<PAGE>
<TABLE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
<S> <C>
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 0-25442
WILMINGTON TRUST CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0328154
-------------------------------------------------------------- -------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(302) 651-1000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
Number of Shares of Issuer's Common Stock ($1.00 par value) Outstanding at
March 31, 1996 - 34,657,844 shares
<PAGE>
Wilmington Trust Corporation and Subsidiaries
Form 10-Q
Index
Part I. Financial Information
Page
----
Item 1 - Financial Statements
Consolidated Statement of Condition 3
Consolidated Statement of Income 5
Consolidated Statement of Changes in Stockholders'
Equity 7
Consolidated Statement of Cash Flows 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. Other Information
Item 1 - Legal Proceedings 23
Item 2 - Changes in Securities 23
Item 3 - Defaults Upon Senior Securities 23
Item 4 - Submission of Matters to a Vote of
Security Holders 23
Item 5 - Other Information 24
Item 6 - Exhibits and Reports on Form 8-K 25
Index to Exhibits 25
Exhibit 11
Exhibit 27
(2)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
Wilmington Trust Corporation and Subsidiaries
March 31, December 31, March 31,
1996 1995 1995
(In thousands) ---------- ------------ ----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 204,362 $ 252,831 $ 231,437
----------- ----------- -----------
Interest-bearing time deposits in other banks --- --- ---
----------- ----------- -----------
Federal funds sold and securities purchased
under agreements to resell 107,000 78,866 198,831
----------- ----------- -----------
Investment securities available for sale:
U.S. Treasury and government agencies 560,754 536,995 ---
Obligations of state and political
subdivisions 17,110 18,627 5,237
Other securities 317,947 354,621 239,228
----------- ----------- -----------
Total investment securities available
for sale 895,811 910,243 244,465
----------- ----------- -----------
Investment securities held to maturity:
U.S. Treasury and government agencies 300,832 236,444 533,231
Obligations of state and political subdivisions 20,788 20,822 39,558
Other securities 217,312 193,269 314,658
----------- ----------- -----------
Total investment securities held to
maturity (market values were $536,221,
$453,323, and $873,666, respectively) 538,932 450,535 887,447
----------- ----------- -----------
Loans:
Commercial, financial and agricultural 1,146,529 1,159,434 1,021,439
Real estate-construction 110,231 104,871 103,460
Mortgage-commercial 780,032 770,304 750,322
Mortgage-residential 663,341 669,658 614,281
Consumer 815,587 823,381 814,650
Unearned income (7,173) (5,733) (3,516)
----------- ----------- -----------
Total loans net of unearned income 3,508,547 3,521,915 3,300,636
Reserve for loan losses (50,524) (49,867) (47,899)
----------- ----------- -----------
Net loans 3,458,023 3,472,048 3,252,737
----------- ----------- -----------
Premises and equipment, net 81,764 79,734 73,615
Other assets 137,443 127,941 116,022
----------- ----------- -----------
Total assets $ 5,423,335 $ 5,372,198 $ 5,004,554
=========== =========== ===========
(3)
<PAGE>
March 31, December 31, March 31,
1996 1995 1995
(In thousands) ---------- ------------ ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 670,525 $ 721,400 $ 593,576
Interest-bearing:
Savings 356,566 340,581 364,170
Interest-bearing demand 1,016,445 1,007,009 1,010,533
Certificates under $100,000 1,246,457 1,230,045 1,051,842
Certificates $100,000 and over 304,878 288,550 159,131
----------- ----------- -----------
Total deposits 3,594,871 3,587,585 3,179,252
----------- ----------- -----------
Short-term borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 1,196,146 1,166,163 1,289,036
U.S. Treasury demand 38,856 29,389 27,650
----------- ----------- -----------
Total short-term borrowings 1,235,002 1,195,552 1,316,686
----------- ----------- -----------
Other liabilities 112,157 101,690 87,290
Long-term debt 28,000 28,000 ---
----------- ----------- -----------
Total liabilities 4,970,030 4,912,827 4,583,228
----------- ----------- -----------
Stockholders' equity:
Common stock ($1.00 par value) authorized
50,000,000 shares; outstanding 39,012,912,
39,012,912 and 38,920,743 shares,
respectively 39,013 39,013 38,921
Capital surplus 57,865 58,111 58,043
Retained earnings 474,715 462,215 424,849
Net unrealized gain/(loss) on investment
securities available for sale, net of taxes 262 4,379 (93)
----------- ----------- -----------
Total contributed capital and retained
earnings 571,855 563,718 521,720
Less: Treasury stock at cost 4,355,068,
3,922,753 and 3,831,407 shares,
respectively (118,550) (104,347) (100,394)
----------- ----------- -----------
Total stockholders' equity 453,305 459,371 421,326
----------- ----------- -----------
Total liabilities and stockholders' equity $ 5,423,335 $ 5,372,198 $ 5,004,554
=========== =========== ===========
See notes to consolidated financial statements.
