CORUS BANKSHARES INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-6136

CORUS BANKSHARES, INC.
(Exact name of registrant as specified in its charter)

MINNESOTA 41-0823592
(State of incorporation or organization) (I.R.S. Employer Identification No.)

3959 N. LINCOLN AVE., CHICAGO, ILLINOIS 60613-2431
(Address of principal executive offices) (Zip Code)

(773) 832-3088
(Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

As of July 31, 2003, the Registrant had 14,039,044 common shares, $0.05 par
value, outstanding.

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CORUS BANKSHARES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 2003

TABLE OF CONTENTS

PART I. -- FINANCIAL INFORMATION

ITEM 1. Financial Statements ............................................................. 1

ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................................... 11

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk ...................... 31

ITEM 4. Controls and Procedures ......................................................... 31

PART II. -- OTHER INFORMATION

ITEM 1. Legal Proceedings ................................................................ 32

ITEM 2. Changes in Securities and Use of Proceeds ........................................ 32

ITEM 3. Defaults Upon Senior Securities .................................................. 32

ITEM 4. Submission of Matters to a Vote of Security Holders .............................. 32

ITEM 5. Other Information ................................................................ 32

ITEM 6. Exhibits and Reports on Form 8-K ................................................. 33

Signatures .......................................................................... 34

Exhibit 3(ii) - Amended and Restated By-Laws ........................................ 35

Exhibit 15 - Letter re unaudited financial information .............................. 45

Exhibit 31.1 - Certifications Pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002 ........................................... 46

Exhibit 31.2 - Certifications Pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002 ........................................... 47

Exhibit 32 - Certifications Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 ........................................... 48

Exhibit 99 - Independent Accountants' Review Report ................................. 49

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CORUS BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS

See accompanying notes.

1

CORUS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

See accompanying notes.

2

CORUS BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2003
(Unaudited)

See accompanying notes.

CORUS BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2002
(Unaudited)

See accompanying notes.

3

CORUS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(Dollars in thousands)

See accompanying notes.

4

CORUS BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Consolidated Financial Statements

The Consolidated Balance Sheets and Statements of Income, Cash Flows and
Changes in Shareholders' Equity are unaudited. The interim financial
statements reflect all adjustments (consisting only of normal recurring
accruals) that are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in Corus
Bankshares, Inc.'s consolidated financial statements for the three years
ended December 31, 2002 included in Corus' Annual Report on Form 10-K for
the year ended December 31, 2002. The results of operations for the interim
period should not be considered indicative of results to be expected for
the full year.

2. Recent Accounting Pronouncements

In May 2003, Statement of Financial Accounting Standards ("SFAS") No. 150,
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" was issued, establishing standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. This statement requires
that an issuer classify certain financial instruments, which may previously
have been classified as equity, as liabilities. This generally includes
financial instruments which either 1) require mandatory redemption at a
specified time other than upon liquidation or termination of the entity, 2)
include an obligation to either repurchase the issuer's equity shares or is
indexed to such an obligation and which may require settlement in cash or
3) require the issuance of a variable number of the issuer's shares based
on a monetary amount which is generally unrelated to the value of those
shares. The Statement was effective for Corus as of May 31, 2003 and is not
expected to have a material impact on the Company's accounting and
reporting.

In April 2003, SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" was issued, amending and clarifying
financial accounting and reporting for certain derivative instruments. This
statement is generally effective for contracts entered into or modified
after June 30, 2003. The Statement is not expected to have a material
impact on the Company's accounting and reporting for derivatives.

In December 2002, SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure" was issued and provides alternative
methods of transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation. In addition, the
statement amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about
the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. This statement was effective
for Corus beginning with the fiscal period ending December 31, 2002.
Because the Company plans to continue its accounting for stock-based
compensation under APB No. 25, the adoption of SFAS No. 148 is not expected
to have a material impact on results of operations or financial position.
See Note 8 of Notes to Consolidated Financial Statements for required
disclosure.

5

3. Segment Reporting

The following reflects the disclosure requirements set forth by SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
For purposes of this statement, Management has determined that Commercial
Lending, Consumer Lending, Retail Banking, and Corporate Support are the
primary operating segments of the Company.

Commercial Lending derives its revenues from interest and fees on loans
made to businesses. The loan products include, among others, commercial
real estate mortgage term loans, construction loans, mezzanine loans, and
loans to customers in the check cashing industry.

Consumer Lending is composed of home equity, residential mortgage, and
other loans to individual borrowers. Revenues of this segment are from
interest and fees on the loans.

The Retail Banking segment provides general banking services such as
checking, savings, money market, and time deposit accounts as well as a
variety of other services. Revenues for Retail Banking are derived from
credit for funds provided to the other segments, as well as fees related to
banking services.

Corporate Support includes the net effect of support units after revenue
and expense allocations, treasury management, and other corporate
activities. Revenues primarily relate to dividends from the Company's
investment in the common stocks of financial industry companies and the net
effect of transfer pricing related to loan and deposit balances. In
addition, revenues include realized gains/(losses) on equity securities.
Corporate Support also incorporates the difference between the Company's
reported provision for credit losses, which is determined in accordance
with generally accepted accounting principles, and the credit provisions
allocated to the reportable business units.

Business line results are derived from the Company's business unit
profitability reporting system by specifically attributing managed balance
sheet assets, deposits, and other liabilities and their related income or
expense. Funds transfer pricing methodologies are utilized to allocate a
cost for funds used or credit for funds provided to all business line
assets and liabilities. The provision for credit losses recorded by each
operating segment is based on the net charge-offs incurred by each line of
business. Income and expenses directly related to each business line,
including fees, service charges, salaries and benefits, and other direct
expenses are accounted for within each segment's financial results in a
manner similar to the consolidated financial statements. Expenses incurred
by centrally managed operations units that directly support business lines'
operations are charged to the business lines based on standard unit costs
and volume measurements. Capital is allocated to each line of business,
including both on- and off-balance-sheet items, based on its inherent
risks, including credit, operational, and other business risks.
Designations, assignments, and allocations may change from time to time as
management accounting systems are enhanced or product lines change.

