Corus Finally Takes Its Medicine

Florida projects comprised 59% of the funded balances for the potential problem loans, with Miami condominium projects making up 34%. In light of the glut of condominium units in Miami -- Corus's largest lending market area -- it's conceivable that as more projects are completed and investors balk at following through on their commitments to purchase units, Corus will see another increase in nonaccrual loans in the months ahead.

As mentioned above, Corus' somewhat low loan loss reserve coverage of 21% doesn't tell the whole story, since the company's overall level of capital was relatively high as of March 31. Over the past year, the company has stayed ahead of net loan charge-offs. Provisions for reserves for the four quarters ended March 31 totaled $97.4 million, while net charge-offs totaled just $56.9 million. With such a high concentration of nonperforming and potential problem loans concentrated in regions with an oversupply of condominium units, it's hard to see how this pattern can continue.