</TABLE>
(4)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Wilmington Trust Corporation and Subsidiaries
For the three months ended
March 31,
------------------------------------
(In thousands; except per share data) 1996 1995
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 77,958 $ 72,707
Interest and dividends on investment securities:
Taxable interest 17,723 10,896
Tax-exempt interest 499 597
Dividends 2,197 2,463
Interest on time deposits in other banks --- ---
Interest on federal funds sold and securities purchased
under agreements to resell 386 157
---------- ----------
Total interest income 98,763 86,820
---------- ----------
Interest on deposits 31,517 24,245
Interest on short-term borrowings 15,618 16,216
Interest on long-term debt 393 ---
---------- ----------
Total interest expense 47,528 40,461
---------- ----------
Net interest income 51,235 46,359
Provision for loan losses (3,500) (1,760)
---------- ----------
Net interest income after provision
for loan losses 47,735 44,599
---------- ----------
OTHER INCOME
Trust and investment management fees 23,100 21,442
Service charges on deposit accounts 4,710 4,045
Other operating income 4,623 4,216
Securities gains/(losses) (3) 7
---------- ----------
Total other income 32,430 29,710
---------- ----------
Net interest and other income 80,165 74,309
---------- ----------
OTHER EXPENSE
Salaries and employment benefits 29,169 27,002
Net occupancy 2,698 2,422
Furniture and equipment 3,446 3,140
Stationery and supplies 1,480 1,408
(5)
<PAGE>
For the three months ended
March 31,
------------------------------------
(In thousands; except per share data) 1996 1995
---------- ----------
FDIC insurance 164 1,910
Other operating expense 9,152 8,477
---------- ----------
Total other expense 46,109 44,359
---------- ----------
NET INCOME
Income before income taxes 34,056 29,950
Applicable income taxes 11,037 8,980
---------- ----------
Net income $ 23,019 $ 20,970
========== ==========
Net income per share $ 0.66 $ 0.60
========== ==========
Weighted average shares outstanding 35,008 35,184
Cash dividends per share $ 0.30 $ 0.27
See notes to consolidated financial statements.
</TABLE>
(6)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
Wilmington Trust Corporation and Subsidiaries
Common Stock
--------------- Capital Retained Treasury Valuation
(in thousands; except per share data) Shares Amount surplus earnings stock reserve
------ ------ ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 35,449 $ 38,921 $ 58,117 $ 413,375 $ (91,896) $ (295)
Net income ---- ---- ---- 20,970 ---- ----
Cash dividends paid - $.27 per share ---- ---- ---- (9,496) ---- ----
Common stock issued under employment
benefit plans 8 ---- (74) ---- 211 ----
Acquisition of treasury stock (368) ---- ---- ---- (8,709) ----
Adjustments to net unrealized loss on
investment securities available for sale,
net of income taxes of $114 ---- ---- ---- ---- ---- 202
------- ------- ------- --------- --------- ---------
Balance, March 31, 1995 35,089 $ 38,921 $ 58,043 $ 424,849 $ (100,394) $ (93)
======= ========= ========= ========= =========== =========
Balance, January 1, 1996 35,090 $ 39,013 $ 58,111 $ 462,215 $ (104,347) $ 4,379
Net income ---- ---- ---- 23,019 ---- ----
Cash dividends paid - $.30 per share ---- ---- ---- (10,519) ---- ----
Common stock issued under employment
benefit plans 53 ---- (246) ---- 1,349 ----
Acquisition of treasury stock (485) ---- ---- ---- (15,552) ----
Adjustments to net unrealized loss on
investment securities available for sale,
net of income taxes of $2,316 ---- ---- ---- ---- ---- (4,117)
------- --------- --------- ---------- ----------- ---------
Balance, March 31, 1996 34,658 $ 39,013 $ 57,865 $ 474,715 $ (118,550) $ 262
======= ========= ========= ========== =========== ========
See notes to consolidated financial statements.
