UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Commission file number: 0-25442
WILMINGTON TRUST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
51-0328154
------------------------------------
(I.R.S. Employer Identification No.)
Rodney Square North, Wilmington, Delaware 19890
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(Address of principal executive offices)(Zip Code)
(302) 651-1000
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Common Stock, $1.00 Par Value
-----------------------------
(Title of class)
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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 report(s), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of February 28, 1997, the aggregate market value of voting stock held by
non-affiliates* of the registrant was $1,497,252,182.
Indicate the number of share outstanding of the registrant's class of common
stock, as of the latest practical date.
Class Outstanding At February 28, 1997
- --------------------------- --------------------------------
Common Stock, $1 Par Value
Documents Incorporated Part of 10-K in which
By Reference Incorporated
- -------------------------- ------------------------
(1) Proxy Statement for 1997 Part III
Annual Stockholders' Meeting
of Wilmington Trust Corporation
(2) 1996 Annual Report to Stockholders Parts I, II,
III and IV
_________________________
* For purposes of this calculation, directors and executive officers are
deemed to be "affiliates."
<PAGE>
TABLE OF CONTENTS
PART I
Item 1 Business.......................................................1
Item 2 Properties....................................................30
Item 3 Legal Proceedings.............................................31
Item 4 Submission of Matters to a Vote of Security Holders...........31
PART II
Item 5 Market for Registrant's Common Stock and Related
Stockholder Matters...........................................31
Item 6 Selected Financial Data.......................................32
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operation............................33
Item 8 Financial Statements and Supplementary Data...................33
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...........................34
PART III
Item 10 Directors and Executive Officers of the Registrant............34
Item 11 Executive Compensation........................................34
Item 12 Security Ownership of Certain Beneficial Owners and
Management....................................................34
Item 13 Certain Relationships and Related Transactions................34
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K...................................................34
<PAGE>
PART I
ITEM 1 - BUSINESS
Wilmington Trust Corporation, a Delaware corporation (the "Corporation"),
was incorporated under the laws of Delaware in 1985, but remained inactive until
1990. On August 22, 1991, the Corporation became the parent holding company of
Wilmington Trust Company, a Delaware-chartered bank and trust company and the
Corporation's principal subsidiary (the "Bank"). The Corporation's principal
place of business is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890. Its telephone number is (302) 651-1000.
The Corporation was organized primarily to become the holding company of
the Bank. As such, the Corporation's principal role at present is to supervise
and coordinate the Bank's activities and provide it with capital and services.
Virtually all of the Corporation's income is from dividends received from the
Bank. The Corporation's current staff principally consists of its management,
who are executive officers generally serving in similar capacities for the Bank.
The Corporation from time to time utilizes the Bank's support staff without
payment of any fees. Delaware's favorable business and legal environment have
contributed to the Bank's operating results. See "Bank Regulation -- Other Laws
and Regulations."
In October 1993, the Corporation acquired Freedom Valley Bank, a
Pennsylvania-chartered commercial bank with four branches in Chester and
Delaware Counties, Pennsylvania. In January 1994, Freedom Valley Bank acquired
trust powers and, in February 1994, its name was changed to Wilmington Trust of
Pennsylvania. The Corporation supervises and coordinates the activities of
Wilmington Trust of Pennsylvania.
In June 1994, the Corporation formed Wilmington Trust FSB, a
Federally-chartered savings bank with trust powers headquartered in Salisbury,
Maryland. During 1994, Wilmington Trust FSB acquired one branch of the former
John Hanson Federal Savings Bank and two branch locations of the former Second
National Federal Savings Bank from the Resolution Trust Corporation. In November
1995, Wilmington Trust FSB merged with Wilmington Trust of Florida, National
Association, a national association with trust powers headquartered in Florida
which previously was a subsidiary of the Bank. As a result of that transaction,
Wilmington Trust FSB now also has three branch locations in Florida. It also
operates trust agency offices in Easton, Maryland and Las Vegas, Nevada. The
Bank, Wilmington Trust of Pennsylvania and Wilmington Trust FSB sometimes are
hereinafter collectively referred to as the "Banks."
As of December 31, 1996, the Corporation had total assets of $5.6 billion
and total stockholders' equity of $464.7 million. On that date, 33,893,304
shares of the Corporation's common stock were issued and outstanding, which were
held by 10,241 shareholders of record. At December 31, 1996, total loans
outstanding were approximately $3.8 billion.
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<PAGE>
LENDING ACTIVITIES
The Bank historically has concentrated its banking activities within
Delaware. Wilmington Trust of Pennsylvania concentrates its banking activities
in Pennsylvania. Wilmington Trust FSB concentrates its banking activities in
Maryland and Florida.
RESIDENTIAL MORTGAGE LOANS
In general, the Banks directly originate or purchase residential first
mortgage loans. These are secured principally by properties located in Delaware,
Pennsylvania, Maryland and Florida. The Bank generally services loans which it,
Wilmington Trust of Pennsylvania or Wilmington Trust FSB originate or purchase
and which are not subsequently resold.
