Wilmington Trust suffers wider-than-expected 2Q loss

Wilmington Trust Corp. reported a wider-than-expected second-quarter loss of $116 million, or $1.33 a share, thanks largely to souring construction loans that continue to plague the regional bank. Wilmington set aside $374 million in the latest quarter to cover loan losses, an increase of $74 million from the first quarter, based on an assessment of non-performing loans, loan chargeoffs and less optimistic risk ratings on its portfolio. The firm also took about $19 million in credit expenses after assessing the creditworthiness of some off-balance sheet commitments. “My priority is to return our company to profitability and position our businesses for future growth, but first we must continue to deal with the lingering effects of a weak economy and housing market,” chairman and chief executive Don Foley, who took the helm from Ted Cecala last month, said in a press release. “Our second quarter results demonstrate we are doing that. We are fully committed to working through our credit issues.” Wilmington’s per-share loss was steeper than most analysts expected. The average analyst estimate was for a loss of 30 cents a share. But Gerard Cassidy, a managing director at RBC Capital Markets who expected a loss of $1.38 per share, was pleasantly surprise. Mr. Cassidy said that Wilmington is taking the right steps by admitting to its credit problems and taking the losses. “They’re certainly making headway,” he said. “They took big steps forward, which they need to be congratulated for. They’re at the spot where other regional banks were about a year ago. But they have enough liquidity and capital, they just need a hard-nosed group to go in and work out those bad loans.” Though Wilmington doesn’t disclose its number of clients, the firm said its customers are by and large “sticking with them,” and that it’s also gaining new clients.