Wilmington Trust posts 3Q loss on investment hit

Wilmington Trust Corp. said Friday it posted a third-quarter loss as the regional bank wrote down the value of some investment portfolio holdings.

Although the company’s adjusted results beat Wall Street expectations, shares of Wilmington Trust fell 83 cents, or 5.4 percent, to $14.45 in afternoon trading. The stock has traded in a 52-week range of $6.76 to $30.15.

The bank posted a loss available to common shareholders of $10.4 million, or 15 cents per share, compared with a year-ago profit of $22.9 million, or 34 cents per share.

The latest quarter included $38.1 million in losses primarily from pooled trust-preferred securities, which some banks and insurers use to raise capital. The hybrid investments share characteristics of both debt and stock. On an after-tax basis, the securities losses in the latest quarter reduced net income by about $23.6 million, or 34 cents per share.

Excluding that, the company’s operating profit in the latest quarter was $17.8 million, or 19 cents per share.

Wilmington Trust said it recorded the charge because some issuers of the securities that it held in its investment portfolio couldn’t meet cash flow obligations. Values also were reduced due to a lack of trading activity for the securities.

“Unfortunately, recessionary pressures reduced the value of some of our investment securities and triggered accounting rules that require us to write them down,” said Ted Cecala, chairman and CEO.

Analysts polled by Thomson Reuters expected profit of 7 cents per share, excluding items.

Wilmington Trust said the latest quarter’s loss from the securities offset mostly strong performance in its banking operations.

The company’s provision for loan losses was $38.7 million, down 28 percent from the second quarter.

Net charge-offs, or loans written off as unpaid, were $21.8 million, down 40 percent less from the previous quarter.

Non-performing assets, or loans that are considered past due, totaled $397.5 million, $67.2 million higher than at the end of the second quarter. Commercial construction loans for residential projects in Delaware and Pennsylvania accounted for two-thirds of the increase.

Wilmington Trust provides banking services throughout the mid-Atlantic region, as well wealth advisory services for clients in 36 countries, and corporate client services in 88 countries.