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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number 0-6136
CORUS BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0823592
(State of incorporation of organization) (I.R.S. Employer Identification No.)
3959 N. Lincoln Ave., Chicago, Illinois 60613-2431
(Address of principal executive offices) (Zip Code)
(773) 388-3088
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
- --------------------------------------- ------------------------------------
Common stock, par value $0.05 per share NASDAQ
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
Documents Incorporated By Reference
Parts I and II of this Form 10-K incorporate by reference certain information
from the Registrant's 1997 Annual Report to Shareholders. Part III of this Form
10-K incorporates by reference certain information from the Registrant's
definitive Proxy Statement dated March 17, 1998, for its Annual Meeting of
Shareholders to be held on May 20, 1998.
On February 28, 1998, the Registrant had 14,576,142 common shares outstanding.
Of these, 7,290,003 common shares having an aggregate market value (based on
the closing price for these shares as reported in a summary of national market
issues in The Wall Street Journal for stocks listed on NASDAQ on February 28,
1998) of approximately $320.8 million, were owned by shareholders other than
directors and executive officers of the Registrant and any other person known
by the Registrant as of the date hereof to beneficially own five percent or
more of Registrant's common shares.
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PART I.
ITEM 1. BUSINESS
CORUS BANKSHARES, Inc., incorporated in Minnesota in 1958, is a bank holding
company registered under the Bank Holding Company Act of 1956. CORUS provides
consumer and corporate banking products and services through its wholly-owned
banking subsidiary, CORUS BANK, N.A.
The bank has twelve branches in the Chicago metropolitan area and offers
general banking services such as checking, savings, money market and time
deposit accounts; commercial, mortgage, home equity, student and personal
loans; trust services; safe deposit boxes and a variety of additional services.
The bank also provides clearing, depository and credit services to more than
400 currency exchanges in the Chicago area.
CORUS owns an operations subsidiary, Bancorp Operations Company, that comprises
an insignificant portion of CORUS' total assets and net income. Bancorp
Operations Company provides item processing, bookkeeping and other ancillary
bank support services to CORUS' bank subsidiary.
COMPETITION
All of CORUS' principal business activities are highly competitive. CORUS
competes actively with other financial services providers offering a wide array
of financial products and services. The competitors include other banks,
savings and loan associations, credit unions, brokerage firms, finance
companies, insurance companies, mutual funds and mortgage bankers. Competition
is generally in the form of interest rates and points charged on loans,
interest rates paid on deposits, service charges, banking hours, fiduciary
services and other service-related products.
EMPLOYEES
At December 31, 1997, CORUS employed a total of 689 full-time equivalent
persons, consisting of 135 executives, management and supervisory personnel and
554 clerical and secretarial employees.
SUPERVISION AND REGULATION
General
CORUS is a bank holding company within the meaning of the Bank Holding Company
Act of 1956, as amended (the Act), and is registered as such with the Board of
Governors of the Federal Reserve System (the Federal Reserve Board). The Act
requires every bank holding company to obtain the prior approval of the Federal
Reserve Board before acquiring, merging with or consolidating into another bank
holding company, acquiring substantially all the assets of any bank, or
acquiring direct or indirect ownership or control of 5% or more of the voting
shares of any bank or bank holding company.
The Act also prohibits a bank holding company, with certain exceptions, from
acquiring direct or indirect ownership or control of 5% or more of the voting
shares of any company which is not a bank and from engaging in any business
other than that of banking, managing and controlling banks or furnishing
services to banks and their subsidiaries. However, CORUS may engage in and own
shares of companies engaged in
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certain businesses determined by the Federal Reserve Board to be closely
related to banking or managing or controlling banks.
The Illinois Bank Holding Company Act of 1957 (the Illinois Act), as amended,
permits CORUS to acquire banks located anywhere in Illinois. Other amendments
of the Illinois Act authorize combinations between banks and bank holding
companies located in Illinois and banks and bank holding companies located in
another state if that other state has passed legislation granting similar
privileges to Illinois banks and bank holding companies. Effective December 1,
1990, holding companies from any state were permitted to acquire Illinois banks
and bank holding companies if the other state allows Illinois bank holding
companies the same privilege. In June 1993, the Illinois Act was amended to
eliminate all branch restrictions. Accordingly, banks located in Illinois are
permitted to establish branches anywhere in the state.
