##### 



Exhibit 99.1 (CORUS BANKSHARES)




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##### 



CORUS BANKSHARES 2004 ANNUAL REPORT FINANCIAL HIGHLIGHTS YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands, except per share data)B A L A N C E   S H E E T  S U M M A R YAssets
    
    $
    5,017,787
    
    
    $
    3,643,830
    
    
    $
    2,617,050Deposits
    
    
    4,100,152
    
    
    
    2,846,402
    
    
    
    2,059,773Loans, net
    
    
    2,760,946
    
    
    
    2,397,323
    
    
    
    1,705,340Common shareholders equity
    
    
    599,591
    
    
    
    546,180
    
    
    
    482,041I N C O M
E   S T A T E M E N T   S U M M A R YNet interest income
    
    $
    151,464
    
    
    $
    123,427
    
    
    $
    98,287Net income
    
    
    97,939
    
    
    
    58,410
    
    
    
    49,314Cash dividends paid to common shareholders
    
    
    33,140
    
    
    
    18,548
    
    
    
    8,918P E
R   S H
A R E   D A T A(1)Diluted earnings
    
    $
    3.40
    
    
    $
    2.04
    
    
    $
    1.72Cash dividends paid
    
    
    1.19
    
    
    
    0.66
    
    
    
    0.32Book value at year-end
    
    
    21.57
    
    
    
    19.48
    
    
    
    17.07Market value at year-end
    
    
    48.01
    
    
    
    31.02
    
    
    
    21.83F I N A N C I A L   R A T I O SReturn on average common shareholders equity
    
    
    17.4
    %
    
    
    11.6
    %
    
    
    10.6
    %Return on average assets
    
    
    2.4
    %
    
    
    2.0
    %
    
    
    1.9
    %Efficiency ratio
    
    
    33.5
    %
    
    
    37.5
    %
    
    
    40.9
    %
 (1)All amounts have been restated to reflect a 100% stock dividend on 12/15/03 . 1




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##### 



CORUS BANKSHARES 2004 ANNUAL REPORT A   L E T T E R
  to  O U R   S H A R E H O L D E R S WE ARE PLEASED TO REPORT 2004 net income of $97.9 million, or
$3.40 per diluted share. Among 2004 s highlights: our total assets topped
$5 billion for the first time ever; loan originations set all-time records; and overall
loan losses were quite low, including commercial real estate loan losses of $0 . All in
all, 2004 was a year of significant growth and outstanding performance. FINANCIAL STRENGTH. Our common equity was nearly $600
million at the end of 2004 . Maintaining a solid equity base has been
one of our guiding principles. Another source of
Corus financial strength is our large supply of liquid assets. LIQUIDITY IS CRITICAL. Banks must stand ready at all times to meet
depositors withdrawal requests and to fund disbursements under outstanding loan
commitments. Commercial real
estate construction loans, which are a significant part of our business, tend to start with very
low balances and thus bring about large unfunded commitments. Our commitments on commercial real
estate construction loans are intended to be, and in fact must be (if the borrower is to complete
the project), drawn down. As of December 31, 2004, Corus had total unfunded loan
commitments of about $2.7 billion. We expect to fund 100% of these
committed amounts and generally expect these fundings to take place over the next 24
months. One difficult part of assessing our liquidity needs is estimating loan payoffs over
that same 24 -month period. See Managements Discussion & Analysis section for further
discussion of liquidity. 2




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##### 



CORUS BANKSHARES 2004 ANNUAL REPORT (ASSETS GRAPH)
    

(COMMERCIAL REAL ESTATE LOAN COMMITMENTS GRAPH)
    
    (EQUITY GRAPH)
 In order to have cash available at all times for our deposit and loan customers, the Bank
maintains high levels of liquid investments, in the form of overnight loans to other major banks,
and high quality, short-term marketable securities. It is important to note that none of these
liquid investments are pledged as collateral for any borrowings of the Bank and are therefore fully
available to us to liquidate at a moments notice. Maintaining large amounts of liquid investments
is a conscious action undertaken as part of our broader strategy of enhancing the safety of our
operations. Our strong capital position, combined with our large pool of liquid investments, has
positioned Corus to weather the adversities that could result from a serious recession. During the
recession of 1989  1992, most banks that had foreclosed real estate were
required, either by the bank regulators or the stock market, to sell their problem loans and their
foreclosed real estate at tremendous losses during the depths of the recession. Our planning
anticipates that at some point in the future we will have problem loans and, further, that we will
have to foreclose on some properties. It is our desire to have the ability to hold foreclosed real
estate until markets have stabilized and values have recovered. We plan on charging off portions of
any problem loan such that the loan is written down to the then current appraised value of the
property in the midst of a recession. Furthermore, our goal is that the Bank remain well
capitalized after these charge-offs. 3




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##### 



CORUS BANKSHARES 2004 ANNUAL REPORT COMMERCIAL REAL ESTATE PORTFOLIO. Our commercial real estate loan
portfolio (including unfunded loan commitments) grew from $3.8 billion at
December 31, 2003, to
$5.3 billion at December 31, 2004 . We continue to be very
pleased with the growth of our business, which included the addition of many new customers during
the year. Loan originations were $4.1 billion during 2004  a record year
for us. Our current pipeline of negotiations for new commercial real estate loans stands at
nearly $4.7 billion and we are optimistic that 2005 will bring another year
of strong originations and continued growth in loans outstanding. We have seen the most
opportunities in the condominium market, where we finance both the construction of new condominium
projects and the conversion of apartment projects to condominium ownership. In fact, at December
2004 , condominium loans comprised 76% of our total commercial real estate
portfolio. Corus has pursued several unorthodox strategies in our commercial real estate lending
business. First, investing such a large portion of a banks assets in commercial real estate loans
is unusual in the banking industry and could be considered a concentration of risk. While we
understand this approach brings with it certain risks, we feel that it is important to focus on the
business that we know best. Corus has been originating increasingly larger commercial real estate
loans and we believe we have developed considerable expertise in this market. Second, it is unusual for a bank our size to lend nationwide. Over 90% of our
total loan commitments (outstanding balances plus unfunded commitments) are secured by properties
outside of Illinois. We believe this geographic distribution provides us with an important form of
diversification and further mitigates our concentration in commercial real estate loans. Third, we actively use our legal lending limit, and we further supplement this with loans
participated to the holding company. This allows Corus to make and hold individual loans up to
approximately $135 million. At December 31, 2004, the 35
largest loans averaged $75 million and made up half of our total loan portfolio.
Concentrating on larger loans has two important benefits: 1) it allows senior
management to become intimately familiar with every large loan that we originate; and 2)
we think that there is less competition associated with larger loans. Finally, we have instituted a unique compensation program for the commercial real estate loan
officers that can be highly lucrative for the officers who are originating new business. The
aggregate 2004 commissions for our 10 highest paid loan officers was
$8.9 million. In order to manage the risks posed by such an arrangement, Robert
Glickman, who is not in this bonus program and who is a major shareholder, approves every large
loan. An additional, and critical, aspect of this compensation program is that each officer shares
in the risk of loss on the loans they generate. A substantial portion of the officers commission
is deferred for many years and is at risk of loss in the event any of their loans 4




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CORUS BANKSHARES 2004 ANNUAL REPORT (COMMERCIAL REAL ESTATE LOAN ORIGINATIONS GRAPH)
    

(COMMERCIAL REAL ESTATE LOAN GRAPH)
 fail to perform. The total value of all deferred commissions was $30.2 million at
year-end 2004. This
motivates each officer to make safe loans and it aligns the officers and Banks interests very
closely. Another noteworthy item is our $585 million portfolio of hotel loans. During the
years 2001 to 2003, the hotel industry went through some difficult
financial times. We had several loans secured by hotels that were generating lower cash flows than
we would have liked. However, there was a general recovery evident in 2004. Due in
large part to strong sponsorship and a low interest rate environment, only one of those loans
became delinquent during the last four years. We are happy to report that we negotiated a
restructuring of this loan which included a substantial principal paydown from the borrower. The
borrower is current on his monthly payments and we dont anticipate any loss on this loan.
Management continues to track each of the hotel loans in our portfolio very carefully. Frankly,
2001 to 2003 was a very trying time in the hotel industry. The fact that we
escaped with no losses is quite gratifying and an excellent test of our underwriting skills. Our total commercial real estate loan portfolio continues to perform extremely well, as
evidenced by zero (yes, $0) charge-offs in 2004, and a very small amount of
delinquent loans. Perhaps even more remarkably, we have had no net charge-offs on this entire
portfolio over the past 10 years. We are proud of the success we have had in the
commercial real estate business thus far, and we believe that all of the risks noted above are
being managed prudently, with a careful eye on the bottom line. 5




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CORUS BANKSHARES 2004 ANNUAL REPORT RISK ASSESSMENT OF COMMERCIAL REAL ESTATE PORTFOLIO. Corus has
spent the past several years developing and refining an internal loan rating system to
better understand the risks
inherent in our commercial real estate portfolio. This system provides us with an insight into
potential levels of nonperforming loans and charge-offs for the portfolio as a whole. It is
important for our shareholders to understand that Corus business strategy of originating (and
retaining) large amounts of commercial real estate loans, while quite successful and lucrative to
date, presents some material risks. The foundation of our internal loan rating system is managements estimation of the
Probability of Default (POD) and Loss Given Default (LGD) for each of our
commercial real estate loans if a serious recession were to occur. (As an example, we look to the
severe declines in property values experienced in California and New England during the late
1980s and early 1990s.) The POD is our estimate of how likely
it is, given a serious recession, a loan would go into default while the LGD is our
estimate, given such a default, of what percentage of the loan would have to be charged off.
Additionally, while our system of analysis is based on a serious recession, it is certainly
possible that we could experience meaningful nonperforming assets and charge offs even in the
absence of such a recession. Our internal loan rating system involves 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. Under such a scenario, our system projects that we could have $818
million of defaulted commercial real estate loans and $143 million of these
loans would be charged off. This would clearly be a huge increase from our historical experience. With the preceding being said, it is essential to understand that we underwrite our loans with
the potential for such a recession in mind. In fact, we assume a serious recession will occur every
ten years or so. Based on such a frequency, the projected $143 million of charge-offs
would represent an annualized loss expense of $14.3 million, or 0.27% of
our total loan commitments of $5.3 billion. We factor in this economic loss expense
when analyzing the potential profitability of each loan we underwrite. It is only after that
economic loss expense has been subtracted that we begin to assess whether the loan presents an
acceptable potential profit versus the perceived risks. While we have yet to experience a large
amount of nonperforming loans or charge-offs, our planning anticipates that it will occur and we
have already factored this cost into the profitability of our loans. Our prior comments should not be taken to imply that an environment of large nonperforming
loans and charge-offs would not be distracting or unpleasant  it would certainly be both. The
point is that we judge the success of our business plan, and its results, not based on the results
of any one given year, but rather from the perspective of a full business cycle. 6




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CORUS BANKSHARES 2004 ANNUAL REPORT On a related point, it should be noted that these economic loss expense figures are
considered too speculative under Generally Accepted Accounting Principles to be used in determining
a banks Allowance for Loan Losses. In turn, this means that such potential losses cant give rise
to a current loan loss provision expense. However, while Corus cant reserve for these potential
losses, which would build our Allowance, what we can do  and what we have done  is to build the
Banks capital base to reflect the potential for such losses. Corus Banks capital goal is straightforward and built from three components: (a) the
regulatory minimum for well-capitalized (the highest rating), (b) a cushion to that regulatory
minimum (you dont ever want to be right at the cusp of well-capitalized or, far worse, fall
below), and (c) the sum of potential future loan losses (on an after-tax basis, as Corus would
receive a tax deduction on such charge-offs if they were to occur). This last component represents
our reserve for these potential losses. While we have spent considerable time discussing our business plan with you  the owners  and
with our banking regulators, reporting nonperforming loans and charge-offs of this magnitude could
nonetheless lead to, among other things, an adverse reaction on the part of our bank regulators,
bad publicity, a sharp decline in our stock price, and deposit withdrawals. While this is not a
scenario we find appealing, it is one that we all need to be aware could occur and must plan for
accordingly. This is the reason we keep such extremely high levels of liquidity and capital. (NET INCOME GRAPHIC)
    
    (NET INTEREST INCOME GRAPHIC)
    
    (EFFICIENCY RATIO GRAPHIC)
 7




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CORUS BANKSHARES 2004 ANNUAL REPORT Please note that while our internal loan rating system generates very precise numbers, and we
have worked hard to arrive at inputs we believe reasonable, this precision is more a function of
the mathematical nature of the model than a belief on our part that we can predict future results
with any such certainty. Our model, like all models, requires numerous assumptions and, in this
case, assumptions about how vulnerable each and every individual loan will be to a serious
recession at some unknown point in the future. Further, the pristine credit quality of our
commercial real estate portfolio over the past ten-plus years has deprived us of any meaningful
data points with which we might have been able to refine our estimates. While the results reflect
our best estimates, the actual level of nonperforming loans and charge-offs that may ultimately
come to pass could be materially different from our projections. We discuss this topic further
under the Commercial Real Estate Risk Analysis heading in the Managements Discussion & Analysis
section of this annual report. FOCUSED FOR THE FUTURE. We remain focused on our two main businesses. The
two main business activities for Corus are commercial real estate lending and deposit
gathering.
Our main goals for 2005 are as follows:  1)
    As mentioned, we closed on over $4.1 billion in new commercial real
estate loans during 2004. We hope to set a new record in 2005  2)
    Gather deposits by building on the relationships we have forged with our current
customers and by working to attract new deposit customers; and  3)
    Maintain our low cost structure, as reflected in 2004s outstanding
efficiency ratio of 33% . THANKS TO OUR PARTNERS. For our shareholders, we wish to thank you for
the confidence you have displayed by buying and holding our stock. We think of you as our
partners and pledge
to treat you with respect and work hard to make your investment worthwhile. For our customers, we
wish to thank you for your past business and we look forward to a long future with you. For our
officers and employees, we sincerely thank you for your many contributions to our success and tell
you again that we are proud of you and the job that you are doing.
Sincerely, (-S- Joseph C. Glickman)
    

(-S- Robert J. Glickman)JOSEPH C. GLICKMAN
    
    ROBERT J. GLICKMANChairman of the Board
    
    President and Chief Executive Officer
 8




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##### 

\

(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) FINANCIAL REVIEW consolidated balance sheets
    
    
    10consolidated statements of income
    
    
    11consolidated
statements ofchanges in
shareholders  equity
    
    
    12consolidated statements ofcash flows
    
    
    13notes toconsolidated financial statements
    
    
    14reports ofindependent registered public accounting firm
    
    
    44managements
report oninternal control
over  financial reporting
    
    
    46managements discussion andanalysis offinancial statements
    
    
    47supplemental financial data: 10-year history
    
    
    72directors andexecutive officers
    
    
    74
 9




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(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) CONSOLIDATED BALANCE SHEETS DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)A S S E T SCash and due from banks  noninterest-bearing
    
    $
    55,806
    
    
    $
    63,524Federal funds sold
    
    
    1,473,500
    
    
    
    682,000Securities:Available-for-sale, at fair valueCommon stocks (amortized cost $128,620 and $95,661)
    
    
    219,099
    
    
    
    188,844Other securities (amortized cost $447,182 and $242,308)
    
    
    447,526
    
    
    
    244,062Held-to-maturity, at amortized cost (fair value $12,353 and $11,802)
    
    
    12,344
    
    
    
    11,744Total Securities
    
    
    678,969
    
    
    
    444,650Loans, net of unearned income
    
    
    2,793,828
    
    
    
    2,433,771Less: Allowance for loan losses
    
    
    32,882
    
    
    
    36,448Net Loans
    
    
    2,760,946
    
    
    
    2,397,323Premises and equipment, net
    
    
    25,399
    
    
    
    26,313Accrued interest receivable and other assets
    
    
    18,644
    
    
    
    25,497Goodwill,
net of accumulated amortization of $30,009
    
    
    4,523
    
    
    
    4,523Total Assets
    
    $
    5,017,787
    
    
    $
    3,643,830L I A B I L I T I E S   A N D   S H A R E H O L D E R S    E Q U I T YLiabilities:Deposits:Noninterest-bearing
    
    $
    235,700
    
    
    $
    227,960Interest-bearing
    
    
    3,864,452
    
    
    
    2,618,442Total Deposits
    
    
    4,100,152
    
    
    
    2,846,402Long-term debt  subordinated debentures
    
    
    255,158
    
    
    
    172,500Other borrowings
    
    
    6,931
    
    
    
    36,403Accrued interest payable and other liabilities
    
    
    55,955
    
    
    
    42,345Total Liabilities
    
    
    4,418,196
    
    
    
    3,097,650Shareholders equity:Common stock, $0.05 par value, 50,000,000 shares authorized;
27,795,648 and 28,036,888 shares issued, respectively
    
    
    1,390
    
    
    
    1,402Surplus
    
    
    21,243
    
    
    
    16,942Equity  options outstanding

    
    
    6,737
    
    
    
    5,670Retained earnings
    
    
    512,844
    
    
    
    460,458Accumulated other comprehensive income
    
    
    57,377
    
    
    
    61,708Total Shareholders Equity
    
    
    599,591
    
    
    
    546,180Total Liabilities and Shareholders Equity
    
    $
    5,017,787
    
    
    $
    3,643,830
 See accompanying notes. 10




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(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) CONSOLIDATED STATEMENTS ofINCOME YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(in thousands, except per-share data)I N T E R E S T,   L O A N   F E E S,   A N D   D I V I D E N D   I N C O M EInterest and fees on loans:Taxable
    
    $
    193,724
    
    
    $
    151,523
    
    
    $
    127,998Tax-advantaged
    
    
    118
    
    
    
    158
    
    
    
    222Federal funds sold
    
    
    16,335
    
    
    
    4,912
    
    
    
    7,486Securities:Taxable
    
    
    5,004
    
    
    
    7,537
    
    
    
    11,847Tax-advantaged
    
    
    95
    
    
    
    63
    
    
    
    66Dividends
    
    
    6,287
    
    
    
    5,311
    
    
    
    4,810Trading account
    
    
    496
    
    
    
    735
    
    
    
    449Total Interest, Loan Fees, and Dividend Income
    
    
    222,059
    
    
    
    170,239
    
    
    
    152,878I N T E R E S T   E X P E N S EDeposits
    
    
    60,370
    
    
    
    43,836
    
    
    
    52,796Long-term debt  subordinated debentures
    
    
    9,354
    
    
    
    1,812
    
    
    
    Other borrowings
    
    
    871
    
    
    
    1,164
    
    
    
    1,795Total Interest Expense
    
    
    70,595
    
    
    
    46,812
    
    
    
    54,591Net Interest Income
    
    
    151,464
    
    
    
    123,427
    
    
    
    98,287Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    Net Interest Income After Provision for Loan Losses
    
    
    151,464
    
    
    
    123,427
    
    
    
    98,287N O N I N T E R E S T   I N C O M EService charges on deposit accounts
    
    
    11,438
    
    
    
    11,878
    
    
    
    12,065Securities gains, net
    
    
    37,349
    
    
    
    2,366
    
    
    
    7,258Other income
    
    
    2,628
    
    
    
    2,676
    
    
    
    3,756Total Noninterest Income
    
    
    51,415
    
    
    
    16,920
    
    
    
    23,079N O N I N T E R E S T   E X P E N S ESalaries and employee benefits
    
    
    38,458
    
    
    
    34,426
    
    
    
    29,672Net occupancy
    
    
    3,764
    
    
    
    4,231
    
    
    
    3,839Data processing
    
    
    2,435
    
    
    
    2,722
    
    
    
    2,445Depreciation  furniture and equipment
    
    
    1,750
    
    
    
    1,823
    
    
    
    2,448Other expenses
    
    
    9,866
    
    
    
    9,331
    
    
    
    9,068Total Noninterest Expense
    
    
    56,273
    
    
    
    52,533
    
    
    
    47,472Income Before Income Taxes
    
    
    146,606
    
    
    
    87,814
    
    
    
    73,894Income tax expense
    
    
    48,667
    
    
    
    29,404
    
    
    
    24,580Net Income
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314Net income per share:(1)Basic
    
    $
    3.51
    
    
    $
    2.08
    
    
    $
    1.74Diluted
    
    
    3.40
    
    
    
    2.04
    
    
    
    1.72Weighted average common shares and common share equivalents
outstanding
    
    
    28,818
    
    
    
    28,703
    
    
    
    28,590
 See accompanying notes.   (1)All amounts have been restated to reflect a 100% stock dividend on 12/15/03. 11




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) CONSOLIDATED STATEMENTS ofCHANGES inSHAREHOLDERS EQUITY ACCUMULATEDEQUITY
    
    
    
    
    
    
    OTHERCOMMON
    
    
    
    
    
    
    OPTIONS
    
    
    RETAINED
    
    
    COMPREHENSIVESTOCK
    
    
    SURPLUS
    
    
    OUTSTANDING
    
    
    EARNINGS
    
    
    INCOME
    
    
    TOTAL(dollars in thousands, except per-share data)Balance at December 31, 2001
    
    $
    1,416
    
    
    $
    15,243
    
    
    $
    
    
    
    $
    391,798
    
    
    $
    42,429
    
    
    $
    450,886Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,314
    
    
    
    
    
    
    
    49,314Other comprehensive income:Changes in net unrealized gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,004
    )
    
    
    (9,004
    )Reclassification adjustment for net gains
realized in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,765
    )
    
    
    (4,765
    )Income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,819
    
    
    
    4,819Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,364Retirement of 80,800 common shares
    
    
    (4
    )
    
    
    (44
    )
    
    
    
    
    
    
    (1,650
    )
    
    
    
    
    
    
    (1,698
    )Cash dividends declared on common stock,
$0.318 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,980
    )
    
    
    
    
    
    
    (8,980
    )Deferred compensation
    
    
    
    
    
    
    1,469
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,469Balance at December 31, 2002
    
    $
    1,412
    
    
    $
    16,668
    
    
    $
    
    
    
    $
    430,482
    
    
    $
    33,479
    
    
    $
    482,041Adoption of SFAS No. 123
    
    
    
    
    
    
    (3,115
    )
    
    
    4,256
    
    
    
    
    
    
    
    
    
    
    
    1,141Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,410
    
    
    
    
    
    
    
    58,410Other comprehensive income:Changes in net unrealized gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,541
    
    
    
    44,541Reclassification adjustment for net gains
realized in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,112
    )
    
    
    (1,112
    )Income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,200
    )
    
    
    (15,200
    )Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,639Stock options vested
    
    
    
    
    
    
    
    
    
    
    1,711
    
    
    
    
    
    
    
    
    
    
    
    1,711Shares issued under the stock option plan,
29,600 common shares
    
    
    2
    
    
    
    688
    
    
    
    (168
    )
    
    
    
    
    
    
    
    
    
    
    522Stock option settlements
    
    
    
    
    
    
    (102
    )
    
    
    (129
    )
    
    
    
    
    
    
    
    
    
    
    (231
    )Retirement of 231,200 common shares
    
    
    (12
    )
    
    
    (95
    )
    
    
    
    
    
    
    (5,136
    )
    
    
    
    
    
    
    (5,243
    )Cash dividends declared on common stock,
$0.830 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,298
    )
    
    
    
    
    
    
    (23,298
    )Deferred compensation
    
    
    
    
    
    
    2,898
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,898Balance at December 31, 2003
    
    $
    1,402
    
    
    $
    16,942
    
    
    $
    5,670
    
    
    $
    460,458
    
    
    $
    61,708
    
    
    $
    546,180Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,939
    
    
    
    
    
    
    
    97,939Other comprehensive income:Changes in net unrealized gains on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,919
    
    
    
    24,919Reclassification adjustment for net gains
realized in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,582
    )
    
    
    (31,582
    )Income tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,332
    
    
    
    2,332Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,608Stock options vested
    
    
    
