Wilmington Trust Corporation Q1 2010 Earnings Call Transcript

Wilmington Trust Corporation Q1 2010 Earnings Call Transcript
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Wilmington Trust Corporation (WL)

Q1 2010 Earnings Call Transcript

April 23, 2010 10:00 am ET

Executives

Ellen Roberts – VP, IR

Ted Cecala – Chairman and CEO

Dave Gibson – CFO

Bob Harra – President and COO

Bill North – Chief Credit Officer

Bill Farrell – Head of Corporate Client Services

Analysts

Andy Stapp – B. Riley & Co.

Matt Schultheis – Boenning and Scattergood

Mac Hodgson – SunTrust Robinson Humphrey

Gerard Cassidy – RBC Capital Markets

Steve Moss – Janney Montgomery Scott

Justin Maurer – Lord Abbett

Chris McGratty – KBW

Tom Alonso – Macquarie

David West – Davenport and Co.

Brooke Vanderguy [ph] – Lionsback Capital [ph]

Leo Harmon – FMA

Charlie Ernst [ph] – Diamondback Capital [ph]

Presentation

Operator

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Greetings and welcome to the Wilmington Trust first quarter 2010 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ms. Ellen Roberts, Vice President of Investor Relations. Thank you, Ms. Roberts. You may now begin.

Ellen Roberts

Thank Tracy. Good morning, everybody. Thanks for joining us this morning. I’d like to remind you that the supporting materials for this call are available on our Web site at

www.wilmingtontrust.com

. This call is being recorded. The replay details are in the earnings release and on our Web site, again,

www.wilmingtontrust.com

.

Our agenda this morning features remarks from our Chairman and Chief Executive Officer, Ted Cecala, also present are Bob Harra, who is our President, Chief Operating Officer and Head of the Regional Banking Business, our Chief Financial Officer, Dave Gibson; our Chief Credit Officer, Bill North; the Head of our Corporate Client Services Business, Bill Farrell; and the Head of our Wealth Advisory Services Business, Mark Graham.

We’ll start with remarks from Mr. Cecala, and then he will take questions at the conclusion of his formal remarks. I want to remind you that news reporters maybe attending maybe attending this call. And anybody is permitted to ask questions, and I just have to give you a brief forward-looking statement disclaimer.

Our comments may contain forward-looking statements that reflect our current expectations about our performance. Our ability to achieve the results reflected in these statements could be affected adversely by changes in national or regional economic conditions, changes in market interest rates, fluctuations in equity or fixed income markets higher than expected credit losses, changes in the market values of securities and our investment portfolio and other factors described in disclosure documents we file publicly from time-to-time.

With that I will turn it over to Ted.

Ted Cecala

Thanks, Ellen, and good morning. Thank you for joining us for this discussion of our results for the first quarter of 2010. I hope you have had a chance to review our earnings release. I don’t plan on repeating everything in the release, but will speak to the significant items for the quarter and afterwards I’ll respond to questions that you may have.

As we reported earlier today we recorded net loss for the quarter of $29 million. This was primarily due to the $77 million provision for loan losses and a charge of $18 million for other than temporary impairment on pooled trust preferred securities. These two items overshadowed other positive developments during the quarter, especially, our advisory businesses.

Corporate client services and Wealth Advisory Services results continue to mitigate the effect of economic pressures on our banking business. The expenses were well controlled and were less than 1% of the fourth quarter levels. We completed an offering of common stock during the quarter which raised $274 million and substantially increased our capital ratios. And I will review each of these areas in more detail over the course of this call.

In my discussion today, my performance comparisons will be against 2009 fourth quarter and I would like to begin by discussing the regional banking business. For the quarter, commercial loans on average declined $61 million, of that amount CF&A loans and construction loans declined 57 million and 37 million respectively.

This was offset by 2% increase in commercial mortgages, the increasing commercial mortgage loans is associated with performing construction loans moving into the commercial mortgage category, most of which will see refinancing in the secondary market.

Retail loans were down $98 million, reflecting continued run off of the indirect auto loan portfolio. In total, loans on average declined 159 million during the quarter. Of this, this decline in loans we saw a record high deposit levels which increased on average nearly $500 million this quarter.

Now I would like to provide an overview of credit quality, which will be followed with a more detail review by Dave Gibson later in the call. Non-accruing loans rose $13 million while nonperforming assets, which also include OREO and renegotiated loans, rose $32 million. By comparison, for the fourth quarter of last year, non-accruing loans rose $88 million and total non-performing assets increased $121 million.

Net charge-offs for the quarter were $29 million, that’s down from 33 million last quarter. And the reserve for loan losses increased by $48 million to $300 million reaching 3.44% of loan at the end of the quarter.

Turning now to our net interest margin, the net interest margin was 303, that’s down nine basis points from last quarter. The decline was driven by the loss of interest income due to declining loan balances and we added some government securities to the portfolio that have very well yields these securities have maturities of less than six months.

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