Wilmington Trust Corp. warned Wednesday that its fourth-quarter loan-loss provision rose sevenfold from a year earlier, because of deterioration in commercial and consumer portfolios.

The $12.1 billion-asset Delaware company said it anticipates recording a $67 million provision for the quarter. It now plans to disclose its results Jan. 30, a week later than previously scheduled, to give it more time to evaluate the impact of the economic downturn.


Ted Cecala, Wilmington Trust's president and chief executive officer, said in an interview Wednesday that he is pessimistic about this year.


"I wish I had a crystal ball for 2009, but if the economy deteriorates further, we could see additional losses over the balance of the year," Cecala said. "But as we get to the second half and the fourth quarter, it could improve."


In a regulatory filing, Wilmington Trust said that 67% of the fourth-quarter provision is tied to deteriorating commercial loans. At the end of the third quarter commercial credits made up roughly 69% of its $9.46 billion loan portfolio.


Wilmington Trust also said 22% of the provision is tied to commercial credits previously identified as substandard or watch-listed, while 45% is tied to commercial loans that have had their ratings cut.


A third of the provision is tied to deterioration in the company's consumer portfolio, which made up 19% of the its loan portfolio at the end of the third quarter.


Wilmington Trust set aside $9.2 million for loan losses in the fourth quarter of 2007, but Cecala said that it is difficult to compare those results with this year's numbers, because "we are in a very different economy today."


According to its regulatory filing, Wilmington Trust expects to report about $25 million of net chargeoffs for the fourth quarter, though a spokesman for the company said that figure is at the higher end of its expectations and based on the current economic conditions.


For the full year, it expects to report about $52 million of net chargeoffs.


The sharp increase in the loan-loss provision is the second in as many quarters for Wilmington Trust. In the third quarter, it more than doubled its provision from a year earlier, to $19.6 million. Its third-quarter, profits fell more than 50%, to $22.9 million, or 34 cents a share.


Analysts said that other Middle Atlantic banking companies, including Fulton Financial Corp. of Lancaster, Pa., and National Penn Bancshares in Boyertown, have pre-announced rising fourth-quarter credit costs in the past couple weeks.


Andy Stapp, an analyst with B. Riley & Co., said he expects more such announcements, since companies in the region are dealing with hefty losses in construction, consumer, and auto lending portfolios.


Cecala said that he thinks the region is "doing well and perhaps will fare better than other areas of the country, because of the diversity of businesses in the region, but that doesn't mean we are immune to general economic conditions."


Though Stapp said Wilmington Trust could consider selling the loans to reduce future losses, Cecala said he does not think it will need to do anything dramatic to fix the problems in its loan portfolio.


"This is the cycle we are in," he said. "Some loans will get better on their own. Others will be charged off."


Cecala also said Wilmington Trust expects an increase in defaults. Currently only 1.6% of its loans are past due.


"We are going through an economic cycle, not off an economic cliff," he said.


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