    
    
    
    
    
    
    
    1,402
    
    
    
    
    
    
    
    
    
    
    
    1,402Shares issued under the stock option plan,
23,860 common shares
    
    
    1
    
    
    
    828
    
    
    
    (183
    )
    
    
    
    
    
    
    
    
    
    
    646Stock option settlements
    
    
    
    
    
    
    (272
    )
    
    
    (94
    )
    
    
    
    
    
    
    
    
    
    
    (366
    )Stock option expirations
    
    
    
    
    
    
    38
    
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    (20
    )Retirement of 265,100 common shares
    
    
    (13
    )
    
    
    (76
    )
    
    
    
    
    
    
    (10,732
    )
    
    
    
    
    
    
    (10,821
    )Cash dividends declared on common stock,
$1.250 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,821
    )
    
    
    
    
    
    
    (34,821
    )Deferred compensation
    
    
    
    
    
    
    3,783
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,783Balance at December 31, 2004
    
    $
    1,390
    
    
    $
    21,243
    
    
    $
    6,737
    
    
    $
    512,844
    
    
    $
    57,377
    
    
    $
    599,591
 See accompanying notes.
All amounts have been restated to reflect a 100% stock dividend on 12/15/03. 12




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) CONSOLIDATED STATEMENTS ofCASH FLOWS YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)C A S H   F L O W S  F R O M   O P E R A T I N G   A C T I V I T I E SNet income
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    2,524
    
    
    
    3,082
    
    
    
    3,705Amortization of investment and loan premiums, net
    
    
    443
    
    
    
    966
    
    
    
    505Deferred income tax expense (benefit)
    
    
    1,416
    
    
    
    (3,760
    )
    
    
    1,633Securities gains, net
    
    
    (37,349
    )
    
    
    (2,366
    )
    
    
    (7,258
    )Proceeds (outlay) from trading activity, net
    
    
    4,229
    
    
    
    694
    
    
    
    (626
    )Deferred compensation, net
    
    

    5,528
    
    
    
    4,064
    
    
    
    2,320Stock option expense
    
    
    1,402
    
    
    
    1,711
    
    
    
    Decrease (increase) in accrued interest receivable and other assets
    
    
    1,370
    
    
    
    (4,790
    )
    
    
    7,990Increase (decrease) in accrued interest payable and other liabilities
    
    
    2,895
    
    
    
    (959
    )
    
    
    (1,838
    )Net Cash Provided by Operating Activities
    
    
    80,397

    
    
    
    57,052
    
    
    
    55,745C A S H   F L O W S  F R O M  I N V E S T I N G   A C T I V I T I E SProceeds from maturities of held-to-maturity securities
    
    
    671
    
    
    
    119
    
    
    
    337Proceeds from maturities of available-for-sale securities
    
    
    209,218
    
    
    
    150,330
    
    
    
    73,868Proceeds from sales of available-for-sale securities
    
    
    15,559
    
    
    
    10,883
    
    
    
    233,589Purchases of available-for-sale securities
    
    
    (425,259
    )
    
    
    (135,267
    )
    
    
    (359,959
    )Proceeds from sales of non-hedge derivatives
    
    
    7,800
    
    
    
    
    
    
    
    Net increase in loans
    
    
    (360,670
    )
    
    
    (695,214
    )
    
    
    (275,006
    )Bad debt recoveries
    
    
    2,099
    
    
    
    3,114
    
    
    
    2,229Purchases of premises and equipment
    
    
    (1,610
    )
    
    
    (1,075
    )
    
    
    (2,652
    )Net Cash Used in Investing Activities
    
    
    (552,192
    )
    
    
    (667,110
    )
    
    
    (327,594
    )C A S H   F L O W S  F R O M   F I N A N C I N G  A C T I V I T I E SIncrease (decrease) in deposit accounts
    
    
    1,253,750
    
    
    
    786,629
    
    
    
    (61,683
    )Proceeds from issuance of long-term debt  subordinated debentures
    
    
    75,000
    
    
    
    172,500
    
    
    
    Repayment of debt
    
    
    (35,000
    )
    
    
    (9,000
    )
    
    
    (4,000
    )Increase (decrease) in other borrowings, net
    
    

    5,528
    
    
    
    (2,707
    )
    
    
    (3,706
    )Stock option exercises/settlements
    
    
    260
    
    
    
    291
    
    
    
    Retirements of common shares
    
    
    (10,821
    )
    
    
    (5,243
    )
    
    
    (1,698
    )Cash dividends paid on common shares
    
    
    (33,140
    )
    
    
    (18,548
    )
    
    
    (8,918
    )Net Cash Provided by (Used in) Financing Activities
    
    
    1,255,577
    
    
    
    923,922
    
    
    
    (80,005
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    783,782
    
    
    
    313,864
    
    
    
    (351,854
    )Cash and cash equivalents at beginning of year
    
    
    745,524
    
    
    
    431,660
    
    
    
    783,514Cash and Cash Equivalents at End of Year
    
    $
    1,529,306
    
    
    $
    745,524
    
    
    $
    431,660Supplemental disclosures:Interest paid
    
    $
    66,217
    
    
    $
    48,357
    
    
    $
    56,416Income taxes paid
    
    
    48,950
    
    
    
    30,900
    
    
    
    22,772
 See accompanying notes. 13




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T E S to C O N S
O L I D A T E D   F I N A N C I A L   S T A T E M E N T S N O T E 1: S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S 
 The consolidated financial statements include the accounts of Corus Bankshares, Inc. (Corus or
the Company) and its wholly owned subsidiary, Corus Bank, N.A. (the Bank). Corus, through its
subsidiary bank, provides retail banking services primarily in the Chicago metropolitan area. In
addition, Corus commercial lending group provides financing nationwide, almost exclusively
collateralized by real estate. In the preparation of the consolidated financial statements,
management is required to make certain estimates and assumptions that affect the reported amounts
contained in the consolidated financial statements. Management believes that the estimates made are
reasonable; however, changes in estimates may be required if economic or other conditions change
significantly beyond managements expectations. See Allowance for Loan Losses accounting policies
below. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Corus and its
subsidiary. Intercompany transactions impacting the income statement are limited to interest
payments by the subsidiary bank on parent company deposit accounts. Other intercompany transactions
include dividend payments, capital contributions, and the use of parent company stock in the
subsidiary banks Commercial Loan Officer Commission Program and the Stock Option Plan. All
intercompany accounts and transactions have been eliminated in the consolidated financial
statements. Cash and Cash Equivalents Cash and cash equivalents include cash, due from banks, and federal funds sold which have an
original maturity of 90 days or less. Securities Securities are classified based on managements intention at time of purchase. Taking any action
that would require the reclassification of any security to another classification after it has been
initially designated as trading, available-for-sale, or held-to-maturity, is against the Banks
policy and requires approval by the Board of Directors. Trading securities, which are generally held in anticipation of short-term gains, are carried at
their fair value. Realized and unrealized gains and losses on trading account securities are
reflected in the Consolidated Statements of Income in securities gains, net. Available-for-sale securities are those securities to be held for indefinite periods of time. These
securities
include those that management intends to use as part of its asset/liability management strategy and
may be sold in response to changes in interest rates, market conditions or other reasons. These
securities are carried at fair value. The difference between amortized cost and fair value, less
deferred income taxes, is reflected as a component of other comprehensive income in the
Consolidated Statements of Changes in Shareholders Equity. Amortized cost represents the cost of
securities plus or minus the amortization/accretion of premium/discount, adjusted for losses
associated with other than temporary declines in value. Securities held-to-maturity represents securities that Corus has the ability and positive intent to
hold to maturity. These securities are carried at amortized cost. Interest and dividend income, including amortization of premiums and accretion of discounts, are
included in interest, loan fees, and dividend income. Realized gains and losses are determined on a
specific identification basis. 14




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Gains or losses from available-for-sale securities are recognized when either the investment is
sold or when the company is acquired by another company, regardless of whether the acquisition
price is paid in cash or stock. Provisions are made to write down the value of securities for
declines in value that are other than temporary. Loans Loans are reported at the principal amount outstanding, net of any unearned discount or deferred
origination fees. Interest income is generally recognized using the level-yield method. Loan
origination fees, net of direct costs related to the origination, are deferred and amortized as a
yield adjustment over the lives of the related loans. The accrual of interest income is discontinued on any loan when there is reasonable doubt as to the
ultimate
collectibility of interest or principal. Loans past due over 90 days continue to accrue interest
income only if there are adequate sources of repayment. These sources include sufficient collateral
to cover repayment of the loan or other designated sources of repayment. Nonaccrual loans are
returned to accrual status when the financial position of the borrower indicates there is no longer
any reasonable doubt as to the payment of principal or interest. Nonaccrual loans, troubled debt restructurings, and loans past due by 90 days or more are
considered to
be impaired loans. Impairment is also measured by comparing the book value of the loan to its fair
value, based on the present value of expected cash flows, the market price of the loan, or the fair
value of the underlying collateral. If the fair value of the loan is less than the book value, a
valuation allowance is established as a component of the allowance for loan losses and the loan is
considered to be impaired. Interest income from nonaccrual impaired loans is recognized on a cash
basis and only when collection of the related principal balances is no longer in question. Home equity lines of credit and second mortgage loans are generally charged off after 120 days past
due or after 60 days past due if the account is in bankruptcy. Other loan types are charged off
when designated loss by the Banks regulators, past due more than 180 days (unless
well-collateralized), or when deemed uncollectible by management. Past due and delinquency status
is determined based on contractual terms. Allowance for Loan Losses The allowance for loan losses (the Allowance) is available to absorb losses inherent in the loan
portfolio.
Decreases to the Allowance result as loans, or portions thereof, are charged off while increases
result from the recovery of previously charged-off loans. In addition, the Allowance is increased
by provisions for loan losses that are charged to earnings. The Allowance is based upon quarterly analyses. The Allowance analyses take into account both
reviews of
specific credits and an overall assessment of the loan portfolio. 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 real estate, construction, commercial, and
residential) 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). For commercial real estate loans, management believes that Corus loss and delinquency experience
may not accurately reflect the inherent losses in the portfolio. Accordingly, for commercial real
estate loans, Corus utilizes the respective historical rates as published by the Federal Deposit
Insurance Corporation (FDIC) in its Quarterly Banking Profilepublication. The Quarterly Banking
Profileprovides net charge-off data by loan category, as submitted by financial institutions on
their quarterly Call Reports. Based on a review of the types of loans included 15




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) within each group, the loss rates reported for the groups most comparable to Corus commercial real
estate portfolio are utilized in the analysis. While Corus has experienced almost zero charge-offs
in its commercial real estate loan portfolio over the last 10 years, we are not so naive as to
believe that this trend can continue indefinitely. As such, unadjusted industry results are a
reasonable basis for estimating the losses inherent in our portfolio. In addition to historical loss rates, other 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 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 and Exchange Commission, may not ultimately be correct. In that event,
estimates of inherent losses may differ from actual results. Premises and Equipment Premises and equipment are stated at cost, less accumulated depreciation. Depreciation on premises
is computed primarily using the straight-line method over the estimated useful life. Depreciation
on furniture and equipment is computed using accelerated methods. Expenditures for normal repairs
and maintenance are charged to expense as incurred. Other Real Estate Owned Other real estate owned includes properties acquired through foreclosure. These properties are
generally recorded at the lower of cost or estimated realizable value. Gains and losses from the
sale or write-down of other real estate owned are included in other income. The net costs of
maintaining these properties are included in operating expenses. Goodwill Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is subjected to an annual
impairment test. The test consists of a two-step process whereby a determination is first made as
to whether impairment exists, and then whether an adjustment is required. Derivatives The Company enters into certain derivative transactions primarily as part of its overall interest
rate risk management process. Interest rate derivatives may also be purchased as trading securities
in anticipation of taking gains on short-term price movements. SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended, requires a company to recognize all
derivative instruments at fair value on its balance sheet. The accounting for changes in fair value
(i.e., gains or losses) of a derivative instrument depends on whether it has been designated and
qualifies as part of a hedging relationship and further, on the type of hedging relationship. The
Company formally documents all relationships between hedging instruments and hedged items, as well
as its risk-management objective and strategy for undertaking each hedge transaction. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the
fair value of fixed-rate assets, liabilities, or firm commitments are considered fair value hedges
under SFAS No. 133. Fair value hedges are accounted for by recording the fair value of the
derivative instrument and the fair value of the hedged asset or liability on the balance sheet. The
changes in the fair value of the derivatives and the hedged assets or 16




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) liabilities are recorded in the income statement. The adjustment to the hedged asset or liability
is included in the basis of the hedged item, while the fair value of the derivative is recorded as
a freestanding asset or liability. Actual cash receipts or payments and related amounts accrued
during the period on derivatives, included in a fair value hedge relationship, are recorded as
offsets to the related interest income or expense recorded on the hedged asset or liability. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in
expected future cash flows, or other types of forecasted transactions, are considered cash flow
hedges. Cash flow hedges are accounted for by recording the fair value of the derivative instrument
on the balance sheet as either a freestanding asset or liability, with a corresponding offset
recorded in other comprehensive income within shareholders equity, net of taxes. Amounts are
reclassified from other comprehensive income to the income statement in the period or periods the
hedged transaction affects earnings. Under both the fair value and cash flow hedge methods, any ineffective portions of the hedges are
recognized immediately in income. For derivative instruments not designated as hedging instruments,
the gain or loss is recognized in noninterest income as a part of securities gains, net. Stock-Based Employee Compensation Corus utilizes its stock to compensate employees under two different plans, the Stock Option Plan
and the
Commercial Loan Officer Commission Program (the CLO Program). These plans are described more
fully in Note 14 and in Managements Discussion and Analysis of Financial Statements. Effective January 1, 2003, Corus adopted the fair value recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Corus elected to adopt SFAS No. 123 using the modified
prospective method. Under the modified prospective method, the recognition of compensation cost
beginning in 2003 is the same as what would have been recognized had the provisions of SFAS No. 123
been applied since the date of grant for all outstanding options. However, results for prior years
have not been restated and therefore reflect the previous method of accounting for stock-based
compensation under the recognition and measurement provisions of Accounting Principles Board
Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees, and
 related Interpretations. Under the fair-value method, compensation cost for stock-based compensation is recognized over the
vesting period of the instrument based on the fair value as determined at the grant date. No
adjustments to expense are recorded to reflect any changes in fair value subsequent to the grant
date. Exercises, in general, result in no additional expense and compensation expense is never
recognized for options forfeited prior to vesting. With respect to the CLO Program, under APB No. 25, Corus was required to account for any
compensation deferred in Corus stock under variable plan accounting. As such, Corus was required to
record an adjustment to compensation expense based on the value of deferred shares as determined by
changes in the market price of Corus stock. This mark-to-market adjustment is not required under
SFAS No. 123. However, mark-to-market adjustments are still required for compensation deferred in
investments other than Corus stock. All stock options granted under the Stock Option Plan had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following table illustrates the
effect on net income and earnings per share if the fair-value-based method had been applied to all
outstanding and unvested awards in each period. 17




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands, except per-share data)Net income, as reported
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314Add: Stock-based employee compensation expense included
in reported net income, net of related tax effects
    
    
    967
    
    
    
    1,112
    
    
    
    101Deduct: Total stock-based employee compensation
expense determined
under fair-value-based method for all awards, net of
related tax effects
    
    
    (967
    )
    
    
    (1,112
    )
    
    
    (1,046
    )Pro Forma Net Income
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    48,369Earnings per share:(1)Basic  as reported
    
    $
    3.51
    
    
    $
    2.08
    
    
    $
    1.74Basic  pro forma
    
    
    3.51
    
    
    
    2.08
    
    
    
    1.71Diluted  as reported
    
    
    3.40
    
    
    
    2.04
    
    
    
    1.72Diluted  pro forma
    
    
    3.40
    
    
    
    2.04
    
    
    
    1.69
 (1) All amounts have been restated to reflect a 100% stock dividend on 12/15/03.
 For the pro forma disclosure, the estimated fair value of the options is amortized to expense over
the options five-year vesting period. The fair value of options granted was computed using the
Black-Scholes model using the following assumptions: GRANT DATE
    
    7/19/04
    
    
    4/30/04
    
    
    4/10/03
    
    
    6/11/02
    
    
    4/22/02Risk-free rate
    
    
    4.68
    %
    
    
    4.85
    %
    
    
    4.28
    %
    
    
    5.44
    %
    
    
    5.68
    %Expected life
    
    10 years
    
    10 years
    
    10 years
    
    10 years
    
    10 yearsExpected volatility
    
    
    27.20
    %
    
    
    27.30
    %
    
    
    25.90
    %
    
    
    26.30
    %
    
    
    26.30
    %Expected dividend yields
    
    
    3.15
    %
    
    
    3.27
    %
    
    
    4.76
    %
    
    
    1.32
    %
    
    
    1.28
    %Fair value(1)
    
    $
    10.92
    
    
    $
    10.48
    
    
    $
    3.80
    
    
    $
    9.79
    
    
    $
    10.36
  (1) All amounts have been restated to reflect a 100% stock dividend on 12/15/03.
 Reclassifications Certain prior year amounts have been reclassified to conform to the 2004 presentation. 18




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T E 2 : R E C E N T
  A C C O U N T I N G  
 P R O N O U N C E M E N T S 
 SFAS No. 123 (Revised 2004)  Share-Based Payment On December 16, 2004, the FASB issued SFAS No. 123(R), which is a revision of SFAS No. 123,
Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows.
Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123.
However, Statement 123(R) requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the income statement based on their fair values. Pro
forma disclosure is no longer an alternative. For calendar-year companies, Statement 123(R) must be
adopted no later than July 1, 2005. Corus adopted the fair-value-based method of accounting for share-based payments effective January
1, 2003, using the modified prospective method described in SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure. Currently, the Company uses the
Black-Scholes formula to
estimate the value of stock options granted to employees and expects to continue to use this
acceptable option valuation model upon the required adoption of Statement 123(R) on July 1, 2005.
The Company does not anticipate that adoption of Statement 123(R) will have a material impact on
its results of operations or its financial position. 19




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T E   3 : S E C U R I T I E S 
 The amortized cost, gross unrealized gains and losses, and fair value of securities were as
follows: AMORTIZED
    
    
    GROSS UNREALIZED
    
    
    FAIRDECEMBER 31, 2004
    
    COST
    
    
    GAINS
    
    
    LOSSES
    
    
    VALUE(dollars in thousands)A V A I L A B L E    F O R    S A L EU.S. Government and agencies
    
    $
    427,868
    
    
    $
    23
    
    
    $
    (204
    )
    
    $
    427,687Common stocks
    
    
    128,620
    
    
    
    90,479
    
    
    
    
    
    
    
    219,099Other
    
    
    19,314
    
    
    
    535
    
    
    
    (10
    )
    
    
    19,839Total
    
    $
    575,802
    
    
    $
    91,037
    
    
    $
    (214
    )
    
    $
    666,625H E L D    T O    M A T U R I T YState and municipal
    
    $
    600
    
    
    $
    5
    
    
    $
    
    
    
    $
    605Other
    
    
    11,744
    
    
    
    4
    
    
    
    
    
    
    
    11,748Total
    
    $
    12,344
    
    
    $
    9
    
    
    $
    
    
    
    $
    12,353
 AMORTIZED
    
    
    GROSS UNREALIZED
    
    
    FAIRDECEMBER 31, 2003
    
    COST
    
    
    GAINS
    
    
    LOSSES
    
    
    VALUE(dollars in thousands)A V A I L A B L E    F O R    S A L EU.S. Government and agencies
    
    $
    205,902
    
    
    $
    837
    
    
    $
    
    
    
    $
    206,739Corporate debt securities
    
    
    27,427
    
    
    
    764
    
    
    
    
    
    
    
    28,191Common stocks
    
    
    95,661
    
    
    
    93,183
    
    
    
    
    
    
    
    188,844Other
    
    
    8,979
    
    
    
    153
    
    
    
    
    
    
    
    9,132Total
    
    $
    337,969
    
    
    $
    94,937
    
    
    $
    
    
    
    $
    432,906H E L D    T O    M A T U R I T YState and municipal
    
    $
    1,100
    
    
    $
    44
    
    
    $
    
    
    
    $
    1,144Other
    
    
    10,644
    
    
    
    14
    
    
    
    
    
    
    
    10,658Total
    
    $
    11,744
    
    
    $
    58
    
    
    $
    
    
    
    $
    11,802
 20




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) The scheduled maturities for securities were as follows: AVAILABLE-FOR-SALE
    
    
    HELD-TO-MATURITYAMORTIZED
    
    
    FAIR
    
    
    AMORTIZED
    
    
    FAIRDECEMBER 31, 2004
    
    COST
    
    
    VALUE
    
    
    COST
    
    
    VALUE(dollars in thousands)Due in:One year or less
    
    $
    283,362
    
    
    $
    283,360
    
    
    $
    601
    
    
    $
    606After one year through five years
    
    
    144,506
    
    
    
    144,327
    
    
    
    70
    
    
    
    74After five years through ten years
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1After ten years
    
    
    3,143
    
    
    
    3,240
    
    
    
    23
    
    
    
    23Subtotal
    
    
    431,011
    
    
    
    430,927
    
    
    
    695
    
    
    
    704Securities not due at a single maturity
    
    
    144,791
    
    
    
    235,698
    
    
    
    11,649
    
    
    
    11,649Total
    
    $
    575,802
    
    
    $
    666,625
    
    
    $
    12,344
    
    
    $
    12,353
 Actual maturities may differ from those scheduled due to prepayments by the issuers. Gross gains realized on sales of available-for-sale securities totaled $31.6 million, $10.1
million, and $4.8 million during 2004, 2003, and 2002, respectively. Gross realized losses from the
sale of available-for-sale securities since 2002 are limited to a loss of $25,000 recognized in
2002. Corus did, however, realize a book loss in 2003 of $9.0 million due to an adjustment for an
other than temporary decline in value, as defined by SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Please see Managements Discussion and Analysis of
Financial Statements for further discussion. Securities having an aggregate carrying value of $19.3 million and $12.3 million at December
31, 2004 and 2003, respectively, were pledged as collateral to secure public deposits and for other
purposes. 21




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT) NOTE 4: LOANS 
 Total loans, net of deferred loan fees and other discounts of $36.7 million and $25.5 million at
December 31, 2004 and 2003, respectively, were as follows: DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)Commercial real estate:Senior non-construction
    
    $
    1,419,670
    
    
    $
    1,207,015Senior construction
    
    
    1,101,973
    
    
    
    1,005,206Mezzanine
    
    
    111,278
    
    
    
    53,790Total Commercial Real Estate
    
    
    2,632,921
    
    
    
    2,266,011Commercial
    
    
    109,582
    
    
    
    98,621Residential real estate and other
    
    
    51,325
    
    
    
    69,139Total
    
    $
    2,793,828
    
    
    $
    2,433,771
 In addition to the loan balances listed in the above table, Corus has loan commitments of $2.7
billion representing the (as yet) unfunded balances associated with Corus loans. Please see Note
12 for additional details. As of December 31, 2004, 67% of Corus outstanding commercial real estate loans (76% of total
commitments) were collateralized by condominium buildings in major metropolitan areas. Please see
Managements Discussion and Analysis of Financial Statements for a breakdown of loans by size,
collateral type, and geographic distribution. Changes in the allowance for loan losses were as follows: 2004
    
    
    2003
    
    
    2002(dollars in thousands)Balance at January 1
    
    $
    36,448
    
    
    $
    36,629
    
    
    $
    40,457Provision for loan losses
    
    
    
    
    
    
    
    

    
    
    Charge-offs
    
    
    (665
    )
    
    
    (3,295
    )
    
    
    (6,057
    )Recoveries
    
    
    2,099
    
    
    
    3,114
    
    
    
    2,229Reclassification
    
    
    (5,000
    )
    
    
    
    
    