</TABLE>
(7)
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) For the three months ended
Wilmington Trust Corporation and Subsidiaries March 31,
(in thousands) ---------------------------------
1996 1995
------ ------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 23,019 $ 20,970
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 3,500 1,760
Provision for depreciation 2,597 2,238
Amortization of investment securities available for sale
discounts and premiums 976 ---------
Amortization of investment securities held to maturity
discounts and premiums 13 1,112
Deferred income taxes 14,897 16,396
Losses on sales of loan 133 ---------
Securities losses/(gains) 3 (7)
Increase in other assets (9,502) (1,069)
Decrease in other liabilities (2,114) (9,800)
-------- ----------
Net cash provided by operating activities 33,522 31,600
-------- ----------
INVESTING ACTIVITIES
Proceeds from sales of investment securities available for sale 5,733 18,894
Proceeds from maturities of investment securities available for sale 311,954 425,988
Proceeds from maturities of investment securities held to maturity 24,082 42,168
Purchases of investment securities available for sale (344,280) (435,788)
Purchases of investment securities held to maturity (78,879) (198,782)
Gross proceeds from sales of loans 13,251 ----
Net increase in loans (2,859) (18,933)
Net increase in premises and equipment (4,627) (5,075)
-------- ----------
Net cash used for investing activities (75,625) (171,528)
-------- ----------
FINANCING ACTIVITIES
Net decrease in demand, savings and interest-bearing demand (25,454) (172,095)
Net increase in certificates of deposit 32,740 42,597
Net increase in federal funds purchased and securities sold under
agreements to repurchase 29,983 391,537
Net increase/(decrease) in U.S. Treasury demand 9,467 (9,658)
Cash dividends (10,519) (9,496)
Proceeds from common stock issued under employment benefit plans 1,103 137
Payments for common stock acquired through buybacks (15,552) (8,709)
-------- ----------
Net cash provided by financing activities 21,768 234,313
-------- ----------
(Decrease)/increase in cash and cash equivalents (20,335) 94,385
Cash and cash equivalents at beginning of period 331,697 335,883
---------- ----------
Cash and cash equivalents at end of period $ 311,362 $ 430,268
========== ==========
(8)
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) For the three months ended
Wilmington Trust Corporation and Subsidiaries March 31,
(in thousands) ---------------------------------
1996 1995
------ ------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 46,820 $ 35,747
Taxes 958 769
Loans transferred during the year:
To other real estate owned $ 7,516 $ 582
From other real estate owned 3,894 3,438
See notes to consolidated financial statements.
</TABLE>
(9)
<PAGE>
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Wilmington Trust Corporation and Subsidiaries
NOTE 1 - ACCOUNTING AND REPORTING POLICIES
The accounting and reporting policies of Wilmington Trust
Corporation (the "Corporation"), a holding company which owns all of
the issued and outstanding shares of capital stock of Wilmington
Trust Company, Wilmington Trust of Pennsylvania (formerly Freedom
Valley Bank) and Wilmington Trust FSB, conform to generally accepted
accounting principles and practices in the banking industry. The
information for the interim periods is unaudited and includes all
adjustments which are of a normal recurring nature and which
management believes to be necessary for fair presentation. Results
of the interim periods are not necessarily indicative of the results
that may be expected for the full year. This note is presented and
should be read in conjunction with the Notes to the Consolidated
Financial Statements included in the Corporation's 1995 Annual
Report to Stockholders.
(10)
<PAGE>
Wilmington Trust Corporation and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUMMARY
-------
Net income for the first quarter of 1996 was $23 million, or $.66 per
share. This was a $2 million, or 10%, increase over the $21 million, or
$.60 per share, reported for the first quarter of 1995.
Net interest income for the first quarter of 1996 was $51.2 million, an
increase of $4.9 million, or 11%, over the $46.4 million reported for the
first quarter of 1995.
The quarterly provision for loan losses was $3.5 million, an increase of
$1.7 million, or 99%, over the $1.7 million provision for the first
quarter of 1995. The provision increased the reserve for loan losses to
$50.5 million, or 1.44% of total period-end loans outstanding. This is an
increase of $2.6 million over the $47.9 million, or 1.45% of total loans
outstanding, reported for the first quarter of 1995.
Noninterest income for the first quarter of 1996 was $32.4 million, an
increase of $2.7 million, or 9%, over the $29.7 million reported for the
first quarter of 1995.
Operating expenses were $46.1 million, an increase of $1.8 million, or 4%,
over the $44.4 million reported for the first quarter of 1995.
Return on assets for the first quarter of 1996, on an annualized basis,
was 1.76%, down slightly from 1.82% for the first quarter of 1995. Return
on stockholders' equity, also on an annualized basis, was 20.09%, down
slightly from the 20.41% reported for the first quarter of 1995.
STATEMENT OF CONDITION
----------------------
Average total assets for the first quarter of 1996 were $5.25 billion, a
$577 million, or 12%, increase over the $4.67 billion reported for the
first quarter of 1995. Approximately $572 million of this increase was
attributable to earning assets which rose, on average, to $4.91 billion
for the first quarter of 1996.
All three components of earning assets contributed to this increase.
Investment securities rose $339 million, or 32%, on average to $1.39
billion as the Corporation increased its holdings of U.S. Treasury and
government agency securities in anticipation of projected first quarter
1996 maturities. The average level of loans outstanding rose $216
(11)
<PAGE>
STATEMENT OF CONDITION (continued)
----------------------
million, or 7%, to $3.5 billion as commercial loans grew by $131 million,
or 13%, to $1.14 billion. Commercial and residential mortgage loans also
contributed to this increase, growing by $36 million, or 5%, to $773
million, and $53 million, or 9%, to $665 million, respectively.
