Wilmington Trust Corp.'s first-quarter net income plunged 47% as the commercial lender's loan-loss provision tripled.
But shares jumped 12% as earnings smashed analysts' expectations.
Wilmington Trust, a banking and trust-services provider whose operations are more limited than larger banks, reported net income of $21.8 million, or 26 cents a share, down from $41.4 million, or 61 cents, a year earlier. Excluding securities gains and write-downs, the company earned 19 cents in the latest quarter.
Analysts surveyed by Thomson Reuters, on average, were expecting earnings of 4 cents a share.
Revenue fell 0.3% to $189.2 million.
In February, Fitch Ratings cut its long-term issuer default rating on Wilmington, citing recent deterioration in Wilmington's loan portfolio. Fitch observed at the time that conditions in Wilmington's core mid-Atlantic region had weakened late in the fourth quarter, after outperforming other parts of the country.
As a result, Wilmington Trust's loan-loss provision mushroomed to $67.5 million. The figure dropped to $29.5 million in the first quarter, itself a surge from the prior year's $10 million.
Nonperforming assets, or loans in danger of going bad, surged to 2.67% from 0.88% a year earlier and 2.19% in the fourth quarter. Net charge-offs were 0.22%, compared with 0.05% and 0.27%, respectively.
Wilmington Trust's corporate-client services operations saw revenue of $11.5 million, slightly less than a year earlier amid weak demand for traditional capital markets and structured-finance transactions. The segment provides back-office service for unbundled retirement plans.
Wealth-advisory revenue fell amid volatility in the financial markets.