    
    Balance at December 31
    
    $
    32,882
    
    
    $
    36,448
    
    
    $
    36,629
 In 2004, Corus reclassified $5.0 million of the Allowance to a separate liability account,
representing a reserve for losses associated with unfunded loan commitments. 22




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) At December 31, 2004 and 2003, Corus had
impaired loans totaling $29.2 million and $15.6 million, respectively, of
which $20,000 and $17,000 , respectively, have been specifically reserved
for in the allowance for loan losses. The average balance of impaired loans during the year was
$19.6 million in 2004 and $18.9 million in
2003. Interest income recognized on impaired loans was $852,000 in
2004 and $630,000 in 2003. Nonaccrual loans totaled $76,000 and $7.9 million as of
December 31, 2004 and 2003, respectively. The interest
foregone on these loans, net of cash receipts, was $4,300 and $1.3
million for 2004 and 2003, respectively. During 2004,
a nonaccrual loan totaling $7.1 million was returned to accrual status. The interest
not recognized during the nonaccrual period is being earned over the remaining life of the loan. Changes in the balance of loans to directors and principal officers of Corus and its subsidiary
were as follows: (dollars in thousands)Balance at December 31, 2003
    
    $
    26,121New loans
    
    
    Repayments
    
    
    (140
    )Advances
    
    
    14,531Reclassifications
    
    
    (40,512
    )Balance at December 31, 2004
    
    $
    
 These loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with other customers. In
the opinion of management, these loans did not involve more than the normal risk of collection or
possess other favorable features. Reclassifications reflect the balance of loans to individuals who
are no longer classified as directors or principal officers. 23




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T E  5  :  P R E M I S E S  A N D  E Q U I P M E N T
 Premises and equipment were as follows: DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)Land and improvements
    
    $
    8,366
    
    
    $
    8,344Buildings and improvements
    
    
    28,392
    
    
    
    27,956Furniture and equipment
    
    
    19,980
    
    
    
    18,828Gross Premises and Equipment
    
    
    56,738
    
    
    
    55,128Less accumulated depreciation
    
    
    (31,339
    )
    
    
    (28,815
    )Total Premises and Equipment, Net
    
    $
    25,399
    
    
    $
    26,313
 Two banking locations occupy offices under long-term operating lease agreements. Rent
expense under these lease agreements totaled $404,000, $372,000, and
$344,000 for the years ended December 31, 2004,
2003, and 2002, respectively. Minimum fixed lease obligations, including taxes, insurance and other expenses, to the extent such
costs are fixed by lease agreements, for leases in effect at December 31,
2004, were as follows: YEARS ENDING DECEMBER 31
 (dollars in thousands)2005
    
    $
    4102006
    
    
    4202007
    
    
    4302008
    
    
    4412009
    
    
    4512010 and thereafter
    
    
    1,585Minimum Payments
    
    $
    3,737
 24




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T E  6  :  D E P O S I T S
 Interest-bearing deposits at
December 31, 2004, include
certificates of deposit (CDs) totaling $1.8 billion, of which
$1.0 billion related to CDs in amounts of $100,000 or more.
At December 31, 2003, CDs totaled $1.0 billion,
of which $0.7 billion related to CDs in amounts of $100,000
or more. Interest expense on CDs of $100,000 or more totaled
$20.5 million and $18.5 million in 2004 and
2003, respectively. At December 31, 2004, the scheduled maturities of all certificates of
deposit were as follows: BROKERED
    
    
    RETAILYEARS ENDED DECEMBER 31
    
    CDs
    
    
    CDs
    
    
    TOTAL(dollars in thousands)2005
    
    $
    116,435
    
    
    $
    1,184,937
    
    
    $
    1,301,3722006
    
    
    98,229
    
    
    
    30,032
    
    
    
    128,2612007
    
    
    79,721
    
    
    
    15,871
    
    
    
    95,5922008
    
    
    94,001
    
    
    
    6,420
    
    
    
    100,4212009
    
    
    63,395
    
    
    
    7,188
    
    
    
    70,5832010 and thereafter
    
    
    56,138
    
    
    
    
    
    
    
    56,138Total
    
    $
    507,919
    
    
    $
    1,244,448
    
    
    $
    1,752,367
 As of December 31, 2004 and 2003, overdraft demand
deposits totaling $33.4 million and $24.6 million, respectively, were
reclassified from deposits to loans. 25




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T
E  7  :  L O N G  T E R M  D E B T    S U B O R D I N A T E D  D E B E N T U R E S
 In 2004, Corus formed two wholly owned finance subsidiaries, for the sole
purpose of issuing Trust Preferred securities, in addition to the five subsidiaries formed in
2003. The subsidiaries have issued a total of $247.5 million in Trust
Preferred securities, and Corus, in turn, has issued a total of $255.2 million in
subordinated debentures to the trusts  the difference being Corus investment in the subsidiaries.
These subsidiaries are not consolidated for accounting purposes. Corus Consolidated Balance Sheets
include gross debentures issued to unconsolidated subsidiaries of $255.2 million and
an investment in unconsolidated subsidiaries of $7.7 million. The terms for both the
Trust Preferred securities and the subordinated debentures are essentially identical. The
instruments all mature 30 years from the issuance date and include interest rates
ranging from LIBOR plus 2.22% to 3.10%, resetting quarterly.
Combined issuance fees totaled $1.6 million and are being
amortized over the 30year periods. Interest is payable quarterly, although Corus has the option to defer
the interest payments for a period not to exceed 20 consecutive quarters. Absent the
exercise of this option, Corus has no financial covenants related to this debt. Debentures outstanding totaled $255.2 million and $172.5 million as
of December 31, 2004 and 2003, respectively. $77.3
million of the debentures are scheduled to mature in 2034 , with the remaining
amount scheduled to mature in 2033. Interest and fees included in interest expense
totaled $9.4 million and $1.8 million for the years ended December
31, 2004 and 2003, respectively. 26




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) N O T E  8  :  O T H E R  B O R R O W I N G S
 As of December 31, 2004 , Corus had an agreement to borrow up to
$80 million in a revolving line of credit maturing on
June 25, 2006. Interest is payable quarterly and accrues at a rate of LIBOR plus
140 basis points. In addition, a fee at an annual rate of
1/4% of the average unused commitment is due quarterly. As of December 31, 2003, Corus had a similar arrangement for a
revolving line of credit of up to $20 million combined with a term note of $50
million maturing on June 25, 2006. Interest was payable quarterly
but accrued at a rate of LIBOR plus 150 basis points. The unfunded fee of
1/4% also applied. 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 both loan losses and unfunded loan commitments to
total loans. Corus is in compliance with all loan covenants as of
December 31, 2004. The debt is secured by 100% of the common stock of the subsidiary bank. Outstanding balances, and interest and fees for these notes were as follows: BALANCE OUTSTANDING
    
    
    INTEREST AND FEES FOR THEAT DECEMBER 31
    
    
    YEARS ENDED DECEMBER 312004
    
    
    2003
    
    
    2004
    
    
    2003(dollars in thousands)Term note
    
    $
    
    
    
    $
    35,000
    
    
    $
    691
    
    
    $
    1,068Revolving note
    
    
    5,500
    
    
    
    
    
    
    
    130
    
    
    
    89Other
    
    
    1,431
    
    
    
    1,403
    
    
    
    7
    
    
    
    7Total
    
    $
    6,931
    
    
    $
    36,403
    
    
    $
    828
    
    
    $
    1,164
 Other debt relates to periodic balances associated with Corus role of facilitating tax
payments for the U.S. Treasury. Interest is paid at a rate of Federal Funds Rate minus 25
basis points and the debt is secured by a pledged security valued at approximately
$5.5 million. N O T E  9  :  I N C O M E  T A X E S
 The components of income tax expense were as follows: YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Current tax expense
    
    $
    48,297
    
    
    $
    34,305
    
    
    $
    22,947Deferred tax expense (benefit)
    
    
    370
    
    
    
    (3,760
    )
    
    
    1,633Deferred federal benefit  SFAS No.123 adoption
    
    
    
    
    
    
    (1,141
    )
    
    
    Income Tax Provision
    
    $
    48,667
    
    
    $
    29,404
    
    
    $
    24,580
 27




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) A reconciliation of the statutory federal income tax rate to the effective rate is as
follows: YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Dividends received deduction
    
    
    (1.1
    )
    
    
    (1.5
    )
    
    
    (1.6
    )Adjustment for tax exposure
    
    
    (0.8
    )
    
    
    
    
    
    
    Tax-exempt income
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )Other, net
    
    
    0.1
    
    
    
    0.1
    
    
    
    Effective Rate
    
    
    33.2
    %
    
    
    33.5
    %
    
    
    33.3
    %
 Deferred taxes were recorded based upon differences between the financial statement and tax
basis of assets and liabilities. The following deferred taxes were recorded: DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)D E F E R R E D  T A X  A S S E T SAllowance for loan losses and reserve for
loan losses related to unfunded commitments
    
    $
    13,131
    
    
    $
    11,842Deferred compensation
    
    
    6,649
    
    
    
    4,405Stock options
    
    
    2,481
    
    
    
    1,984Other than temporary impairment
    
    
    1,735
    
    
    
    3,137Other deferred tax assets
    
    
    300
    
    
    
    266Gross Deferred Tax Assets
    
    
    24,296
    
    
    
    21,634D E F E R R E D  T A X  L I A B I L I T I E SUnrealized securities gains
    
    
    (32,866
    )
    
    
    (33,228
    )Gains on nonmonetary stock transactions
    
    
    (7,593
    )
    
    
    (1,284
    )Purchase accounting adjustments
    
    
    (980
    )
    
    
    (932
    )Pension
    
    
    (504
    )
    
    
    (694
    )Mark-to-market adjustments on non-hedge derivatives
    
    
    
    
    
    
    (1,947
    )Other deferred tax liabilities
    
    
    (986
    )
    
    
    (1,032
    )Gross Deferred Tax Liabilities
    
    
    (42,929
    )
    
    
    (39,117
    )Net Deferred Tax Liability
    
    $
    (18,633
    )
    
    $
    (17,483
    )
 Management believes that the gross deferred tax asset of $24.3 million at
December 31, 2004, could be realized through the carryback of taxable income against
prior years. Please refer to the Noninterest Expense section of Managements Discussion and
Analysis of Financial Statements. 28




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) NOTE 10: EMPLOYEE BENEFIT PLANS 
 Corus maintains a noncontributory defined benefit pension plan (Retirement Income Plan and
Trust) and a defined contribution plan (Employees Savings Plan and Trust). Expense for each of the plans was as
follows: YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Retirement Income Plan and Trust
    
    $
    613
    
    
    $
    1,054
    
    
    $
    158Employees Savings Plan and Trust
    
    
    199
    
    
    
    206
    
    
    
    190Total
    
    $
    812
    
    
    $
    1,260
    
    
    $
    348
 Pension Plan Substantially all employees are eligible to participate in a noncontributory defined benefit
plan after meeting age and service requirements. Pension benefits are based on length of service
and compensation. Funding for the plan is based on actuarial cost methods. No contributions were
made during the three years ended December 31, 2004. Pension plan assets are primarily invested in common stocks. Net periodic benefit cost was comprised of the following: YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Service cost
    
    $
    787
    
    
    $
    751
    
    
    $
    615Interest cost
    
    
    1,387
    
    
    
    1,271
    
    
    
    1,177Actual (gain)/loss on plan assets
    
    
    (2,448
    )
    
    
    (4,752
    )
    
    
    3,941Net amortization and deferral
    
    
    887
    
    
    
    3,784
    
    
    
    (5,575
    )Net Periodic Benefit Cost
    
    $
    613
    
    
    $
    1,054
    
    
    $
    158
 29




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Reconciliations of the plans projected benefit obligations and fair value of plan assets as
well as the funded status to the amounts recognized in Corus Consolidated Balance Sheets follow: Change in Projected Benefit Obligation 2004
    
    
    2003(dollars in thousands)Benefit obligation at January 1
    
    $
    20,553
    
    
    $
    19,312Service cost
    
    
    787
    
    
    
    751Interest cost
    
    
    1,387
    
    
    
    1,271Actuarial loss
    
    
    2,505
    
    
    
    146Benefits paid
    
    
    (954
    )
    
    
    (927
    )Benefit Obligation at December 31
    
    $
    24,278
    
    
    $
    20,553
 Change in Fair Value of Plan Assets 2004
    
    
    2003(dollars in thousands)Fair value of plan assets at January 1
    
    $
    19,946
    
    
    $
    16,121Actual gain on plan assets
    
    
    2,448
    
    
    
    4,752Benefits paid
    
    
    (954
    )
    
    
    (927
    )Fair Value of Plan Assets at December 31
    
    $
    21,440
    
    
    $
    19,946
 Funded Status DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)Funded status
    
    $
    (2,838
    )
    
    $
    (607
    )Unrecognized actuarial loss
    
    
    4,207
    
    
    
    2,589Prepaid Benefit Cost
    
    $
    1,369
    
    
    $
    1,982
 The prepaid benefit cost represents the amount recognized in the Consolidated Balance Sheets
as of December 31. The accumulated benefit obligation for the plan was $18.2 million and $16.0 million at December 31, 2004 and
2003, respectively. 30




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) The following assumptions
were used in accounting for the pension plan: Benefit Obligation DECEMBER 31
    
    2004
    
    
    2003Discount rate
    
    
    6.25
    %
    
    
    6.75
    %Rate of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
 Net Periodic Benefit Cost DECEMBER 31
    
    2004
    
    
    2003Discount rate
    
    
    6.75
    %
    
    
    6.75
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %Rate of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
 Plan assets are invested entirely in diversified equity securities and it is managements
plan to keep them invested in a diversified pool of equities going forward. Managements investment
horizon is considered long term and, as such, long-term equity returns were studied using
historical data over rolling 10-, 15- and 20- year periods going back until the early 20thcentury. Based on its review of these
historical returns, management determined that an expected long-term rate of return of 8.00%
was reasonable. Plan Assets Corus pension plan weighted average allocations at December 31, 2004 and
2003, by asset category were as follows: PLAN ASSETS AT DECEMBER 31ASSET CATEGORY
    
    2004
    
    
    2003Equity securities
    
    
    99
    %
    
    
    99
    %Other
    
    
    1
    %
    
    
    1
    %Total
    
    
    100
    %
    
    
    100
    %
 The plan trustees intentions are to invest the majority of plan assets in a portfolio of
diversified domestic equity securities with the remainder in cash to meet the immediate needs of
the plan. The plan trustees believe that over the long term, which is thought to be the proper
horizon for this asset, equity securities will outperform all other investment alternatives. This
is based on careful study of historical returns of various asset classes. The plan trustees are
prepared to accept some volatility in specific annual returns during periods when equity securities
under-perform the broader market, however, they firmly believe that, over the long run, such a
strategy will perform better than a more diversified asset allocation strategy. Contributions Corus expects to make no contributions to its pension plan in 2005 . 31




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Expected Future Benefit
Payments The following benefit payments are expected to be paid in each of the next five fiscal years
and in the aggregate for the five fiscal years thereafter: PENSION BENEFITYEARS ENDING DECEMBER 31
    
    PAYMENTS(dollars in thousands)2005
    
    $
    9962006
    
    
    9982007
    
    
    9932008
    
    
    9802009
    
    
    1,0272010  2014
    
    
    6,780Total
    
    $
    11,774
 Measurement Date The measurement date for the 2004 fiscal year is December 31, 2004.
Asset values are determined as of this date. Pension liabilities are valued at the beginning
of the year and adjusted to December 31. The end of the year discount rate is used to
determine the beginning of year liability. Savings Plan Most employees are eligible to become participants of Corus Employees Savings Plan and
Trust. Corus matching contributions to this plan are discretionary. For the years ended December
31, 2004, 2003, and 2002, Corus matched 20% of participants
contributions, up to a maximum of $1,500. NOTE 11: DERIVATIVES 
 SFAS No. 133, as amended, established 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 item 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 derivatives primarily to hedge its interest rate risk. This is accomplished via
interest rate swaps (to effectively convert fixed-rate loans and brokered CDs to
floating rate) and interest rate basis swaps (to effectively convert LIBOR -based
floating rate loans to Treasury-based floating-rate loans). Nearly all of the interest rate swaps
qualified as fair value hedges and received hedge accounting treatment. While the interest rate
basis swaps provided the desired economic hedge to interest rate fluctuations, they did not meet
the strict criteria required to qualify for hedge accounting. The interest rate basis swaps were
sold in April 2004. Corus also purchases and sells interest rate derivatives in anticipation of trading gains. The
impact of market adjustments, as well as any gains or losses upon the sale of these swaps held for
trading, is recorded directly into income. 32




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) The income statement impact and notional amounts related to both hedge and non-hedge derivatives
were as follows: Derivative Gain/(Loss)INCOME STATEMENTYEARS ENDED DECEMBER 31
    
    CLASSIFICATION
    
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Fair value hedge (fixed-to-floating swaps):Loan hedge
    
    Interest Income
    
    $
    (10
    )
    
    $
    33
    
    
    $
    (85
    )Brokered CD hedge(1)
    
    Interest Expense
    
    
    
    
    
    
    
    
    
    
    Total fair value hedge
    
    
    
    
    
    
    (10
    )
    
    
    33
    
    
    
    (85
    )Non-hedge:Fixed-to-floating swaps  trading
    
    Noninterest Income
    
    
    3,580
    
    
    
    
    
    
    
    Fixed-to-floating swaps  loans
    
    Noninterest Income
    
    
    80
    
    
    
    37
    
    
    
    (31
    )Basis swaps
    
    Noninterest Income
    
    
    1,446
    
    
    
    523
    
    
    
    3,150Total non-hedge
    
    
    
    
    
    
    5,106
    
    
    
    560
    
    
    
    3,119Total Derivative Gain
    
    
    
    
    
    $
    5,096
    
    
    $
    593
    
    
    $
    3,034
 Notional Amounts of DerivativesDECEMBER 31
    
    
    
    
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Fair value hedge (fixed-to-floating swaps):Loan hedge
    
    
    
    
    
    $
    3,539
    
    
    $
    5,664
    
    
    $
    7,356Brokered CD hedge(1)
    
    
    
    
    
    
    418,503
    
    
    
    427,503
    
    
    
    Non-hedge:Fixed-to-floating swaps  trading
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fixed-to-floating swaps  loans
    
    
    
    
    
    
    879
    
    
    
    963
    
    
    
    1,047Basis swaps
    
    
    
    
    
    
    
    
    
    
    950,000
    
    
    
    700,000
   (1)
    These swaps qualify for the shortcut method, as defined by SFAS No.
133 . Corus does not anticipate any income statement impact from the associated
mark-to-market adjustments. The counterparties to these instruments are major financial institutions with credit ratings
of A or better. 33




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) NOTE 12: FINANCIAL INSTRUMENTS 
 In the normal course of business, Corus invests in various financial assets, incurs various
financial liabilities and enters into agreements involving unrecognized financial instruments
(consisting of standby letters of credit, commitment letters, and unused lines of credit). The fair
value estimates of financial instruments presented below are not necessarily indicative of the
amounts Corus might receive or pay in actual market transactions. Potential taxes and other
transaction costs have also not been considered in estimating fair value. As some of Corus assets
and liabilities are not considered financial instruments, the disclosures below do not reflect the
fair value of Corus as a whole. Corus had the following financial instruments: 2004
    
    
    2003DECEMBER 31
    
    CARRYINGAMOUNT
    
    
    FAIRVALUE
    
    
    CARRYINGAMOUNT
    
    
    FAIRVALUE(dollars in thousands)F I N A N C I A L   A S S E T SCash and cash equivalents
    
    $
    1,529,306
    
    
    $
    1,529,306
    
    
    $
    745,524
    
    
    $
    745,524Securities available-for-sale
    
    
    666,625
    
    
    
    666,625
    
    
    
    432,906
    
    
    
    432,906Securities held-to-maturity
    
    
    12,344
    
    
    
    12,353
    
    
    
    11,744
    
    
    
    11,802Loans, net
    
    
    2,760,946
    
    
    
    2,764,872
    
    
    
    2,397,323
    
    
    
    2,414,258Accrued interest receivable
    
    
    14,473
    
    
    
    14,473
    
    
    
    12,795
    
    
    
    12,795Other assets
    
    
    
    
    
    
    
    
    
    
    5,657
    
    
    
    5,657F I N A N C
I A L   L I A B I L I T I E SDeposits without a stated maturity
    
    $
    2,347,785
    
    
    $
    2,347,785
    
    
    $
    1,827,480
    
    
    $
    1,827,480Certificates of deposit
    
    
    1,752,367
    
    
    
    1,753,225
    
    
    
    1,018,922
    
    
    
    1,029,958Long-term debt  subordinated debentures
    
    
    255,158
    
    
    
    262,660
    
    
    
    172,500
    
    
    
    173,178Other borrowings
    
    
    6,931
    
    
    
    6,931
    
    
    
    36,403
    
    
    
    36,403Accrued interest payable
    
    
    8,005
    
    
    
    8,005
    
    
    
    3,627
    
    
    
    3,627Other liabilities
    
    
    18
    
    
    
    18
    
    
    
    60
    
    
    
    60U N R E C O
G N I Z E D   F I N A N C I A L  L I A B I L I T I E SStandby letters of credit
    
    $
    5
    
    
    $
    5
    
    
    $
    367
    
    
    $
    367Commitment letters
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unused lines of credit
    
    
    
    
    
    
    831
    
    
    
    
    
    
    
    947
 Cash and cash equivalentsare short-term in nature and, as such, fair value approximates
carrying value. Securitiesconsist primarily of common stocks and investments in U.S. government and
agency notes. Fair values are based on quoted market prices, when available. Non-quoted instruments
are valued based on discounted cash flows using current interest rates for similar securities. 34




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Loansare valued based on type of loan. The fair value of variable-rate loans that reprice
frequently is assumed to approximate carrying value. The fair value of fixed-rate loans is based on
the discounted amount of scheduled cash flows. The discount rate used is equal to the current rate
of the appropriate index plus the average spread on the existing portfolio. Carrying value and fair
value include the market value of both hedged loans and the related interest rate swaps. The total
hedge ineffectiveness reflected in these balances was immaterial at December 31, 2004.
The fair values of interest rate swaps are based on either quoted market or dealer prices. Accrued interest receivableis short-term in nature and, as such, fair value approximates carrying
value. Other assetsreflect the fair value of basis swaps that do not qualify for hedge accounting. As
these are marked to market on a quarterly basis, carrying value equals fair value. The fair values
of basis swaps are based on either quoted market or dealer prices. Deposits without a stated maturityare assumed to approximate carrying value. Certificates of depositfair values are based on discounted contractual cash flows. Discount rates
are selected using the rates that were offered at year-end. Long-term Debt  subordinated debenturesare floating rate and reprice quarterly. However, the
spreads available on similar debt may fluctuate over time giving rise to changes in fair value. Other borrowingsare either short-term in nature or reprice quarterly and, as such, fair value
approximates carrying value. Accrued interest payableis short-term in nature and, as such, fair value approximates carrying
value. Other liabilitiesreflect the fair value of interest rate swaps that do not qualify for hedge
accounting. As these are marked to market on a quarterly basis, carrying value equals fair value.
The fair values of interest rate swaps are based on either quoted market or dealer prices. Unrecognized financial liabilitiesare valued based on estimated fees currently charged to enter
similar agreements, taking into account the remaining terms of the agreement and the present
creditworthiness of the counterparties. Carrying value represents deferred fees arising from the
unrecognized financial instruments. 35




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) The following is additional information related to the unrecognized financial liabilities: DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)S T A N D B Y  L E T T E R S  O
F  C R E D I TCommercial real estate:Senior non-construction
    
    $
    12,937
    
    
    $
    10,502Senior construction
    
    
    
    
    
    
    Mezzanine
    
    
    
    
    
    
    Commercial
    
    
    4,328
    
    
    
