Wilmington Trust Corp.'s fourth-quarter loss narrowed on a jump in loan-loss provisions as the banking and trust-services provider's credit quality deteriorated.
But Chairman and Chief Executive Ted T. Cecala said Wilmington's global corporate trust business had its best quarter ever. Sales in corporate client services rose 18%. The growth shows how the company has shifted product mix in response to the changing environment, he said.
The bank has bounced back and forth between losses and profit for more than a year, hurt by securities write-downs in its investment portfolio. It has $330 million from the U.S. government's Troubled Asset Relief Program to repay.
While many larger banks rode the rally in equity markets, Wilmington Trust's operations were more limited owing to its status as a banking and trust-services provider.
Wilmington Trust posted a loss of $11.2 million, or 23 cents a share, from a year-earlier loss of $68.5 million, or $1.02 a share. Analysts surveyed by Thomson Reuters projected a 4-cent profit.
The company's loan-loss provisions jumped 23% to $82.8 million while net charge-offs — loans lenders don't view as collectible — rose 30% to $33.1 million. Nonperforming assets, those near default, more than doubled to $518.7 million.
Tangible common equity ratio, which measures how much of a bank's hard assets it common shareholder actually own, rose to 5.4% from 5.12% a year ago but fell from 5.6% in the previous quarter.
Tier 1 risk-based capital ratio, a key measure of financial strength, rose to 9.85% from 9.24% a year earlier but fell from 9.95% in the previous quarter.
In December, Standard & Poor's Ratings Services downgraded Wilmington Trust because of deteriorating asset quality and its exposure to residential-construction lending.
Wilmington Trust shares closed Thursday at $15.26 and weren't active premarket. The stock, which hit an 18-year low in March, is down 6% from a year ago.