S&P downgrades Wilmington Trust to junk

Standard & Poor's said it lowered its counterparty credit ratings on Wilmington Trust Corp. to BB+/B from BBB-/A-3 and on its main banking subsidiary, Wilmington Trust Co. DE, to BBB-/A-3 from BBB/A-2.

The outlook is negative.

The downgrades follow Wilmington's report of a large rise in nonperforming assets in the 2009 fourth quarter, stemming mainly from problematic residential construction loans in its Delaware market.

The agency said the bank is vulnerable due to high exposure to commercial real estate and to large borrower relationships with developers.

The bank reported solid pre-provision earnings in the fourth quarter, supported by its corporate trust and wealth management fee-based businesses, S&P added.

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