CORUS' subsidiary bank is a national bank and, as such, is supervised, examined
and regulated by the Office of the Comptroller of the Currency under the
National Bank Act. Since a national bank is also a member of the Federal
Reserve System and its deposits are insured by the Federal Deposit Insurance
Corporation (FDIC), the subsidiary bank is also subject to the applicable
provisions of the Federal Reserve Act, the Federal Deposit Insurance Act, and,
in certain respects, to state laws applicable to financial institutions.
The subsidiary bank is subject to FDIC deposit insurance assessments. Under the
FDIC's risk-based assessment system, the assessment rate is based on
classification of a depository institution in one of nine risk assessment
categories. Such classification is based upon the institution's capital level
and upon certain supervisory evaluations of the institution by its primary
regulator. The subsidiary bank's FDIC deposit insurance cost for 1998 will be
approximately .01% of deposits.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
initiated new intense regulation for the financial services industry. FDICIA
made significant changes in the legal environment for insured banks, including
reductions in insurance coverage for certain types of deposits, increases in
consumer-oriented requirements, and substantial revisions in the supervision,
examination and audit processes. FDICIA also required new reporting by banks
and mandated adoption of new regulations concerning capital, liquidity,
internal controls, safety and soundness and prompt corrective action.
Capital Adequacy
The Federal Reserve Board established risk-based capital guidelines that
require bank holding companies to maintain minimum ratios. The main objective
of the risk-based capital requirements is to provide a fair and consistent
framework for comparing capital positions of all banking institutions. Under
these guidelines, capital consists of two components, core capital elements
(Tier 1 capital) and supplementary capital elements (Tier 2 capital). Assets
and off-balance-sheet items are assigned broad risk categories. The aggregate
dollar value of each category is multiplied by a risk weight associated with
this category.
In 1992, the FDIC adopted new regulations that defined five capital categories
for purposes of implementing the requirements under FDICIA. The five capital
categories, which range from "well-capitalized" to "critically
under-capitalized", are based on the level of risk-based capital measures. The
minimum risk-based capital ratios for Tier 1 capital to
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risk-weighted assets and total risk-based capital to risk-weighted assets to be
classified as well-capitalized are 6.0% and 10.0%, respectively. At December
31, 1997, CORUS' Tier 1 capital and total risk-based capital ratios were 15.3%
and 16.6%, respectively.
In addition, bank regulatory agencies established a leverage ratio to
supplement the risk-based capital guidelines. The leverage ratio is intended to
ensure that adequate capital is maintained against risks other than credit
risk. A minimum required ratio of Tier 1 capital to total assets of 3.0% is
required for the highest quality bank holding companies that are not
anticipating or experiencing significant growth. All other banking institutions
must maintain a leverage ratio of 4.0% to 5.0% depending upon an institution's
particular risk profile. At December 31, 1997, CORUS' leverage ratio was 10.5%.
Interstate Banking
The Riegle-Neal Interstate Bank and Branching Efficiency Act of 1994 (IBBA)
permits bank holding companies that are adequately capitalized and managed to
acquire banks located in any other state after September 29, 1995, subject to
certain statewide and nationwide deposit concentration limits. States may also
prohibit acquisition of banks that have not been in existence for at least five
years.
The interstate branching by merger provisions were effective on June 1, 1997,
unless a state takes legislative action prior to that date. The long-term
effects on CORUS of such changes in interstate banking and branching laws
cannot be predicted. However, it is likely that there will be increased
competition from national and regional banking firms headquartered outside of
Illinois.
STATISTICAL DATA
Pages 4 through 10 contain supplemental statistical data. This data should be
read in conjunction with CORUS' Management's Discussion and Analysis of
Financial Statements and the Consolidated Financial Statements and notes
thereto of the 1997 Annual Report to Shareholders (1997 Annual Report),
incorporated herein by reference in response to Items 7 and 8 hereof.
