Charge Hits Wilmington Profit

The noncash charge of $72.3 million went toward impairment of an affiliate's valuation.
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Wilmington Trust (WL) said its net profit for the third quarter fell 87%, due to noncash charge of $72.3 million.

The Wilmington, Del.-based financial services holding company earned $5.2 million, or 8 cents a share, in the third quarter, compared with $42.8 million, or 62 cents a share, a year ago. Adjusted for the noncash charge, earnings were $46.8 million, or 67 cents a share. On that basis, analysts polled by Thomson First Call were expecting a net profit of $48.56 million or 69 cents a share.

First-quarter revenue increased 6.5% from a year ago to $171 million. Analysts polled by Thomson First Call were estimating revenue of $178 million.

The noncash charge of $72.3 million was toward impairment of the valuation of its affiliate, money manager Roxbury Capital Management. In the third quarter, the money manager wound up its microcap fund and announced plans to exit its fixed-income fund by the end of 2006.

In its outlook for the rest of 2006, Wilmington said it expects net interest margin to decline modestly while expenses are estimated to grow at 7% for the whole year.

The company said its wealth advisory business revenue increased 8% and the corporate clients services revenue rose 10% from the corresponding period a year ago. Revenue grew 35% at its affiliate money manager Cramer Rosenthal McGlynn.

Net interest income in the third quarter rose 11.1% from a year ago to $93 million. The net interest margin rose 17 basis points from a year ago to 3.83%. Loan balances rose 9% to $7.76 billion compared with the year-ago third quarter.

The stock was down $2.19, or 4.9%, to $42.55 in recent trading Friday.

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