    2,159Home equity
    
    
    
    
    
    
    Consumer
    
    
    

    
    
    
    Total Standby Letters of Credit
    
    
    17,265
    
    
    
    12,661C O M M I T M E N T  L
E T T E R S  O U T S T A N D I N GCommercial real estate:Senior non-construction
    
    
    35,500Senior construction
    
    
    52,500
    
    
    
    375,865Mezzanine
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    Total Commitment Letters
    
    
    88,000
    
    
    
    375,865U N U S E D  C
O M M I T M E N T S  U N D E R  L
I N E S  O F  C
R E D I TCommercial real estate:Senior non-construction
    
    
    116,540
    
    
    
    73,399Senior construction
    
    
    2,427,228
    
    
    
    1,086,169Mezzanine
    
    
    31,751
    
    
    
    8,547Commercial
    
    
    12,642
    
    
    
    27,909Home equity
    
    
    9,323
    
    
    
    11,287Consumer
    
    
    599
    
    
    
    674Total Unused Lines of Credit
    
    
    2,598,083
    
    
    
    1,207,985T O T A L  C
O M M I T M E N T SCommercial real estate:Senior non-construction
    
    
    164,977
    
    
    
    83,901Senior construction
    
    
    2,479,728
    
    
    
    1,462,034Mezzanine
    
    
    31,751
    
    
    
    8,547Commercial
    
    
    16,970
    
    
    
    30,068Home equity
    
    
    9,323
    
    
    
    11,287Consumer
    
    
    599
    
    
    
    674Total Commitments Outstanding
    
    $
    2,703,348
    
    
    $
    1,596,511
 36




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) NOTE 13: LEGAL AND REGULATORY PROCEEDINGS 
 Corus is involved in various legal and regulatory proceedings 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. NOTE 14: SHAREHOLDERS EQUITY 
 Shareholders Equity and Dividend Restrictions The payment of dividends to Corus by its subsidiary bank is subject to federal regulatory
limitations. National banks are generally allowed to pay dividends to the extent of net income
for the current and prior two years less dividends paid, without regulatory approval. The payment
of dividends by any bank may also be affected by other factors, such as the maintenance of
adequate capital. Corus subsidiary bank was considered well capitalized as of December 31, 2004.
Corus capital category is determined solely for the purpose of applying prompt corrective action
and that capital category may not constitute an accurate representation of Corus overall
financial condition or prospects. At December 31, 2004, the total amount of the subsidiary banks
retained earnings available for dividends without prior regulatory approval and maintaining
well-capitalized status was $101.3 million. Regulatory Capital Corus and its subsidiary bank are required to maintain certain capital ratios. Failure to
maintain these ratios would severely limit their ability to pay dividends, support growth, and
repurchase shares and would increase the amount of FDIC insurance premiums. At December 31, 2004
and 2003, Corus and its subsidiary bank were categorized as well capitalized. Corus capital
category is determined solely for the purpose of applying prompt corrective action and that
capital category may not constitute an accurate representation of Corus overall financial
condition or prospects. There have been no events since December 31, 2004, that management
believes would have changed that category. The minimum ratios required to be well-capitalized as
well as Corus and its subsidiary banks actual regulatory capital and ratios were as follows: Regulatory Capital and Ratios TIER 1
    
    
    TOTALTIER 1
    
    
    RISK-BASED
    
    
    RISK- BASEDLEVERAGE
    
    
    CAPITAL
    
    
    CAPITALAMOUNT
    
    
    RATIO
    
    
    AMOUNT
    
    
    RATIO
    
    
    AMOUNT
    
    
    RATIO(dollars in thousands)Minimum ratios for well-capitalized
    
    
    
    
    
    
    5.0
    %
    
    
    
    
    
    
    6.0
    %
    
    
    
    
    
    
    10.0
    %December 31,2004:Corus Bankshares
    
    $
    716,891
    
    
    
    15.7
    %
    
    $
    716,891
    
    
    
    15.4
    %
    
    $
    863,788
    
    
    
    18.5
    %Subsidiary bank
    
    
    662,138
    
    
    
    14.9
    
    
    
    662,138
    
    
    
    14.8
    
    
    
    700,020
    
    
    
    15.7December 31,2003:Corus Bankshares
    
    $
    639,931
    
    
    
    18.7
    %
    
    $
    639,931
    
    
    
    17.9
    %
    
    $
    730,829
    
    
    
    20.5
    %Subsidiary bank
    
    
    573,966

    
    
    
    17.2
    
    
    
    573,966
    
    
    
    16.7
    
    
    
    610,414
    
    
    
    17.7
 37




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Stock Option Plan Options to purchase Corus common stock have been granted to employees under the Stock
Option Plan 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. At December 31, 2004, there were 441,000 shares available for grant. Changes in stock options were as follows: Stock Options 2004
    
    
    2003
    
    
    2002WEIGHTED
    
    
    
    
    
    
    WEIGHTED
    
    
    
    
    
    
    WEIGHTEDAVERAGE
    
    
    
    
    
    
    AVERAGE
    
    
    
    
    
    
    AVERAGENUMBER
    
    
    EXERCISE
    
    
    NUMBER
    
    
    EXERCISE
    
    
    NUMBER
    
    
    EXERCISEYEARS ENDED DECEMBER 31
    
    OF SHARES
    
    
    PRICE
    
    
    OF SHARES
    
    
    PRICE
    
    
    OF SHARES
    
    
    PRICE(number of shares in thousands)Beginning options outstanding
    
    
    1,359
    
    
    $
    18.88
    
    
    
    1,174
    
    
    $
    18.35
    
    
    
    978
    
    
    $
    16.72
    

Grants
    
    
    165
    
    
    
    38.31
    
    
    
    236
    
    
    
    20.99
    
    
    
    223
    
    
    
    25.01Exercises/Settlements
    
    
    (44
    )
    
    
    17.06
    
    
    
    (51
    )
    
    
    16.75
    
    
    
    (12
    )
    
    
    16.02Forfeitures/Expirations
    
    
    (36
    )
    
    
    22.95
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    19.78Ending Options Outstanding
    
    
    1,444
    
    
    $
    21.05
    
    
    
    1,359
    
    
    $
    18.88
    
    
    
    1,174
    
    
    $
    18.35Exercisable at December 31
    
    
    869
    
    
    $
    17.33
    
    
    
    654
    
    
    $
    16.71
    
    
    
    479
    
    
    $
    15.84
 The following table summarizes information about stock options outstanding at December 31, 2004. OPTIONS OUTSTANDING
    
    
    OPTIONS EXERCISABLENUMBER
    
    
    WEIGHTED AVERAGE
    
    
    WEIGHTED
    
    
    NUMBER
    
    
    WEIGHTEDRANGE OF
    
    OUTSTANDING
    
    
    REMAINING
    
    
    AVERAGE
    
    
    EXERCISABLE
    
    
    AVERAGEEXERCISE PRICES
    
    AT 12/31/04
    
    
    CONTRACTUAL LIFE
    
    
    EXERCISE PRICE
    
    
    AT 12/31/04
    
    
    EXERCISE PRICE(number of options in thousands)$12-$14
    
    
    170
    
    
    5.2 years
    
    $
    12.54
    
    
    
    134
    
    
    $
    12.55$15 -$21
    
    
    732
    
    
    5.6 years
    
    
    17.24
    
    
    
    551
    
    
    
    16.00$22-$25
    
    
    379
    
    
    6.8 years
    
    
    24.81
    
    
    
    184
    
    
    
    24.76$26-$40
    
    
    163
    
    
    9.3 years
    
    
    38.31
    
    
    
    
    
    
    
    N/AAll Options
    
    
    1,444
    
    
    6.3 years
    
    $
    21.05
    
    
    
    869
    
    
    $
    17.33
 38




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) NOTE 15 : NET INCOME PER
SHARE(1)   Net income per share was calculated as follows: YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(in thousands, except per-share data)Denominator for basic earnings per-share:average common shares outstanding
    
    
    27,896
    
    
    
    28,102
    
    
    
    28,298Dilutive common stock options
    
    
    922
    
    
    
    601
    
    
    
    292Denominator for Diluted Earnings Per Share
    
    
    28,818
    
    
    
    28,703
    
    
    
    28,590Numerator: Net income attributable to common shares.
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314Net income per share:Basic
    
    $
    3.51
    
    
    $
    2.08
    
    
    $
    1.74Diluted
    
    
    3.40
    
    
    
    2.04
    
    
    
    1.72
   (1)
    
    All amounts have been restated to reflect a 100% stock dividend on 12/15/03. NOTE 16: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 primarily from interest and fees on commercial real
estate loans, including first mortgage term loans, senior construction loans, and mezzanine loans.
Revenues also include service charges and interest on loans to customers in the check cashing
industry. Consumer Lending is comprised 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 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
U.S. generally accepted accounting principles (GAAP), 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 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 39




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) 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. The following is a summary of significant segment information as required by SFAS No. 131: INTERYEAR ENDED DECEMBER 31,
    
    COMMERCIAL
    
    
    CONSUMER
    
    
    RETAIL
    
    
    CORPORATE
    
    
    SEGMENT2004
    
    LENDING
    
    
    LENDING
    
    
    BANKING
    
    
    SUPPORT
    
    
    ELIMINATIONS
    
    
    CONSOLIDATED(dollars in thousands)Total
Revenues(1)
    
    $
    119,214
    
    
    $
    2,962
    
    
    $
    50,858
    
    
    $
    29,845
    
    
    $
    
    
    
    $
    202,879Net Income
    
    
    60,000
    
    
    
    1,137
    
    
    
    18,302
    
    
    
    18,500
    
    
    
    
    
    
    
    97,939Total Average Assets
    
    
    2,624,066
    
    
    
    56,763
    
    
    
    3,174,501
    
    
    
    705,988
    
    
    
    (2,510,966
    )
    
    
    4,050,352End of Period Goodwill
    
    
    
    
    
    
    
    
    
    
    4,523
    
    
    
    
    
    
    
    
    
    
    
    4,523
 INTERYEAR ENDED
    
    COMMERCIAL
    
    
    CONSUMER
    
    
    RETAIL
    
    
    CORPORATE
    
    
    SEGMENTDECEMBER 31,2003
    
    LENDING
    
    
    LENDING
    
    
    BANKING
    
    
    SUPPORT
    
    
    ELIMINATIONS
    
    
    CONSOLIDATED(dollars in thousands)Total
Revenues(1)
    
    $
    82,430
    
    
    $
    4,481
    
    
    $
    41,297
    
    
    $
    12,139
    
    
    $
    
    
    
    $
    140,347Net Income
    
    
    37,600
    
    
    
    1,317
    
    
    
    13,047
    
    
    
    6,446
    
    
    
    
    
    
    
    58,410Total Average Assets
    
    
    2,191,251
    
    
    
    80,720
    
    
    
    2,492,752
    
    
    
    199,685
    
    
    
    (1,980,387
    )
    
    
    2,984,021End of Period Goodwill
    
    
    
    
    
    
    
    
    
    
    4,523
    
    
    
    
    
    
    
    
    
    
    
    4,523
 INTERYEAR ENDED
    
    COMMERCIAL
    
    
    CONSUMER
    
    
    RETAIL
    
    
    CORPORATE
    
    
    SEGMENTDECEMBER 31,2002
    
    LENDING
    
    
    LENDING
    
    
    BANKING
    
    
    SUPPORT
    
    
    ELIMINATIONS
    
    
    CONSOLIDATED(dollars in thousands)Total
Revenues(1)
    
    $
    59,403
    
    
    $
    7,453
    
    
    $
    37,164
    
    
    $
    17,346
    
    
    $
    
    
    
    $
    121,366Net Income
    
    
    25,045
    
    
    
    2,003
    
    
    
    10,588
    
    
    
    11,678
    
    
    
    
    
    
    
    49,314Total Average Assets
    
    
    1,681,921
    
    
    
    120,963
    
    
    
    2,168,877
    
    
    
    373,341
    
    
    
    (1,705,673
    )
    
    
    2,639,429End of Period Goodwill
    
    
    
    
    
    
    
    
    
    
    4,523
    
    
    
    
    
    
    
    
    
    
    
    4,523
   (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. 40




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##### 



NOTE 17:PARENT COMPANY FINANCIAL STATEMENTS Corus condensed parent company financial statements were as follows: Condensed Balance SheetsDECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)A S S E T SCash
    
    $
    1,394
    
    
    $
    5,879Available -for-sale securities, at fair value
    
    
    224,180
    
    
    
    188,844Investment in subsidiaries
    
    
    674,267
    
    
    
    584,966Loans, net of unearned income
    
    
    10,702
    
    

    
    Other assets
    
    
    1,707
    
    
    
    16,282Total Assets
    
    $
    912,250
    
    
    $
    795,971L I A B I L I T I E S  A
N D  S
H A R E H O L D E R S  E
Q U I T YLong-term debt  subordinated debentures
    
    $
    255,158
    
    
    $
    177,837Other borrowings
    
    
    5,500
    
    
    
    35,000Other liabilities
    
    
    52,001
    
    
    
    36,954Shareholders equity
    
    
    599,591
    
    
    
    546,180Total Liabilities and Shareholders Equity
    
    $
    912,250
    
    
    $
    795,971
 Condensed Statements of IncomeYEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands , except per-share data)I N C O M EDividends from bank subsidiary
    
    $
    32,500
    
    
    $
    35,000
    
    
    $
    12,000Interest, loan fees, and dividend income
    
    
    6,824
    
    
    
    5,393
    
    
    
    4,834Securities gains, net
    
    
    31,582
    
    
    
    1,112
    
    
    
    951Other income
    
    
    47
    
    
    
    
    
    
    
    Total Income
    
    
    70,953
    
    
    
    41,505
    
    
    
    17,785E X P E N S EInterest expense
    
    
    10,175
    
    
    
    3,025
    
    
    
    1,773Other expenses
    
    
    1,554
    
    
    
    1,002
    
    
    
    912Total Expense
    
    
    11,729
    
    
    
    4,027
    
    
    
    2,685Income Before Income Taxes and Equity in
Undistributed Net Income of Subsidiary
    
    
    59,224
    
    
    
    37,478
    
    
    
    15,100Income tax expense/(benefit)
    
    
    7,988
    
    
    
    (433
    )
    
    
    (93
    )Income Before Equity in Undistributed Net Income
of Subsidiary
    
    
    51,236
    
    
    
    37,911
    
    
    
    15,193Equity in undistributed net income of bank
subsidiary
    
    
    46,703
    
    
    
    20,499
    
    
    
    34,121Net Income
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314Net income per share(1):Basic
    
    $
    3.51
    
    
    $
    2.08
    
    
    $
    1.74Diluted
    
    
    3.40
    
    
    
    2.04
    
    
    
    1.72
   (1)
    All amounts have been restated to reflect a 100% stock dividend on 12/15/03. 41




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Condensed Statements of Cash Flows YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)C A S H  F
L O W S  F R O M  O
P E R A T I N G  A
C T I V I T I E SNet income
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    5
    
    
    
    11
    
    
    
    15Securities gains, net
    
    
    (31,582
    )
    
    
    (1,112
    )
    
    
    (951
    )Deferred income tax expense (benefit)
    
    
    7,711
    
    
    
    (2,089
    )
    
    
    96Decrease (increase) in other assets
    
    
    14,570
    
    
    
    (1,549
    )
    
    
    504Increase (decrease) in other liabilities
    
    
    4,792
    
    
    
    (927
    )
    
    
    (1,683
    )Equity in undistributed net income of subsidiary
    
    
    (46,703
    )
    
    
    (20,499
    )
    
    
    (34,121
    )Net Cash Provided by Operating Activities
    
    
    46,732
    
    
    
    32,245
    
    
    
    13,174C A S H  F
L O W S  F R O M  I
N V E S T I N G  A
C T I V I T I E SProceeds from sales of available -for-sale
securities
    
    
    15,079
    
    
    
    10,883
    
    
    
    2,335Purchases of available -for-sale securities
    
    
    (21,109
    )
    
    
    (3,954
    )
    
    
    (2,329
    )Purchases of premises and equipment
    
    
    
    
    
    
    (5
    )
    
    
    (6
    )Investment in subsidiary trusts
    
    
    (2,321
    )
    
    
    (5,337
    )
    
    
    Loan participations funded, net
    
    
    (10,702
    )
    
    
    
    
    
    
    Capital infusion to subsidiary bank
    
    
    (42,000
    )
    
    
    (172,500
    )Net Cash Used in Investing Activities
    
    
    (61,053
    )
    
    
    (170,913
    )
    
    
    C A S
H  F L O W S  F R O M  F
I N A N C I N G  A C T I V I T I E SIssuance of debt
    
    
    77,321
    
    
    
    177,837
    
    
    
    Repayment of debt
    
    
    (35,000
    )
    
    
    (9,000
    )
    
    
    (4,000
    )Increase (decrease) in borrowings, net
    
    
    5,500
    
    
    
    (1,375
    )
    
    
    1,375Stock option exercises/settlements
    
    
    791
    
    
    
    471
    
    
    
    Equity increase from subsidiary equity compensation
plans
    
    
    5,185
    
    
    
    
    
    
    
    Retirements of common shares
    
    
    (10,821
    )
    
    
    (5,243
    )
    
    
    (1,698
    )Cash dividends paid on common shares
    
    
    (33,140
    )
    
    
    (18,548
    )
    
    
    (8,918
    )Net Cash Provided by (Used in) Financing
Activities
    
    
    9,836
    
    
    
    144,142
    
    
    
    (13,241
    )Net (Decrease) Increase in Cash and Cash
Equivalents
    
    
    (4,485
    )
    
    
    5,474
    
    
    
    (67
    )Cash and cash equivalents at beginning of year
    
    
    5,879
    
    
    
    405
    
    
    
    472Cash and Cash Equivalents at End of Year
    
    $
    1,394
    
    
    $
    5,879
    
    
    $
    405
 42




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) NOTE 18 : QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of quarterly financial information for the years ended December 31,
2004 and 2003: YEAR ENDED DECEMBER 31, 2004
    
    
    YEAR ENDED DECEMBER 31, 2003FOURTH
    
    
    THIRD
    
    
    SECOND
    
    
    FIRST
    
    
    FOURTH
    
    
    THIRD
    
    
    SECOND
    
    
    FIRSTQUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER(1)
    
    
    QUARTER(1)
    
    
    QUARTER(1)(dollars in thousands, except per-share data)Interest income
    
    $
    67,385
    
    
    $
    53,614
    
    
    $
    50,328
    
    
    $
    50,732
    
    
    $
    49,175
    
    
    $
    43,887
    
    
    $
    38,930
    
    
    $
    38,247Interest expense
    
    
    24,310
    
    
    
    17,650
    
    
    
    14,685
    
    
    
    13,950
    
    
    
    13,301
    
    
    
    11,260
    
    
    
    10,776
    
    
    
    11,475Net Interest Income
    
    
    43,075
    
    
    
    35,964
    
    
    
    35,643
    
    
    
    36,782
    
    
    
    35,874
    
    
    
    32,627
    
    
    
    28,154
    
    
    
    26,772Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Interest Income After
Provision for Loan Losses .
    
    
    43,075
    
    
    
    35,964
    
    
    
    35,643
    
    
    
    36,782
    
    
    
    35,874
    
    
    
    32,627
    
    
    
    28,154
    
    
    
    26,772Noninterest income, excluding
securities gains/(losses)
    
    
    3,735
    
    
    
    3,350
    
    
    
    3,498
    
    
    
    3,483
    
    
    
    3,627
    
    
    
    3,612
    
    
    
    3,592
    
    
    
    3,722Securities gains/(losses), net
    
    
    6,932
    
    
    
    16,527
    
    
    
    12,636
    
    
    
    1,254
    
    
    
    68
    
    
    
    1,634
    
    
    
    766
    
    
    
    (101
    )Noninterest expense
    
    
    14,872
    
    
    
    12,851
    
    
    
    14,314
    
    
    
    14,236
    
    
    
    14,180
    
    
    
    13,067
    
    
    
    12,584
    
    
    
    12,702Income Before Taxes
    
    
    38,870
    
    
    
    42,990
    
    
    
    37,463
    
    
    
    27,283
    
    
    
    25,389
    
    
    
    24,806
    
    
    
    19,928
    
    
    
    17,691Income tax expense
    
    
    11,599
    
    
    
    14,833
    
    
    
    12,887
    
    
    
    9,348
    
    
    
    8,532
    
    
    
    8,338
    
    
    
    6,636
    
    
    
    5,898Net Income Available to
Common Shareholders
    
    $
    27,271
    
    
    $
    28,157
    
    
    $
    24,576
    
    
    $
    17,935
    
    
    $
    16,857
    
    
    $
    16,468
    
    
    $
    13,292
    
    
    $
    11,793Net income per share:(2)Basic
    
    $
    0.98
    
    
    $
    1.01
    
    
    $
    0.88
    
    
    $
    0.64
    
    
    $
    0.60
    
    
    $
    0.59
    
    
    $
    0.47
    
    
    $
    0.42Diluted
    
    
    0.95
    
    
    
    0.98
    
    
    
    0.85
    
    
    
    0.62
    
    
    
    0.59
    
    
    
    0.58
    
    
    
    0.46
    
    
    
    0.41
   (1)
    
    Restated to reflect the adoptionof SFAS No. 123.(2)
    
    All amounts have been restated to reflect a 100% stock dividend on 12/15/03. Common Stock Market Information andDividend Highlights (Unaudited) YEAR ENDED DECEMBER 31, 2004
    
    
    YEAR ENDED DECEMBER 31, 2003FOURTH
    
    
    THIRD
    
    
    SECOND
    
    
    FIRST
    
    
    FOURTH
    
    
    THIRD
    
    
    SECOND
    
    
    FIRSTQUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTER
    
    
    QUARTERStock price rangeHigh
    
    $
    50.50
    
    
    $
    46.20
    
    
    $
    41.86
    
    
    $
    41.25
    
    
    $
    32.09
    
    
    $
    27.30
    
    
    $
    25.34
    
    
    $
    22.45Low
    
    
    42.76
    
    
    
    39.25
    
    
    
    36.50
    
    
    
    31.20
    
    
    
    27.12
    
    
    
    24.17
    
    
    
    19.99
    
    
    
    19.73Close
    
    
    48.01
    
    
    
    43.13
    
    
    
    41.11
    
    
    
    40.29
    
    
    
    31.02
    
    
    
    26.74
    
    
    
    24.07
    
    
    
    19.96Cash dividends declared
    
    
    0.313
    
    
    
    0.313
    
    
    
    0.313
    
    
    
    0.313
    
    
    
    0.250
    
    
    
    0.250
    
    
    
    0.250
    
    
    
    0.080
   All amounts have been restated to reflect a 100% stock dividend on 12/15/03.Corus common stock is a NASDAQ National Market Issue trading under the ticker symbol CORS. 43




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) REPORT ofINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Corus Bankshares, Inc. We have audited the accompanying consolidated balance sheets of Corus Bankshares, Inc. and
subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of income,
changes in shareholders equity and cash flows for each of the three years in the period ended
December 31, 2004. These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion. In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Corus Bankshares, Inc. and subsidiary as of
December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 2004, in conformity with U.S.
generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of Corus Bankshares, Inc.s internal control
over financial reporting as of December 31, 2004, based on criteria established in Internal
Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 25, 2005, expressed an unqualified opinion thereon. -s- Ernst & Young LLP Chicago, IllinoisFebruary 25, 2005 44




