Wilmington Trust Corp., the biggest commercial bank still based in the Philadelphia area, financed the inflated construction boom at the Delaware Shore in the mid-2000s, and it's paying a high price now that the bubble has burst and unfinished, unsold developments litter Sussex County.
"Net charge-offs for construction loans totaled $145.1 million since 2008," or one-sixth of the bank's construction portfolio - and a larger proportion of the loans are still in trouble, Janney Capital Markets analyst Stephen M. Moss told clients, adding that the latest losses made for "a brutal quarter." He urged investors to sell the stock.
Shares fell around 5%, to $10.30, in early afternoon trading after Wilmington Trust posted continuing losses for the past quarter. New chief executive Donald E. Foley and bank auditors are sorting through failed southern Delaware construction loans the bank made under Foley's departed predecessor, Ted T. Cecala, and aggressively writing them down.
There was better news from the bank's Corporate Client Services unit, which manages bankruptcies and tax shelters: Sales topped $51.3 million, a record for Wilmington Trust.