6

Following is a summary of significant segment information, as required by
SFAS No. 131:

FOR THE THREE MONTHS ENDED JUNE 30, 2003

FOR THE THREE MONTHS ENDED JUNE 30, 2002

FOR THE SIX MONTHS ENDED JUNE 30, 2003

FOR THE SIX MONTHS ENDED JUNE 30, 2002

(1) Net interest income before provision for loan losses plus noninterest
income.

The profitability of each of Corus' business segments may be affected by
changes in, and the level of, interest rates. The direction and degree of
this impact will vary based on the asset/liability mix of each segment.

7

4. Derivatives

As of January 1, 2001, Corus implemented SFAS No. 133, as amended. This
statement establishes accounting and reporting standards requiring that
every derivative instrument be recorded in the balance sheet as either an
asset or liability measured at its fair value. Special accounting for
qualifying hedges ("hedge accounting") allows a derivative's gains and
losses to be either offset by the change in fair value of the hedged risk
or deferred through recognition in a component of other comprehensive
income. Those derivatives that do not qualify for hedge accounting are
required to be marked to market with the impact of the market adjustment
recorded directly to income.

Corus utilizes interest rate fixed-to-floating swaps (pay fixed/receive
floating and pay floating/receive fixed) and basis swaps to reduce interest
rate risk by improving the balance between rate sensitive assets and
liabilities. While these derivatives provide the desired economic hedge to
interest rate fluctuations, they do not all meet the strict criteria
required to qualify for hedge accounting. All but one of the
fixed-to-floating swaps qualified as fair value hedges and received hedge
accounting treatment. The Company's basis swaps, however, do not meet the
strict criteria required to qualify for hedge accounting.

For the three months ended June 30, 2003 and 2002, Corus recorded net gains
of $1.0 million and $2.0 million, respectively, related to SFAS No. 133.
For both of the six months ended June 30, 2003 and 2002, Corus recorded net
gains of $2.7 million related to SFAS No. 133. The income statement impact
and notional amounts related to both hedge and non-hedge derivatives were
as follows:

DERIVATIVE INCOME/(LOSS)

NOTIONAL AMOUNTS OF DERIVATIVES

(1) These swaps were entered into beginning in April 2003 and qualify for the
"shortcut method," as defined by SFAS No. 133. Corus does not anticipate
any net income statement impact from the associated mark-to-market

8

5. Issuance of Trust Preferred Securities

In June 2003, the Company formed Corus Statutory Trust I ("Trust I") and
Corus Statutory Trust II ("Trust II"), both wholly-owned finance
subsidiaries of the Company, for the sole purpose of issuing and selling
capital securities and using the proceeds to purchase subordinated
debentures issued by the Company. Trust I issued $27.5 million of trust
preferred securities at a floating rate of 3-month LIBOR plus 3.05%,
resetting quarterly. Trust II issued $20.0 million of trust preferred
securities at a floating rate of 3-month LIBOR plus 3.10%, resetting
quarterly. All trust preferred securities mature in June 2033, although the
securities are callable quarterly on or after June 2008, or earlier in the
event of certain changes or amendments to regulatory requirements or
federal tax rules. Corus owns all of the combined $1.5 million of common
securities issued by the two trusts. The sole assets of Trust I and Trust
II are subordinated debentures issued by Corus of $28.4 million and $20.6
million, respectively, both due in June 2033. The subordinated debentures
and the trust preferred securities pay distributions and dividends,
respectively, on a quarterly basis. Corus has the ability to defer interest
payments on the subordinated debentures and distributions on the trust
preferred securities for a period not to exceed 20 consecutive quarters,
however subject to certain restrictions with regard to Corus' ability to
make, among other things, distributions to holders of Corus common stock.
Combined issuance fees totaled $544,000 and are being amortized
straight-line over the 30-year lives of the securities. Finally, Corus has,
through various agreements, essentially fully and unconditionally
guaranteed payment of all amounts due under the trust preferred securities.

6. Other Borrowings

On June 26, 2001, Corus entered into an agreement with a third party to
borrow $70 million, consisting of a term note in the amount of $50 million
and a revolving note in the amount of $20 million, both at an effective
interest rate equal to LIBOR plus 150 basis points, adjusted quarterly.
Corus has extended the maturity date on both loans to June 25, 2006, and
either loan may be prepaid at any time without premium or penalty, except
for certain yield maintenance charges not to exceed 3 months interest.
Minimum principal repayment of the term loan is $1.0 million quarterly
beginning September 30, 2001 and the revolving loan is payable upon
maturity. Interest is payable quarterly. In addition, a fee at an annual
rate of 1/4% of the average unused revolving note commitment is due
quarterly.

Among other restrictions, loan covenants require Corus to maintain
prescribed levels of capital, limit the level of nonperforming loans
relative to capital, and maintain a minimum ratio of the allowance for loan
losses to total loans. The debt is secured by 100% of the common stock of
the subsidiary bank. As of June 30, 2003, management believes that Corus
was in compliance with all loan covenants.

Interest and fees for both notes for the six months ended June 30, 2003
totaled $625,000. At June 30, 2003, the term note and revolving credit line
had outstanding balances of $37.0 million and $3.3 million, respectively.

9

7. Net Income Per Share

Net income per share was calculated as follows:

8. Stock-Based Employee Compensation

Corus utilizes stock options to compensate employees under the, shareholder
approved, 1999 Stock Option Plan ("the Plan"). Under the Plan, options to
purchase Corus' common stock have been granted to employees at prices equal
to the fair market value of the underlying stock on the dates the options
were granted. The options vest 20% per year, over a five-year period, and
expire in 10 years. The Company accounts for the Plan under the recognition
and measurement principles of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees, and related Interpretations"
("APB No. 25"). Since all options granted under the Plan had an exercise
price equal to the market value of the underlying common stock on the date
of grant, the granting of the options had no impact on net income. The
following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation," to stock-based employee
compensation.

10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS SUMMARY

Corus Bankshares, Inc. is a one-bank holding company headquartered in Chicago,
Illinois. In addition to deposit gathering and servicing the check cashing
industry, Corus specializes in making commercial real estate and construction
loans with a concentration, by property type, in residential condominiums,
office buildings, hotels and apartments. With regard to the remainder of its
loan portfolio, Corus is allowing its residential first mortgage and home equity
loan balances to run off.