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CHANGES IN INTEREST INCOME AND EXPENSE
The following table shows the changes in interest income and expense by major
categories of assets and liabilities attributable to changes in volume or rate
or both, for the periods indicated:
Year Ended December 31, 1997
-------------------------------
(thousands) Volume Rate Total
-------- -------- ---------
Interest Income:
Interest-earning deposits with banks $(206) $(26) $(232)
Federal funds sold 2,865 141 3,006
Taxable securities other than common stocks (1,602) (307) (1,909)
Common stocks 1,481 (73) 1,408
Tax-advantaged securities (193) 40 (153)
Trading account securities 380 380 760
Loans, net of discount (3,211) (6,880) (10,091)
-------- -------- ---------
Net Decrease (486) (6,725) (7,211)
-------- -------- ---------
Interest Expense:
-------- -------- ---------
NOW and money market deposits (187) 1,596 1,409
Savings deposits (567) - (567)
Time deposits 1,201 594 1,795
Short-term borrowings (494) 229 (265)
Federal Home Loan Bank advances 652 26 678
-------- -------- ---------
Net Increase 605 2,445 3,050
-------- -------- ---------
Decrease in Net Interest Income $(1,091) $(9,170) $(10,261)
======== ======== =========
Year Ended December 31, 1996
----------------------------------
Volume Rate Total
------- ------- -------
Interest Income:
Interest-earning deposits with banks $(845) $8 $(837)
Federal funds sold (254) (253) (507)
Taxable securities other than common stocks (4,144) (1,518) (5,662)
Common stocks 648 (144) 504
Tax-advantaged securities (133) 39 (94)
Trading account securities (151) (151) (302)
Loans, net of discount 30,056 (3,623) 26,433
-------- -------- ---------
Net Increase (Decrease) 25,177 (5,642) 19,535
-------- -------- ---------
Interest Expense:
NOW and money market deposits 1,208 (3,309) (2,101)
Savings deposits (615) (47) (662)
Time deposits 7,476 432 7,908
Short-term borrowings 564 (334) 230
Federal Home Loan Bank advances 820 819 1,639
-------- -------- ---------
Net Increase (Decrease) 9,453 (2,439) 7,014
-------- -------- ---------
Increase (Decrease) in Net Interest Income $ 16,728 $(4,207) $ 12,521
======== ======== =========
The tax-equivalent adjustment for interest income on tax-advantaged loans and
securities is reflected through the rate column based on a marginal corporate
income tax rate of 35%. Volume variances are computed using the change in
volume multiplied by the previous year's rate. Rate variances are computed
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using the changes in rate multiplied by the previous year's volume. The change
in interest due to both rate and volume has been allocated between the factors
in proportion to the relationship of the absolute dollar amounts of the change
in each.
SECURITIES PORTFOLIO
Carrying Value of Securities by Category
The carrying value of securities held by CORUS were as follows:
December 31
---------------------------------
(thousands) 1997 1996 1995
--------- -------- --------
Available for sale
U.S. Government and agencies $191,236 $183,404 $220,808
Corporate debt securities 161,454 95,001 105,375
Common stocks 158,660 92,611 34,761
Other 20,513 8,013 3,460
-------- -------- --------
Total $531,863 $379,029 $364,404
======== ======== ========
Held to maturity
State and municipal $4,150 $5,201 $8,199
Other 5,129 6,053 6,368
-------- -------- --------
Total $9,279 $11,254 $14,567
======== ======== ========
Maturities of Securities
The scheduled maturities by security type as of December 31, 1997 were as
follows:
From one From five Not due at
(thousands) One year through five through ten After a single
or less years years ten years maturity Total
--------- ----------- ----------- --------- --------- ---------
C>
U.S. Government
and agencies $190,918 $318 $ -- $ -- $ -- $191,236
Corporate debt
securities 51,998 109,194 262 -- -- 161,454
State and municipal 433 2,515 702 500 -- 4,150
Common stocks -- -- -- -- 158,660 158,660
Other -- 17 45 -- 25,580 25,642
-------- --------- ------ ---- -------- ---------
Total $243,349 $ 112,044 $1,009 $500 $184,240 $541,142
======== ========= ====== ==== ======== =========
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The weighted-average yield for each range of maturities of securities at
December 31, 1997 was as follows:
From one From five Not due at
One year through five through ten After a single
or less years years ten years maturity Total
--------- ------------ ----------- --------- ----------- -----
U.S. Government
and agencies 5.40% 9.02% -- % -- % -- % 5.40%
Corporate debt
securities 5.83 6.11 6.79 -- -- 5.97
State and municipal 8.68 9.91 7.59 10.41 -- 9.45
Common stocks -- -- -- -- N/M N/M
Other -- 5.50 -- -- 7.00 6.15
N/M - Not meaningful.