Average total interest-bearing liabilities for the first quarter of 1996
were $4.07 billion, a $445 million, or 12%, increase over the $3.63
billion reported for the first quarter of 1995. The average level of
total deposits for the first quarter of 1996 was $3.5 billion, a $423
million, or 14%, increase over the $3.1 billion reported for the first
quarter of 1995. Contributing to this growth was a $360 million, or 14%,
increase in the average level of interest-bearing deposits to $2.91
billion for the first quarter of 1996. Virtually all of this increase was
attributable to certificates of deposit acquired in a premium-rate deposit
promotion campaign conducted during the fourth quarter of 1995. The
average level of certificates of deposit under $100,000 rose $203
million, or 20%, to $1.2 billion, while certificates of deposit $100,000
and over rose $182 million, or 121%, to $332 million. The deposits
acquired in the Corporation's deposit promotion program have a seven-month
term and will mature during the second and third quarters of 1996.
The growth in the average level of earning assets during the first quarter
of 1996 outpaced the growth in total deposits by $148.4 million.
Accordingly, the Corporation sought alternative funding sources in the
form of short-term borrowings. The average level of federal funds
purchased was $1.1 billion during the first quarter of 1996. This was an
increase of $58.5 million, or 6%, over the average level of $1.04 billion
for the same quarter last year.
Average stockholders' equity reached $461 million for the first quarter of
1996. This was a $44 million, or 10%, increase over the $417 million
level reported for the first quarter of 1995. Continued strong earnings
offset, in part, by dividend payments and the Corporation's ongoing stock
repurchase program accounted for all of this increase.
NET INTEREST INCOME
-------------------
Net interest income, on a fully tax-equivalent basis ("FTE"), was $53.9
million for the first quarter of 1996. This was a $4.6 million, or 9%,
increase over the $49.3 million reported for the first quarter of 1995.
Interest income (FTE) reached $101.4 million, an increase of $11.7
million, or 13%, over the $89.8 million reported for the first quarter of
1995. Virtually all of this increase was due to the increased level of
earning assets, as the rates earned on those assets fell by six basis
points, from 8.31% a year ago to 8.25% for the first quarter of 1996.
(12)
<PAGE>
STATEMENT OF CONDITION (continued)
----------------------
Interest expense reached $47.5 million, an increase of $7.1 million, or
17%, over the $40.5 million reported for the first quarter of 1995. The
higher level of interest-bearing liabilities ($445 million) resulted in a
$5 million increase in interest expense, while the higher average cost of
funds, due in part to the deposit promotion program, resulted in a $2.1
million increase in interest expense.
The net interest margin for the first quarter of 1996 was 4.36%, down 19
basis points from the 4.55% reported for the first quarter of 1995. The
tables on the following two pages present comparative net interest income
data and a rate/volume analysis of the changes in net interest income for
the first quarters of 1996 and 1995.
(13)
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY AND YEAR-TO-DATE ANALYSIS OF EARNINGS
1996 First Quarter 1995 First Quarter
---------------------------------- -----------------------------------
(In thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Time deposits in other $ --- $ --- --- % $ --- $ --- --- %
banks
Federal funds sold and
securities purchased under
agreements to resell 26,839 386 5.69 10,716 157 5.86
----------- -------- ----------- --------
Total short-term
investments 26,839 386 5.69 10,716 157 5.86
----------- -------- ----- ----------- -------- -----
U.S. Treasury and
government agencies 791,489 12,174 6.21 481,502 6,877 5.71
State and municipal 38,907 771 7.95 46,290 901 7.79
Preferred stock 143,520 2,649 7.30 191,023 3,086 6.46
Asset-backed securities 304,261 4,407 5.79 242,225 3,086 5.10
Other 106,877 1,447 5.46 84,576 1,200 5.64
----------- -------- ----------- --------
Total investment
securities 1,385,054 21,448 6.22 1,045,616 15,150 5.79
----------- ======== ----- ----------- -------- -----
Commercial, financial and
agricultural 1,135,374 25,317 8.84 1,007,919 22,354 8.89
Real estate-construction 106,782 2,480 9.19 104,597 2,627 10.04
Mortgage-construction 773,437 19,002 9.72 737,307 17,561 9.53
Mortgage-residential 665,453 13,142 7.90 612,664 12,102 7.90
Consumer 813,078 19,667 9.70 815,694 19,812 9.83
----------- -------- ----- ----------- -------- -----
Total loans 3,494,124 79,608 9.07 3,278,181 74,456 9.12
----------- -------- ----- ----------- -------- -----
Total earning assets $ 4,906,017 101,442 8.25 $ 4,334,513 89,763 8.31
=========== ======== ===== =========== ======== =====
Funds supporting earning
assets
Savings $ 364,798 2,077 2.41 $ 366,539 2,202 2.44
Interest-bearing demand 991,793 6,483 2.63 996,481 6,476 2.64
Certificates under 1,239,179 18,325 5.95 1,036,469 13,670 5.35
$100,000
Certificates $100,000 and 332,152 4,632 5.52 150,193 1,897 5.05
over ----------- -------- ----- ----------- -------- -----
Total interest-bearing
deposits 2,909,922 31,517 4.35 2,549,682 24,245 3.85
----------- -------- ----- ----------- -------- -----
(14)
<PAGE>
1996 First Quarter 1995 First Quarter
---------------------------------- -----------------------------------
(In thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased
and securities sold under
agreements to repurchase 1,098,145 15,153 5.50 1,039,640 15,609 6.01
U.S. Treasury demand 36,688 465 5.01 38,205 607 6.36
----------- -------- ----- ----------- -------- -----
Total short-term
borrowings 1,134,833 15,618 5.49 1,077,845 16,216 6.02
----------- -------- ----- ----------- -------- -----
Long-term debt 28,000 393 5.65 --- --- ---
----------- -------- ----- ----------- -------- -----
Total interest-bearing
liabilities 4,072,755 47,528 4.67 3,627,527 40,461 4.50
----------- -------- ----------- --------
Other noninterest funds 833,262 --- --- 707,444 --- ---
----------- -------- ----- ----------- -------- -----
Total funds used to
support earning assets $ 4,906,017 47,528 3.89 $ 4,334,971 40,461 3.76
=========== ======== ----- =========== ======== -----
Net interest/income yield 53,914 4.36 49,302 4.55
Tax-equivalent adjustment (2,679) (2,943)
-------- --------
Net interest income $ 51,235 $ 46,359
======== ========
</TABLE>
Average rates are calculated using average balances based on historical
cost and do not reflect the market valuation adjustment required by
Statement Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," effective Janury 1, 1994.