SIGNIFICANT ACCOUNTING POLICIES

Management has determined that one particular accounting policy requires a high
level of judgment: the assessment of the allowance for loan losses.

The allowance for loan losses is based upon quarterly reviews. These reviews
include an assessment of the loan portfolio and include reviews of both specific
credits and an overall assessment. Specific reviews are performed in accordance
with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," and can
result in a specific reserve for certain impaired loans. For those loans not
specifically reviewed, an assessment is performed, by loan type (i.e.,
commercial, commercial real estate, construction, home equity, residential first
mortgage, etc.) to determine an inherent loss rate. The inherent loss rate is
based primarily on a combination of prior loss experience and delinquency levels
(current vs. historical).

Additional factors are also considered including the level of problem and
potential problem loans, trends in volume and terms of loans, changes in risk
selection and underwriting standards, experience, ability and depth of lending
management, and economic and industry conditions.

The assessment as to the adequacy of the allowance for loan losses is grounded
by the assumption that historical experience is a good predictor of future
performance. This assumption, while supported by guidance provided by the
Financial Accounting Standards Board, the Office of the Comptroller of the
Currency, and the Securities & Exchange Commission, may not ultimately be
correct. In that event, estimates of inherent losses may differ from actual
results.

OPERATING RESULTS

For the three months ended June 30, 2003, net income was $12.7 million, or $0.89
per share on a diluted basis, compared to net income of $13.8 million, or $0.96
per share on a diluted basis, in 2002. For the six months ended June 30, 2003,
net income was $25.2 million, or $1.75 per share on a diluted basis, versus
$24.3 million, or $1.70 per share on a diluted basis, in 2002.

Earnings for the second quarter of 2003 represented annualized returns of 10.3%
on equity (ROE) and 1.9% on assets (ROA) compared to 11.8% and 2.1% for the same
period in 2002. Earnings for the first six months of 2003 represented annualized
returns of 10.3% on equity (ROE) and 1.9% on assets (ROA) compared to 10.6% and
1.8% for the same period in 2002.

11

AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN

Tax equivalent adjustments are based on a Federal income tax rate of 35%.

(1) Liquidity management assets include federal funds sold and securities held
at the subsidiary bank. Interest income on securities includes a tax
equivalent adjustment of $17,000 and $18,000 for 2003 and 2002,
respectively.

(2) Dividends on the common stock portfolio include a tax equivalent adjustment
of $964,000 and $884,000 for 2003 and 2002, respectively.

(3) Interest income on tax-advantaged loans includes a tax equivalent
adjustment of $46,000 and $64,000 for 2003 and 2002, respectively.
Unremitted interest on nonaccrual loans is not included in the amounts.
Includes net interest income derived from interest rate swap contracts.

13

Net Interest Income

Net interest income, which is the difference between interest income and fees on
earning assets and interest expense on deposits and borrowings, is the major
source of earnings for Corus. The related net interest margin represents net
interest income as a percentage of the average earning assets during the period.

For the three and six months ended June 30, 2003, Corus' net interest margin
increased by 5 and 37 basis points to 4.37% and 4.34%, respectively, compared to
the prior year. These increases were achieved in spite of the fact that interest
rates, particularly short-term interest rates which most affect Corus, have been
continually falling during the past several years. All else being equal, lower
interest rates reduce Corus' net interest margins due to Corus' "asset
sensitivity" (that is, more floating rate assets than floating rate
liabilities). Corus was able to increase its net interest margin, versus
comparable 2002 periods, due to strong loan growth which allowed the bank to
redeploy a substantial amount of assets previously held in lower yielding
investments into much higher yielding CRE loans. Corus has now redeployed all of
the previously "excess" investments and anticipates that all future net loan
growth will be funded via additional Brokered CDs (see Funding/Liquidity
section). During the three and six months ended June 30, 2003, loans as a
percentage of total earning assets increased to 71% and 70%, respectively,
compared to 64% and 62%, respectively, in the prior year. Corus anticipates that
this ratio will stabilize in the low 70% range.

Another factor affecting yields is the impact of loan fees recognized during the
period. As mentioned previously, loan fee income is a normal part of our
business. The fees typically relate to points paid at closing where the
recognition of income is deferred and amortized over the term of the loan.
Income recognition associated with these fees is relatively predictable and
tends to increase as the overall level of loans increase. Other types of fees,
on the other hand, such as those associated with the prepayment of loans or a
contingent fee arrangement are less predictable and can result in earnings
spikes since recognition of the income is not deferred, but rather recorded when
received. Importantly, these fees are as much a part of Corus' business as
points, they are simply accounted for differently due to their unpredictable
nature. For the three and six months ended June 30, 2003, loan fees totaled $6.5
million and $13.6 million, respectively, compared to loan fees of $7.1 million
and $10.6 million, respectively, for the three and six months ended June 30,
2002. This growth in fees for the first half of 2003, over 2002, is driven by
our continued growth in total loans, especially commercial real estate loans
which generate virtually all of the loan fees.

Noninterest Income

For the three and six months ended June 30, 2003, noninterest income decreased
by $1.0 million and $2.6 million, respectively compared to the prior year. The
decreases resulted from lower securities gains, as described below. In fact,
excluding the impact of security gains, noninterest income for both the quarter
and year-to-date would be essentially flat compared to the prior year.

Securities Gains/(Losses), net
For the three and six months ended June 30, 2003, Corus recorded net security
gains of $766,000 and $665,000, respectively, compared to $1.8 million and $3.3
million of net gains in the same periods of 2002. The following details the net
securities gains/(losses) by source:

14

Sales of common stocks at Bank Holding Company

Sales of common stocks at the Bank Holding Company relate to the common stock
portfolio of various financial industry companies held at the Bank Holding
Company (see Common Stock Portfolio section for additional details). In the
first quarter of 2003, Corus recognized a $7.3 million gain on security sales
from the portfolio. Corus will periodically sell all or part of certain
positions in order to take advantage of market opportunities as they arise.

Charge for "other than temporary" impairment

In the first quarter of 2003, Corus recorded a charge of $9.0 million related to
"other than temporary" declines in value of certain common stocks held at the
Bank Holding Company. It is important to point out that this charge was not as a
result of the Company selling the associated stocks, but rather an accounting
entry with no cash flow or tax implications. This charge was recorded in
accordance with Statement of Financial Accounting Standards No. 115 "Accounting
for Certain Investments in Debt and Equity Securities" ("FAS 115") and as
further defined by the Securities and Exchange Commission Staff Accounting
Bulletin No. 59 ("SAB 59").

As background, accounting rules require that investments be categorized as
trading, held-to-maturity ("HTM"), or available-for-sale ("AFS"). Trading
securities are those securities that are bought and held principally for the
purpose of selling them in the near term. HTM securities are those investments
which the company has the "positive intent and ability to hold" to maturity.
Finally, AFS securities are those investments not classified as either trading
or HTM. The common stocks held at the Bank Holding Company are classified and
accounted for as AFS securities.

The significance of how an investment is classified is reflected in how
unrealized gains/(losses) are treated in the accounting records and thus in the
company's financial statements. For trading securities, unrealized
gains/(losses) are recorded directly in the income statement each period. This
reflects the assumed short-term nature of these investments and the idea that
these securities are generally purchased with the objective of generating
profits on short-term differences in price. On the other hand, for HTM
securities, unrealized gains/(losses) are generally not recorded at all under
the assumption that any short-term fluctuations in value will ultimately reverse
by maturity. The accounting for AFS securities is somewhat of a middle ground
between trading and HTM. For AFS securities, changes in market value are
recorded each period on the balance sheet, on an after-tax basis directly in
equity as an item referred to as Other Comprehensive Income. These changes in
market value are not reflected in the income statement.

An exception to the above guidelines arises when unrealized losses are
determined to be "other than temporary" ("OTT"). If an investment is determined
to have experienced an OTT decline in value, the loss must then be recognized in
the income statement regardless of how the investment is categorized.
Indications of OTT declines in value include prolonged periods of consistent
unrealized losses or deterioration in the financial condition or near-term
prospects of the issuer. Corus' general practice for marketable equity
securities is to recognize impairment losses on individual securities when the
security has been in a loss position at the close of each trading day during six
(6) consecutive months as of any quarter end. Lastly, Corus evaluates its
investments for OTT declines in value on a lot-by-lot basis, meaning that if
there are multiple purchases of a certain security, each purchase is evaluated
individually.

With all the preceding being said, it is important to note that while the
accounting rules require that we report short-term stock price declines as
"other than temporary" losses in the income statement, the reality is stock
prices - for even the finest and best-managed companies - rise and fall,
sometimes over very extended periods of time (such "extended" periods of times
can easily be multiples of a six month timeframe). The fact that a company's
shares fall in value for a period as short as six months is neither overly
concerning to us nor any reasonable indicator of how the stock may fare in the
future. This is profoundly true if the overall stock market has been declining.
Conversely, if a stock has been falling in the face of a generally rising
market, especially if this has been occurring over a protracted period of time,
this poor relative performance may well indicate a genuine problem with the
company and its prospects. Regardless, such a fundamental/economic approach is
not the way the accounting rules work.

Lastly, while we are required to report security losses from these "other than
temporary" declines in value, we are not allowed to report security gains when
the securities recover in value. Case in point, as of June 30, 2003, $4.8
million of the previously charged-off $9.0 million, has been recovered as the
prices of the associated common stocks have risen. Unfortunately, while Corus
was required to record the $9.0 million charge as a reduction to income, the
recovery does not receive the same accounting treatment, but must instead be
recorded as an unrealized gain (as Other Comprehensive

15

Income in Shareholders' Equity) and not recognized in income until the security
is ultimately sold. Unfortunately, this is another accounting 'disconnect' that
companies, and their investors, must learn to live with.

Mark-to-market adjustments on non-hedge derivatives

Finally, for the three and six months ended June 30, 2003, the Bank recorded
gains of $1.0 million and $2.6 million from what we refer to as mark-to-market
adjustments on non-hedge derivatives. This represents declines of approximately
$1.0 million for the quarter and $151,000 year-to-date, compared to the prior
year. Due to their unusual nature, the basis for these gains requires additional
explanation.

Like many banks, Corus utilizes derivatives to hedge its interest rate risk.
This is accomplished primarily via interest rate swaps (to effectively convert
fixed-rate loans to floating rate or vice versa) and interest rate basis swaps
(to effectively convert LIBOR-based floating rate loans to Treasury-based
floating-rate loans).

As of January 1, 2001, virtually all companies were required to adopt new
derivative accounting rules (known as SFAS No. 133). These rules require that
all derivative instruments be included on the balance sheet at market value. In
addition, the rules provide that if a derivative is "paired-off" against
specific assets and/or liabilities and also passes an additional succession of
tests, then the income statement impact of any periodic changes in the value of
the derivative effectively does not need to be reflected on the company's income
statement. Such derivatives are afforded what is termed "hedge accounting"
treatment. The rules are enormously complex, but suffice it to say that even
though the basis swaps we have entered into are designed to hedge our interest
rate risk - that is, regardless of the accounting treatment the basis swaps are
economic hedges - they do not qualify for hedge accounting treatment and thus
changes in the market value of these instruments must be reflected on our income
statement as security gains/(losses). Our interest rate swaps, on the other
hand, generally do qualify for hedge accounting.

Since Corus' basis swaps do not qualify for hedge accounting treatment, periodic
changes in their market value will appear as security gains/(losses) on the
Company's income statement. Since this income does not stem from having actually
sold the instruments, it is subject to reversal based on future changes in the
market values. In fact, if Corus holds basis swaps to maturity, which we
generally do, the value of the instruments will ultimately return to $0. What
this means is that, provided Corus holds the basis swaps to maturity, the
cumulative gains or losses recognized at any point in time are temporary as they
will ultimately reverse, such that the cumulative gains and losses over the life
of a basis swap will sum to zero.