Actual maturities may differ from those scheduled due to prepayments from
issuers. Common stock yields are not considered meaningful for purposes of this
analysis. Yields on tax-advantaged securities reflect a tax equivalent
adjustment based on a marginal corporate tax rate of 35%.
LOAN PORTFOLIO
Classification of Loans
CORUS' loans were as follows:
December 31
----------------------------------------------------------
(thousands) 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
Commercial real estate $ 711,495 $ 655,793 $ 582,331 $ 354,893 $296,075
Student 412,926 402,859 379,129 354,073 290,635
Residential first mortgage 209,669 286,042 317,787 233,437 251,159
Home equity 131,868 188,755 170,793 57,093 37,578
Commercial 55,062 61,852 78,469 68,620 75,504
Consumer 24,955 27,844 30,273 32,393 27,880
---------- ---------- ---------- ---------- --------
Total $1,545,975 $1,623,145 $1,558,782 $1,100,509 $978,831
========== ========== ========== ========== ========
Maturities of Loans and Sensitivity to Changes in Interest
The following table classifies the scheduled maturities for the following loan
portfolio categories at December 31, 1997:
One year From one After
(thousands) or less to five years five years Total
-------- ------------- ---------- -------
Commercial real estate $158,208 $345,890 $211,859 $715,957
Commercial 29,663 17,585 7,932 55,180
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Of the loans maturing after one year, $333.0 million have fixed rates. To
manage the interest rate exposure of specific, fixed-rate commercial real
estate loans and other loans, CORUS has entered into interest rate swap
agreements. For additional information on such financial instruments, see Note
10 to the Consolidated Financial Statements on pages 39 through 40 of the 1997
Annual Report, incorporated herein by reference in response to Item 8 hereof.
RISK ELEMENTS IN THE LOAN PORTFOLIO
Nonaccrual and Past Due Loans
Nonaccrual loans were as follows:
December 31
------------------------------------------
(thousands) 1997 1996 1995 1994 1993
------ ------ ------ ------ -----
Nonaccrual loans $8,641 $7,427 $8,536 $2,389 $3,098
Nonaccrual loans to total loans 0.56% 0.46% 0.55% 0.22% 0.32%
Interest income that should have been recorded under the original terms of
these loans totaled $503,000 for the year ended December 31, 1997. Total
interest income recorded for these loans in 1997 was $62,000.
Loans past due 90 days or more, including nonaccrual loans, were as follows:
December 31
-------------------------------------------
(thousands) 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
Loans past due 90 days or more $41,248 $50,368 $32,714 $20,620 $14,281
Less guaranteed student loans 14,077 15,163 13,913 13,252 8,231
------- ------- ------- ------- -------
Net loans past due 90 days or more $27,171 $35,205 $18,801 $7,368 $6,050
======= ======= ======= ======= =======
Net loans past due 90 days or more
as a percentage of total loans 1.76% 2.17% 1.21% 0.67% 0.62%
======= ======= ======= ======= =======
Guaranteed student loans that are greater than 90 days past due are classified
as performing due to the principal and accrued interest on such loans being
guaranteed by individual state or private non-profit agencies.
Potential Problem Loans
In addition to those loans disclosed under the preceding "Nonaccrual and Past
Due Loans" section, management identified, through their problem loan
identification system, certain other loans in the portfolio that exhibit a
higher than normal credit risk. However, these loans were not classified as
nonperforming loans. These other loans include loans that are past maturity
more than 45 days, have recent adverse operating cash flow or balance sheet
trends, or have general risk characteristics that the loan officer feels might
jeopardize the future timely collection of principal and interest payments. At
December 31, 1997,
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the principal amount of these loans was $4.9 million. This amount generally
includes loans that were classified for regulatory purposes.