(15)
<PAGE>
<TABLE>
<CAPTION>
RATE-VOLUME ANALYSIS OF NET INTEREST INCOME
For the three months ended March 31,
---------------------------------------------
1996/1995
Increase (Decrease)
due to change in
----------------------------------------------
1 2
(in thousands) Volume Rate Total
------ ---- -----
<S> <C> <C> <C>
Interest income:
Time deposits in other banks $ ---- $ ---- $ ---
Federal funds sold and securities purchased
under agreements to resell 239 (10) 229
------- ------- --------
Total short-term investments 239 (10) 229
------- ------- --------
U.S. Treasury and government agencies 4,328 969 5,297
State and municipal * (146) 16 (130)
Preferred stock * (775) 338 (437)
Asset-backed securities 792 529 1,321
Other * 295 (48) 247
------- ------- --------
Total investment securities 4,795 1,503 6,298
------- ------- --------
Commercial, financial and agricultural * 2,817 146 2,963
Real estate-construction 55 (202) (147)
Mortgage-commercial * 856 585 1,441
Mortgage-residential 1,037 3 1,040
Consumer (64) (81) (145)
-------- ------- --------
Total loans 4,897 255 5,152
-------- ------- --------
Total interest income $11,640 $ 39 $11,679
======== ======= ========
Interest expense:
Savings $ (120) $ (5) $ (125)
Interest-bearing demand (31) 38 7
Certificates under $100,000 2,696 1,959 4,655
Certificates $100,000 and over 2,323 412 2,735
-------- ------- --------
Total interest-bearing deposits 3,448 3,824 7,272
-------- ------- --------
Federal funds purchased and securities sold under
agreements to repurchase 879 (1,335) (456)
U.S. Treasury demand (24) (118) (142)
------- ------- --------
Total short-term borrowings 867 (1,465) (598)
------- ------- --------
(16)
<PAGE>
RATE-VOLUME ANALYSIS OF NET INTEREST INCOME
For the three months ended March 31,
---------------------------------------------
1996/1995
Increase (Decrease)
due to change in
----------------------------------------------
1 2
(in thousands) Volume Rate Total
------ ---- -----
<S> <C> <C> <C>
Long-term Debt ---- 393 393
------- ------- --------
Total interest expense $ 4,981 $2,086 $ 7,067
======= ======= ========
Changes in net interest income $ 4,612
========
</TABLE>
* Variances are calculated on a fully tax-equivalent basis, which includes
the effects of any disallowed interest expense deduction.
1 Changes attributable to volume are defined as change in average balance
multiplied by the prior year's rate.
2 Changes attributable to rate are defined as a change in rate multiplied
by the average balance in the applicable period of the prior year. A
change in rate/volume (change in rate multiplied by change in volume)
has been allocated to the change in rate.
The detail in the above table does not sum to the respective totals due
to changes in the mix of interest-earning assets and interest-bearing
liabilities from year to year.
NONINTEREST REVENUES AND OPERATING EXPENSES
-------------------------------------------
Noninterest revenues for the first quarter of 1996 were $32.4 million, a
$2.7 million, or 9%, increase over the $29.7 million reported for the
first quarter of 1995.
Trust and investment management fees were $23.1 million, an increase of
$1.7 million, or 8%, over the $21.4 million reported for the same quarter
a year ago. Personal trust fees rose $1 million, or 10%, to $11.1 million
on the strength of higher principal and income commissions which were
offset, in part, by lower distribution commissions and estate settlement
fees. Corporate trust fees rose $52,000, or 1%, to $6.6 million as higher
levels of fee income were realized from employee benefit administration
fees. Investment management fees rose $638,000, or 14%, to $5.4 million
on the strength of higher mutual fund service fees and discount brokerage
fees.
