Corus, Colonial on the Brink
With loan quality continuing to plummet, Corus finally eliminated its dividend on common shares in May 2008.
After reporting in early February that its nonperforming assets had increased to $1.9 billion or 23% of total assets, Corus said that while it was still well-capitalized under ordinary regulatory capital guidelines as of Dec. 31, its capital requirements were likely to be increased by regulators. Sure enough, the company entered into an agreement with the OCC on Feb., 18 to achieve and maintain a Tier 1 leverage ratio of at least 9% by June 18.
Corus Bank's Tier 1 leverage ratio stood at a negative 2.1% as of June 30. While the preliminary second-quarter report didn't contain information on credit quality, nonperforming assets comprised 33% of total assets as of March 31, and the bank could had so many problem loans that its net interest income (income from loans and investments less the cost of funds) was negative for the first quarter.
The failure of Corus Bank would likely be very costly for the FDIC, since the bank had $3.7 billion in loans as of June 30, most of which were nonaccrual condominium and commercial real estate loans.The costliest failure during the 2008-2009 banking crisis so far was IndyMac Bank, which failed in July 2008, with an estimated cost to the FDIC's insurance fund of $10.7 billion. The second most costly was BankUnited, which failed May 21, costing the FDIC an estimated $4.9 billion. The largest bank or thrift failure was Washington Mutual, which failed last September but cost the FDIC nothing, since JPMorgan Chase (JPM) acquired all of the thrift's deposits, branches and most other assets, with no loss-sharing agreement with the government.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV