Souring commercial real estate and construction loans are largely responsibly for a Q210 $116.4m loss at private investment bank and wealth adviser Wilmington Trust (WL). Provisions for loan losses rose to $205.2m, following increases in nonperforming loans, loan charge-offs, and loans with unfavorable risk ratings. The results exemplify the negative credit environment being experienced in Delaware. Clients of Wilmington Trust find themselves in a weakened financial condition, the earnings report claims, and with commercial real estate values declining, management increased loan-loss provisions leading to a Q210 performance largely below expectations. “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,” said Donald Foley, Wilmington Trust CEO. “We are fully committed to working through our credit issues, relying on robust risk management tools and analyses.” According to the earnings report, nonaccruing loans accounted for $479.9m of nonperforming assets at Q210, compared with $468.9m at Q110. During the Q210, nonaccruing loans of approximately $119.4m were charged off, and loans of approximately $130.0m were added. Approximately one-half of the new nonaccruing loans were commercial real estate/construction loans. During the 2010 second quarter, property valued at $4.5m was transferred to other real estate owned (REO), and REO valued at $6.6m was sold or written down. This brought the REO balance at June 30, 2010, to $44.2m, which was $2.1m lower than for the trailing quarter. Write to Jacob Gaffney. The author holds no relevant investments.
About the Author
Jacob Gaffney is formerly Editor-in-Chief of HousingWire and HousingWire.com. He previously covered securitization for Reuters and Source Media in London before returning to the United States in 2009. While in Europe for nearly a decade, he covered bank loans and the high yield market, in addition to commercial paper, student loan, auto and credit card space(s). At HousingWire, he began focusing his journalism on all aspects of the housing and mortgage markets.