Analysis of the Allowance for Possible Loan Losses
The activity in the allowance for possible loan losses was as follows:
Year Ended December 31
--------------------------------------------------
(thousands) 1997 1996 1995 1994 1993
--------- -------- ------- ------- -------
Balance at beginning of year $32,668 $25,640 $20,157 $19,552 $17,490
Allowance of acquired subsidiaries -- -- -- -- 1,000
Provision for possible loan losses 16,000 16,000 5,779 -- 1,176
Less charge-offs:
Commercial real estate loans 350 206 284 65 804
Student loans 9,707 4,605 81 45 107
Residential first mortgage loans 431 1 4 20 96
Home equity loans 8,454 6,421 28 -- --
Commercial loans 22 92 269 35 515
Consumer loans 131 16 153 148 330
--------- -------- ------- ------- -------
Total charge-offs 19,095 11,341 819 313 1,852
--------- -------- ------- ------- -------
Add recoveries:
Commercial real estate loans 195 1,026 44 210 296
Student loans 24 80 105 100 596
Residential first mortgage loans 3 -- 5 5 7
Home equity loans 745 375 -- -- --
Commercial loans 19 770 69 303 537
Consumer loans 101 118 300 300 302
--------- -------- ------- ------- -------
Total recoveries 1,087 2,369 523 918 1,738
--------- -------- ------- ------- -------
Net (charge-offs) recoveries (18,008) (8,972) (296) 605 (114)
--------- -------- ------- ------- -------
Balance at end of year $30,660 $32,668 $25,640 $20,157 $19,552
Net (charge-offs)/recoveries to
average loans outstanding (1.15%) (0.56%) (0.02%) 0.06% (0.01%)
========= ======== ======= ======= =======
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Allocation of the Allowance for Loan Losses
The allocation of the allowance for loan losses was as follows:
December 31
----------------------------------------------------------
(thousands) 1997 1996 1995 1994 1993
------- ------- ------- -------- --------
Commercial real estate $2,814 $2,575 $2,934 $5,801 $5,596
Student 2,658 3,608 11,489 1,202 1,424
Residential first mortgage 784 1,034 1,327 2,451 2,233
Home equity 16,180 21,460 1,000 827 483
Commercial 29 45 445 1,368 1,168
Consumer 306 643 476 291 378
Unallocated 7,889 3,303 7,969 8,217 8,270
------- ------- ------- ------- -------
Total $30,660 $32,668 $25,640 $20,157 $19,552
======= ======= ======= ======= =======
Loan Portfolio Composition
The composition of the loan portfolio was as follows:
December 31
---------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Commercial real estate 46% 40% 38% 33% 30%
Student 27 25 24 32 30
Residential first mortgage 14 18 20 21 26
Home equity 8 11 11 5 3
Commercial 3 4 5 6 8
Consumer 2 2 2 3 3
---- ---- ---- ---- ----
Total 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
For further review of the loan loss provision and the allowance for loan losses,
reference is made to pages 27 through 28 of Management's Discussion and Analysis
of Financial Statements of the 1997 Annual Report, incorporated herein by
reference in response to Item 7 hereof.
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DEPOSITS
The scheduled maturities of time deposits in denominations of $100,000 and
greater was as follows at December 31, 1997:
(thousands)
Maturing within 3 months $52,985
After 3 but within 6 months 36,203
After 6 but within 12 months 91,299
After 12 months 144,064
--------
Total $324,551
========
RETURN ON EQUITY AND ASSETS
The following table presents certain ratios relating to CORUS' equity and
assets:
December 31
--------------------------
1997 1996 1995
---- ---- ----
Return on average total assets 1.8% 2.0% 1.8%
Return on average common shareholders' equity 14.9 20.4 20.4
Dividend payout ratio 19.5 15.4 14.3
Average equity to average total assets 11.8 9.9 8.4
ITEM 2. PROPERTIES
CORUS utilizes the building facilities of its Irving Park branch, which is
located at 3959 N. Lincoln Avenue, Chicago, Illinois, for its executive
offices. CORUS owns the property and buildings on which ten of the twelve bank
branch locations are located. The other two branch locations are leased from
unrelated parties.