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) REPORT ofINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Corus Bankshares, Inc. We have audited managements assessment, included in the accompanying Managements Report on
Internal Control over Financial Reporting, that Corus Bankshares, Inc. maintained effective
internal control over financial reporting as of December 31, 2004, based on criteria established in
Internal Control Integrated Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Corus Bankshares, Inc.s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility is to express an
opinion on managements assessment and an opinion on the effectiveness of the companys internal
control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion. A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys assets that could have
a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, managements assessment that Corus Bankshares, Inc. maintained effective
internal control over financial reporting as of December 31, 2004, is fairly stated, in all
material respects, based on the COSO criteria. Also, in our opinion, Corus Bankshares, Inc.
maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2004 based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the 2004 consolidated financial statements of Corus Bankshares,
Inc. and our report dated February 25, 2005, expressed an unqualified opinion thereon. -s- Ernst & Young LLP Chicago, IllinoisFebruary 25, 2005 45




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) managements reportoninternal controloverfinancial reporting Management of Corus Bankshares, Inc. (Corus) is responsible for establishing and maintaining
adequate internal control over financial reporting pursuant to the rules and regulations of the
Securities and Exchange Commission. Corus internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in accordance with U.S.
generally accepted accounting principles. Internal control over financial reporting includes those
written policies and procedures that:  
    pertain to the maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the company;
    provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
    provide reasonable assurance that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and
    provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the companys assets that could have a material effect on the consolidated
financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Corus internal control over financial reporting as
of December 31, 2004. Management based this assessment on criteria for effective internal control
over financial reporting described in Internal Control-Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Managements assessment included
an evaluation of the design of Corus internal control over financial reporting and testing of the
operational effectiveness of its internal control over financial reporting. Management reviewed the
results of its assessment with the Audit Committee of our Board of Directors. Based on this assessment, management determined that, as of December 31, 2004, Corus
maintained effective internal control over financial reporting. Ernst & Young LLP, an independent registered public accounting firm who audited and reported
on the consolidated financial statements of Corus, included in this annual report an attestation
report on managements assessment of Corus internal control over financial reporting. February 15, 2005 46




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) managements discussionandanalysisoffinancial statements EARNINGS SUMMARY 
 Corus Bankshares, Inc. (Corus) reported net income of $97.9 million in 2004, compared with
$58.4 million and $49.3 million in 2003 and 2002, respectively. This translates to diluted
earnings per share of $3.40, $2.04, and $1.72 for 2004, 2003, and 2002, respectively (the earnings
per share for 2002 has been restated to reflect a 100% stock dividend on December 15, 2003).
Return on average common equity was 17.4% for 2004, 11.6% for 2003, and 10.6% for 2002. The return
on average assets was 2.4% in 2004, compared with 2.0% and 1.9% in 2003 and 2002, respectively. Net Interest Income and Net Interest Margin The principal source of earnings for Corus is net interest income, the difference between
interest income and fees on earning assets and interest expense on deposits and borrowings. The
related net interest margin represents net interest income, on a tax-equivalent basis, as a
percentage of average earning assets during the period. The table on the following page presents
Corus consolidated average balance sheets and net interest income and reflects the average yield
on assets and cost of liabilities for the last three years. The yields and costs are adjusted for
the accretion or amortization of deferred fees. Interest income on nonaccrual loans is reflected
either in the year collected or when collection of the associated principal is no longer in
question. Such amounts are not material to net interest income or net change in net interest
income in any year. While nonaccrual loans are included in the average balances, they do not have
a material effect on the average yield. For the twelve months ended December 31, 2004, Corus net interest income rose to $151.5
million, compared to $123.4 million for 2003, an increase of 22.7%. The increase was attributable
primarily to growth in average loans outstanding. Another factor contributing to the growth in net
interest income was a rise in the yield on commercial real estate loans in 2004 as compared to
2003. The increased yield resulted from a complex mixture of various factors including (1) an
increased focus on condominium loans which tend to have higher yields than other property types
and (2) faster payoffs of all types of loans causing the associated loan fees to be amortized over
a shorter time period. The fees typically relate to points paid at closing where the recognition
of income is deferred and amortized ratably over the term of the loan. In 2004, loan fees recorded
in income totaled $43.6 million, compared to $30.7 million in 2003 and $20.8 million in 2002. For the twelve months ended December 31, 2004, Corus net interest margin decreased by 45
basis points compared to the prior year. The decrease in net interest margin was primarily the
result of deposits increasing quite a bit faster than loans outstanding. The deposits not being
used to support loan growth are invested in safe short-term investments that have yields
comparable to what is being paid on the deposits. Therefore, we generate essentially no net
interest income from those deposits. The mix of these zero margin funds with our normal business
has a negative impact on the overall net interest margin. With that said, deposits are the
lifeblood of our bank and we are extremely pleased to have been able to achieve such strong
deposit growth. In 2003, Corus net interest income grew by 25.6% and net interest margin increased by 40
basis points compared to the prior year. These increases were achieved in spite of the fact that
the Federal Reserve cut interest rates twice, for a combined 75 basis points, from the fourth
quarter of 2002 to the fourth quarter of 2003. The increases resulted primarily from strong loan
growth which allowed the Company to invest a greater percentage of assets in loans. Loans are, of
course, Corus highest yielding asset. 47




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) AVERAGE BALANCE SHEETS and NET INTEREST MARGIN 2004
    
    
    2003
    
    
    2002AVERAGE
    
    
    INTEREST
    
    
    YIELD/
    
    
    AVERAGE
    
    
    INTEREST
    
    
    YIELD/
    
    
    AVERAGE
    
    
    INTEREST
    
    
    YIELD/YEARS ENDED DECEMBER 31
    
    BALANCE
    
    
    AND FEES
    
    
    COST
    
    
    BALANCE
    
    
    AND FEES
    
    
    COST
    
    
    BALANCE
    
    
    AND FEES
    
    
    COST(dollars in thousands)ASSETSEarning assets:Federal funds sold
    
    $
    1,110,797
    
    
    $
    16,335
    
    
    
    1.47
    %
    
    $
    465,794
    
    
    $
    4,912
    
    
    
    1.05
    %
    
    $
    454,939
    
    
    $
    7,486
    
    
    
    1.65
    %Taxable securities other
than common stocks
    
    
    150,161
    
    
    
    5,004
    
    
    
    3.33
    %
    
    
    193,827
    
    
    
    7,537
    
    
    
    3.89
    %
    
    
    294,091
    
    
    
    11,847
    
    
    
    4.03
    %Common stocks (1)
    
    
    202,213
    
    
    
    8,657
    
    
    
    4.28
    %
    
    
    159,082
    
    
    
    7,312
    
    
    
    4.60
    %
    
    
    161,487
    
    
    
    6,624
    
    
    
    4.10
    %Tax-advantaged securities(2)
    
    
    2,202
    
    
    
    138
    
    
    
    6.27
    %
    
    
    1,099
    
    
    
    98
    
    
    
    8.88
    %
    
    
    1,135
    
    
    
    102
    
    
    
    8.95
    %Trading account securities
    
    
    26,162
    
    
    
    496
    
    
    
    1.90
    %
    
    
    70,590
    
    
    
    735
    
    
    
    1.04
    %
    
    
    26,647
    
    
    
    449
    
    
    
    1.68
    %CRE loans, net(3)
    
    
    2,324,465
    
    
    
    182,775
    
    
    
    7.86
    %
    
    
    1,838,766
    
    
    
    136,926
    
    
    
    7.45
    %
    
    
    1,400,588
    
    
    
    108,144
    
    
    
    7.72
    %Other loans, net
    
    
    137,325
    
    
    
    11,129
    
    
    
    8.10
    %
    
    
    161,739
    
    
    
    14,839
    
    
    
    9.17
    %
    
    
    207,953
    
    
    
    20,195
    
    
    
    9.71
    %Total Earning Assets
    
    
    3,953,325
    
    
    
    224,534
    
    
    
    5.68
    %
    
    
    2,890,897
    
    
    
    172,359
    
    
    
    5.96
    %
    
    
    2,546,840
    
    
    
    154,847
    
    
    
    6.08
    %Noninterest-reaming assets:Cash and due from banks 
noninterest-bearing
    
    
    85,923
    
    
    
    
    
    
    
    
    
    
    
    76,118
    
    
    
    
    
    
    
    
    
    
    
    78,004Allowance for loan losses
    
    
    (37,109
    )
    
    
    
    
    
    
    
    
    
    
    (36,221
    )
    
    
    
    
    
    
    
    
    
    
    (39,444
    )Premises and equipment, net
    
    
    26,082
    
    
    
    
    
    
    
    
    
    
    
    27,426
    
    
    
    
    
    
    
    
    
    
    
    28,991Other assets, including goodwill
    
    
    22,131
    
    
    
    
    
    
    
    
    
    
    
    25,801
    
    
    
    
    
    
    
    
    
    
    
    25,038Total Assets
    
    $
    4,050,352
    
    
    
    
    
    
    
    
    
    
    $
    2,984,021
    
    
    
    
    
    
    
    
    
    
    $
    2,639,429LIABILITIES AND 
SHAREHOLDERS EQUITYDeposits  interestbearing:Money market deposits
    
    $
    1,312,627
    
    
    $
    26,707
    
    
    
    2.03
    %
    
    $
    981,291
    
    
    $
    16,393
    
    
    
    1.67
    %
    
    $
    892,814
    
    
    $
    18,030
    
    
    
    2.02
    %Retail certificates of deposit
    
    
    650,523
    
    
    
    15,340
    
    
    
    2.36
    %
    
    
    408,670
    
    
    
    10,350
    
    
    
    2.53
    %
    
    
    410,335
    
    
    
    14,843
    
    
    
    3.62
    %Brokered certificates of deposit
    
    
    549,860
    
    
    
    14,554
    
    
    
    2.65
    %
    
    
    392,541
    
    
    
    14,636
    
    
    
    3.73
    %
    
    
    277,210
    
    
    
    17,128
    
    
    
    6.18
    %NOW deposits
    
    
    250,455
    
    
    
    2,939
    
    
    
    1.17
    %
    
    
    174,915
    
    
    
    1,268
    
    
    
    0.72
    %
    
    
    119,331
    
    
    
    573
    
    
    
    0.48
    %Savings deposits
    
    
    167,117
    
    
    
    830
    
    
    
    0.50
    %
    
    
    166,815
    
    
    
    1,189
    
    
    
    0.71
    %
    
    
    156,861
    
    
    
    2,222
    
    
    
    1.42
    %Total Interest-Bearing Deposits
    
    
    2,930,582
    
    
    
    60,370
    
    
    
    2.06
    %
    
    
    2,124,232
    
    
    
    43,836
    
    
    
    2.06
    %
    
    
    1,856,551
    
    
    
    52,796
    
    
    
    2.84
    %Longterm debt 
subordinated debentures
    
    
    208,329
    
    
    
    9,354
    
    
    
    4.49
    %
    
    
    42,952
    
    
    
    1,812
    
    
    
    4.22
    %
    
    
    
    
    
    
    
    
    
    
    
    %Other borrowings
    
    
    36,380
    
    
    
    871
    
    
    
    2.39
    %
    
    
    41,099
    
    
    
    1,164
    
    
    
    2.83
    %
    
    
    51,572
    
    
    
    1,795
    
    
    
    3.48
    %Total Interest-Bearing Liabilities
    
    
    3,175,291
    
    
    
    70,595
    
    
    
    2.22
    %
    
    
    2,208,283
    
    
    
    46,812
    
    
    
    2.12
    %
    
    
    1,908,123
    
    
    
    54,591
    
    
    
    2.86
    %Noninterest-bearing liabilities
and shareholders equity:Noninterest-bearing deposits
    
    
    254,970
    
    
    
    
    
    
    
    
    
    
    
    231,842
    
    
    
    
    
    
    
    
    
    
    
    225,405Other liabilities
    
    
    56,645
    
    
    
    
    
    

    
    
    
    
    
    39,320
    
    
    
    
    
    
    
    
    
    
    
    38,532Shareholders equity
    
    
    563,446
    
    
    
    
    
    
    
    
    
    
    
    504,576
    
    
    
    
    
    
    
    
    
    
    
    467,369Total Liabilities and
Shareholders Equity
    
    $
    4,050,352
    
    
    
    
    
    
    
    
    
    
    $
    2,984,021
    
    
    
    
    
    
    
    
    
    
    $
    2,639,429Earning assets
    
    $
    3,953,325
    
    
    $
    224,534
    
    
    
    5.68
    %
    
    $
    2,890,897
    
    
    $
    172,359
    
    
    
    5.96
    %
    
    $
    2,546,840
    
    
    $
    154,847
    
    
    
    6.08
    %Interest-bearing liabilities
    
    
    3,175,291
    
    
    
    70,595
    
    
    
    2.22
    %
    
    
    2,208,283
    
    
    
    46,812
    
    
    
    2.12
    %
    
    
    1,908,123
    
    
    
    54,591
    
    
    
    2.86
    %Net Interest Spread
    
    
    
    
    
    $
    153,939
    
    
    
    3.46
    %
    
    
    
    
    
    $
    125,547
    
    
    
    3.84
    %
    
    
    
    
    
    $
    100,256
    
    
    
    3.22
    %Net Interest Margin
    
    
    
    
    
    
    
    
    
    
    3.89
    %
    
    
    
    
    
    
    
    
    
    
    4.34
    %
    
    
    
    
    
    
    
    
    
    
    3.94
    %
 Tax equivalent adjustments are based on a federalincome tax rate of 35%.  (1)
    Dividends on the common stock portfolio include a tax equivalent adjustment of $2.4 millon, $2.0 millon, and $1.8 million for2004, 2003, and2002,
respectively.  (2)
    Interest income on tax-advantaged securities includes a tax
equivalent adjustment of $42,000,$34,000, and $36,000 for 2004, 2003, and 2002, respectively.  (3)
    Interest income on tax-advantaged loans includes a tax equivalent adjustment of
$64,000,$85,000, and $120,000 for 2004, 2003, and 2002, respectively. Unremitted interest on nonaccrual loans is not included in the amounts. Includes net
interestincome derived from interest rate swap contracts. 48




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) The following table, which presents the components of changes in net interest income by
volume and rate, provides further evidence supporting the preceding discussion. NetInterest Income Volume/RateAnalysis 2004 COMPARED TO 2003
    
    
    2003 COMPARED TO 2002CHANGE DUE TO(1)
    
    
    
    
    
    
    CHANGE DUE TO(1)YEARS ENDED DECEMBER 31
    
    VOLUME
    
    
    RATE
    
    
    TOTAL
    
    
    VOLUME
    
    
    RATE
    
    
    TOTAL(dollars in thousands)Federal funds sold
    
    $
    8,144
    
    
    $
    3,279
    
    
    $
    11,423
    
    
    $
    147
    
    
    $
    (2,720
    )
    
    $
    (2,573
    )Investment
securities (2)(3)
    
    
    (1,634
    )
    
    
    247
    
    
    
    (1,387
    )
    
    
    (2,241
    )
    
    
    (1,099
    )
    
    
    (3,340
    )Loans, net of unearned
discount (3)(4)
    
    
    35,664
    
    
    
    6,475
    
    
    
    42,139
    
    
    
    30,504
    
    
    
    (7,079
    )
    
    
    23,425Total Increase (Decrease) in

Interest Income
    
    
    42,174
    
    
    
    10,001
    
    
    
    52,175
    
    
    
    28,410
    
    
    
    (10,898
    )
    
    
    17,512Money market deposits
    
    
    6,139
    
    
    
    4,175
    
    
    
    10,314
    
    
    
    1,632
    
    
    
    (3,269
    )
    
    
    (1,637
    )Retail certificates of deposit
    
    
    5,914
    
    
    
    (924
    )
    
    
    4,990
    
    
    
    (51
    )
    
    
    (4,442
    )
    
    
    (4,493
    )Brokered certificates of deposit
    
    
    5,015
    
    
    
    (5,097
    )
    
    
    (82
    )
    
    
    5,713
    
    
    
    (8,205
    )
    
    
    (2,492
    )NOW deposit
    
    
    717
    
    
    
    954
    
    
    
    1,671
    
    
    
    335
    
    
    
    360
    
    
    
    695Savings deposits
    
    
    2
    
    
    
    (361
    )
    
    
    (359
    )
    
    
    106
    
    
    
    (1,139
    )
    
    
    (1,033
    )Borrowings
    
    
    6,201
    
    
    
    1,048
    
    
    
    7,249
    
    
    
    1,140
    
    
    
    41
    
    
    
    1,181Total Increase (Decrease) in
Interest Expense
    
    
    23,988
    
    
    
    (205
    )
    
    
    23,783
    
    
    
    8,875
    
    
    
    (16,654
    )
    
    
    (7,779
    )Increase in Net Interest Income
    
    $
    18,186
    
    
    $
    10,206
    
    
    $
    28,392
    
    
    $
    19,535
    
    
    $
    5,756
    
    
    $
    25,291
  (1)
    The net changes attributable to the combined impact of
volume and rate have been allocated equally to both volume and rate.  (2)
    Dividends on the common stock portfolio reflect a tax
equivalent adjustment for the 70% dividends received deduction.  (3)
    Interest income on tax-advantaged loans and securities
reflects a tax equivalent adjustment based on an income tax rate of 35%.  (4)
    Includes net interest income derived from interest rate swap contracts. 49




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Finally, the following table shows Corus average earning assets for the last three years. Average Earning Assets 2004
    
    
    2003
    
    
    2002YEARS ENDED DECEMBER 31
    
    AMOUNT
    
    
    PERCENT
    
    
    AMOUNT
    
    
    PERCENT
    
    
    AMOUNT
    
    
    PERCENT(dollars in thousands)Loans:Commercial real estate:Senior construction
    
    $
    1,166,436
    
    
    
    29.5
    %
    
    $
    694,961
    
    
    
    24.0
    %
    
    $
    561,918
    
    
    
    22.1
    %Senior non-construction
    
    
    1,102,392
    
    
    
    27.9
    %
    
    
    1,103,312
    
    
    
    38.2
    %
    
    
    799,263
    
    
    
    31.4
    %Mezzanine
    
    
    55,637
    
    
    
    1.4
    %
    
    
    40,493
    
    
    
    1.4
    %
    
    
    39,407
    
    
    
    1.5
    %Total Commercial Real Estate
    
    
    2,324,465
    
    
    
    58.8
    %
    
    
    1,838,766
    
    
    
    63.6
    %
    
    
    1,400,588
    
    
    
    55.0
    %Commercial
    
    
    77,986
    
    
    
    2.0
    %
    
    
    78,744
    
    
    
    2.7
    %
    
    
    84,663
    
    
    
    3.3
    %Residential real estate and other
    
    
    59,339
    
    
    
    1.5
    %
    
    
    82,995
    
    
    
    2.9
    %
    
    
    123,290
    
    
    
    4.8
    %Total Loans
    
    
    2,461,790
    
    
    
    62.3
    %
    
    
    2,000,505
    
    
    
    69.2
    %
    
    
    1,608,541
    
    
    
    63.1
    %Federal funds sold
    
    
    1,110,797
    
    
    
    28.1
    %
    
    
    465,794
    
    
    
    16.1
    %
    
    
    454,939
    
    
    
    17.9
    %Common stocks
    
    
    202,213
    
    
    
    5.1
    %
    
    
    159,082
    
    
    
    5.5
    %
    
    
    161,487
    
    
    
    6.4
    %Securities other than common stocks
    
    
    178,525
    
    
    
    4.5
    %
    
    
    265,516
    
    
    
    9.2
    %
    
    
    321,873
    
    
    
    12.6
    %Total Earning Assets
    
    $
    3,953,325
    
    
    
    100.0
    %
    
    $
    2,890,897
    
    
    
    100.0
    %
    
    $
    2,546,840
    
    
    
    100.0
    %
 Noninterest Income For 2004, Corus reported $51.4 million of total noninterest income compared to $16.9
million in 2003 and $23.1 million in 2002. The fluctuations from year to year are primarily
the result of securities gains. Excluding securities gains, noninterest income decreased in
2004 and 2003 by 3.4% and 8.0%, respectively. Noninterest Income 2004/2003
    
    
    2003/2002YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002
    
    
    CHANGE
    
    
    CHANGE(dollars in thousands)Service charges on deposit accounts
    
    $
    11,438
    
    
    $
    11,878
    
    
    $
    12,065
    
    
    
    (3.7
    )%
    
    
    (1.5
    )%Securities gains, net
    
    
    37,349
    
    
    
    2,366
    
    
    
    7,258
    
    
    NM
    
    

    
    (67.4
    )%Other
    
    
    2,628
    
    
    
    2,676
    
    
    
    3,756
    
    
    
    (1.8
    )%
    
    
    (28.8
    )%
    
    
    
    
    
    
    

Total Noninterest Income
    
    $
    51,415
    
    
    $
    16,920
    
    
    $
    23,079
    
    
    
    203.9
    %
    
    
    (26.7
    )%Noninterest Income, Excluding Securities
Gains, Net
    
    $
    14,066
    
    
    $
    14,554
    
    
    $
    15,821
    
    
    
    (3.4
    )%
    
    
    (8.0
    )%
 NM  Not Meaningful Service Charges on Deposit AccountsIn 2004, service charge income decreased $440,000,
or 3.7%, to $11.4 million. The decrease resulted primarily from two factors. First, net fees
earned from business accounts declined due to the impact of increases in short-term interest
rates, which result in higher earnings credits to the customers and lower net service charge
income to Corus. Second, fees earned from personal accounts declined as the bank decided to
eliminate service charges for both Internet Banking and Bill Payment services in 2004. The
decrease from 2002 to 2003 resulted mostly from higher earnings credits to business accounts
due to a rise in average balances. 50




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Securities Gains, NetIn 2004, net security gains totaled $37.3 million, compared to $2.4
million and $7.3 million in 2003 and 2002, respectively. Securities Gains,Net YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Gains on common stocks
    
    $
    31,582
    
    
    $
    10,074
    
    
    $
    951Trading account gains/(
losses), net
    
    
    4,229
    
    
    
    694
    
    
    
    (626
    )Charge for other than
temporary impairment
    
    
    
    
    
    
    (8,962
    )
    
    
    Sales of securities at
subsidiary bank
    
    
    13
    
    
    
    
    
    
    
    3,814Mark-to-market adjustments on
non-hedge derivatives
    
    
    1,525
    
    
    
    560
    
    
    
    3,119Total Securities Gains, Net
    
    $
    37,349
    
    
    $
    2,366
    
    
    $
    7,258
 Gains on Common StocksGains on common stocks relate to Corus common stock portfolio of various
financial industry companies. Gains or losses are recognized either when the investment is sold or
when the company is acquired by another company. During 2004, $10.1 million in gains were
recognized due to sales while $21.5 million in gains were the result of third party
stock-for-stock acquisitions of companies in which Corus held an equity investment. The gains from
third party acquisitions are recognized regardless of whether the acquisition price is paid in
cash or stock. Note that gains from stock-for-stock transactions have neither a cash flow nor net
tax impact; this is GAAP treatment for accounting for stock-for-stock acquisitions. In 2003, $7.3
million in gains were recognized due to sales while $2.8 million in gains were the result of third
party stock-for-stock acquisitions. Trading Account Gains/(Losses), NetFrom time to time, the Company may enter into security
transactions in anticipation of taking gains on short-term price movements. Such securities are
classified on our books as trading securities. Eligible trading securities include Treasury
securities, agency securities and interest rate derivatives. All open trading positions are
monitored closely by senior management and loss limits are in place to reduce potential losses. Securities purchased for trading purposes are, at the time of purchase, clearly indicated as
Trading Account securities on the Companys books. Taking any action that would require the
reclassification of any security to another classification after it has been initially designated
as trading, available-for-sale, or held-to-maturity, is against the Banks policy and requires
approval by the Banks Board of Directors. For the years ended December 31, 2004 and 2003, the Company realized net gains of $4.2
million and $694,000, respectively, and a net loss of $626,000 in 2002 related to this trading. Charge for Other Than Temporary ImpairmentIn 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 SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and as further defined by the Securities and Exchange
Commission Staff Accounting Bulletin No. 59, Accounting for Noncurrent Marketable Equity
Securities. 51




