus switching to a new health insurance administrator. Depreciation
on furniture and equipment increased $150,000 due to higher depreciation expense
related to new furniture for the newly remodeled headquarters' building which
was near its completion at December 31, 1998.
The effective tax rate for the first quarter of 1999 was 34.5% versus 34.2% in
1998. The increase in the effective tax rate was primarily due to an increase in
the amortization of goodwill due to the acquisition of the investment management
business at March 31, 1998.
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, 1999 AND 1998
FINANCIAL CONDITION
Earning Assets
The following table details the composition of CORUS' earning assets:
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998 March 31, 1998
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
----------------------- --------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Loans:
Commercial real estate:
Mortgage $ 544,187 22% $ 533,253 22% $ 567,116 26%
Construction 233,297 10 228,311 9 192,866 9
Student 440,135 18 431,304 17 427,930 20
Residential first mortgage 126,412 5 137,683 6 189,593 9
Home equity 163,374 7 85,408 3 119,594 5
Commercial 97,719 4 108,759 4 50,883 2
Medical Finance 24,713 1 24,821 1 22,424 1
Consumer 1,775 -- 2,048 -- 3,045 --
---------------------- ------------------- --------------------
Total loans 1,631,612 67 1,551,587 62 1,573,451 72
Securities other than common stocks 608,062 25 718,580 29 394,619 18
Common stocks 185,538 8 185,698 8 174,415 8
Federal funds sold 2,300 -- 2,000 -- 31,600 1
Interest-bearing deposits with banks -- -- 13,000 1 26,999 1
---------------------- ------------------- --------------------
Total $2,427,512 100% $2,470,865 100% $2,201,084 100%
========== ===== ========= === ========== ===
</TABLE>
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, 1999 AND 1998
Loans
Total loans at March 31, 1999 were $1.63 billion, an increase of $80 million, or
5.2%, from December 31, 1998. Commercial real estate mortgage loans increased
$10.9 million, or 2.1%, from December 31, 1998. Commercial real estate
construction loans increased $5.0 million, or 2.2%, from December 31, 1998. At
March 31, 1999, unfunded construction loan commitments totaled $293.8 million.
At March 31, 1999, residential first mortgage declined $11.3 million, or 8.2%
compared with December 31, 1998. Home equity loans increased $78.0 million, or
91.3%, from December 31, 1998. This increase is due to the purchase of a
portfolio of $86.5 million second mortgage high-loan-to-value home loans.
Student loans increased $8.8 million, or 2.0%, from December 31, 1998.
Commercial Real Estate Loans
The composition of the commercial real estate loan portfolio by type of
collateral securing the loan was as follows at March 31, 1999 (in thousands):
Rental apartments $ 167,138
Hotel/Motel 157,592
Nursing homes 143,644
Condo/Loft conversion and other residential for sale 71,348
Retail 66,985
Industrial 63,820
Office 56,980
Other 49,977
-----------
Total $ 777,484
==========
At March 31, 1999, approximately 60.8% of the outstanding balances of commercial
real estate loans were secured by collateral located in the five county Chicago
metropolitan areas. The largest single concentration of outstanding balances
outside of this area, 6.7%, is secured by collateral in Arizona.
In addition to the outstanding commercial real estate loans of $777 million,
Corus also had commitments on commercial real estate loans outstanding at March
31st of $357 million. Commitments are primarily comprised of partially funded
construction loans and commitment letters outstanding. At March 31, 1999, Corus
thus had total outstanding loans and commitments of $1.13 billion. Of the $1.13
billion total, $475 million, or 42%, is attributable to 27 loans. Those same 27
loans have current loan balances outstanding of $272 million.
12
<PAGE> 15
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Securities Other Than Common Stocks
At March 31, 1999, total securities other than common stocks were $608.1
million, a decrease of $110.5 million, or 15.4%, compared with $718.6 million at
December 31, 1998.
