Wilmington Trust Corp. says it plans to continue expanding its wealth advisory services in the United States and its corporate-client services internationally after both businesses posted strong second-quarter growth.
During the quarter, the Delaware company bought a wealth manager to expand into Boston and completed the purchase of a corporate-client services provider in Luxembourg in response to demand in Ireland and Germany and other opportunities in Europe. Related Links
"We will continue to see growth in our wealth advisory services revenue from both expansion and acquisition and [from] growth in our corporate-client services business because of expansion in Europe," Ted T. Cecala, Wilmington Trust's chairman and chief executive officer, said during a quarterly earnings call on Friday.
The company closed the quarter by completing its purchase of Bingham Legg Advisers LLC, a Boston wealth manager for wealthy individuals and families.
The wealth manager, which now operates under the Wilmington Trust brand, was established in 1999 in a joint venture between what is now Bingham McCutchen LLP, an international law firm, and the Baltimore wealth manager Legg Mason Inc. Bingham Legg had $1.3 billion under management and $874 million under administration when the deal closed June 29.
With the purchase completed, Wilmington Trust has a presence in five of the top seven high-net-worth markets. In addition to Boston, it has operations in New York, Philadelphia, southern Florida, and Southern California, However, it lacks wealth management offices in Chicago and San Francisco. Mr. Cecala said the company is not in a rush to be in every major market.
"The other two are attractive, but unless we have the right opportunity, we aren't going to jump out and just put our name on a door and say, 'We are here,' " Mr. Cecala said.
Wilmington Trust would consider buying a firm to add offices in regions where it already is, Mr. Cecala said. Last year it added family wealth advisory offices on the East Coast and opened advisory offices in Connecticut, New Jersey, and Pennsylvania. He said the company is beginning to see returns from expanding the wealth advisory network, and added there will "absolutely" be opportunities to attract wealthy customers from competitors in the wake of deals such as Bank of America's purchase of U.S. Trust Corp.
The Delaware company announced Friday its net income grew 4.3% in the quarter, to $48.9 million, or 70 cents per share, from a year earlier, beating analysts' estimates by three cents, according to Thomson Financial Inc.
Gerard Cassidy, an analyst at Royal Bank of Canada's RBC Capital Markets, said Wilmington Trust, like the other fee-based banks, had a strong quarter but that "meaningful deterioration in its credit business forced the company to use some levers to offset it."
Mr. Cecala said credit losses were stable and have been since the fourth quarter of 2005. "Our reserve and provisioning levels are in line with our business plans," he said. The company continues to get commercial and consumer loan growth but at a slower rate.
Wilmington Trust's corporate-client services business made a "major investment" to enhance its collateralized debt obligation services business last year, he said, and though the company has seen no revenue from the initiative yet, the pipeline is strong despite a lot of negative news about CDOs. "Our activities with CDOs present no material risk to Wilmington Trust," he said. "We do not extend credit in CDO transactions. We act as a trustee, custodian, a paying agent, or an administrator in these deals."
