The truth will set you free. Wilmington Trust was a boring trust bank located in Delaware. It’s stock price was $45 in late 2007. They sold out yesterday for $3.84. Calculated Risk is 100% correct. Look at the chart. Your bad loans do not suddenly go up 100% in 3 months. They were bad all along. This report is the canary in a coal mine. Every large bank in this country is reporting fraudulent numbers in their financial statements. Their commercial real estate loans are only worth 30 to 50 cents what they are reporting. Reality sucks, but it is reality.
Wilmington Trust: A warning of more CRE Construction Losses coming?
by CalculatedRisk on 11/02/2010 09:14:00 AM
Yesterday M&T Bank bought Wilmington Trust. From the WSJ: A Fire Sale in Wilmington
Wilmington announced that M&T Bank would buy it, in an all-stock deal, for about $3.84 a share, compared with Friday’s $7.11 close. Wilmington did so while releasing results that showed third-quarter, tangible book value dropped to $3.84 compared with $7.92 in the second quarter. … Most striking is the speed of the deterioration in the loan book.
Here is the M&T Bank presentation too.
And from the conference call:
CEO: “Credit quality clearly remains the big story. So, let me say a few more things on that subject. The negative effects of the protracted recessionary environment in Delaware, and how these pressures are challenging the financial health of many of our borrowers, simply cannot be over stated. In the third quarter, evidence mounted that had things were getting worse for some of our borrowers. And even some of our strongest clients began to feel the pressure. The financial conditions of more of our borrowers weakened, their cash flows tightened, and appraisals continued to show significant declines in collateral valuations. These issues manifested themselves in our credit metrics, to a significantly greater degree than in the second quarter.
By the end of the third quarter, we had evaluated more than 92% of our Commercial Real Estate/Construction and mortgage loans, and the trend line is not encouraging. It appears to us, that there is no significant economic or real estate recovery on the horizon. This gives us little assurance that our loan portfolio will strengthen significantly in the near term, and our capital position will not erode further.”
Analyst: Don, the Company obviously had credit issues, but the decline in TC, book value, etc., the magnitude of increase of non-performers still was pretty surprising. Can you talk at all about whether or not a specific event drove this quarter’s results? Was there a regulatory exam, if not, what changed so dramatically in the last 90 days?
Wilmington Trust, CEO: Well, what we saw an acceleration in the deterioration of the credit quality of many of our customers over this quarter. We receive a lot in terms of the appraisal information that we gathered. all indicating that both the magnitude and velocity of this credit deterioration was — was very significant for us.
Analyst: When was your last exam?
Wilmington Trust CEO: We are — our soundness exam started some time at the end of June, beginning of July. And we are still going through the exit process at this point.