Common Stocks
At March 31, 1999, investments in the common stocks of financial industry
companies were $185.5 million, a decrease of $160,000, or 0.09%, compared with
$185.7 million at December 31, 1998. During the first quarter of 1999, the
pretax unrealized gains on this portfolio increased by $469,000.
At March 31, 1999, Corus held investments in 45 equity securities of
publicly-traded financial industries companies with total unrealized gains of
$69.6 million, which were included in the available for sale securities
classification. At March 31, 1999, 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 $ 112,753 61%
Between $5 and $10 billion 24,346 13
Between $1 and $5 billion 25,738 14
Between $500 million and $1 billion 15,320 8
Under $500 million 7,381 4
---------------------- -------------------
Total $ 185,538 100%
====================== ===================
</TABLE>
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) March 31 December 31 March 31
1999 1998 1998
------------------ ------------------ ---------------
<S> <C> <C> <C>
Nonperforming loans:
Residential first mortgage $ 9,627 $ 11,769 $ 15,136
Commercial real estate 1,494 2,436 4,444
Commercial - 9 21
Home equity 1,168 1,415 2,605
Student 318 476 326
Medical Finance 1,099 1,102 713
Consumer 4 127 41
------------------ ------------------ --------------
Total nonperforming loans 13,710 17,334 23,286
Other real estate owned 5,326 4,971 5,740
------------------ ------------------ --------------
Total nonperforming assets $ 19,036 $ 22,305 $ 29,026
================== ================== ==============
Nonaccrual loans included in non-performing
loans above $ 4,679 $ 5,307 $ 9,074
================== ================== ==============
Nonperforming loans/Total loans 0.84% 1.12% 1.48%
Nonperforming assets/Total assets 0.74% 0.86% 1.25%
Allowance for loan losses/
Nonperforming loans 257.17% 206.37% 137.66%
</TABLE>
13
<PAGE> 16
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Nonperforming residential first mortgage loans are secured by first mortgages on
primarily owner-occupied, residential property. At March 31, 1999, other real
estate owned was comprised of two commercial real estate properties with a
carrying value of $132,000 and forty-seven residential properties with a
carrying value of $5.2 million. During the first three months of 1999, ten
residential properties with a carrying value of $1.3 million and one commercial
property with a carrying value of $106,000, were sold for net gains of $174,000
and $66,000, respectively.
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 $14.5, $17.5 and $14.7 million at
March 31, 1999, December 31, 1998 and March 31, 1998, 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
March 31
-------------------------------------
(thousands) 1999 1998
------------------ ---------------
<S> <C> <C>
Balance at beginning of period $ 35,773 $ 30,660
Provision for loan losses 1,000 3,000
Less charge-offs:
Commercial real estate loans 38 -
Student loans 703 107
Residential first mortgage loans 83 103
Home equity loans 993 1,864
Commercial loans 50 -
Consumer loans 62 -
------------------ ---------------
Total charge-offs 1,929 2,074
------------------ ---------------
Add recoveries:
Commercial real estate loans 13 96
Student loans 47 13
Residential first mortgage loans 1 -
Home equity loans 339 338
Commercial loans 2 -
Consumer loans 12 23
------------------ ---------------
Total recoveries 414 470
------------------ ---------------
Net charge-offs (1,515) (1,604)
------------------ ---------------
Balance at March 31 $ 35,258 $ 32,056
================== ===============
Loans at March 31 $ 1,631,612 $ 1,573,451
================== ===============
Allowance as a percentage of loans 2.16% 2.04%
================== ===============
</TABLE>
14
<PAGE> 17
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
The vast majority of the home equity chargeoffs relate to Corus' Ultimate Home
Equity product. These loans were originated at up to 100% of the underlying
property's value and are charged off when they become 120 days past due. At
March 31, 1999, Ultimate Home Equity loans totaled $49.2 million. Of this total
$605,000 was classified as nonperforming loans. The following represents an
aging schedule of Ultimate Home Equity loans at March 31, 1999 (in thousands):
Current $ 46,987
31 to 60 days past due 1,029
61 to 90 days past due 561
91 to 120 days past due 605
---------
Total $ 49,182
=========
The second mortgage high-loan-to-value home loans, purchased during the first
quarter of 1999, will also be charged off when they become 120 days past due.