As of June 30, 2003, Corus has recorded net cumulative gains of $7.7 million
related to mark-to-market adjustments on non-hedge derivatives. While the
portfolio of basis swaps vary both in notional amounts and maturities, they will
all have matured by 2008. This means that, absent Corus entering into any
additional basis swaps between now and 2008 (although it is likely the Company
will put on new basis swaps before then), the previously recognized $7.7 million
of security gains will have to "reverse" in the form of $7.7 million of security
losses between now and 2008, provided the swaps are held to maturity. While
management can predict the eventual reversal of these gains, we cannot predict
in what periods or in what periodic amounts those reversals will occur.

Noninterest Expense

For the three and six months ended June 30, 2003, noninterest expense increased
by $1.8 million, and $1.2 million, respectively, compared to the prior year.
These increases are mainly due to increases in salaries and benefits driven by
the impact of the mark-to-market adjustments associated with the Commercial Loan
Officer Commission Program ("the CLO Program"), discussed in further detail
below. Absent the increases in the mark-to-market adjustments associated with
the CLO Program, both salaries and benefits and noninterest expenses in total
were essentially flat.

The CLO Program is a compensation plan whereby commissions may be earned each
year with a portion paid currently and the remainder deferred for up to 10 years
(note that both the paid and deferred amounts are expensed in that year). The
deferred portion can be invested, at each participant's option, in among other
instruments, Corus common stock. The number of shares deferred is determined by
dividing the commission amount by an average stock price, as defined in the plan
document. To the extent that commissions are deferred in Corus stock, the
Company repurchases an equal number of shares in the open market. In this way,
the Company has effectively "hedged" itself against changes in the value of the

16

stock between the deferral date and the ultimate delivery date. Ideally, this
should be the end of the story until the shares are ultimately released at the
end of the deferral period.

However, the deferred amounts are subject to loss under certain circumstances.
As a result, actual amounts due to the employees are not known until the end of
the deferral period and as such the CLO Program must be accounted for under what
is known as "variable plan accounting" rules. Under these rules, the Company is
required to record an adjustment to income based on changes in the market value
of the deferred stock. Therefore even though the Company has clearly purchased,
and is essentially holding in "inventory", the shares required to satisfy its
obligation to the employees - essentially a perfect hedge - changes in the
liability to the employees, as defined by changes in the market value of the
deferred stock, must be recorded as either expense or income. In other words, if
the price of Corus stock rises, the Company must record additional compensation
expense and if the price falls, a reduction to compensation expense is recorded.
We refer to this as the CLO Program mark-to-market adjustment. It is important
to note this charge carries neither tax nor cash flow implications.

During the second quarter of 2003, the market price of Corus stock increased and
as a result, additional compensation expense of $1.3 million was recorded. By
comparison, during the second quarter of 2002, Corus' stock price declined
slightly resulting in a reduction to expense of $200,000, a fluctuation of $1.5
million. On a year-to-date basis, the CLO Program mark-to-market adjustment
resulted in additional expense of $726,000 in 2003, and $64,000 in 2002.

FINANCIAL CONDITION

Earning Assets

The following table details the composition of Corus' earning assets:

Loans

The following table details the composition of Corus' loan portfolio:

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Commercial Real Estate Lending

Commercial real estate loans are comprised of non-construction, construction,
and mezzanine loans. The non-construction loans are of relatively short
duration, rarely more than five years in length, and usually shorter. Some would
call these "bridge" loans or "mini-perms," but the meaning of these labels is
not standardized in the lending industry. These loans are fully funded, or
nearly so, when the loan closes. Construction loans typically have maturities of
24 to 36 months and are funded throughout the term as construction progresses.
Mezzanine loans are essentially second mortgage loans on commercial real estate
projects, almost always subordinate to a Corus construction or non-construction
loan (as opposed to a third party's). Interest rates charged for mezzanine loans
are considerably higher than those charged for typical commercial real estate
loans, but they also carry additional risk.

The table above shows commercial real estate loans of $1.9 billion, an increase
of $322.3 million or 20.8% compared to December 31, 2002. This table, however,
only reflects actual balances outstanding, which excludes commitments. While not
yet funded, commitments, which consist of unfunded loan amounts, commitment
letters and letters of credit, are also a significant part of the loan
portfolio. Including commitments, the commercial loan portfolio, as shown below
totals $3.1 billion.

The table below shows a reconciliation of commercial real estate loans
outstanding to the total including commitments.

COMMERCIAL REAL ESTATE LOANS OUTSTANDING INCLUDING COMMITMENTS

Corus' commitments are primarily comprised of unfunded commitments under
commercial real estate construction loans. As highlighted in the table on the
following page, the majority of the commitments relate to condominiums, rental
apartments, and office building loans.

While committed amounts are useful for period-to-period comparisons, caution
should be used in attempting to use commitments as a basis for predicting future
outstanding balances.

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The following tables break out commercial real estate loans by 1) property type,
2) location, 3) size and 4) a cross-section of location and property type.

COMMERCIAL REAL ESTATE LOANS - BY PROPERTY TYPE

(1) Includes both funded and unfunded commitments, letters of credit, and
outstanding commitment letters.

COMMERCIAL REAL ESTATE LOANS - BY MAJOR METROPOLITAN AREA

(1) Includes both funded and unfunded commitments, letters of credit, and
outstanding commitment letters.

(2) Includes northern Virginia and Maryland loans.

(3) No other metropolitan area exceeds three percent of the total.

19

COMMERCIAL REAL ESTATE LOANS - BY TOTAL COMMITMENT

(1) Includes both funded and unfunded commitments, letters of credit, and
outstanding commitment letters.

COMMERCIAL REAL ESTATE LOAN COMMITMENTS - BY MAJOR METROPOLITAN AREA AND
PROPERTY TYPE(1)

(1) Includes both funded and unfunded commitments, letters of credit, and
outstanding commitment letters.

(2) Includes warehouse/light industrial, nursing homes, vacant land, retail,
and other.

(3) Includes northern Virginia and Maryland loans.

(4) No other metropolitan area exceeds three percent of the total.

