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(CHICAGO, IL) -- The expected federal seizure of the nation's most aggressive condo development lender, Corus Bank  (NASDAQ: CORS) of Chicago, finally happened.

The Federal Deposit Insurance Corp. took over Corus late Friday, Sept. 11, and sold the $7.07 billion-asset institution to another Chicago bank, MB Financial, for a price that hasn't yet been disclosed.

The shutdown is expected to cost the Federal Deposit Insurance Corp. about $1.7 billion, reports the Chicago Tribune.

MB, which had about $8 billion in assets before the Corus deal, also agreed to buy about $3 billion of Corus' assets, comprised mainly of cash and marketable securities. The FDIC said it expects to sell most of the rest in the next 30 days in a private placement transaction.

(Please see related postings,  "Miami Dolphins Owner Wins Preliminary OK to Charter New Bank, Sept. 11, 2009;   "Corus Bank Trophy Caribbean Miami Beach Condo Sold After Owner Returns Key to Lender, Sept. 7, 2009; Big-Name Condo Investors Await Corus Bank's Pending Seizure by FDIC, Sept. 4, 2009.")

The FDIC takeover of Corus marked the 93nd bank failure this year. It is also the largest so far in 2009. Last year there were 26; three in 2007; and none in 2006 and 2005.

The 11-branch Corus Bank earned its reputation as a major lender by betting big on condominium development in Sun Belt states.

According to the FDIC, of Corus Bank's $997 million in condominium loan commitments in Miami and elsewhere in Southeast Florida,  $873 million were in "nonaccrual" status as of March 31. That meant the loans had deteriorated to the point where collection of all principal and interest was no longer expected as of March 31.

As of June 30, 44 percent of its assets were "nonperforming" including seriously delinquent loans or properties in foreclosure.

The South Florida Business Journal reports Corus Bank had 14 condo construction loans and two apartment loans with a $1.03 billion balance as of March 31.

 Of those, 12 condo loans and both apartment loans with balances and commitments of $955 million were nonperforming.

In addition, one more South Florida condo loan valued at $49 million was classified as a potential problem loan, which meant Corus expected to record a loss on the project.
That means only one Corus development loan in South Florida valued at $28 million was in good standing as of March 31.

In total, Corus-financed projects in South Florida account for 2,350 completed units, which have had 737 closings as of March 31, and another 1,334 units under construction.

The bank hasn't issued a breakdown of its loan portfolio since then. Its financial statement for the second quarter was never finalized.

Corus held two repossessed properties in South Florida: the 342 unsold units in the Tao condominium in Sunrise and the 216-unit Aventine at Boynton Beach apartment complex.

Corus  is the biggest Illinois bank to require government intervention since Continental Illinois in 1984 and the 16th bank to collapse in Illinois in 2009.

 MB Financial has purchased three failed banks so far this year.  It had about 70 branches before the Corus deal Sept. 11. MB Financial now has 81 branches.

The approximately $2 billion in local deposits are expected to provide a great source of funding for MB's commercial banking business.

As of Aug. 31, Corus had total deposits of $6.6 billion. MB will assume most of those deposits.

Corus was dragged down by bad condominium loans in Florida, California and Las Vegas.

Although more than 40 Illinois banks have received money so far through the U.S. Treasury Department's Troubled Asset Relief Program, Corus's request to participate was denied.

Left sitting on the sidelines, Corus conceded that finding additional sources of capital on its own during a worldwide financial crisis would be an uphill struggle. The hiring of an investment banking firm turned out to be fruitless.

In April, Robert Glickman, whose family had until recently owned nearly 45 percent of the publicly traded bank, resigned as chief executive of the company. His father, who had bought Corus' predecessor bank in 1966, also stepped down as chairman. The family has been dumping most of its shares in the bank, which is publicly traded.

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