Florida condo lending sinks Chicago's Corus Bank: Nation's 90th bank failure in 2009
Wake up and good morning. No big surprise here -- Venture anticipated this -- as the nation's bank failures for 2009 hurtle towards triple digits. Chicago's Corus Bank, perhaps the country's poster child for excessive condo development lending in Florida, failed Friday, and was sold to another bank. Corus is the 90th bank to fail this year, a failure the FDIC estimates will cost its deposit insurance fund $1.7 billion. Here are the details from the FDIC deal.
So what was a $7 billion bank in Chicago doing pouring hundreds of millions of dollars into Florida condo development? The bank must have had a death wish to over-concentrate its lending in a dicey subset of Florida's economy. But banker's never study history and, apparently, are doomed to repeat the lessons sorely learned of previous lousy banking practices.
Here are just a few of the many Tampa Bay deals -- in excess of 70 statewide at last count -- Corus threw money at:
* Centergate Lansbrook Village, Palm Harbor. Corus loaned $112.6 million and was forced last month to repossess the project for failing to pay $75 million in debts. More on that repossession here.
* Element, Tampa (shown above in photo by Skip O'Rourke of the St. Petersburg Times). Corus loaned $84.3 million.
* Arbors at Branch Creek Tampa. Corus loaned $52.6 million. Check out this quote from a Corus banker in 2005: "Our knowledge of the Tampa condo market allowed us to work quickly with the mezzanine lender and borrower to put together this deal with no recourse and no pre-sales," said Brian Brodeur, Corus Bank senior vice president. I guess it sounded good at the time.
* Arbors at Carrollwood Tampa. Corus loaned $47 million. Was that a good deal? As the Tampa Bay Business Journal reported earlier this summer: "Israel-based Gamla-Cedron Group bought 149 units at the Arbors at Carrollwood for $5.8 million, or $39,000 per unit — a $96,000 discount per unit from what ABBA Real Estate Development Group paid in 2005. (Corus loaned its money to ABBA.)
* Tuscany at International Plaza, Tampa. Corus loaned $23.5 million. Used to be known as SummerWalk at Westshore.
Bank woes -- be it banks elsewhere that loaned heavily in Florida, or Florida banks heavily staked in local commercial real estate -- are still on about page 100 of a War and Peace-sized tale of misery. In its quarterly report on Florida, the FDIC indicates the lack of diversification of Florida bank lending. Look at the off-the Richter-Scale concentration of commercial real estate lending. And the Miami Herald, in its weekend report on bank stress, cites an analysis by Charlottesville, Va.-based SNL, which analyzes banking trends, that shows more than 53 cents of every dollar loaned by Florida-based banks goes for commercial real estate, compared with 24 cents per dollar among other U.S. banks.
Worse, it shows that as of mid-2009, 11.2 percent of the commercial real-estate loans at Florida banks were delinquent, compared with 7.5 percent at banks outside Florida. And Florida banks have far less set aside to absorb bad loans.
-- Robert Trigaux, Times Business Columnist