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Corus policy for marketable equity securities is to recognize impairment losses on
individual securities when either the security has been in a loss position at the close of each
trading day during six consecutive months as of any quarter end or when a security suffers a
rapid and material decrease in value and Corus determines the loss to be reasonably permanent in
nature. Corus evaluates its investments for other than temporary 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. Markto-Market Adjustments on Non-Hedge DerivativesFor years ended December 31, 2004, 2003, and
2002, the Bank recorded gains of $1.5 million, $560,000, and $3.1 million, respectively, from
mark-to-market adjustments on non-hedge derivatives. These adjustments resulted primarily from
basis swaps held by Corus, which were sold in April 2004. Mark-to-market adjustments associated
with the remaining non-hedge derivatives have been, and are expected to remain, immaterial. Other Income Other income consists primarily of ATM fees, safe deposit box rental income and other
various customer fees. Other income was essentially unchanged from 2003 to 2004. In 2002, Corus
received a $1.0 million payment associated with the sale of the trust and investment management
business in 2000. Corus agreed, in lieu of ongoing contingent earn-out payments, to accept the
one-time final payment of $1.0 million. Absent this one-time payment, other income for 2002 is
in line with subsequent years. Noninterest Expense For 2004, total noninterest expense increased $3.7 million, or 7.1%, to $56.3 million. See
discussion below for analysis by expense category. Noninterest
Expense 2004/2003
    
    
    2003/2002YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002
    
    
    CHANGE
    
    
    CHANGE(dollars in thousands)Salaries and employee
benefits
    
    $
    38,458
    
    
    $
    34,426
    
    
    $
    29,672
    
    
    
    11.7
    %
    
    
    16.0
    %Net occupancy
    
    
    3,764
    
    
    
    4,231
    
    
    
    3,839
    
    
    
    (11.0
    )%
    
    
    10.2
    %Data processing
    
    
    2,435
    
    
    
    2,722
    
    
    
    2,445
    
    
    
    (10.5
    )%
    
    
    11.3
    %Depreciation
 furniture and
equipment
    
    
    1,750
    
    
    
    1,823
    
    
    
    2,448
    
    
    
    (4.0
    )%
    
    
    (25.5
    )%Other
    
    
    9,866
    
    
    
    9,331
    
    
    
    9,068
    
    
    
    5.7
    %
    
    
    2.9
    %Total Noninterest Expense
    
    $
    56,273
    
    
    $
    52,533
    
    
    $
    47,472
    
    
    
    7.1
    %
    
    
    10.7
    %Efficiency ratio
    
    
    33.5
    %
    
    
    37.5
    %
    
    
    40.9
    %
 Salaries and Employee BenefitsIn 2004, salaries and benefits increased $4.0 million, or 11.7%,
compared to the prior year. The increase in salaries and benefits is largely attributable to
increases in commission-based commercial loan officer compensation of $2.7 million. This
includes both amounts paid during the year and expenses related to deferred portions of the
commercial loan officers commissions. All deferred commissions are fully accrued in the year in
which they are earned (although payment is deferred for nine years). 52




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Salaries, other than the commission-based commercial loan officer compensation,
increased for the year by $1.1 million, or 5.4%. This increase was driven by a combination of
additional retail personnel to support the dramatic deposit growth and increased compensation
associated with the conversion of our core data processing system. In 2003, salaries and benefits increased $4.8 million, or 16.0% compared to the prior year,
driven primarily by two factors. First, officer salaries and bonuses increased $2.8 million
compared to 2002 due to increases in commissions earned by the commercial loan officers. Second,
Corus began expensing stock options using the fair-value method in 2003. Under the modified
prospective method allowed by SFAS No. 123/148, the expense is recorded beginning in the year of
adoption. Thus, prior year results reflect only those minimal amounts recorded in accordance with
the previous methodology. The increase in stock option expense for 2003 compared to 2002 was $1.6
million. Corus continues to focus on effectively controlling compensation expense by paying a limited
number of talented people a premium over market salaries rather than staffing at higher peer-group
levels. This policy results in higher employee productivity and an increased willingness to accept
more responsibility in carrying out Corus goals and objectives. Net OccupancyIn 2004, net occupancy decreased by $467,000, or 11%, to $3.8 million compared to
2003 predominantly due to amortizing expenses that ended in 2003. In 2003, net occupancy expense
increased by $392,000 compared to 2002 due to an increase in real estate taxes and building
maintenance and repairs. Data ProcessingIn 2004, data processing decreased by $287,000, or 10.5%, to $2.4 million compared
to 2003. The decrease was due to the savings provided by implementing a new core data processing
system in the second quarter of 2004. Further savings are anticipated in the future with 2005
costs estimated to be $1.5 to $1.8 million. In 2003, data processing increased $277,000, or 11.3%, to $2.7 million primarily due to an
increase in incremental ATM/debit card transaction costs of $133,000. Other factors contributing
to the increase were expenses incurred relating to customizing imaging statements and converting
data processing systems. Furniture and Equipment DepreciationIn 2004, depreciation of furniture and equipment remained
relatively flat compared to 2003. In 2003, depreciation of furniture and equipment decreased to
$1.8 million, a decrease of $625,000, or 25.5%. Corus utilizes accelerated depreciation methods
which, due to the purchase of a $1.6 million document imaging and statement rendering system in
2002, resulted in an unusually high amount of depreciation in 2002. In addition, 2003 reflects the
lower depreciation amounts associated with assets approaching the end of their useful lives. Other ExpensesOther noninterest expense consists of various expenses, the most significant being:
audits &. exams, stationery &. supplies, legal &. professional, equipment repairs &. maintenance,
advertising, armored courier costs, postage, and correspondent bank charges. In 2004, other expenses increased by $535,000, or 5.7%, to $9.9 million compared to 2003. The
increase is primarily incremental audit fees in excess of $500,000. The audit fee increases were
directly attributable to the cost of additional resources needed for the implementation of the
internal control review required by Section 404 of the Sarbanes-Oxley Act of 2002. 53




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) In 2003, other expenses increased by $263,000, or 2.9%, to $9.3 million compared to
2002. The increase is attributable to increases in legal and professional expenses associated with
the commercial overdraft collection activities and an increase in equipment repairs &. maintenance
for the year. This was partially offset by decreased expenses related to lower levels of other
real estate owned properties. Efficiency RatioThe banking industry uses a standard known as the efficiency ratio to measure a
banks operational efficiency. The ratio is derived by dividing gross operating expenses by the sum
of fully taxable equivalent net interest and other income, adjusted for securities gains and
losses. Corus efficiency ratio was 33.5%, 37.5%, and 40.9% in 2004, 2003, and 2002, respectively.
Management continues to effectively limit increases in operating expenses as the Companys revenues
grow. Cost ManagementCost management is a fundamental element of Corus culture. Management constantly
reviews operating expenses to ensure that they are minimized while maintaining a high level of
quality customer service. Corus remains committed to identifying additional reductions in costs
while maintaining superior customer service and stringent internal controls. Income TaxesIncome tax expense was $48.7 million in 2004, compared to $29.4 million and $24.6
million in 2003 and 2002, respectively. The effective tax rate remained relatively flat at 33.2%
in 2004, 33.5% in 2003, and 33.3% in 2002. Differences between the effective tax rate and the
statutory federal rate are driven by nontaxable income or nondeductible expenses. For Corus, the
most significant item relates to the favorable tax treatment allowed for dividend income  only
30% of dividend income received is taxable. In addition, in 2004, Corus recorded a favorable tax
adjustment related to the expiration of certain tax exposure items. This also contributed to the
reduction in the effective tax rate. Please refer to Note 9 to Consolidated Financial Statements
for a reconciliation of the statutory federal income tax rate to the effective rate. Corus net deferred tax liability was $18.6 million at December 31, 2004, compared with a net
deferred tax liability of $17.5 million at December 31, 2003. The increase was due to the
nonmonetary gains recorded on stock-for-stock acquisitions (which are not taxable until cash is
received), net of deferred tax benefits associated with deferred compensation. InflationThe impact of inflation on a financial institution differs significantly from that of an
industrial company, as virtually all assets and liabilities of a financial institution are monetary
in nature. Monetary items, such as cash, loans and deposits, are those assets and liabilities that
are or will be converted into a fixed number of dollars regardless of changes in prices. Management
believes the impact of inflation on financial results depends upon Corus ability to react to
changes in interest rates. Interest rates do not necessarily move in the same direction, or at the
same magnitude, as the prices of other goods and services. Management seeks to manage the
relationship between interest-sensitive assets and liabilities in order to protect against wide
interest rate fluctuations, including those resulting from inflation. 54




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Common Stocks At December 31, 2004, Corus held investments in the common stocks of 27 financial industry
companies valued at $219.1 million, including net unrealized gains of $90.5 million. The following is a list of Corus holdings as of December 31, 2004: TICKER
    
    
    
    
    
    
    MARKET
    
    
    PERCENTAGE OFCORPORATION
    
    SYMBOL
    
    
    SHARES HELD
    
    
    VALUE
    
    
    PORTFOLIO(dollars in thousands)Amcore
Financial Inc.
    
    AMFI
    
    
    142,500
    
    
    $
    4,586
    
    
    
    2.1
    %Amsouth Bancorporation
    
    ASO
    
    
    466,015
    
    
    
    12,070
    
    
    
    5.5Associated
Banc Corp.
    
    ASBC
    
    
    121,179
    
    
    
    4,027
    
    
    
    1.8Bank of
America Corp.
    
    BAC
    
    
    670,594
    
    
    
    31,511
    
    
    
    14.4Bank of New
York Co. Inc.
    
    BK
    
    
    100,000
    
    
    
    3,342
    
    
    
    1.5Banknorth
Group Inc.
    
    BNK
    
    
    90,000
    
    
    
    3,294
    
    
    
    1.5BB&T
Corp.
    
    BBT
    
    
    33,736
    
    
    
    1,418
    
    
    
    0.6Citigroup
Inc.
    
    
    C
    
    
    
    225,000
    
    
    
    10,840
    
    
    
    5.0City
National Corp.
    
    CYN
    
    
    84,000
    
    
    
    5,935
    
    
    
    2.7Comerica Inc.
    
    CMA
    
    
    339,300
    
    
    
    20,704
    
    
    
    9.5Commerce
Bancshares Inc.
    
    CBSH
    
    
    29,915
    
    
    
    1,502
    
    
    
    0.7Compass
Bancshares Inc.
    
    CBSS
    
    
    108,750
    
    
    
    5,293
    
    
    
    2.4First Source
Corp.
    
    SRCE
    
    
    18,992
    
    
    
    484
    
    
    
    0.2Fremont
General Corp.
    
    FMT
    
    
    650,000
    
    
    
    16,367
    
    
    
    7.5Hibernia
Corp.
    
    HIB
    
    
    154,200
    
    
    
    4,550
    
    
    
    2.1JP Morgan
Chase & Co.
    
    JPM
    
    
    500,864
    
    
    
    19,539
    
    
    
    8.9MAF Bancorp
Inc.
    
    MAFB
    
    
    281,550
    
    
    
    12,619
    
    
    
    5.8Mellon
Financial Corp.
    
    MEL
    
    
    100,000
    
    
    
    3,111
    
    
    
    1.4Mercantile
Bankshares Corp.
    
    MRBK
    
    
    58,500
    
    
    
    3,054
    
    
    
    1.4Merrill
Lynch & Co. Inc.
    
    MER
    
    
    132,000
    
    
    
    7,890
    
    
    
    3.6Morgan Stanley Dean Witter
& Co.
    
    MWD
    
    
    82,000
    
    
    
    4,553
    
    
    
    2.1National
City Corp.
    
    NCC
    
    
    74,520
    
    
    
    2,798
    
    
    
    1.3Provident
Bancshares Corp.
    
    PBKS
    
    
    43,757
    
    
    
    1,591
    
    
    
    0.7Regions
Financial Corp.
    
    RF
    
    
    143,554
    
    
    
    5,109
    
    
    
    2.3SunTrust
Banks Inc.
    
    STI
    
    
    48,000
    
    
    
    3,546
    
    
    
    1.6US Bancorp
    
    USB
    
    
    268,870
    
    
    
    8,421
    
    
    
    3.8Wachovia
Corp.
    
    WB
    
    
    398,191
    
    
    
    20,945
    
    
    
    9.6Total
    
    
    
    
    
    
    
    
    
    $
    219,099
    
    
    
    100.0
    %
 In 2004, Corus received dividends on the stock portfolio of $6.3 million compared to $5.3
million in 2003. In addition to dividend income, Corus also recognized $31.6 million in security
gains in 2004 and $1.1 million in 2003 (net of the charge for other than temporary impairment
of $9.0 million) related to the common stock portfolio. See Noninterest Incomefor discussion of
treatment of realized and unrealized gains and losses. 55




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Securities Other Than Common Stocks Corus current asset/liability management philosophy is that all current security purchases
are classified as available-for-sale or trading. This is due to managements belief that
virtually all securities should be available to be sold in conjunction with our liquidity and
asset/liability management strategies. At December 31, 2004, securities other than common stocks increased by $204.1 million, or
79.8% from the prior year, due mainly to Corus increased investment in U.S. Government and
agency notes. As of December 31, 2004, 65.8% of the carrying value of the available-for-sale
portfolio with stated maturities was scheduled to mature within one year and 99.3% within five
years. Loans The following table details the composition of Corus loan portfolio: Loan Portfolio 2004
    
    
    2003DECEMBER 31
    
    AMOUNT
    
    
    PERCENT
    
    
    AMOUNT
    
    
    PERCENT(dollars in thousands)Commercial real estate:Senior non-construction
    
    $
    1,419,670
    
    
    
    51
    %
    
    $
    1,207,015
    
    
    
    50
    %Senior construction
    
    
    1,101,973
    
    
    
    39
    
    
    
    1,005,206
    
    
    
    41Mezzanine
    
    
    111,278
    
    
    
    4
    
    
    
    53,790
    
    
    
    2Total Commercial Real Estate
    
    
    2,632,921
    
    
    
    94
    
    
    
    2,266,011
    
    
    
    93Commercial
    
    
    109,582
    
    
    
    4
    
    
    
    98,621
    
    
    
    4Residential real estate and other
    
    
    51,325
    
    
    
    2
    
    
    
    69,139
    
    
    
    3Total Loans
    
    $
    2,793,828
    
    
    
    100
    %
    
    $
    2,433,771
    
    
    
    100
    %
 Commercial Real Estate LendingCommercial real estate loans are comprised of senior
non-construction, senior construction, and mezzanine loans. The maturities of senior
non-construction loans are typically 1 to 5 years in length. Many of these loans are to borrowers
in the business of converting apartments to condominiums. These loans are typically funded at the
outset and paid down as the condominiums are sold. Most of the remaining senior non-construction
loans are typically amortizing loans collateralized by income-producing properties such as
hotels, office buildings or apartment projects. Senior 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 first mortgage
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 commercial real estate lending activity primarily finances one of four types of real
estate: condominiums, hotels, office buildings, and apartment projects. Corus loans finance
projects in major markets nationwide with a target loan size from $20 million to $135 million. At December 31, 2004, funded commercial real estate loans totaled $2.6 billion, an increase
of $367 million, or 16%, compared to the prior year. This, however, only reflects actual balances
outstanding, which excludes 56




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) commitments. While not yet funded, commitments, which consist of unfunded loan
amounts and commitment letters issued, are also a significant part of the loan portfolio.
Including commitments, the commercial loan portfolio totals $5.3 billion. The following table provides a reconciliation of commercial real estate loans outstanding to the
total including commitments: Commercial Real Estate Loans Outstanding Including Commitments 2004
    
    
    2003DECEMBER 31
    
    AMOUNT
    
    
    PERCENT
    
    
    AMOUNT
    
    
    PERCENT(dollars in thousands)Funded loans, net
    
    $
    2,632,921
    
    
    
    50
    %
    
    $
    2,266,011
    
    
    
    59
    %Commitments:Loans
    
    
    2,575,519
    
    
    
    48
    
    
    
    1,168,115
    
    
    
    31Commitment letters
    
    
    88,000
    
    
    
    2
    
    
    
    375,865
    
    
    
    10Letters of credit
    
    
    12,937
    
    
    
    
    
    
    
    10,502
    
    
    
    Total
    
    $
    5,309,377
    
    
    
    100
    %
    
    $
    3,820,493
    
    
    
    100
    %
 Corus commitments are primarily comprised of unfunded commitments under commercial real
estate senior construction 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. Commercial Real Estate Loans  OriginationsCorus originated 84 loans with commitments
aggregating $4.1 billion in 2004, which more than doubles the dollar volume of originations in
2003 of 62 loans aggregating $1.8 billion. To clarify, an origination occurs when a loan closes
with the origination amount equaling Corus full commitment under that loan. Since many of Corus
loans are for construction projects, the funds are often not drawn by the borrower at the closing
but rather over an extended period of time. Due to this characteristic, coupled with the rather
unpredictable nature of loan paydowns/payoffs (collectively referred to as paydowns),
attempting to use loan originations as a proxy for loan growth is not advisable. Commercial Real Estate Loans PaydownsTotal paydowns in the twelve months ended December
31, 2004, were $2.1 billion. This compares to total paydowns of $0.9 billion in the same period
of 2003. The timing of loan paydowns is inherently difficult to predict. With that said, we
expect that our paydowns will generally trend higher as our loan portfolio increases in size. 57




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) The following tables break out loans by size, property type, and location: Commercial Real Estate Loans  By Total Commitment 2004
    
    2003LOANS
    
    TOTAL
    
    
    
    
    
    LOANS
    
    TOTALOUTSTANDING
    
    COMMITMENT(1)
    
    
    
    
    
    OUTSTANDING
    
    COMMITMENT(1)NUMBER
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NUMBERDECEMBER 31
    
    OF LOANS
    
    
    AMOUNT
    
    
    %
    
    
    AMOUNT
    
    
    %
    
    
    OF LOANS
    
    
    AMOUNT
    
    
    %
    
    
    AMOUNT
    
    
    %(dollars
in millions)$80 million and above
    
    
    13
    
    
    $
    326
    
    
    
    12
    %
    
    $
    1,261
    
    
    
    24
    %
    
    
    3
    
    
    $
    95
    
    
    
    4
    %
    
    $
    254
    
    
    
    7
    %$60 million to $80 million
    
    
    12
    
    
    
    401
    
    
    
    15
    %
    
    
    833
    
    
    
    16
    %
    
    
    13
    
    
    
    367
    
    
    
    16
    %
    
    
    868
    
    
    
    22
    %$40 million to $60 million
    
    
    26
    
    
    
    632
    
    
    
    24
    %
    
    
    1,256
    
    
    
    23
    %
    
    
    17
    
    
    
    460
    
    
    
    20
    %
    
    
    802
    
    
    
    21
    %$20 million to $40 million
    
    
    38
    
    
    
    694
    
    
    
    26
    %
    
    
    1,133
    
    
    
    21
    %
    
    
    40
    
    
    
    787
    
    
    
    35
    %
    
    
    1,126
    
    
    
    30
    %$1 million to $20 million
    
    
    87
    
    
    
    591
    
    
    
    23
    %
    
    
    835
    
    
    
    16
    %
    
    
    89
    
    
    
    538
    
    
    
    24
    %
    
    
    748
    
    
    
    20
    %Less than $1 million
    
    
    130
    
    
    
    25
    
    
    
    1
    %
    
    
    27
    
    
    
    1
    %
    
    
    188
    
    
    
    44
    
    
    
    2
    %
    
    
    47
    
    
    
    1
    %Deferred fees/other discounts
    
    
    N/A
    
    
    
    (36
    )
    
    
    (1
    )%
    
    
    (36
    )
    
    
    (1
    )%
    
    
    N/A
    
    
    
    (25
    )
    
    
    (1
    )%
    
    
    (25
    )
    
    
    (1
    )%Total
    
    
    306
    
    
    $
    2,633
    
    
    
    100
    %
    
    $
    5,309
    
    
    
    100
    %
    
    
    350
    
    
    $
    2,266
    
    
    
    100
    %
    
    $
    3,820
    
    
    
    100
    %
  (1)
Includes both funded and unfunded commitments, letters of credit, and
outstanding commitment letters. Commercial Real Estate
Loans  By Property Type 2004
    
    2003LOANS
    
    TOTAL
    
    
    
    
    
    
    LOANS
    
    TOTALOUTSTANDING
    
    COMMITMENT(1)
    
    
    
    
    
    OUTSTANDING
    
    COMMITMENT(1)NUMBER
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NUMBERDECEMBER 31
    
    OF LOANS
    
    
    AMOUNT
    
    
    %
    
    
    AMOUNT
    
    
    
    
    
    
    %
    
    
    OF LOANS
    
    
    AMOUNT
    
    
    %
    
    
    AMOUNT
    
    
    %(dollars in millions)Condominium
    
    
    103
    
    
    $
    1,766
    
    
    
    67
    %
    
    $
    4,014
    
    
    
    
    
    
    
    76
    %
    
    
    55
    
    
    $
    826
    
    
    
    36
    %
    
    $
    1,873
    
    
    
    49
    %Hotel
    
    
    31
    
    
    
    427
    
    
    
    16
    %
    
    
    585
    
    
    
    
    
    
    
    11
    %
    
    
    40
    
    
    
    534
    
    
    
    24
    %
    
    
    714
    
    
    
    19
    %Office
    
    
    12
    
    
    
    116
    
    
    
    4
    %
    
    
    307
    
    
    
    
    
    
    
    6
    %
    
    
    21
    
    
    
    373
    
    
    
    16
    %
    
    
    549
    
    
    
    15
    %Rental apartment
    
    
    9
    
    
    
    239
    
    
    
    9
    %
    
    
    295
    
    
    
    
    
    
    
    5
    %
    
    
    15
    
    
    
    332
    
    
    
    15
    %
    
    
    429
    
    
    
    11
    %Other
    
    
    21
    
    
    
    96
    
    
    
    4
    %
    
    
    117
    
    
    
    
    
    
    
    2
    %
    
    
    31
    
    
    
    182
    
    
    
    8
    %
    
    
    233
    
    
    
    6
    %Loans less than $1 million
    
    
    130
    
    
    
    25
    
    
    
    1
    %
    
    
    27
    
    
    
    
    
    
    
    1
    %
    
    
    188
    
    
    
    44
    
    
    
    2
    %
    
    
    47
    
    
    
    1
    %Deferred fees/other discounts
    
    
    N/A
    
    
    
    (36
    )
    
    
    (1
    )%
    
    
    (36
    )
    
    
    
    
    
    
    (1
    )%
    
    
    N/A
    
    
    
    (25
    )
    
    
    (1
    )%
    
    
    (25
    )
    
    
    (1
    )%Total
    
    
    306
    
    
    $
    2,633
    
    
    
    100
    %
    
    $
    5,309
    
    
    
    
    
    
    
    100
    %
    
    
    350
    
    
    $
    2,266
    
    
    
    100
    %
    
    $
    3,820
    
    
    
    100
    %
  (1)
Includes both funded and unfunded commitments, letters of credit, and
outstanding commitment letters. 58




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Commercial Real Estate Loans  By Major Metropolitan Area 2004
    
    
    2003LOANS
    
    
    TOTAL
    
    
    
    
    
    
    LOANS
    
    
    TOTALNUMBER
    
    
    OUTSTANDING
    
    

COMMITMENT(1)
    
    
    NUMBER
    
    
    OUTSTANDING
    
    

COMMITMENT(1)DECEMBER 31
    
    OF LOANS
    
    
    AMOUNT
    
    
    %
    
    
    AMOUNT
    
    
    %
    
    
    OF LOANS
    
    
    AMOUNT
    
    
    %
    
    
    AMOUNT
    
    
    %(dollars in millions)CaliforniaLos Angeles
    
    
    19
    
    
    $
    230
    
    
    
    9
    %
    
    $
    534
    
    
    
    10
    %
    
    
    25
    
    
    $
    355
    
    
    