20

The following table shows the locations of new loans originated during the first
six months of 2003 and 2002:

COMMERCIAL REAL ESTATE LOAN ORIGINATIONS - BY LOCATION

(1) Includes northern Virginia and Maryland loans.

(2) While this loan has a face amount of $86 million, the maximum allowable
outstanding at any given time is $70 million. Of that $70 million maximum,
the Bank holds $63.9 million and $6.1 million has been participated to the
Bank Holding Company.

Loan Participations

While Corus generally prefers to initiate and fund its own loans without
participations either bought or sold, there are limited instances where Corus
has either purchased or sold interests in certain loans. The following table
details various loan participations in which Corus has purchased an interest:

The commercial real estate markets have been good for many years and Corus has
had particularly impressive results. We have actually had, in total, net
recoveries on this portfolio over the past 10 years. While our commercial real
estate portfolio continues to show minimal delinquencies and virtually no
losses, we recognize this sort of performance cannot persist indefinitely.

Other Lending

Commercial loans are primarily loans to Corus' customers in the check cashing
industry. Balances fluctuate based on seasonal cash requirements and are
generally secured by the equity of the check cashing operation.

With regard to the remaining portfolio, residential first mortgage and home
equity loan balances continue to decline as the Bank implements plans to allow
these portfolios to "run-off." Minimal new originations are expected.

21

Common Stocks

At June 30, 2003, Corus had investments in the common stocks of 30 financial
industry companies totaling $160.0 million, including net unrealized gains of
$67.1 million. These investments are included in the available-for-sale
classification. The following is a list of Corus' holdings, by market value, as
of June 30, 2003:

During the three and six months ended June 30, 2003, Corus received dividends on
the stock portfolio of $1.3 million and $2.6 million, respectively, compared to
$1.2 million and $2.3 million during the same periods of 2002. See noninterest
income section for discussion of treatment of realized and unrealized gains and
losses.

22

Nonperforming Assets

Nonperforming loans are nonaccrual loans, troubled debt restructurings, and 90
days or more past due loans still accruing interest. The breakdown by loan
category is shown below:

Total nonperforming assets increased compared to December 2002 by $16.0 million
to $23.3 million. The increase is primarily due to an increase in Troubled Debt
Restructurings ("TDR's"). A TDR is a loan that was restructured in such a way as
to provide the borrower with some form of concession relative to market absent a
concession from the borrower that is deemed to be approximately proportionate to
the lender's concession. Typically, the lender's concession is in the form of a
lower interest rate, an extended term or forgiven principal or interest. A
borrower's concession often comes in the form of additional loan paydowns and/or
additional collateral.

23

A TDR oftentimes results from situations where the borrower is experiencing
financial problems and expects to have difficulty complying with the original
terms of the loan. However, once the loan is restructured in a TDR, the
prospects of collecting all principal and interest on that loan generally
improve (as the borrower's loan rate and, thus, loan payments are reduced),
albeit at somewhat less favorable terms to the lender. However, the point to
remember is that once a loan becomes a TDR, it generally becomes a safer loan.

With that said, Corus is required to report the balance of any TDR's under the
nonperforming asset category which would seem to imply, in some way, that these
loans are not performing. However the two loans - one is an office loan and the
other a residential development loan - that constitute the $11.2 million
construction TDR balance are not only both current in terms of required
payments, but also are considered to be well collateralized. Management will
continue to monitor these loans closely.

In addition to the increase in TDR's, a $7.1 million loan was placed on
nonaccrual in May 2003. This loan, which is for a hotel located in Oregon, is
currently in foreclosure proceedings. Management believes the loan is well
secured and no loss is expected. Finally, this loan was previously listed as a
potential problem loan.

Potential Problem Loans

In addition to those loans disclosed under the preceding Nonperforming Assets
section, management identified, through their problem loan identification
system, certain other loans in the portfolio where known information about
possible credit problems of borrowers causes management to have serious doubts
as to the ability of such borrowers to comply with the present loan repayment
terms and which may result in future disclosure of such loans as nonaccrual,
past due, or troubled debt restructurings. As of June 30, 2003, the principal
amount of these loans was $22.8 million, driven primarily by one hotel loan
totaling $17.6 million. This level represents a decline from the $32.8 million
reported at March 31, 2003. The decline resulted from the impact of two loans,
one of which became nonaccrual and the other became over 90 days past due.

24

Allowance for Loan Losses

The allowance for loan losses is based on management's analysis of individual
loans, prior and current loss experience, delinquency levels, overall growth in
the portfolio, current economic conditions, and other factors. Management
believes that the level of the allowance for loan losses was adequate at June
30, 2003. A reconciliation of the activity in the allowance for loan losses is
as follows:

During 2002 Corus experienced its first losses in nearly twenty years related to
our business of servicing the check cashing industry with charge-offs of $3.2
million. Furthermore, in our 2002 Annual Report we estimated potential
additional charge-offs of $1.5 million. During the first quarter of 2003, Corus
charged off the previously estimated $1.5 million, but has recovered
year-to-date approximately $394,000 of previously charged off amounts. We are
continuing to work with these customers and are hopeful that additional
recoveries can be made. Excluding the aforementioned amounts, the Company had
net recoveries, year-to-date, of $334,000.

`
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Deposits

The following table details the composition of deposit products by type:

Funding/Liquidity

Corus' policy is to ensure the availability of sufficient funds to accommodate
the needs of borrowers and depositors at all times. This objective is achieved
primarily through the maintenance of liquid assets. Liquid assets are defined as
federal funds sold and marketable securities that can be sold quickly without a
material loss of principal.

The liquidity to fund loan commitments will first come from a combination of
available liquidity and normal paydowns/payoffs of the existing loan portfolio
and then, to the extent necessary, from additional issuance of brokered
certificates of deposit ("BRCD"). A portion of Corus' current loan funding comes
from BRCD and to the extent that total loans outstanding grow in the future,
management expects to fund much, if not all, of that growth with BRCD. In order
to avoid the liquidity risk of an overly significant portion maturing during any
given year, Corus works to have the BRCD maturities staggered, ranging from 1 to
7 years. To further mitigate liquidity risk, Corus' liquidity policy requires
that the Bank hold more liquid assets as the level of BRCD increases. As of June
30, 2003, BRCD totaled $339 million. The Bank has established a BRCD limit such
that BRCD will not exceed 41% of total deposits (i.e., retail deposits and
BRCD). Based on current deposit levels, this implies a maximum amount of BRCD of
$1.3 billion.

