The future of Laketown Wharf in Panama City Beach is again dealt a blow of uncertainly as the owning bank, Corus shows increasing signs of weakening. Friday, they reported a quarterly loss of $260.7 million and stated that more than a third of their “$4.1 billion in outstanding loans were nonperforming.” On the bright side, Mike Dulberg, Corus’s CFO reported that they have $758 million in capital and $4 billion in liquid assetts and the vast majority of its $7.6 billion in consumer deposits is federally insured.
In the article, Daniel Cardenas, senior vice president at Chicago brokerage Howe Barnes Hoefer & Arnett Inc., was quoted:
“The company is in dire straits. Barring a surprise injection of private capital and/or a dramatic rebound in condo values, Corus appears unlikely to survive 2009.”
The article was published in the Wall Street Jounal Commercial section in limited “subscriber only” format, but I found it elsewhere, in full:
4 thoughts on “Laketown Wharf – Corus Bank "Unlikely to Survive '09"”
I certainly does not look good for Corus. The old adage “don’t put all your eggs in one basket” rings true in this case.
The Office of Thrift Supervision (OTS ~ the Treasury Dept’s Bank Regulatory Arm) has rejected Corus’ application for TARP funds. However, this rejection does not mean the bank will fail. As long as they meet capital requirements, they will survive. There are at least 150 banks with significantly lower capital ratios that will be going first. The two (of 7 in 2009) that failed this past Friday were good examples.
Two weeks ago, Corus was approved to enter the mortgages business for individuals. The OTS made that approval. It appears that Corus would like to be in a position to provide individual mortgages for people interested in properties they own.
OTS is playing hardball with the banks. Last year they rejected National City’s request for TARP funds and forced them into a merger with PNC. Their tactics were exposed in a congressional hearing and the Northern Ohio Representative ended up at the White House with a face to face with Treasury and the President. So OTS will be cautious because they are being watched. The last 9 months have seen some historic bank seizures and mergers. But local banks are generally very strong.
Most of Corus’ business is first mortgages on new construction loans. Last quarter of ’08, they took on 4 large properties in the same way that they ended up with Laketown Wharf (develope turned over the keys). All those properties are ready for closings. Corus survival depends on how fast they will close out and sell units in these buildings. That depends on how fast people with wealth and income means start to feel comfortable with taking on a condo.
If Corus becomes desperate, look for auctions at Laketown that drive prices in PCB to low per square foot. Or look for a bulk sale to a resort company or REIT.
No matter what, PCB condo values will continue their slow decline through 2009. Hopefully, 2009 will be the bottom. But I doubt it.
Regardless of what happens to Corus, Laketown Wharf is likely to find a sales direction this year. It should be interesting to see how it will affect the rest of the condo market. To date, the absorption of developer inventory has been very orderly.
I have currently rented a 3 bedroom unit at Laketown Wharf _Not Purchased. I am assuming this is where they are going to make some money on these units. They have a realty agency handling the rental units. Have you heard anything about this arrangement??? We move in June 1st .