Banking: Michigan's Corus fights for capital, threatened with de-listing
Corus Bankshares, Inc., which through its wholly owned subsidiary Corus Bank, N.A., has filed notice with the SEC that it must delay reporting; now NASDAQ has served notice that its reports are overdue and if the position is not rectified, the ultimate sanction is de-listing. Its problems are symptomatic of the USA's small-mid-size banking sector.
The bank specialises in construction finance for residential and commercial developments.
It has already informed the SEC that it is trying to restructure its finances and that, as a result, its reporting will be delayed.
Behind all of this is that the question of finance is tied into the value of assets. Asset values have fallen, leaving the balance sheet weak. That does not instil confidence in potential investors. In general, investors will be looking to value mortgaged assets including incomplete projects at fire sale prices. That may not be enough to save the bank.
In a statement, Corus said "the Company has been working diligently with its financial and professional advisers in seeking qualified sources of outside capital. These efforts during the last several months have prevented the Company from finalising its financial statements on time to file the Form 10-Q within the prescribed time period without unreasonable effort and expense. As part of management's process of finalising its financial statements, the Company is still reviewing the classification of assets and the potential related valuation adjustments which are necessary for the preparation of the financial statements required to be filed as part of the Form 10-Q."
This all boils down to the fact that what would once have been tolerated as a slow paying customer must now be reviewed and potentially reclassified as a defaulter.
That is both expensive and time consuming.
The bank thinks it has time to sort that out. With almost 80 bank failures in the US so far this year, several of which have been a position very similar to that Corus says it is now in, suggests that whether it does so remains open to question.
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