ITEM 3. LEGAL PROCEEDINGS
CORUS is involved in various legal and regulatory proceedings, many involving
matters that arose in the ordinary course of business. The consequences of
these proceedings are not presently determinable but, in the opinion of
management, these proceedings will not have a material effect on the results of
operations, financial position, liquidity or capital resources of CORUS, except
for possibly the matter discussed below.
As disclosed previously, CORUS discovered that certain former employees in the
student loan servicing area had falsified some records of telephone calls, from
late 1993 to April 1994, to students whose loans were delinquent. The telephone
calls are a required action to maintain the enforceability of a student loan's
government guarantee. CORUS terminated the employees involved and informed the
U.S. Department of Education immediately upon discovery of the problem and the
Department commenced an investigation.
CORUS believes that the Department's investigation has been expanded to include
a review of whether CORUS' student loan division has engaged in improper
practices from 1988 to April 1994, including
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whether information contained on guarantee claim forms may have been falsified.
If it is ultimately determined that CORUS acted illegally or violated
Department policy or regulations, CORUS could (i) lose its government
guarantees with respect to certain student loans and (ii) be required to
repurchase a substantial amount of delinquent student loans for which CORUS
previously received guarantee payments. In addition, CORUS or individual
employees could be subject to substantial penalties.
Shortly after reporting the problem, CORUS entered into an interim agreement
with the Department pursuant to which it agreed, pending the conclusion of the
investigation, not to request payment from any guarantor or the Department on
any loans that CORUS is unable to state with certainty were not affected by
incorrect servicing history documentation. Management charged off against the
allowance for loan losses $1.5 million of student loans in the third quarter of
1997 and $4.0 million of student loans during each of the first two quarters of
1997 and the fourth quarter of 1996 that were subject to the interim agreement.
A total of $13.5 million of loans subject to the interim agreement have been
charged off against the allowance for loan losses. The ultimate collectibility
of the loans is uncertain.
Management is unable to predict what actions, if any, the Department will take
following the completion of its investigation, and therefore cannot estimate
the amount or range of any liability that CORUS will ultimately incur. As such,
management is unable to quantify either the student loans that may lose their
government guarantee or the amount of loans that CORUS may be required to
repurchase.
CORUS does not condone or permit such improper practices and is cooperating
fully with the Department's investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PRICE RANGE OF COMMON STOCK
CORUS' common stock trades on the NASDAQ National Market tier of The NASDAQ
Stock Market under the symbol: CORS. The high and low prices for the common
stock for the calendar quarters indicated, as reported by NASDAQ, are listed on
page 46 of the 1997 Annual Report, incorporated herein by reference in response
to Item 7 hereof.
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
As of February 28, 1998, there were 487 shareholders owning CORUS' common
stock, which has a par value of $0.05 per share. Shareholders that own stock in
nominee (i.e., street) name are excluded from the number of security holders of
record.
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DIVIDENDS ON COMMON STOCK
Quarterly cash dividends per common share for the last two years are included
on page 46 of the 1997 Annual Report, incorporated herein by reference in
response to Item 7 hereof. Dividends were declared and paid on a quarterly
basis. The declaration of dividends is at the discretion of CORUS' Board of
Directors and depends upon, among other factors, earnings, capital requirements
and the operating and financial condition of CORUS.
ITEM 6. SELECTED FINANCIAL DATA
Refer to page 46 of the 1997 Annual Report, incorporated herein by reference
for additional selected financial data.