(17)
<PAGE>
Service charges on deposit accounts were $4.7 million, an increase of
$665,000, or 16%, due to higher levels of returned check, overdraft and
stop payment charges. Other operating income was $4.6 million, an
increase of $407,000, or 10%, as higher levels of credit card fee income,
safe deposit box fees and precious metals storage fees were realized.
Operating expenses for the first quarter of 1996 were $46.1 million, an
increase of $1.7 million, or 4%, over the $44.4 million reported for the
first quarter of 1995. Salaries and employment benefits were $29.2
million, an increase of $2.2 million, or 8%, as staffing levels were
increased over year-ago levels. Occupancy expense for the first quarter
of 1996 was $2.7 million, up $276,000, or 11%, over the first quarter of
1995 due primarily to the timing of maintenance expense payments.
Furniture and equipment expense was $3.4 million, an increase of $306,000,
or 10%, while stationery and supply expenses were $1.5 million, an
increase of $72,000, or 5%, over the corresponding levels for the first
quarter of 1995. Other operating expense was $9.3 million, a decrease of
$1.1 million, or 10%, as higher levels of telephone, advertising and other
expense were more than offset by a $1.7 million decrease in deposit
insurance premiums paid to the Federal Deposit Insurance Corporation (the
"FDIC").
INTEREST RATE SENSITIVITY
-------------------------
The Corporation's interest rate sensitivity, as measured by gap analysis,
decreased slightly since the end of the last quarter. At March 31, 1996,
the Corporation's one-year cumulative gap, as a percentage of rate-
sensitive assets, was a negative 21.8%. At December 31, 1995, the
Corporation's one-year cumulative gap was a negative 22.7%.
Gap analysis, used to measure the difference between volumes of interest
rate-sensitive assets and liabilities, examines the Corporation's balance
sheet at one point in time, but does not capture any balance sheet
dynamics that may be present. Because of these inherent limitations, gap
reports cannot predict accurately the change in net interest income that
may occur given a particular change in interest rates. The Corporation
employs simulation models to measure dynamic changes in interest rate-
sensitive assets and liabilities caused by variations in interest rates.
The Corporation also enters into interest rate swaps ("swaps") and
interest rate floor agreements ("floors") as hedges against fluctuations
in the interest rates of identifiable asset categories. The swaps
represent an exchange of interest payments computed on notional amounts.
The Corporation receives fixed-rate interest payments in return for
floating-rate payments on the swaps. At March 31, 1996, the swap
portfolio totaled $450 million and had final maturities of between 1 and
49 months, with a weighted average maturity of 24 months. The floors
generate interest payments based on notional amounts when the floating-
rate index falls below the fixed-rate strike price. When that index is
equal to or above the strike price, no payments are received. A single,
up-front payment was made to purchase each of the floors. These payments
are amortized over each floor's original life.
(18)
<PAGE>
At March 31, 1996, the floor portfolio totaled $200 million and had final
maturities of between 40 and 46 months, with a weighted average maturity
of 43 months. The net interest differential which the Corporation
currently receives on these swaps and floors is reported under the caption
"Interest and fees on loans" in the Corporation's consolidated statements
of income, and is recognized over the lives of the respective agreements.
LIQUIDITY
---------
A financial institution's liquidity represents its ability to meet, in a
timely manner, cash flow requirements that may arise. Liquidity of the
asset side of the balance sheet is provided by the maturity and
marketability of loans, money market assets and investments. Liquidity of
the liability side of the balance sheet is usually provided through a
stable base of core deposits.
The Corporation's quarter-end liquidity ratio, calculated in accordance
with regulatory requirements of the FDIC, was 28.93%. Management believes
that maturities of the Corporation's investment securities, other readily
marketable assets and external sources of funds offer more than adequate
liquidity to meet any cash flow requirements that may arise. Sources of
funds have historically consisted of deposits, amortization and
prepayments of outstanding loans, maturities of investment securities,
borrowings, and interest income. Management monitors the Corporation's
existing and projected liquidity requirements on an ongoing basis and
implements appropriate strategies when deemed necessary.
ASSET QUALITY AND LOAN LOSS PROVISION
-------------------------------------
The Corporation's provision for loan losses for the first quarter of 1996
was $3.5 million, an increase of $1.7 million, or 99%, over the $1.7
million provision for the first quarter of 1995. The reserve at March 31,
1996 was $50.5 million, an increase of $2.6 million, or 6%, over the level
of $47.9 million reported at March 31, 1995. The reserve as a percentage
of total period-end loans outstanding at March 31, 1996 was 1.44%,
virtually unchanged from the 1.45% reported at the corresponding date last
year. Net chargeoffs for the first quarter of 1996 were $2.8 million, an
increase of $313,000 over the $2.5 million reported for the first quarter
of 1995.