    16
    %
    
    $
    505
    
    
    
    13
    %San Diego
    
    
    10
    
    
    
    99
    
    
    
    4
    %
    
    
    324
    
    
    
    6
    %
    
    
    8
    
    
    
    105
    
    
    
    5
    %
    
    
    142
    
    
    
    4
    %San Francisco
    
    
    7
    
    
    
    58
    
    
    
    2
    %
    
    
    197
    
    
    
    4
    %
    
    
    7
    
    
    
    102
    
    
    
    4
    %
    
    
    201
    
    
    
    5
    %Sacramento
    
    
    1
    
    
    
    42
    
    
    
    1
    %
    
    
    45
    
    
    
    1
    %
    
    
    2
    
    
    
    61
    
    
    
    3
    %
    
    
    76
    
    
    
    2
    %California Total
    
    
    37
    
    
    
    429
    
    
    
    16
    %
    
    
    1,100
    
    
    
    21
    %
    
    
    42
    
    
    
    623
    
    
    
    28
    %
    
    
    924
    
    
    
    24
    %Washington,
D.C.(2)
    
    
    30
    
    
    
    452
    
    
    
    17
    %
    
    
    1,023
    
    
    
    19
    %
    
    
    21
    
    
    
    358
    
    
    
    16
    %
    
    
    694
    
    
    
    18
    %Miami
    
    
    23
    
    
    
    518
    
    
    
    20
    %
    
    
    930
    
    
    
    18
    %
    
    
    9
    
    
    
    262
    
    
    
    12
    %
    
    
    461
    
    
    
    12
    %New York City
    
    
    21
    
    
    
    296
    
    
    
    11
    %
    
    
    690
    
    
    
    13
    %
    
    
    21
    
    
    
    261
    
    
    
    11
    %
    
    
    591
    
    
    
    16
    %Chicago
    
    
    26
    
    
    
    333
    
    
    
    13
    %
    
    
    410
    
    
    
    8
    %
    
    
    40
    
    
    
    262
    
    
    
    12
    %
    
    
    463
    
    
    
    12
    %Chicago
 less than$1 million
    
    
    121
    
    
    
    23
    
    
    
    1
    %
    
    
    24
    
    
    
    
    %
    
    
    177
    
    
    
    41
    
    
    
    2
    %
    
    
    43
    
    
    
    1
    %Las Vegas
    
    
    8
    
    
    
    113
    
    
    
    4
    %
    
    
    303
    
    
    
    6
    %
    
    
    1
    
    
    
    1
    
    
    
    
    %
    
    
    1
    
    
    
    
    %Atlanta
    
    
    6
    
    
    
    45
    
    
    
    2
    %
    
    
    248
    
    
    
    5
    %
    
    
    4
    
    
    
    6
    
    
    
    
    %
    
    
    23
    
    
    
    1
    %TexasHouston
    
    
    6
    
    
    
    149
    
    
    
    6
    %
    
    
    158
    
    
    
    3
    %
    
    
    6
    
    
    
    157
    
    
    
    7
    %
    
    
    177
    
    
    
    5
    %Dallas
    
    
    2
    
    
    
    9
    
    
    
    
    %
    
    
    15
    
    
    
    
    %
    
    
    2
    
    
    
    27
    
    
    
    1
    %
    
    
    39
    
    
    
    1
    %Texas Total
    
    
    8
    
    
    
    158
    
    
    
    6
    %
    
    
    173
    
    
    
    3
    %
    
    
    8
    
    
    
    184
    
    
    
    8
    %
    
    
    216
    
    
    
    6
    %Other(3)
    
    
    26
    
    
    
    302
    
    
    
    11
    %
    
    
    444
    
    
    
    8
    %
    
    
    27
    
    
    
    293
    
    
    
    12
    %
    
    
    429
    
    
    
    11
    %Deferred fees/other discounts
    
    
    N/A
    
    
    
    (36
    )
    
    
    (1
    )%
    
    
    (36
    )
    
    
    (1
    )%
    
    
    N/A
    
    
    
    (25
    )
    
    
    (1
    )%
    
    
    (25
    )
    
    
    (1
    )%Total
    
    
    306
    
    
    $
    2,633
    
    
    
    100
    %
    
    $
    5,309
    
    
    
    100
    %
    
    
    350
    
    
    $
    2,266
    
    
    
    100
    %
    
    $
    3,820
    
    
    
    100
    %
   (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. While the average loan commitment at December 31, 2004, was $17 million, the top 35 loans
had an average commitment of $75 million, and made up 50% of the portfolio. Commercial Real Estate Loans Loans PendingFinally, the following table presents a comparison
of Corus loans pending listed in descending order with respect to stage of completion. In other
words, a prospective loan categorized as Commitment Accepted is essentially one step away from
closing while a prospective loan classified as Discussion Pending is in its earliest stages. 59




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Commercial Real Estate
Loans Pending 2004
    
    
    2003NUMBER
    
    
    
    
    
    
    NUMBERDECEMBER 31
    
    OF LOANS
    
    
    AMOUNT
    
    
    OF LOANS
    
    
    AMOUNT(dollars in millions)Commitment accepted
    
    
    2
    
    
    $
    53
    
    
    

    3
    
    
    $
    94Commitment offered
    
    
    1
    
    
    
    35
    
    
    
    6
    
    
    
    282Application received
    
    
    14
    
    
    
    794
    
    
    
    9
    
    
    
    305Application sent out
    
    
    18
    
    
    
    1,175
    
    
    
    8
    
    
    
    451Term sheet issued
    
    
    45
    
    
    
    2,626
    
    
    
    36
    
    
    
    1,715Discussion pending
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    115Total
    
    
    80
    
    
    $
    4,683
    
    
    
    67
    
    
    $
    2,962
 In total, loans pending have increased significantly from the prior year. It has been the
Companys experience that pending loans that reach the Application Received stage are highly
likely to ultimately close. Commercial LendingCommercial 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. Other LendingWith regard to the remaining portfolio, residential first mortgage, home equity,
and student loan balances continue to decline as the Bank continues to allow these portfolios to
run off. Minimal new originations are expected. LIABILITIES AND
SHAREHOLDERS EQUITY  Deposits 2004
    
    
    2003
    
    
    2004/2003 CHANGEYEARS ENDED DECEMBER 31
    
    AMOUNT
    
    
    PERCENT
    
    
    AMOUNT
    
    
    PERCENT
    
    
    AMOUNT
    
    
    PERCENT(dollars in thousands)Money market
    
    $
    1,661,395
    
    
    
    41
    %
    
    $
    1,208,784
    
    
    
    42
    %
    
    $
    452,611
    
    
    
    37
    %Retail certificates of deposit
    
    
    1,244,448
    
    
    
    30
    
    
    
    422,091
    
    
    
    15
    
    
    
    822,356
    
    
    
    195Brokered certificates of deposit
    
    
    507,919
    
    
    
    12
    
    
    
    596,831
    
    
    
    21
    
    
    
    (88,912
    )
    
    
    (15
    )Demand
    
    
    235,700
    
    
    
    6
    
    
    
    227,960
    
    
    
    8
    
    
    
    7,740
    
    
    
    3NOW
    
    
    288,158
    
    
    
    7
    
    
    
    223,590
    
    
    
    8
    
    
    
    64,569
    
    
    
    29Savings
    
    
    162,532
    
    
    
    4
    
    
    
    167,146
    
    
    
    6
    
    
    
    (4,614
    )
    
    
    (3
    )Total
    
    $
    4,100,152
    
    
    
    100
    %
    
    $
    2,846,402
    
    
    
    100
    %
    
    $
    1,253,750
    
    
    
    44
    %
 Deposits grew in 2004 by $1.3 billion, or 44%, led by strong growth in retail certificates of
deposit. During 2004, Corus increased the interest rates it pays on short-term certificates of
deposit (terms of three to twelve months). The competitive interest rates offered by these
certificates have proven to be an attractive investment option for many new and existing
customers. While the response has been tremendous, managements challenge is to develop
strategies to retain these deposits. As of December 31, 2004, approximately $1.2 billion in
retail certificates of deposit mature in under one year as compared to $0.4 billion at December
31, 2003. 60




---



##### 



(CIORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Money market deposits have also grown in 2004, increasing by over 37%. The growth in
money market accounts has resulted primarily from the continued success of the tiered interest
rate Managed Money Market account, first introduced by Corus in 2002. Managed Money Market
accounts total $1.3 billion at December 31, 2004, compared to $0.8 billion at the end of 2003. Long-Term Debt  Subordinated Debentures Corus has formed seven wholly owned, yet unconsolidated, finance subsidiaries 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 are actually
quite straightforward. Trust Preferred securities are essentially long-term debt (30-year terms)
with some unique features. The trusts sold a combined $247.5 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 but senior to common stock) issued by the Company to
the trusts totaling $255.2 million  the difference being Corus investment in the Trusts. The
funds raised by the issuance of the Trust Preferred securities were, in turn, infused into the Bank
as additional capital. Note that the terms for both the Trust Preferred securities and the
subordinated debentures are essentially identical. 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 has historically allowed bank holding companies to include, 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 five years after issuance and quarterly thereafter
(or earlier in the event of certain changes or amendments to regulatory requirements or federal
tax rules). Corus has the right to defer distributions on the Trust Preferred securities and interest
payments on the subordinated debentures for a period not to exceed 20 consecutive quarters without
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 be utilized. Combined issuance fees for the trusts totaled $1.6 million and are being amortized 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. Other Borrowings As of December 31, 2004, other borrowings consisted primarily of a revolving line of credit for up
to $80 million at an interest rate of LIBOR plus 140 basis points. The line of credit matures on
June 25, 2006, and is collateralized by 100% of the common stock of the subsidiary bank. The
balance outstanding at December 31, 2004, was 61




---



##### 



(CHORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) $5.5 million. This line of credit is intended to provide the holding company with the necessary
financing to fund those loans in which it has purchased a participation from its subsidiary bank. The remaining amount outstanding at December 31,2004, of $1.4 million relates to periodic
balances associated with Corus role of facilitating tax payments for the U.S. Treasury. The
balance outstanding at any point in time is a function of tax payments received by the bank
compared to how often, and when, the Treasury collects the funds from Corus. Corus pays interest
on these borrowings at the Federal Funds Rate less 25 basis points. At the end of 2003 the line of credit referred to above was limited to $20 million but Corus
also had an outstanding term note in the amount of $35 million. Both the line of credit and term
note accrued interest at LIBOR plus 150 basis points. Shareholders Equity At December 31, 2004 and 2003, Shareholders Equity was as follows: DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)Common stock
    
    $
    1,390
    
    
    $
    1,402Surplus
    
    
    21,243
    
    
    
    16,942Equity  options outstanding
    
    
    6,737
    
    
    
    5,670Retained earnings
    
    
    512,844
    
    
    
    460,458Accumulated other comprehensive income
    
    
    57,377
    
    
    
    61,708Total Shareholders Equity
    
    $
    599,591
    
    
    $
    546,180
 During 2004, Corus repurchased and retired 265,100 shares at an average price of $40.82 per share.
The 2004 repurchases included 139,600 shares purchased under the 1999 repurchase program and
125,500 shares purchased under the new 2004 repurchase program. Under the 2004 program, Corus
Board of Directors approved the repurchase of up to 1,000,000 shares of common stock, expiring
April 2009. The 1999 plan, which was due to expire in November 2004, was terminated. As of
December 31, 2004, there were 874,500 remaining shares authorized for repurchase under the current
program. Surplus increased by $4.3 million primarily due to the impact of the Commercial Loan Officer
Commission Program (the CLO Program). Under the CLO Program, a portion of the commissions earned
is deferred, some in Corus common stock. Deferrals in stock are initially recorded as additional
surplus. Upon issuance, the par value of the stock is reclassified to common stock. CLO Program
stock deferrals in 2004 totaled $3.8 million. Other increases resulted from various activity
associated with Corus stock option program net of the impact of the stock repurchases mentioned
above. The increase in Equity  options outstanding was primarily due to the recognition of expense
associated with employee stock options that vested in 2004. The balance of the account at December
31, 2004, represents the fair value, based on the Black-Scholes valuation model, of all
outstanding vested stock options. Retained earnings increased by $52.4 million even after declaring nearly $35 million in
dividends to the holders of Corus common stock. Dividends declared in 2004 were nearly 50% higher
than in 2003. 62




---



##### 



(CHORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Finally, accumulated other comprehensive income decreased by $4.3 million as $31.6 million
in previously unrealized security gains on available-for-sale securities was recognized in income. Please
refer to the Noninterest Incomesection of Managements Discussion and Analysis of Financial
Statements for a discussion of the GAAP treatment of security gains. Various measures of capital were as follows: 2004
    
    
    2003DECEMBER 31
    
    AMOUNT
    
    
    RATIO
    
    
    AMOUNT
    
    
    RATIO(dollars in thousands)Common equity (1)
    
    $
    599,591
    
    
    
    11.9
    %
    
    $
    546,180
    
    
    
    15.0
    %Tangible common equity (2)
    
    
    595,068
    
    
    
    11.9
    
    
    
    541,657
    
    
    
    14.9Tier 1 leverage (3)
    
    
    716,891
    
    
    
    15.7
    
    
    
    639,931
    
    
    
    18.7Tier 1 risk-based capital (4)
    
    
    716,891
    
    
    
    15.4
    
    
    
    639,931
    
    
    
    17..9Total risk-based capital (5)
    
    
    863,788
    
    
    
    18..5
    
    
    
    730,829
    
    
    
    20..5
   (1)
    
    Common equity is computed in accordance with generally accepted accounting
principles, which includes unrealized gains/(losses) on
available-for-sale securities. The ratio is common equity to total year-end
assets.(2)
    
    Common equity less goodwill; computed as a
ratio to total year-end assets less-
goodwill.(3)
    
    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
average fourth-quarter assets less goodwill, disallowed portion of deferred income taxes and
unrealized gains on available-for-sale securities.(4)
    
    Tier 1 capital; computed as a ratio to risk-adjusted assets.(5)
    
    Tier 1 capital plus qualifying loan loss
allowance and SFAS No. 115 gain; computed as a ratio to risk-adjusted assets. C R E D I T    R I S K    A N D    A S S E T   Q U A L I T Y Nonperforming Assets Nonperforming loans are nonaccrual loans, troubled debt restructurings and 90 days or more past due
loans still accruing interest. Nonperforming Assets DECEMBER 31
    
    2004
    
    
    2003(dollars in thousands)Nonperforming loans:Nonaccrual
    
    $
    76
    
    
    $
    7,896Troubled debt restructurings
    
    
    23,479
    
    
    
    6,436Loans 90 days or more past due
    
    
    5,675
    
    
    
    1,236Total nonperforming loans
    
    
    29,230
    
    
    
    15,568Other real estate owned
    
    
    44
    
    
    
    66Total Nonperforming Assets
    
    $
    29,274
    
    
    $
    15,634Nonperforming loans/Total loans
    
    
    1.05
    %
    
    
    0.64
    %Nonperforming assets/Total assets
    
    
    0.58
    %
    
    
    0.43
    %Allowance for loan losses/Nonperforming loans
    
    
    112.50
    %
    
    
    234.12
    %
 63




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Total nonperforming assets increased by $13.6 million to $29.3 million, compared to December 31,
2003. The increase is primarily due to an increase in Troubled Debt Restructurings (TDRs). A TDK
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 loan paydowns, and/or additional collateral or
guarantees. 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, 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 TDRs under the nonperforming asset
category, which strongly implies that these loans are not performing. This is not accurate. The two
hotel loans that constitute the $23.5 million TDR balance are current in terms of required
payments. No loss is expected. Allowance for Loan Losses The Allowance 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. Allowance for Loan Losses 2004
    
    
    2003
    
    
    2002(dollars in thousands)Balance at January 1
    
    $
    36,448
    
    
    $
    36,629
    
    
    $
    40,457Provision for loan
losses
    
    
    
    
    
    
    
    
    
    
    Charge-offs
    
    
    (665
    )
    
    
    (3,295
    )
    
    
    (6,057
    )Recoveries
    
    
    2,099
    
    
    
    3,114
    
    
    
    2,229Reclassification
    
    
    (5,000
    )
    
    
    
    
    
    
    Balance at December
31
    
    $
    32,882
    
    
    $
    36,448
    
    
    $
    36,629Loans at December 31
    
    $
    2,793,828
    
    
    $
    2,433,771
    
    
    $
    1,741,969Allowance for loan
losses as a percentage
of loans
    
    
    1.18
    %
    
    
    1.50
    %
    
    
    2.10
    %
 In 2004, there was no provision for loan losses. Management believes this was appropriate given the
results of managements analysis and the balance of the Allowance at December 31, 2004.
Additionally, in 2004, Corus reclassified $5.0 million of the Allowance to a separate liability
account, representing a reserve for losses associated with unfunded loan commitments. 64




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHIC) Net(Charge-off)/Recovery Detail YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002(dollars in thousands)Commercial  check cashing
    
    $
    (13
    )
    
    $
    (252
    )
    
    $
    (559
    )Overdraft  check cashing
    
    
    
    
    
    
    (507
    )
    
    
    (2,660
    )Commercial real estate
    
    
    
    
    
    
    
    
    
    
    17Residential real estate and other
    
    
    1,447
    
    
    
    578
    
    
    
    (626
    )Total Net (Charge-offs)/Recoveries
    
    $
    1,434
    
    
    $
    (181
    )
    
    $
    (3,828
    )
 Net charge-offs associated with the services provided by the Company to customers in the check
cashing business totaled $759,000 and $3.2 million in 2003 and 2002, respectively. These relate to
a specific control weakness, which has since been corrected. Residential real estate and other recoveries reflect the efforts of our residential real
estate department personnel to recover as much as possible of the previously charged off amounts. Commercial Real Estate
Loan Net (Charge-off)/Recovery
 10 Year History COMMERCIAL REAL ESTATE LOAN NETYEARS ENDED DECEMBER 31
    
    (CHARGE-OFF)/RECOVERY(dollars in thousands)2004
    
    $
    2003
    
    
    2002
    
    
    172001
    
    
    102000
    
    
    421999
    
    
    621998
    
    
    1481997
    
    
    (155
    )1996
    
    
    8201995
    
    
    (240
    )Total Net Recoveries
    
    $
    704
 Corus has had particularly impressive results with commercial real estate lending. In fact, we
have actually had zero charge-offs in the past four years, and de minimuscharge-offs over the
past 10 years. With that said, we do anticipate that at some point we will have charge-offs. Independent Loan Review Management contracts for an independent review of its commercial and commercial real estate
loan portfolios. This review examines Corus loan grading and problem loan identification systems.
The loan review function was performed by Crowe Chizek and Company LLC in 2004. The loan review
provides verification that risk assessments and problem loan identification systems are
functioning adequately. Two reviews were performed in 2004, each covering approximately 40% of the
total commitments outstanding (funded plus unfunded loan commitments). 65




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT IMAGE) C R I T I C A L  A C C O U N T I N G  P O L I C I E S 
 Management has determined that one particular accounting policy requires a high level of
judgment: the assessment of the Allowance for Loan Losses (the Allowance). The Allowance is based upon quarterly analyses. The Allowance analyses take into account both
reviews of specific credits and an overall assessment of the loan portfolio. 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 real estate, construction,
commercial, and residential) 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). For commercial real estate loans, management believes that Corus loss and delinquency
experience may not accurately reflect the inherent losses in the portfolio. Accordingly, for
commercial real estate loans, Corus utilizes the respective historical rates as published by the
Federal Deposit Insurance Corporation (FDIC) in its Quarterly Banking Profilepublication. The
Quarterly Banking Profileprovides net charge-off data by loan category, as submitted by financial
institutions on their quarterly Call Reports. Based on a review of the types of loans included
within each group, the loss rates reported for the groups most comparable to Corns commercial
real estate portfolio are utilized in the analysis. While Corus has experienced almost zero
charge-offs in its commercial real estate loan portfolio over the last 10 years, we are not so
naive as to believe that this trend can continue indefinitely. As such, unadjusted industry
results are a reasonable basis for estimating the losses inherent in our portfolio. In addition to historical loss rates, other factors considered include 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 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 and Exchange Commission, may not ultimately be correct. In that
event, estimates of inherent losses may differ from actual results. l i q u i d i t y 
 Corus liquidity policy is to ensure the availability of sufficient funds to accommodate the needs
of borrowers and depositors at all times as well as meeting Corus financial obligations. This
objective is achieved primarily through the maintenance of liquid assets. Liquid assets include
cash and cash equivalents, federal funds sold, and marketable securities that can be sold quickly
without a material loss of principal. Parent Company At December 31, 2004, the parent company had $225.6 million of cash and marketable
securities versus $194.7 million a year earlier. Cash needs of the parent company consist primarily of the payment of dividends to
shareholders, the payment of interest and principal on short-term and long-term debt, and the
payment of operating expenses. 66




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT IMAGE) Also, from time-to-time the parent company may repurchase shares, infuse capital into
the Bank, or be required to advance funds pursuant to any of several loan participation agreements
previously entered into with the Bank. The parent companys primary source of cash to meet these needs is dividends from the Bank.
The Banks ability to pay these dividends is dependent on its ability to generate earnings and to
meet regulatory restrictions (see Note 14 of the Notes to Consolidated Financial Statements). At
December 31, 2004, the Bank had $101.3 million available to pay in dividends to the parent company
without prior regulatory approval while maintaining well-capitalized status. Corus capital
category is determined solely for the purpose of applying prompt corrective action and that
capital category may not constitute an accurate representation of Corus overall financial
condition or prospects. Additional sources of liquidity available to the parent company include dividends from its
equity securities portfolio, a revolving $80 million line of credit (see Note 8 of the Notes to
Consolidated Financial Statements), cash that could be generated from sales of equity securities,
and access to the capital markets. Although Corus currently has no debt ratings or ratings outlook from any of the major ratings
agencies, it has been able to access the capital markets via Pooled Trust Preferred Securities
issuances (see Note 7 of the Notes to Consolidated Financial Statements). The majority of the
proceeds from these issuances were infused into the Bank in order to increase its legal lending
limit, allowing the bank to make larger commercial real estate loans. It should be noted that all of the parent companys debt is variable-rate and, as such,
management cannot say with certainty what interest payments on this debt will be in the future. Subsidiary Bank At December 31, 2004, the Banks liquid assets totaled $2.0 billion, or 41%, of its total assets
compared to $1.0 billion, or 29%, of total assets at December 31, 2003. The Banks principal use of cash is the drawdowns of unfunded loan commitments associated
with the commercial real estate loan portfolio. At December 31, 2004, Corus had unfunded loan
commitments of $2.7 billion. While there is no certainty as to the timing of drawdowns of these
commitments, management anticipates the majority of those loans commitments will fund over the
next 36 months. The liquidity to fund those commitments will come from normal paydowns on the
existing loan portfolio, existing liquid assets, net retail deposit growth (to the extent such
occurs), Bank earnings not paid to the parent company as a dividend, and then, if necessary, from
issuance of additional brokered certificates of deposit (BRCD). In addition, the Bank must
retain sufficient funds to satisfy depositors withdrawal needs as well as cover operating
expenses. With regard to maintaining liquidity against deposits, the Bank allocates liquidity against
retail deposits (all of the Banks deposits except for BRCD) separately from liquidity against
BRCD. In the past year, the Bank has experienced tremendous growth in its retail deposit base.
While the Bank experienced growth in money market and NOW accounts, the largest growth came in the
certificate of deposit (CD) category, primarily with maturities of one year and less. Due to
their short-term nature, these CDs present greater liquidity risk than longer term CDs. With that
said, the growth in these short-term CDs has been very recent and, as such, the Bank has very
little retention information. Rather than attempting to assign different liquidity levels by
product type, maturity, etc., the Bank has instead chosen to allocate substantial liquidity
against retail deposits in total. For BRCDs, the Banks plan is to stagger their maturities over seven years in order to avoid
the liquidity risk of an overly significant portion of BRCD maturing during any given year. To
further mitigate liquidity risk, Corus 67