The student loan chargeoffs were virtually all the result of the interim
agreement the Bank entered into with the Department of Education, as described
in Note 2 of the Notes to Condensed Consolidated Financial Statements on page 5.
At March 31, 1999, the allowance for loan losses as a percentage of total loans
decreased to 2.16% of total loans from 2.31% of total loans at December 31,
1998. As a percentage of nonperforming loans though, the allowance increased to
257.17%, compared with 206.37% at December 31, 1998. Management believes that
the level of the allowance for loan losses was adequate at March 31, 1999.
Student Loan Investigation and Lawsuit
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>
March 31 December 31 March 31
1999 1998 1998
-------- ----------- --------
<S> <C> <C> <C>
Demand 10% 10% 10%
Savings 8 8 9
NOW 4 5 5
Money Market 43 42 49
Certificates of Deposit 35 35 27
-------- ----------- --------
Total 100% 100% 100%
======== =========== ========
</TABLE>
At March 31, 1999, December 31, 1998 and March 31, 1998, CORUS had retail
certificates of deposit obtained from brokers of $368.1, $402.8 and $260.4
million, respectively.
15
<PAGE> 18
ITEM 2. - CORUS BANKSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Capital
Corus' consolidated leverage ratio (Tier 1 capital/total average quarterly
assets) was 10.6% at March 31, 1999, well in excess of the minimum regulatory
level of 5%. The consolidated Tier 1 and total risk-based capital ratios were
14.8% and 17.8%, respectively, exceeding the minimum well-capitalized Tier 1 and
total risk-based capital ratios of 6.00% and 10.00%, respectively.
During the first three months of 1999, Corus repurchased and retired 43,752
shares at an average price of $32.63 per share. A total of 312,852 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 $1.2 million for the first
three months of 1999, compared with $143.3 million of net cash used in operating
activities for the same period in 1998. The change was primarily due to the
$153.5 million trading securities portfolio at March 31, 1998.
Net cash provided by investing activities totaled $49.2 million for the first
three months of 1999, compared with $109.6 million in 1998. The decrease was due
to the purchase of the second mortgage high-loan-to-value home loans.
Net cash used in financing activities totaled $64.7 million for the first three
months of 1998, compared with $34.4 million of net cash provided by financing
activities in 1998. This change was primarily due to a decrease in both deposit
accounts and short-term borrowing.
YEAR 2000 READINESS DISCLOSURE
State of Readiness
In June of 1997, responsibility for our Year 2000-readiness project was assigned
to the Project Management Group that reports directly to the Chief Operating
Officer who is also a member of the Corus Bank Board of Directors.
Corus' Year 2000 project plan is designed after the Federal Financial
Institutions Examination Council (FFIEC) model:
Phase I - Awareness June, 1997 - Present
Phase II - Assessment July, 1997 - Present
Phase III - Renovation January, 1998 - December, 1998
Phase IV - Validation June, 1998 - June, 1999
Corus' Board of Directors receives formal status reports quarterly updating them
on the progress of the project.
The assessment phase took the form of a mass inventory performed to identify
information technology systems including information systems, software and
equipment. The inventory also identified non-technology relationships such as
environmental systems, business partners and major borrowers. During the
assessment phase of Corus' readiness project, approximately 31% of Corus'
internal systems have been identified as being mission critical. Of these
mission critical systems, 87% have been upgraded to a Year 2000 ready status or
are not date sensitive. The remaining 13% of the mission critical systems are in
the process of being renovated, replaced or upgraded to be Year 2000 ready.
Renovation, replacements, and upgrades are scheduled to be completed by the end
of the second quarter 1999.