Issuance of Trust Preferred Securities

In June 2003, Corus formed two wholly owned finance subsidiaries of the Company
for the sole purpose of issuing what are commonly referred to as Trust Preferred
securities. Trust Preferred securities are a very common form of raising
tax-advantaged capital, especially for bank holding companies. While the legal
structure of Trust Preferred securities is unfortunately quite complicated, both
the essence of these securities, and the basis for Corus' decision to utilize
them, is mercifully straightforward. Trust preferred securities are essentially
long-term debt (30-year terms) with some unique features (discussed below).

The trusts sold $47.5 million of Trust Preferred securities via a private
placement, the proceeds of which were "lent" to the Company and secured by
subordinated debentures (subordinate to all other debt of the Company's but
senior to common stock) issued by the Company to the trusts. The funds raised by
the issuance of the Trust Preferred securities were, in turn, infused into the
Bank as additional capital thus increasing the Bank's legal lending limit by
just over $7 million. The increased legal lending limit, which will allow Corus
to pursue larger loans, drove Corus' decision to pursue this financing strategy.

As cited above, Trust Preferred securities have several unique attributes. One
of the most notable, and the key to the widespread issuance of Trust Preferred
securities, is that the Federal Reserve allows bank holding companies to
include,

26

up to certain limits, Trust Preferred securities in the regulatory calculation
of capital (what is known as "Tier 1" capital) while providing the issuer with a
tax deductible funding vehicle. In addition, Trust Preferred securities: a) have
no financial covenants (except in the event that the Company ever opts to defer
payments, as described below), b) are not "puttable" back to Corus, and c)
include an option for Corus to call them at par beginning on June 2008 and
quarterly thereafter (or earlier in the event of certain changes or amendments
to regulatory requirements or federal tax rules).

The Trust Preferred securities also grant Corus the right to defer interest
payments on the subordinated debentures, and distributions on the Trust
Preferred securities, for a period not to exceed 20 consecutive quarters without
the subordinated debentures or Trust Preferred securities going into default
(this provision is subject however to certain restrictions with regard to Corus'
ability to make, among other things, dividends, distributions, etc. to holders
of Corus common stock). It should be noted that this provision was not
negotiated by Corus, but rather is a standard and required feature of Trust
Preferred securities in order for the Federal Reserve to allow such instruments
to be counted in capital at the bank holding company. While this deferral option
is present, Corus does not anticipate that it would ever be utilized. See Note 5
of Notes to Consolidated Financial Statements for additional information.

Capital

Regulatory capital and the associated ratios for Corus and its subsidiary bank
as of June 30, 2003 are presented below:

(1) Tier 1 capital, which is shareholders' equity less goodwill, disallowed
portion of deferred income taxes and unrealized gains on
available-for-sale securities; computed as a ratio to quarterly average
assets less goodwill, disallowed portion of deferred income taxes, and
unrealized gains on available-for-sale securities.

(2) Tier 1 capital; computed as a ratio to risk-adjusted assets.

(3) Tier 1 capital plus qualifying loan loss allowance and SFAS No. 115
gain; computed as a ratio to risk-adjusted assets.

Commercial Real Estate "Risk" & Capital Disclosure

The following disclosure is not computed in accordance with Generally Accepted
Accounting Principles ("GAAP") and is considered a non-GAAP disclosure.
Management believes that this presentation, while not in accordance with GAAP,
provides useful insight into how management analyzes and quantifies risk and
determines the appropriate level of capital.

Management has made a concerted effort to distill the numerous objective, as
well as subjective, risks inherent in the commercial real estate ("CRE") loans
we originate into a rigorous system to analyze and quantify risk. At its core,
this system takes the form of management and loan officers estimating a loan's
Probability of Default ("POD") and its Loss Given Default ("LGD") if a serious
recession should occur. This point bears repeating - the POD and LGD estimates
are not based on today's market conditions, instead they are arrived at by
"stressing" all major assumptions regarding the cash flow and/or values of the
underlying real estate down to levels that could manifest themselves during a
"serious" recession. As a proxy, we use, among other things, the extreme
declines in CRE property values witnessed during the late 1980's and early
1990's. Typically, we assume that office and hotel projects will be worth only
50% to 60% of their cost (not appraised value) and we typically assume that
rental and for-sale housing will be worth 60% to 80% of cost. Keep in mind that
while these are the typical discounts, each loan is analyzed individually and
may have discounts larger or smaller than mentioned above. Lastly, it is
important to realize that we could well have nonperforming loans and/or
charge-offs in economic conditions other than what might be characterized as
"serious." While Corus has attempted to be conservative in

27

its assessment of potential defaults and losses, it is possible that actual
defaults and/or losses may be greater, perhaps materially, than estimated.

Following is a table that summarizes the total size of our CRE loan portfolio,
the weighted average POD and LGD percentages and the resulting implied CRE loans
that could default and losses that could occur.

(1) The POD and LGD estimates are not based on today's market conditions,
instead they are arrived at by "stressing" all major assumptions
regarding the cash flow and/or values of the underlying real estate
down to levels S that could manifest themselves during a "serious"
recession.

(2) The assumed average CRE loan interest rate was the rate at the time of
the analysis period and does not attempt to project future interest
rates.

Management believes that the declines in the POD and LGD factors from June 30,
2002 to June 30, 2003 reflect, in aggregate, a safer portfolio.

The above figures are a critical piece of the output from the Bank's internal
"risk" identification system, however, the system would be incomplete if these
risks did not assist in calculating an appropriate level of risk-adjusted
capital for the Bank to maintain, but they do. Broadly speaking, the capital the
Bank allocates to CRE loans can be split into three interrelated, but distinct,
categories.