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT IMAGE) liquidity policy requires that the Bank hold more liquid assets as the level of BRCD
increases. As of December 31, 2004, BRCD totaled $507.9 million. The Bank has established a BRCD
limit such that this funding source will not exceed 41% of total deposits (i.e., retail deposits
and BRCD). Based on deposit levels at December 31, 2004, this implies a maximum amount of BRCD
of $2.5 billion. It should be noted, however, that should the Bank fail to maintain its
well-capitalized status, its ability to access credit through BRCD would be limited. The Company is not aware of any known trends, commitments, events, regulatory
recommendations or uncertainties that would have any adverse effect on the Companys capital
resources, operations or liquidity. M A R K E T   R I S K   M A N A G E M E N T 
 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. Corus uses 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
simulates earnings under a variety of interest rate scenarios to quantify the effect of potential
movements in interest rates on projected net interest income. These simulations incorporate
managements assumptions regarding the future composition of the balance sheet, which may include
loan and deposit growth. Also factored into the modeling is the use of derivative financial
instruments, which may include basis swaps, interest rate swaps, floors, and options. Due to the recent rise in short-term interest rates, the majority of the Banks commercial
real estate loan floors have moved out-of-the-money and Corus has returned to a net
asset-sensitive position under all scenarios shown below. This asset-sensitivity stems from the
fact that the vast majority of the Banks assets reprice based on short-term rates, while a
meaningful portion of liabilities are either permanently fixed (noninterest-bearing deposits are
fixed at zero percent) or do not reprice in lock-step with changes in short-term rates
(administered-rate deposits). Additionally, shareholders equity is effectively fixed, for
accounting purposes, at zero percent. As such, we expect that an increase in short-term rates
will result in an increase of the Banks net interest margin and, conversely, a decrease in
short-term rates will result in a decrease in the Banks net interest margin. Interest rate sensitivity was as follows: Rate Shock Amount(1)
    
    100 bp
    
    
    50 bp
    
    
    0 bp
    
    
    +50 bp
    
    
    +100 bp
    
    
    +200 bp
    
    
    +300 bpPercent change in the next twelve months
net interest income vs. constant rates:December 31, 2004
    
    
    (0.7
    )%
    
    
    (1.7
    )%
    
    
    
    
    
    
    2.7
    %
    
    
    5.6
    %
    
    
    11.9
    %
    
    
    18.4
    %December 31, 2003
    
    NM(2)
    
    
    1.3
    %
    
    
    
    
    
    
    (2.8
    )%
    
    
    (4.3
    )%
    
    
    (1.5
    )%
    
    
    2.7
    %
   (1)
    
    These shocks represent hypothetical instantaneous
and sustained changes from current rates.(2)
    
    Not meaningful due to the low level of
interest rates at December 31, 2003. The change in the Banks interest rate risk profile from December 31, 2003, is largely a
function of two factors. First, the rise in interest rates since year-end has reduced the
projected impact of interest rate floors embedded in commercial real
estate loan agreements 
previously the primary cause of the Banks liability-sensitivity. Second, 68




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##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) the Banks deposit base has grown primarily from an increase in certificates of
deposit with terms of six and twelve months. The model assumes that these deposits are generally
invested in variable-rate assets. Corus is also exposed to price risk with its common stock portfolio in financial industry
companies valued at $219.1 million, including net unrealized gains of $90.5 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. C O M M E R C I A L  R E A L  E S T A T E  R I S K  A N A L Y S I S 
 The following disclosure is not computed in accordance with 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 the Bank originates 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. The POD is our estimate of how likely it is,
given a serious recession, a loan would go into default while the LGD is our estimate, given such
a default, of what percentage of the loan would have to be charged off. This point bears repeating
 the POD and LGD estimates are not based on todays market conditions; they are instead 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. Management
believes that assessing the impact that a severe recession would have on the portfolio is the best
method to truly stress the portfolio. As a proxy for the potential cash flow and/or values of the underlying real estate,
management uses, among other things, the severe declines in CRE property values experienced in
California and New England during the late 1980s and early 1990s. The analysis assumes, based on
information collected from various regulatory and industry sources, that office and hotel projects
will be worth only 50% to 60% of their cost (not appraised value) and typically assumes 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. Additionally, while this system of analysis is based on a serious recession,
it is certainly possible that the Company could experience meaningful nonperforming loans (NPL)
and charge-offs even in the absence of such a recession. While Corus has attempted to be
conservative in its assessment of potential defaults and losses, it is conceivable that actual
defaults and/or losses may be greater, perhaps materially, than estimated. Note that this analysis
is not predicated upon when or how often serious recessions may occur, but rather upon the
anticipation of such events. 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. The increases in POD and LGD are largely a function of the increasing levels of
mezzanine loans as a percentage of total loans. 69




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) DECEMBER 31
    
    2004
    
    
    2003(dollars in millions)C R E  L O A N S  &  U N F U N D E D  C O M M I T M E N T SCRE loans outstanding
    
    $
    2,633
    
    
    $
    2,266Unfunded commitments
    
    
    2,676
    
    
    
    1,554CRE Loans Plus Unfunded Commitments
    
    $
    5,309
    
    
    $
    3,820P O T E N T I A L  D E F A U L T S  &  L O S S E SCRE loans plus unfunded commitments
    
    $
    5,309
    
    
    $
    3,820Weighted average Probability of Default
(POD)(1)
    
    
    15.4
    %
    
    
    14.4
    %Potential CRE Loans That Could Default
    
    
    818
    
    
    
    550Weighted average Loss Given Default
(LGD)(1)
    
    
    17.5
    %
    
    
    16.4
    %Potential Losses That Could Occur
    
    $
    143
    
    
    $
    90N O N P E R F O R M I N G  &  N O N A C C R U A L  L O A N SPotential CRE loans that could default
    
    $
    818
    
    
    $
    550Potential losses that could occur
    
    
    (143
    )
    
    
    (90
    )Potential Remaining CRE NPL
Balances(2)
    
    $
    675
    
    
    $
    460
   (1)
    
    The POD and LGD estimates are not based on todays market conditions; they
are instead 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.(2)
    
    Not necessarily all nonperforming loans would be nonaccrual; however, in
order to be conservative we will assume 100% of the above nonperforming loans are
nonaccrual. This internal loan rating system involves 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. Under such a scenario, this system projects that the Bank
could have $818 million of defaulted commercial real estate loans and $143 million of these loans
would be charged off. This would clearly be a huge increase from Corns historical experience. With the preceding being said, it is essential to understand that the Bank underwrites loans
with the potential for such a recession in mind. In fact, management assumes a serious recession
will occur every ten years or so. Based on such a frequency, the projected $143 million of
charge-offs would represent an annualized loss expense of $14.3 million, or 0.27% of Corus
total loan commitments of $5.3 billion. This economic loss expense is factored in when
analyzing the potential profitability of each loan the Bank underwrites. It is only after that
economic loss expense has been subtracted that management begins to assess whether the loan
presents an acceptable potential profit versus the perceived risks. While the Bank has yet to
experience a large amount of nonperforming loans or charge-offs, our planning anticipates that it
will occur and we have already factored this cost into the profitability of our loans. Please note that while this internal loan rating system generates very precise numbers, and
management has worked hard to arrive at inputs we believe reasonable, this precision is more a
function of the mathematical nature of the model than a belief on our part that future results
can be predicted with any such certainty. This model, like all models, requires numerous
assumptions and, in this case, assumptions about how vulnerable each and every individual loan
will be to a serious recession at some unknown point in the future. Further, the pristine credit
quality of Corus commercial real estate portfolio over the past ten-plus years has deprived us
of any meaningful data 70




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) points with which management might have been able to refine the estimates. While the
results reflect our best estimates, the actual level of nonperforming loans and charge-offs that
may ultimately come to pass could be materially different from these projections. F O R W A R D  L O O K I N G  S T A T E M E N T S 
 This disclosure 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 risks, uncertainties and other factors which could cause
actual results to differ materially from future results expressed or implied by such
forward-looking statements. Important factors that might cause Corus actual results to differ
materially include, but are not limited to, the following:  
    the general state of the economy and, together with all aspects of our business that are
affected by changes in the economy, the impact that changes in rates have on Corus net interest margin;
    Corus ability to continue its strong loan originations and, in turn, its ability to increase the commercial real
estate loan portfolio;
    the timing of drawdowns on unfunded loan commitments and paydowns of existing loans;
    Corus ability to access and maintain cost-effective funding to support marginal loan growth;
    Corus ability to limit losses associated with nonperforming loans;
    changes in managements estimate of the adequacy of the allowance for loan losses;
    the impact of competitors pricing initiatives on loan and deposit products;
    the extent of defaults and losses given default, and the resulting lost interest income from such defaults; and
    changes in the laws, regulations and policies governing financial services companies. Corus undertakes no obligation to revise or update these forward-looking statements to reflect
events or circumstances after the date of this report. 71




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT GRAPHICS) S U P P L E M E N T A L
  F I N A N C I A L   D A T A:   I O - Y E A R   H I S T O R Y YEARS ENDED DECEMBER 31
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(dollars in thousands, except per-share data)C O N D E N S E D   I N C O M E   S T A T E M E N T SNet interest income
    
    $
    151,464
    
    
    $
    123,427
    
    
    $
    98,287
    
    
    $
    107,709Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noninterest income
    
    
    51,415
    
    
    
    16,920
    
    
    
    23,079
    
    
    
    25,716Noninterest expense
    
    
    56,273
    
    
    
    52,533
    
    
    
    47,472
    
    
    
    51,100Income Before Income Taxes
    
    
    146,606
    
    
    
    87,814
    
    
    
    73,894
    
    
    
    82,325Income tax expense
    
    
    48,667
    
    
    
    29,404
    
    
    
    24,580
    
    
    
    28,142Net Income
    
    $
    97,939
    
    
    $
    58,410
    
    
    $
    49,314
    
    
    $
    54,183S E L E C T
E D   P E R - S H A R E   D A T A(1)Diluted earnings
    
    $
    3.40
    
    
    $
    2.04
    
    
    $
    1.72
    
    
    $
    1.89Cash dividends declared on common stock
    
    
    1.250
    
    
    
    0.830
    
    
    
    0.318
    
    
    
    0.308Book value at year-end
    
    
    21.57
    
    
    
    19.48
    
    
    
    17.07
    
    
    
    15.92Market price at year-end
    
    
    48.01
    
    
    
    31.02
    
    
    
    21.83
    
    
    
    22.70A V E R A G E SAssets
    
    $
    4,050,352
    
    
    $
    2,984,021
    
    
    $
    2,639,429
    
    
    $
    2,672,971Loans, net of unearned discount
    
    
    2,461,790
    
    
    
    2,000,505
    
    
    
    1,608,541
    
    
    
    1,615,665Earning assets
    
    
    3,953,325
    
    
    
    2,890,897
    
    
    
    2,546,840
    
    
    
    2,577,433Deposits
    
    
    3,185,552
    
    
    
    2,356,074
    
    
    
    2,081,956
    
    
    
    2,160,333Shareholders equity
    
    
    563,446
    
    
    
    504,576
    
    
    
    467,369
    
    
    
    424,427A T   Y
E A R - E N DAssets
    
    $
    5,017,787
    
    
    $
    3,643,830
    
    
    $
    2,617,050
    
    
    $
    2,659,322Loans, net of unearned discount
    
    
    2,793,828
    
    
    
    2,433,771
    
    
    
    1,741,969
    
    
    
    1,475,245Earning assets
    
    
    4,946,297
    
    
    
    3,560,421
    
    
    
    2,539,400
    
    
    
    2,507,403Deposits
    
    
    4,100,152
    
    
    
    2,846,402
    
    
    
    2,059,773
    
    
    
    2,121,456Shareholders equity
    
    
    599,591
    
    
    
    546,180
    
    
    
    482,041
    
    
    
    450,886(C H A R G E
- O F F S)/R E C O V E R I E S - C O M M E R C I A L  R
E A L   E S T A T E   L O A N S(2)Charge-offs
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Recoveries
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    10Net (Charge-offs )/Recoveries
    
    $
    
    
    
    $
    
    
    
    $
    17
    
    
    $
    10S I G N I F I C A N T   R A T I O SReturn on average assets
    
    
    2.4
    %
    
    
    2.0
    %
    
    
    1.9
    %
    
    
    2.0
    %Return on average equity
    
    
    17.4
    %
    
    
    11.6
    %
    
    
    10.6
    %
    
    
    12.8
    %Efficiency ratio(3)
    
    
    33.5
    %
    
    
    37.5
    %
    
    
    40.9
    %
    
    
    40.1
    %Net interest margin
    
    
    3.9
    %
    
    
    4.3
    %
    
    
    3.9
    %
    
    
    4.3
    %Nonperforming loans/Total loans
    
    
    1.0
    %
    
    
    0.6
    %
    
    
    0.4
    %
    
    
    0.4
    %Allowance for loan losses/Nonperforming loans
    
    
    112.5
    %
    
    
    234.1
    %
    
    
    562.0
    %
    
    
    697.5
    %Allowance for loan losses/Total loans
    
    
    1.2
    %
    
    
    1.5
    %
    
    
    2.1
    %
    
    
    2.7
    %C A P I T A L   R A T I O STier 1 leverage
    
    
    15.7
    %
    
    
    18.7
    %
    
    
    17.3
    %
    
    
    15.4
    %Tier 1 risk-based capital
    
    
    15.4
    %
    
    
    17.9
    %
    
    
    16.8
    %
    
    
    19.4
    %Total risk-based capital
    
    
    18.5
    %
    
    
    20.5
    %
    
    
    18.9
    %
    
    
    22.0
    %C O M M O N   S H A R E   D A T A(1)Weighted average fully diluted shares
    
    
    28,818
    
    
    
    28,703
    
    
    
    28,590
    
    
    
    28,619Common shares outstanding at year-end
    
    
    27,796
    
    
    
    28,037
    
    
    
    28,238
    
    
    
    28,319
   (1)
    
    All amounts have been restated to reflect a 100% stock dividend on 12/15/03.(2)
    
    This section contains charge-off/recovery history for commercial real estate
loans only and is not representative of the total charge-off/recovery history for all loan types.(3)
    
    Total noninterest expense less goodwill
amortization divided by the sum of fully taxable equivalent
net interest income and noninterest income excluding securities gains and losses and one-time gains
on the sale of businesses. 72




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT IMAGE) 2000
    
    
    1999
    
    
    1998
    
    
    1997
    
    
    1996
    
    
    1995$
    121,051
    
    
    $
    106,131
    
    
    $
    98,220
    
    
    $
    101,271
    
    
    $
    111,339
    
    
    $
    98,517
    
    
    
    
    
    
    
    10,000
    
    
    
    16,000
    
    
    
    16,000
    
    
    
    5,77947,260
    
    
    
    18,948
    
    
    
    25,666
    
    
    
    26,913
    
    
    
    23,067
    
    
    
    14,11154,654
    
    
    
    63,096
    
    
    
    51,889
    
    
    
    51,677
    
    
    
    50,496
    
    
    
    51,650113,657
    
    
    
    61,983
    
    
    
    61,997
    
    
    
    60,507
    
    
    
    67,910
    
    
    
    55,19938,903
    
    
    
    21,257
    
    
    
    21,369
    
    
    
    21,136
    
    
    
    24,005
    
    
    
    19,429$
    74,754
    
    
    $
    40,726
    
    
    $
    40,628
    
    
    $
    39,371
    
    
    $
    43,905
    
    
    $
    35,770$
    2.62
    
    
    $
    1.41
    
    
    $
    1.38
    
    
    $
    1.32
    
    
    $
    1.47
    
    
    $
    1.180.298
    
    
    
    0.288
    
    
    
    0.278
    
    
    
    0.265
    
    
    
    0.238
    
    
    
    0.18214.23
    
    
    
    11.41
    
    
    
    10.93
    
    
    
    9.93
    
    
    
    7.95
    
    
    
    6.4824.74
    
    
    
    12.00
    
    
    
    16.13
    
    
    
    19.78
    
    
    
    16.13
    
    
    
    12.75$
    2,518,960
    
    
    $
    2,530,782
    
    
    $
    2,417,647
    
    
    $
    2,237,419
    
    
    $
    2,174,088
    
    
    $
    1,957,9791,807,453
    
    
    
    1,640,101
    
    
    
    1,525,349
    
    
    
    1,570,521
    
    
    
    1,601,269
    
    
    
    1,315,1052,398,989
    
    
    
    2,419,667
    
    
    
    2,311,562
    
    
    
    2,127,140
    
    
    
    2,063,608
    
    
    
    1,846,1852,081,986
    
    
    
    2,115,575
    
    
    
    2,031,198
    
    
    
    1,888,966
    
    
    
    1,890,688
    
    
    
    1,762,275346,880
    
    
    
    326,776
    
    
    
    295,854
    
    
    
    263,612
    
    
    
    215,158
    
    
    
    165,425$
    2,598,467
    
    
    $
    2,378,544
    
    
    $
    2,577,460
    
    
    $
    2,251,927
    
    
    $
    2,218,528
    
    
    $
    2,125,0921,551,880
    
    
    
    1,727,357
    
    
    
    1,551,587
    
    
    
    1,545,975
    
    
    
    1,623,145
    
    
    
    1,558,7822,458,499
    
    
    
    2,265,687
    
    
    
    2,470,865
    
    
    
    2,135,616
    
    
    
    2,111,928
    
    
    
    1,965,9232,107,630
    
    
    
    1,964,420
    
    
    
    2,154,676
    
    
    
    1,863,066
    
    
    
    1,900,679
    
    
    
    1,898,540402,353
    
    
    
    327,825
    
    
    
    318,130
    
    
    
    291,633
    
    
    
    235,590
    
    
    
    194,726$
    
    
    
    $
    (61
    )
    
    $
    (18
    )
    
    $
    (350
    )
    
    $
    (206
    )
    
    $
    (284
    )42
    
    
    
    123
    
    
    
    166
    
    
    
    195
    
    
    
    1,026
    
    
    
    44$
    42
    
    
    $
    62
    
    
    $
    148
    
    
    $
    (155
    )
    
    $
    820
    
    
    $
    (240
    )3.0
    %
    
    
    1.6
    %
    
    
    1.7
    %
    
    
    1.8
    %
    
    
    2.0
    %
    
    
    1.8
    %21.6
    %
    
    
    12.5
    %
    
    
    13.7
    %
    
    
    14.9
    %
    
    
    20.4
    %
    
    
    21.6
    %38.1
    %
    
    
    41.0
    %
    
    
    41.5
    %
    
    
    38.9
    %
    
    
    35.9
    %
    
    
    42.9
    %5.1
    %
    
    
    4.5
    %
    
    
    4.3
    %
    
    
    4.9
    %
    
    
    5.5
    %
    
    
    5.4
    %0.3
    %
    
    
    0.7
    %
    
    
    1.1
    %
    
    
    1.8
    %
    
    
    2.2
    %
    
    
    1.2
    %769.8
    %
    
    
    255.7
    %
    
    
    206.4
    %
    
    
    112.8
    %
    
    
    92.8
    %
    
    
    136.4
    %2.6
    %
    
    
    1.9
    %
    
    
    2.3
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    1.6
    %14.0
    %
    
    
    11.9
    %
    
    
    10.3
    %
    
    
    10.5
    %
    
    
    9.7
    %
    
    
    9.2
    %16.0
    %
    
    
    15.3
    %
    
    
    15.0
    %
    
    
    15.1
    %
    
    
    13.5
    %
    
    
    12.6
    %18.6
    %
    
    
    17.8
    %
    
    
    18.1
    %
    
    
    16.4
    %
    
    
    14.8
    %
    
    
    13.9
    %28,605
    
    
    
    28,928
    
    
    
    29,547
    
    
    
    29,932
    
    
    
    29,988
    
    
    
    30,48228,286
    
    
    
    28,739
    
    
    
    29,102
    
    
    
    29,363
    
    
    
    29,640
    
    
    
    30,054
 73




---



##### 



(CORUS BANKSHARES 2004 ANNUAL REPORT IMAGE) D I R E C T O R S andE X E C U T I V E   O F F I C E R S DIRECTORS 
  Joseph C. GlickmanChairman of the Board,
Corus Bankshares, Inc. Robert J. GlickmanPresident and Chief Executive Officer,
Corus Bankshares, Inc.
 Robert J. Buford*President and Chief Executive Officer,
Planned Equities, Inc.
Planned Realty Group, Inc. Kevin R. CallahanPrivate Investor Rodney D. Lubeznik*President, Restaurant Management Corp. * Audit Committee Member
 Michael J. McClure*Financial Consultant Peter C. RobertsExecutive Vice President and
Chief Executive Officer- Americas,
Jones Lang LaSalle
   E X E C U T I V E   O F F I C E R S 
  Robert J. GlickmanPresident and Chief Executive Officer Randy P. CurtisExecutive Vice President, Retail Banking Michael G. SteinExecutive Vice President,
CommercialLending Tim H. TaylorExecutive Vice President and
Chief Financial Officer John M. BarkidjijaSenior Vice President, Commercial Lending Brian J. BrodeurSenior Vice President, Commercial Lending Michael E. DulbergSenior Vice President and
Chief Accounting Officer
 Michael W. JumpSenior Vice President, Operations Terence W. KeenanSenior Vice President, Commercial Lending Richard J. KoretzSenior Vice President, Finance John R. MarkowiczSenior Vice President, Commercial Lending Joel C. SolomonSenior Vice President, Commercial Lending Janice BakeFirst Vice President, Operations Yolanda M. DeenFirst Vice President, Retail Banking Dwight L. FrankfatherFirst Vice President, Commercial Lending Peter R. FreundFirst Vice President, Commercial Lending
 Mary S. KoehlerFirst Vice President, Retail Banking Marilyn Klehm MartinFirst Vice President, Operations Lori B. NeimanFirst Vice President, Commercial Lending Daniel A. NiedermeyerFirst Vice President, Consumer Lending/Operations Mary Kay PhillipsFirst Vice President, Retail Banking David R. PlogerFirst Vice President, Commercial Lending Daniel P. SemenakFirst Vice President, Finance Timothy J. StodderFirst Vice President, Commercial Lending
   74




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##### 



s h a r e h o l d e r   i n f o r m a t i o n
    
    (GRAPHIC)Corporate offices

3959 North Lincoln Avenue
Chicago, Illinois 60613
Telephone 773-832-3088
www.corusbank.comAccess to reports

The Companys Annual
Report on Form 10-K, quarterly
reports on Form 10-Q, current
reports on Form 8-K, and all
amendments to those reports are
made available free of charge
through the Companys website
at www.corusbank.com as soon
as reasonably practicable after
such material is electronically
filed with or furnished to the
Securities and Exchange
Commission. Copies will be
available upon written request
to the Chief Financial Officer
of the Company. A charge will
be made for exhibits requested.
    
    Annual meeting
10:00 a.m., April 21, 2005
DOUBLETREE HOTEL &
EXECUTIVE MEETING CENTER
CHICAGO  NORTH SHORE
9599 Skokie Boulevard
Skokie, Illinois 60077
Telephone 847-679-7000Transfer AgentAnd Registrar

Mellon Investor Services LLC
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660
1-888-213-0965
Toll-free number for shareholders
1-800-231-5469
TDD (Telecommunications
Device for the Deaf) number
for hearing/speech impaired
shareholders
www.melloninvestor.comMarket-Makers For
Corus Bankshares, Inc.
Stock Include:


Citigroup Global Markets, Inc.
FTN Midwest Securities Corp.
Goldman, Sachs & Co.
Howe Barnes Investments, Inc.
Knight Securities, L.P.
 Design Presesley Jacobs: a design partnership




---



##### 



(CORUS BANKSHARES GRAPHICS)