16
<PAGE> 19
Assessment of Year 2000 risk for commercial lending customers is an ongoing
process that relies heavily on an interview between commercial lending officers
and the customers. This interview assesses the customers' awareness of the
potential financial impact of Year 2000 issues on their business and any
relevant risk to Corus. This potential Year 2000 risk to the bank, through its
lending relationship with each customer, is eventually identified as "high",
"medium" or "low". This methodology of risk assessment allows Corus to take
appropriate measures to monitor Year 2000 risk for its commercial lending
customers.
Validation of the Year 2000 readiness status of these mission critical systems
is on schedule. Corus anticipates completing the last of the required validation
during the second quarter of 1999. In some instances, Corus participates in a
method of testing known as proxy testing. In proxy testing, the service provider
tests with a representative sample of financial institutions that use a
particular service on the same platform. Test results then are shared with all
similarly situated clients of the service provider. Internal validation efforts
were also aided through the use of an outside consulting group. The consulting
group formulated the test methodology and provided guidance on the testing of
individual applications.
Corus relies on third-party providers for the majority of data processing needs.
The core data processing systems for both customer information and student
lending have been upgraded and are running a version the third parties have
certified as Year 2000 ready. Testing of these two systems is complete. The core
data processing system that maintains account and customer information for
Corus' Trust area has also been upgraded to a Year 2000 ready version. Proxy
testing of this system is complete.
Costs to Address Year 2000 Issues
Although Corus does not currently expect the costs of Year 2000 readiness to be
material, some expenses will be incurred. Corus estimates total costs (which
include expenses and investments) associated with the project to be
approximately $1.3 million.
The Risks of Year 2000 Issues and Contingency Planning
Information technology and non-information technology elements that expose Corus
to Year 2000 risk have been internally classified into three levels of
importance. Critical A items are those that would, upon failure, severely limit
our ability to participate in the business of banking. Ten items have been
deemed to be Critical A. The ten items include various data processing and
information systems, the interface between Corus' information systems and the
ATM network, the telecommunications system, and the wire transfer system. A
specific example of a Critical A item is Corus' core data processing system
whose failure would inhibit Corus' ability to process, record, and access
customer and account information. The second tier of items which would impact
Corus, but not as severely as Critical A items, are Critical B items. Some
examples of Critical B items are an ATM terminal and a security system. All
other elements, such as photocopy machines, are considered non-critical.
The most reasonably likely worst case scenario relating to the Year 2000 issue
would involve the failure of the Critical A items. At this stage of the overall
readiness project, Corus does not believe that any failure is reasonably likely
to occur. Nonetheless, Corus' goal is to be prepared for a worst case scenario.
Corus currently has a written Business Recovery Plan in place. Corus is in the
process of modifying this plan to address how to deal with Critical A and
Critical B failures caused by Year 2000 events. Department managers are creating
remediation and business resumption contingency plans for their respective
functions that will be used in the modification of Corus' plan. Corus intends to
have contingency plans in place and validated no later than June 30, 1999.
17
<PAGE> 20
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:
o Federal and state legislative and regulatory developments, including the
ultimate resolution of the student loan investigation by the U.S.
Department of Education;
o Changes in management's estimate of the adequacy of the allowance for loan
losses;
o Changes in the level and direction of loan and write-offs;
o Interest rate movements and their impact on customer behavior and Corus'
net interest margin;
o Changes in the overall mix of Corus' loan and deposit products;
o The impact of repricing and competitors' pricing initiatives on loan and
deposit products;
o Corus' ability to adapt successfully to technological changes to meet
customers' needs and developments in the marketplace;
o The impact of the Year 2000 on Corus' data processing vendors, customers
and other vendors;
o Corus' ability to access cost-effective funding;
o The purchase of the second mortgage high-loan-to-value portfolio and the
capability of Corus to minimize loan delinquencies and charge-offs of the
acquired loans;
o The ability of Corus to generate additional fee income from its
acquisitions of an investment management business; and
o Economic conditions.
18
<PAGE> 21
ITEM 3 - CORUS BANKSHARES, INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
There has been no material change from Corus' disclosure in item 7a of its 1998
10-K.