December 31
----------------------------------------------------------
(thousands, except per share data) 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Interest income $183,932 $190,950 $171,114 $114,541 $101,325
Interest expense 82,661 79,611 72,597 45,748 35,573
---------- ---------- ---------- ---------- ----------
Net interest income 101,271 111,339 98,517 68,793 65,752
Provision for loan losses 16,000 16,000 5,779 -- 1,176
---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 85,271 95,339 92,738 68,793 64,576
Noninterest income, excluding
securities gains (losses) 21,547 19,436 15,443 12,572 12,869
Securities gains (losses), net 4,881 3,316 (1,332) 663 (330)
Noninterest expense 51,192 50,181 51,650 45,222 38,626
Income tax expense 21,136 24,005 19,429 12,790 13,167
---------- ---------- ---------- ---------- ----------
Net income available to common
shareholders 39,371 43,905 35,770 24,016 25,322
Change in unrealized securities
gains 29,508 9,384 12,337 (6,945) 992
---------- ---------- ---------- ---------- ----------
Comprehensive income $68,879 $53,289 $48,107 $17,071 $26,314
========== ========== ========== ========== ==========
Net income per share:
Basic $2.66 $2.96 $2.36 $1.58 $1.67
Diluted 2.63 2.93 2.35 1.57 1.66
========== ========== ========== ========== ==========
Cash dividends declared per
common share $0.53 $0.48 $0.36 $0.30 $0.27
========== ========== ========== ========== ==========
Assets $2,251,927 $2,218,528 $2,125,092 $1,889,445 $1,441,762
========== ========== ========== ========== ==========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained under the caption "Management's Discussion and
Analysis of Financial Statements" on pages 18 through 29 of the 1997 Annual
Report is incorporated herein by reference.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained under the caption "Risk Management" on pages 28
through 29 of the 1997 Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of CORUS, including the notes thereto,
and other information on pages 30 through 46 of the 1997 Annual Report are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On February 12, 1997, the Audit Committee and Board of Directors of CORUS
recommended that the shareholders ratify Arthur Andersen LLP at the annual
meeting as independent accountants of CORUS for fiscal 1997. This
recommendation caused the dismissal of KPMG Peat Marwick LLP (KPMG) as the
independent accountants of CORUS upon the completion of the audit of CORUS'
financial statements as of and for the year ended December 31, 1996 and the
issuance of their report thereon.
For the two years ended December 31, 1996, KPMG's reports on the financial
statements did not contain an adverse or a disclaimer of opinion nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
For the two years ended December 31, 1996 and from December 31, 1996 through
the effective date of the dismissal, there were no disagreements between KPMG
and CORUS on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure or any reportable events.
CORUS requested that KPMG furnish a letter addressed to the United States
Securities and Exchange Commission stating whether KPMG agrees with the
preceding statements. KMPG's letter dated March 25, 1997 is incorporated by
reference to CORUS' Annual Report on Form 10-K for the year ended December 31,
1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and executive officers of CORUS is incorporated
herein by reference to the descriptions under "Elections of Directors and
Ownership of Shares" on pages 2 through 3 of the 1998 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference to
the material under the caption "Executive Compensation" on pages 4 through 14
of the 1998 Proxy Statement.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the material under the headings
"Outstanding Voting Securities and Principal Shareholders" and "Election of
Directors and Ownership of Shares" on pages 1 through 2 and 3, respectively, of
the 1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
incorporated herein by reference to the material under the heading
"Transactions with Management and Others" on page 14 of the 1998 Proxy
Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statement Schedules:
(13) The portions of Registrant's 1997 Annual Report incorporated by reference
into Part I or Part II of Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
Index
Pages
Consolidated Balance Sheets 30
Consolidated Statements of Income and Comprehensive Income 31
Consolidated Statements of Changes of Shareholders' Equity 32
Consolidated Statements of Cash Flows 33
Notes to Consolidated Financial Statements 34-46
Report of Independent Public Accountants 47-48
(16) Letter regarding change in certifying accountant incorporated by
reference to the Registrant's Annual Report on Form10-K for the year ended
December 31, 1996.
(b) Reports on Form 8-K:
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Michael J. McClure /s/ First Vice March 17, 1998
President & Chief
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Joseph C. Glickman /s/ Chairman of the Board of Directors March 17, 1998
Robert J. Glickman /s/ President, Chief Executive Officer & Director March 17, 1998
Timothy H. Taylor /s/ Senior Vice President & Chief Financial March 17, 1998
Officer
Michael J. McClure /s/ First Vice President & Chief Accounting March 17, 1998
Officer
Steven D. Fifield /s/ Director March 17, 1998
Karl H. Horn /s/ Director March 17, 1998
Michael Levitt /s/ Director March 17, 1998
Rodney D. Lubeznik /s/ Director March 17, 1998
Michael Tang /s/ Director March 17, 1998
William H. Wendt, III /s/ Director March 17, 1998
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