The following table presents the risk elements in the Corporation's loan
portfolio:
(19)
<PAGE>
<TABLE>
<CAPTION>
RISK ELEMENTS
March 31, December 31, March 31,
1996 1995 1995
---------- ------------ ----------
<S> <C> <C> <C>
Nonaccruing $ 27,531 $ 33,576 $ 30,844
Restructured -- -- --
Past due 90 days or more 19,673 19,346 19,651
-------- -------- --------
Total $ 47,204 $ 52,922 $ 50,495
======== ======== ========
Percent of total loans at period-end 1.35% 1.50% 1.53%
Other real estate owned $ 17,910 $ 14,288 $ 14,745
</TABLE>
Nonaccruing loans at March 31, 1996 were $27.5 million, a decrease of $6
million from the $33.6 million reported at December 31, 1995 and a $3.3
million decrease from the $30.8 million reported at the same date last
year. Other real estate owned, which is reported as a component of other
assets in the consolidated statements of condition, consists of assets
that have been acquired in lieu of foreclosure or acceptance of a deed in
lieu of foreclosure and loans classified as in-substance foreclosed.
These assets are recorded on the books of the Corporation at the lower of
their cost or the estimated fair value less cost to sell, adjusted
periodically based upon current appraisals. Nonperforming assets (other
real estate owned plus nonaccruing loans) at March 31, 1996 totaled $47.2
million, or 1.35% of period-end loans outstanding. This was a decrease of
$5.7 million, or 11%, from the $52.9 million and 1.50% of period-end loans
outstanding reported at December 31, 1995 and a $3.3 million decrease from
the $50.5 million and 1.53% reported at the end of the same quarter last
year. These balances reflect the reclassification of loans previously
reported as in-substance foreclosed to the nonaccrual category in
accordance with the provisions of Statement of Financial Accounting
Standards Number 114. As a result of the Corporation's ongoing monitoring
of its loan portfolio, at March 31, 1996, approximately $16.7 million of
its loans were identified which are either currently performing in
accordance with their terms or which are less than 90 days past due but
for which, in management's opinion, serious doubt exists as to the
borrowers' ability to continue to repay their loans in full on a timely
basis.
(20)
<PAGE>
The reserve for loan losses at quarter-end was 1.84 times the level of
nonaccruing loans. Management believes the reserve is adequate, based
upon currently available information. The Corporation's determination of
the adequacy of its reserve is based upon an evaluation of classified
loans and other assets, past loss experience, current economic and real
estate market conditions and any regulatory recommendations.
CAPITAL RESOURCES
-----------------
A strong capital position provides a margin of safety for both depositors
and stockholders, enables a financial institution to take advantage of
profitable opportunities and provides for future growth. The
Corporation's total risk-based capital ratio at the end of the first
quarter of 1996 was 12.84%, and its core (Tier 1) leveraged capital ratio
was 8.40%. The corresponding ratios from one year ago were 12.30% and
8.74%, respectively. Both of these ratios are well in excess of the
current regulatory minimums of 8% and 4%, respectively.
Reflecting the Corporation's performance and favorable outlook, the Board
of Directors, at its April meeting, increased the quarterly dividend by
10%, to 33 cents per share. This raises the per-share annual dividend
rate to $1.32 and marks the fifteenth consecutive year in which dividends
have been increased. The current quarterly dividend is payable May 15,
1996 to stockholders of record on May 1, 1996.
At its April meeting, the Board of Directors also authorized the buyback
of an additional four million shares of the Corporation's common stock.
This program will commence upon the completion of the current stock
buyback program of three million shares that was initiated in October of
1993. To date, there have been 2.8 million shares purchased under that
program. The Corporation has bought back over seven million of its shares
since 1987. The purchased shares will be held as treasury stock and may
be reissued in connection with acquisitions, the exercise of stock options
and for other corporate purposes. Currently, there are 43.7 million
shares of the Corporation's common stock outstanding.
Management monitors the Corporation's capital position and will make
adjustments as needed to insure that the capital base will satisfy
existing and impending regulatory requirements, as well as meet
appropriate standards of safety and provide for future growth.
ACCOUNTING PRONOUNCEMENTS
-------------------------
In March 1995, the FASB issued SFAS No. 121 - "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." This Statement requires impairment losses to be recorded on long-
lived assets used in operations when the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. This Statement was adopted on January 1, 1996
(21)
<PAGE>
and, based on current circumstances, will not have a material impact on
earnings.
In May 1995, the FASB issued SFAS No. 122 - "Accounting for Mortgage
Servicing Rights an amendment to FASB No. 65," which requires that an
enterprise recognize as separate assets the rights to service mortgage
loans for others, however these servicing rights are acquired. This
Statement requires that a mortgage banking enterprise assess its
capitalized mortgage servicing rights for impairment based upon the fair
value of those rights. Impairment should be recognized through a
valuation allowance. This Statement was adopted on January 1, 1996, and
based upon current circumstances, will not have a material impact upon
earnings.
In October 1995, the FASB issued SFAS No. 123 - "Accounting for Stock
Based Compensation," which provides an alternative to APB Opinion No. 25 -
"Accounting for Stock Issued to Employees" in accounting for stock-based
compensation issued to employees. The Corporation will continue to
utilize the cost measurement principles of APB Opinion No. 25, while
adopting only the disclosure provisions of FASB No. 123. This Statement
was adopted on January 1, 1996 and will not impact earnings.
