(CHICAGO, IL) -- The clock is ticking loudly for Chicago-based Corus Bank, the biggest lender of luxury South Florida condominium communities.
Treasury Secretary Timothy Geitner has told the 51-year-old affiliate of Corus Bankshares Inc. it must raise at least $390 in capital by June or face being placed into receivership.
If Corus can't reach the capital goal, it will rank, by assets, as the largest bank failure this year, according to the Federal Deposit Insurance Corp.
It would also mark the 35th bank failure in 2009 to date. In 2008, 24 banks went under; three fell in 2007. There were no bank failures in 2006.
The deadline facing Corus is peculiar since the bank's assets, as of March 31, 2009, totaled $7.7 billion.
However, for the quarter ended Dec. 31, 2008, the bank reported a net loss of $317 million, or a loss of $5.90 a share. That compared to a profit of $1.9 million or three cents a share in the same fourth quarter of 2007.
Corus blames its deteriorating financial condition on the swollen loan delinquencies by condo developers in the past 12 months.
For example, Foresight Analytics of Oakland, CA, estimates the delinquency rate on condo-construction loans in the first quarter of this year at 32.2 percent, up from 13.4 percent in the same 2008 period.
As of Sept. 30, 2008, Corus held mortgages on 18 condo construction and apartment loans with an estimated value of $1.38 billion, according to the bank's previous statement.
Meanwhile, Corus itself continues to foreclose on loans made by developers for several name South Florida projects. On Monday, May 11, Corus foreclosed on the 28-story, 118-unit Onyx on the Bay in Miami. The bank expects to file foreclosure actions this quarter on two other condo projects.
Besides Onyx on the Bay, other South Florida condo projects that hold Corus Bank mortgages include:
Jade Ocean Condominiums in Sunny Isles Beach; Paramount Bay, the Mint at Riverfront, The Ivy and Marina Blue, all in Miami; Trump International Hotel and Tower in Fort Lauderdale; and Edge Condominium in West Palm Beach.
But even as Corus goes through the foreclosure filing exercises against delinquent borrowers, other potential buyers are looking at Corus itself as a takeover or partial purchase product.
"...Only bulk or vulture investors would look at" the Corus delinquent loans at this time, notes Jack McCabe, CEO, McCabe Research & Consulting, Deerfield Beach, FL.
Persons in a position to know say that among condo developers considering buying some or all of the bank's loan portfolio are Related Cos. of New York City and Related Group of Coral Gables, FL. The purchases would be made through the FDIC which would auction off the distressed development loans.
"This isn't real good news for sellers, but it's fantastic news for buyers," Peter Zalewski, a principal at Condo Vultures Realty LLC in Bal Harbour, FL, tells The Wall Street Journal.
"...Control of those assets could translate into a very significant windfall over the long term," observes Robert Kaplan, CEO of Olympian Capital Group in New York City.
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