In order to increase capital and enhance its liquidity, on Feb 22, 2010, Wilmington Trust Corp. (WL) announced the beginning of the public offering of its 18,875,000 shares that have been underwritten on its common stock. At $13.25 per share, the gross total stock offering is valued at about $250 million. 

For this, Wilmington has appointed J.P. Morgan Securities Inc., a wing of JPMorgan & Chase Co. (JPM) and Keefe, Bruyette & Woods Inc. as the book-running managers. 

Additionally, Wilmington has also granted a 30-day option to its underwriters for the purchase of an additional 15% of shares offered to cover any over-allotments. The net proceeds from the stock offering will be eligible for both tangible common equity and regulatory Tier 1 capital and will be used for general business operations. Besides, the proceeds may include the redemption of preferred stock that was issued to the U.S. Treasury under the government bailout program, subject to regulatory approval. 

Over the last 30 days, 3 of 9 analysts covering the stock have lowered their estimates for the first quarter of 2010, while one upward revision was witnessed. Currently, the Zacks Consensus Estimate for first quarter is an operating loss of 1 cent per share, which would be down by 103.5% from the year-ago quarter. 

The fewer upward estimate revisions for the first quarter indicate a likelihood of downward pressure on the performance of the stock in the near term. 

With respect to earnings surprises, the stock has been almost steady over the last four quarters, with three positive surprises. The average remained positive at 40.4%. This implies that Wilmington has surpassed the Zacks Consensus Estimate by 40.4% over that period. 

The upside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, currently stands at 200%. 

Wilmington reported a fourth quarter loss available to common shareholders of $15.7 million or 23 cents per share compared to a loss of $69.4 million or $1.02 per share in the year-ago quarter. The results modestly lagged behind the Zacks Consensus Estimate of a gain of 4 cents. 

Wilmington results reflected an increase in advisory revenue, driven largely by a growth in the corporate client services business. However, this was substantially offset by higher loan loss provisions that reduced net interest income and reflected higher levels of non-performing loans and charge-offs, and risk rating downgrades, primarily in the commercial construction portfolio

Wilmington is not the sole firm in the industry to tread the path of raising funds through stock offering. On Feb 22, Portfolio Recovery Associates, Inc. (PRAA) announced the completion of its $75.5 million public stock offering, started on Feb 16, to repay its debt. The offering of 1.25 million shares was priced at $52.50 per share. Underwriters exercised an option to purchase an extra 187,500 shares to cover over-allotments.
Read the full analyst report on “WL”
Read the full analyst report on “JPM”
Read the full analyst report on “PRAA”
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