Hard times ahead in the condo market eventually could cost Corus its dividend.Condominium financing is another part of the banking business that is suffering with the real estate downturn, as
In its second-quarter 2007 earnings release, Corus Bankshares provided a detailed analysis of its asset quality problems. Four condominium projects represented the majority of Corus Bank's problem loans. Two of them were on the Gulf Coast of Florida. Corus stated that because of additional contributions from other lenders subordinate to Corus, interest and principal payments were actually still "current" for all of its nonaccruing condominium loans. This means that while the institution couldn't book all of these payments as interest income, the money was still coming in. There was no assurance that these payments would continue.
Corus long-term shareholders were sitting pretty at the end of 2006, with a five-year total return of 133%. This compared favorably with returns over the same period for the S&P 600 Small Cap Index (80%) and the S&P 600 Financial Index (103%). Since then, Corus shares have been hit hard by the real estate downturn, dropping from $24.16 at year-end to around $13.88. The stock's split-adjusted high was $33.74, back on April 28, 2006.