19
<PAGE> 22
CORUS BANKSHARES, INC.
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS.
On April 8, 1999, the Department of Justice filed a civil lawsuit against Corus
Bankshares, Inc. and Corus Bank, N.A. in the United States District Court
Northern District of Illinois Eastern Division alleging, among other things,
that Corus violated the federal False Claims Act by submitting fraudulent
insurance claims for defaulted student loans. The government alleges that some
insurance claims filed were false because certain of Corus' supporting records
were not retained or because certain Corus records do not exactly match the
insurance claims submitted or because certain claimed due diligence was not
performed. The lawsuit seeks triple damages and a civil penalty of $10,000 for
each false claim submitted by Corus. The lawsuit does not specify the amount of
the damages, although the Department of Justice alleges that the aggregate
amount of the false claims was more than $11.8 million. Refer to Note 2 of the
Notes to Condensed Consolidated Financial Statements on page 5 for further
information.
ITEM 2: CHANGES IN SECURITIES.
This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.
ITEM 5: OTHER INFORMATION.
None.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
- ------------
3a Amended and Restated Articles of Incorporation is incorporated
herein by reference to Exhibit 4.1 to the Form S-8 filing dated
May 22, 1998;
3b By-Laws are incorporated herein by reference to Exhibit 4.2 to
the Form S-8 filing dated May 22, 1998;
4 Corus Bankshares 1999 Stock Option Plan dated April 28, 1999
(incorporated by reference to Exhibit 4.3 of the Company's Form
S-8 Registration Statement (No. 333-77481) filed with the
Securities and Exchange Commission on April 30, 1999).
11 Computation of Net Income per Common Share is on Page 22.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
- ------------------------
None
20
<PAGE> 23
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)
May 13, 1999 By: /s/ Tim H. Taylor
------------------
Tim H. Taylor
Executive Vice President
Chief Financial Officer
(Principal Accounting
Officer and duly authorized
Officer of Registrant)
21
<PAGE> 1
EXHIBIT 11 - CORUS BANKSHARES, INC.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31
(thousands, except per share amounts) 1999 1998
--------- -------
<S> <C> <C>
Denominator for basic earnings per share - average common shares
outstanding 14,522 14,595
Dilutive common stock options 170 225
--------- -------
Denominator for diluted earnings per share 14,692 14,820
======== =======
Numerator: Net income attributable to common shares $ 10,378 $ 9,902
======== =======
Net income per share:
Basic $ 0.71 $ 0.68
Diluted 0.71 0.67
</TABLE>
22
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 57,394
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 787,293
<INVESTMENTS-CARRYING> 6,307
<INVESTMENTS-MARKET> 6,478
<LOANS> 1,631,612
<ALLOWANCE> 35,258
<TOTAL-ASSETS> 2,586,740
<DEPOSITS> 2,117,390
<SHORT-TERM> 969
<LIABILITIES-OTHER> 103,170
<LONG-TERM> 40,000
0
0
<COMMON> 725
<OTHER-SE> 324,486
<TOTAL-LIABILITIES-AND-EQUITY> 2,586,740
<INTEREST-LOAN> 38,706
<INTEREST-INVEST> 8,696
<INTEREST-OTHER> 494
<INTEREST-TOTAL> 47,895
<INTEREST-DEPOSIT> 21,722
<INTEREST-EXPENSE> 22,328
<INTEREST-INCOME-NET> 25,567
<LOAN-LOSSES> 1,000
<SECURITIES-GAINS> (26)
<EXPENSE-OTHER> 13,995
<INCOME-PRETAX> 15,841
<INCOME-PRE-EXTRAORDINARY> 15,841
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,378
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
<YIELD-ACTUAL> 4.25
<LOANS-NON> 4,679
<LOANS-PAST> 8,512
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 35,773
<CHARGE-OFFS> 1,929
<RECOVERIES> 414
<ALLOWANCE-CLOSE> 35,258
<ALLOWANCE-DOMESTIC> 35,258
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