(22)
<PAGE>
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
Not Applicable
Item 2 - Changes in Securities
Not Applicable
Item 3 - Defaults Upon Senior Securities
Not Applicable
Item 4 - Submission of Matters to a Vote of Security Holders
At the Corporation's Annual Stockholders' Meeting held on April 18,
1996 (the "Annual Meeting"), the nominees for director proposed by
the Corporation were elected. The votes cast for those nominees
were as set forth below:
For Withheld
------------- --------
Carolyn S. Burger 24,886,616 228,413
Robert C. Forney 24,889,320 225,709
Robert V.A. Harra, Jr. 24,890,916 226,113
Rex L. Mears 24,905,519 225,710
Leonard W. Quill 24,900,801 228,428
Robert W. Turnell, Jr. 24,903,891 225,338
In addition, at the Annual Meeting, the Corporation's stockholders
approved the following proposals:
a. 1996 Employee Stock Purchase Plan
The 1996 Employee Stock Purchase Plan, designed to encourage wider
ownership of the Corporation's common stock by its employees, is for
a term of four years and authorizes the issuance of up to 500,000
shares of the Corporation's common stock. The vote for that plan
was as follows:
For Against Abstain
------- ------- -------
24,091,464 892,470 131,403
(23)
<PAGE>
b. 1996 Long-Term Incentive Plan
The 1996 Long-Term Incentive Plan, designed primarily to assist the
Corporation in attracting and retaining highly competent officers
and other key employees, is for a term of four years and authorizes
the issuance of up to 1,200,000 shares of the Corporation's common
stock. The vote in favor of that plan was as follows:
For Against Abstain
------- ------- -------
23,552,885 1,316,785 240,362
c. Approval of Increase in Authorized Common Stock
The proposal to increase the number of shares of the
Corporation's authorized common stock from 50,000,000 to 150,000,000
was approved by the Corporation's stockholders as follows:
For Against Abstain
------- ------- -------
21,310,345 3,524,104 131,181
d. Ratification of Selection of Ernst & Young LLP as Independent Public
Accountants
The proposal to ratify the selection of the firm of Ernst & Young
LLP as the Corporation's independent public accountants for the
year ending December 31, 1996 was approved by the Corporation's
stockholders as follows:
For Against Abstain
------- ------- -------
24,794,238 183,186 133,515
Item 5 - Other Information
Not Applicable
Item 6 - Exhibits and Reports on Form 8-K
The exhibits listed below are being filed as part of this report.
These exhibits will be made available to any shareholder upon
(24)
<PAGE>
receipt of a written request therefor, together with payment of
$.20 per page for duplicating costs.
Exhibit Number Exhibit
-------------- ----------------------------------------------
11 Statement re computation of per share earnings
27 Financial data schedule
(25)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILMINGTON TRUST CORPORATION
DATE May 14, 1996 /s/ Leonard W. Quill
-------------------------------
Name: Leonard W. Quill
Title: Chairman of the Board
and Chief Executive
Officer
DATE May 14, 1996 /s/ Ted T. Cecala
-------------------------------
Name: Ted T. Cecala
Title: Vice Chairman and
Chief Operating Officer
(26)
<PAGE>
<PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
--------------------------------------------------
Earnings per share of $.66 for the first quarter of 1996 were
computed by dividing net income of $23,019,024 by the weighted average
number of shares of common stock outstanding during the quarter of
35,007,900.
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Corporation's Form 10-Q for the 3 months ended March 31, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 204,362
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 107,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 895,811
<INVESTMENTS-CARRYING> 538,932
<INVESTMENTS-MARKET> 536,221
<LOANS> 3,508,547
<ALLOWANCE> 50,524
<TOTAL-ASSETS> 5,423,335
<DEPOSITS> 3,594,871
<SHORT-TERM> 1,235,002
<LIABILITIES-OTHER> 112,157
<LONG-TERM> 28,000
0
0
<COMMON> 39,013
<OTHER-SE> 414,292
<TOTAL-LIABILITIES-AND-EQUITY> 5,423,335
<INTEREST-LOAN> 77,958
<INTEREST-INVEST> 20,419
<INTEREST-OTHER> 386
<INTEREST-TOTAL> 98,763
<INTEREST-DEPOSIT> 31,517
<INTEREST-EXPENSE> 47,528
<INTEREST-INCOME-NET> 51,235
<LOAN-LOSSES> 3,500
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 46,109
<INCOME-PRETAX> 34,056
<INCOME-PRE-EXTRAORDINARY> 23,019
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,019
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
<YIELD-ACTUAL> 4.36
<LOANS-NON> 27,531
<LOANS-PAST> 19,673
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 16,740
<ALLOWANCE-OPEN> 49,867
<CHARGE-OFFS> 3,557
<RECOVERIES> 714
<ALLOWANCE-CLOSE> 50,524
<ALLOWANCE-DOMESTIC> 50,524
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<PAGE>
</TABLE>