The first, and largest component, is that for the Bank to receive the highest
regulatory capital rating, known as well-capitalized, $246 million of capital
must be kept against our $1.9 billion of CRE loans on the balance sheet and the

28

$1.2 billion of CRE related commitments (comprised of unfunded construction
loans and outstanding commitment letters) as of June 30, 2003. The
well-capitalized designation is very important in numerous respects; among other
things, being below well-capitalized could potentially increase the Bank's FDIC
premiums and adversely affect its ability to issue brokered certificates of
deposit or pay dividends to the Bank Holding Company.

The second component is driven off of the POD and LGD factors. As shown above,
total potential charge-offs under a serious recession, based on June 30, 2003
balances, are calculated at $73 million. Assuming certain IRS guidelines are
followed, charge-offs are fully tax-deductible. Therefore, the potential $73
million of charge-offs would translate into an after-tax decrease in equity of
$48 million.

The third, and last, component is a "cushion" over and above the regulatory
well-capitalized minimums - this cushion was approximately $48 million (only
coincidentally equal to the second component) as of June 30, 2003.

These three components of capital allocated to CRE loans totaled $342 million as
of June 30, 2003. Lastly, the Bank has various non-CRE loans, commitments, and
other items that require additional capital of $33 million, thus yielding a
grand total capital goal of $375 million. The Bank had actual regulatory capital
(Bank equity less goodwill plus a portion of the allowance for loan losses) of
$480 million at June 30, 2003, or $105 million in excess of our capital goal.

29

FORWARD-LOOKING STATEMENTS

This filing contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by, among other things, the use of
forward-looking terms such as "may," "intends," "expects," "anticipates,"
"estimates," "projects," "targets," "forecasts" "seeks," or "attempts" or the
negative of such terms or other variations on such terms or comparable
terminology. By their nature, these statements are subject to numerous
uncertainties that could cause actual results to differ materially from those in
the statements. Important factors that might cause Corus' actual results to
differ materially include, but are not limited to, the following:

o the general state of the economy and, together with all
aspects of Corus' business that are affected by changes in the
economy, the impact that changing rates have on Corus' net
interest margin;

o Corus' ability to increase the commercial real estate loan
portfolio;

o Corus' ability to access cost-effective funding to fund
marginal loan growth;

o changes in management's estimate of the adequacy of the
allowance for loan losses;

o changes in the overall mix of Corus' loan and deposit
products;

o the impact of competitors' pricing initiatives on loan and
deposit products; and

o the extent of defaults and losses given default, and the
resulting lost interest income from such defaults.

Corus undertakes no obligation to revise or update these forward-looking
statements to reflect events or circumstances after the date of this filing.

30

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Management

Corus' operations are subject to risk resulting from interest rate fluctuations
to the extent that there is a difference between the amount of interest-earning
assets and the amount of interest-bearing liabilities that are
prepaid/withdrawn, mature, or reprice in specified periods. The principal
objective of Corus' asset/liability management activities is to provide maximum
levels of net interest income while maintaining acceptable levels of interest
rate and liquidity risk and facilitating funding requirements. Corus utilizes an
interest rate sensitivity model as the primary quantitative tool in measuring
the amount of interest rate risk that is present at the end of each quarter. The
model uses income simulation to quantify the effects of various interest rate
scenarios on the projected net interest income over a five-year period. Factored
into the modeling is the use of derivative financial instruments, which may
include basis swaps, interest rate swaps, floors and options. The indices of
these derivatives correlate to on-balance sheet instruments and modify net
interest sensitivity to levels deemed to be appropriate based on the current
economic outlook.

Interest rate sensitivity was as follows:

(1) These "shocks" represent hypothetical instantaneous and sustained
changes from current rates.

Corus' projected one-year sensitivity to interest rates has not changed
significantly since December 31, 2002. Note that given the extraordinarily low
absolute level of market interest rates, caution should be used in attempting to
extrapolate these results beyond the range shown above.

Corus is also exposed to price risk with its common stock portfolio in financial
industry companies valued at $160.0 million as of June 30, 2003, including net
unrealized gains of $67.1 million. This price risk would impact the net income
of Corus, in the form of securities losses, should unrealized losses on
individual securities be determined to be "other than temporary." This price
risk would also affect any gains or losses that may be realized on the sale of
certain equity securities in the future.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of
the Company's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of June 30, 2003. Based on and
as of the time of such evaluation, the Company's management, including the Chief
Executive Officer and Chief Financial Officer, concluded that the Company's
disclosure controls and procedures were effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiary) required to be included in the Company's periodic filing with the
Securities and Exchange Commission.

31

PART II. OTHER INFORMATION

TEM 1: LEGAL PROCEEDINGS.

This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS.

This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a) The Annual Meeting of Shareholders was held on April 10, 2003.

(c) At the Annual Meeting of Shareholders the following matter was
submitted to a vote of the shareholders:

(1) The election of six directors to the Board of Directors to serve until
the next annual meeting of shareholders or until their successors are
elected and take office:

(2) The ratification of the appointment of Ernst & Young LLP as Corus'
independent accountants for the 2003 fiscal year:

(3) The proposal to amend Corus' Articles of Incorporation:

ITEM 5: OTHER INFORMATION.

None.

32

PART II - OTHER INFORMATION

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

3(i) Amended and Restated Articles of Incorporation are incorporated herein
by reference to Exhibit 3(i) to the Form 10-Q filing dated May 8, 2003.

3(ii) Amended and Restated By-Laws

15 Letter re unaudited interim financial information

31.1 Certification of CEO pursuant to Section 302(a) of the Sarbanes-Oxley
Act of 2002

31.2 Certification of CFO pursuant to Section 302(a) of the Sarbanes-Oxley
Act of 2002

32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99 Independent Accountants' Review Report

(b) Reports on Form 8-K.

A Form 8-K was filed on April 16, 2003 regarding publicly released
information on the Company's financial condition and results of
operations for the quarter ended March 31, 2003.

33

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

CORUS BANKSHARES, INC.
(Registrant)

August 8, 2003 By: /s/ Michael E. Dulberg
-------------------------------------
Michael E. Dulberg
First Vice President and
Chief Accounting Officer

(Principal Accounting Officer and
duly authorized Officer of Registrant)

34