Eighty-three percent of the Chicago-based lender's loans relate to construction and development, the most at any of the 100 largest public U.S. banks, the newspaper said, citing Stanford Group Co.
NEW YORK (Reuters) - Corus Bankshares Inc <CORS.O> faces extensive pain in the coming months as more commercial real estate construction and development loans go sour, and as regulators step up their scrutiny of such lending, the Wall Street Journal said on Wednesday.
Eighty-three percent of the Chicago-based lender's loans relate to construction and development, the most at any of the 100 largest public U.S. banks, the newspaper said, citing Stanford Group Co.
Most of these loans went to developers that build condominiums in cities hit hard by the nation's housing crisis, including Atlanta, Las Vegas and Miami, the newspaper said.
Corus has said it ended the year with $8.93 billion of assets and $4.34 billion of net loans, and that construction loans represented 90 percent of total condominium loan commitments as of December 31.
!ADVERTISEMENT!The bank also said it ended the year with $663.2 million of cash and equivalents and, according to the newspaper, is among the best capitalized among midsize to large U.S. banks.
But the newspaper said Corus and other lenders face risks.
It said that while many condominium loans are still performing, that may change as developers deplete reserves they use to pay interest costs during construction.
The worry is that lagging sales will make it tough for developers to eventually pay off interest and principal, especially if buyers walk away because the value of their units has fallen by more than the amounts of deposits they put down.
As of year end, Corus said it had $282.6 million of loans that were 90 days or more past due and had stopped accruing interest, but had set aside only $71 million for loan losses, or 1.61 percent of total loans. Fourth-quarter profit fell 96 percent, it said.
Corus did not immediately return a request for comment.
Shares in Corus closed Tuesday at $11.64. They closed at $18.04 on March 26 last year. The company's market value is about $612.3 million, according to Reuters data.
(Reporting by Jonathan Stempel; Editing by Louise Ireland)
