Wilmington (NYSE:WL)
Historical Stock Chart
From Jul 2019 to Jul 2024
Wilmington Trust Corporation (NYSE:WL) said today that it expects
results for the 2008 fourth quarter to reflect an increase in the
provision for loan losses. In addition, the company may record a
non-cash charge for other-than-temporary impairments of trust-preferred
securities. Wilmington Trust plans to announce 2008 fourth quarter and
full-year results on January 30, 2009.
Ted T. Cecala, Wilmington Trust chairman and chief executive officer,
said, “While the economy in the mid-Atlantic region is well diversified
and the downturn has been less severe in this area than in other parts
of the United States, economic conditions have affected some of our
clients negatively, which led us to increase our provision and reserve
for loan losses as we go through this part of the economic cycle.”
Increase in provision for loan losses
Wilmington Trust estimates the 2008 fourth quarter provision for loan
losses will be approximately $67 million. The expected increase reflects
changes in the status of loans in the commercial and industrial,
commercial real estate/construction, and consumer loan portfolios. These
changes were caused by a variety of factors, most of which were not
apparent until late in the fourth quarter. These factors included rapid
deterioration in the economic environment, downgrades in internal risk
ratings, reductions in appraised values, higher levels of loan
charge-offs, and an increase in nonperforming loans.
Of the estimated $67 million:
Approximately 31% is due to downgrades of commercial credits that
previously held pass ratings.
Approximately 14% reflects increases in reserves for past-rated
commercial credits due to deteriorating economic trends.
Approximately 22% is associated with previously identified substandard
and watchlisted commercial credits that deteriorated further in the
2008 fourth quarter.
Approximately 33% is associated with consumer credits.
Management estimates net charge-offs for the 2008 fourth quarter will be
approximately $25 million, which would result in a quarterly net
charge-off ratio of approximately 26 basis points. For the 2008 full
year, management estimates net charge-offs will be approximately $52
million and the net charge-off ratio will be approximately 56 basis
points.
For the 2008 full year, management estimates the provision for loan
losses will be approximately $115 million. Management expects the
reserve for loan losses at December 31, 2008, to be approximately $157
million, or approximately 1.6% of total loans outstanding.
Other-than-temporary impairment charge
At September 30, 2008, the company's portfolio of trust-preferred
securities (TruPS) had an original cost basis of $326 million and an
estimated fair value of $208 million. All were considered temporarily
impaired as of that date.
During the 2008 fourth quarter, Moody’s Investors Service downgraded
certain TruPS in the portfolio to below investment grade. Ratings by
other rating services on these securities remained above investment
grade. As of September 30, 2008, the downgraded securities had an
original cost basis of approximately $119 million and a market value of
approximately $71 million.
The downgrades increase the potential for these securities to become
other-than-temporarily impaired (OTTI). Such a determination would
require the company to record a non-cash OTTI charge in an amount that
reflects any decrease in valuation.
Management currently is evaluating projected cash flows and other
factors to estimate fair market valuations for all of the TruPS in the
investment portfolio, and is unable at this time to estimate the amount
of an OTTI charge for the 2008 fourth quarter.
Forward-looking statements
This release may contain forward-looking statements that reflect our
current expectations about our performance. These statements rely on a
number of assumptions and estimates and are subject to various risks and
uncertainties that could cause our actual results to differ from our
expectations. Factors that could affect our financial results include,
among other things, changes in national or regional economic conditions;
changes in market interest rates; significant changes in banking laws or
regulations; increased competition in our businesses;
higher-than-expected credit losses; the effects of acquisitions; the
effects of integrating acquired entities; a substantial and permanent
loss of either client accounts and/or assets under management at
Wilmington Trust and/or our affiliate money managers, Cramer Rosenthal
McGlynn and Roxbury Capital Management; changes in the market values of
securities in our investment portfolio; unanticipated changes in
regulatory, judicial, or legislative tax treatment of business
transactions; and economic uncertainty created by unrest in other parts
of the world.
About Wilmington Trust
Wilmington Trust Corporation (NYSE:WL) is a financial services holding
company that provides Regional Banking services throughout the
mid-Atlantic region, Wealth Advisory Services for high-net-worth clients
in 36 countries, and Corporate Client Services for institutional clients
in 86 countries. Its wholly owned bank subsidiary, Wilmington Trust
Company, which was founded in 1903, is one of the largest personal trust
providers in the United States and the leading retail and commercial
bank in Delaware. Wilmington Trust Corporation and its affiliates have
offices in Arizona, California, Connecticut, Delaware, Florida, Georgia,
Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York,
Pennsylvania, South Carolina, Vermont, the Cayman Islands, the Channel
Islands, London, Dublin, Frankfurt, Luxembourg, and Amsterdam. For more
information, visit www.wilmingtontrust.com.