The Banks maintain excellent relationships with correspondent brokers in
their market areas from which they purchase residential mortgage loans. The
banks foster public awareness of their residential mortgage loan products
through television and newspaper advertising and direct mail.
The Banks offer both fixed and adjustable rates of interest on residential
mortgage loans, with terms ranging up to 30 years. Adjustable rate mortgage
("ARM") loans increase the responsiveness of the Banks' loan portfolios to
changes in market interest rates. However, ARM loans generally carry lower
initial interest rates than fixed-rate loans with comparable maturities. In
light of their sensitivity to changes in interest rates, the terms of ARM loans
may increase the possibility of delinquencies in periods of high interest rates.
COMMERCIAL LOANS
The Banks also originate loans secured by mortgages on commercial real
estate and multi-family residential real estate. Such loans generally involve
greater risks than one-to-four family residential mortgage loans. Commercial and
multi-family real estate loans usually are larger than such residential mortgage
loans. Since payment of loans secured by commercial and multi-family residential
properties often is dependent on the successful operation and management of
those properties, repayment of these loans may be subject to a greater extent to
adverse conditions in the real estate market or the economy generally than loans
secured by one-to-four family residential properties. In addition, the
commercial real estate business is cyclical and subject to downturns,
overbuilding and local economic conditions. The Banks seek to minimize these
risks in a number of ways, including: (1) limiting the size of their individual
commercial and multi-family real estate loans; (2) monitoring the aggregate size
of their commercial and multi-family housing loan portfolios; (3) generally
requiring equity in the property securing the loan equal to a certain percentage
of the appraised value or selling price; and (4) requiring in most instances
that the financed project generates cash flow adequate to meet required debt
service payments.
The Banks also make other types of commercial loans to businesses located
in their market areas. Lines of credit, term loans and demand loans are offered
to finance, among other things, working capital, accounts receivable, inventory
and equipment purchases. Typically, such commercial loans have terms not
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<PAGE>
exceeding seven years, and bear interest either at fixed rates or at rates
fluctuating with a designated interest rate. These types of commercial loans
frequently are secured by the borrower's assets and, in many cases, are further
collateralized by guarantees of the borrower's owners and/or their principal
officers.
CONSTRUCTION LOANS
The Banks make loans and participate in financing for the construction of
residences and commercial buildings. The Banks also originate loans for the
purchase of unimproved property to be used for residential and commercial
purposes. In such cases, the Banks frequently provide the construction funds to
improve the properties.
The Banks' residential and commercial construction loans generally have
terms of 24 months or less, and interest rates which adjust from time to time in
accordance with changes in a designated interest rate. Loan proceeds are
disbursed in increments as construction progresses and as inspections warrant.
The Banks finance the construction of individual, owner-occupied houses only if
qualified professional contractors are involved and only on the basis of the
Banks' underwriting and construction loan management guidelines. Construction
loans may be underwritten and structured to convert to permanent loans at the
end of the construction period.
Residential and commercial construction loans afford the Banks the
opportunity to increase the interest rate sensitivity of their loan portfolios
and to receive yields higher than those obtainable on permanent residential
mortgage loans. These higher yields correspond to the higher risks associated
with construction lending. Construction lending risks include those associated
generally with loans on the type of property securing the loan, as well as other
risks. The Banks sometimes agree to fund the interest on a construction loan by
including the interest as part of the total construction loan. A high degree of
skill is required to evaluate accurately the total funds required to complete a
commercial construction project and the post-completion value of the project. As
a result, commercial construction lending often involves the disbursement of
substantial funds with repayment dependent largely on the success of the
ultimate project rather than the ability of the borrower or guarantor to repay
principal and interest. In light of these factors, the analysis of prospective
construction loan projects requires greater expertise than that required for
residential mortgage lending on completed structures. For these reasons, the
Banks engage several individuals experienced in underwriting in connection with
their construction lending.
LOANS TO INDIVIDUALS
The Banks offer both secured and unsecured personal lines of credit,
installment loans, home improvement loans, direct and indirect automobile loans,
student loans and credit card facilities. The Banks view such consumer lending
as a basic part of their program to provide a wide range of financial services
to their customers. The Banks develop public awareness of their consumer loan
products primarily through newspaper advertising and direct mail. Consumer loans
generally have shorter terms and higher interest rates than residential first
mortgage loans. Through their consumer lending, the Banks attempt to enhance the
spread between their average loan yields and their cost of funds, as well as
their matching of assets and liabilities expected to mature or reprice in the
same periods.
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<PAGE>
The Banks generally receive fees for originating loans and for taking
applications and committing to originate loans. In addition, they receive fees
for issuing letters of credit, as well as late charges and other fees in
connection with their lending activities.
UNDERWRITING STANDARDS
In determining whether or not to originate or purchase a mortgage loan, the
Banks assess both the borrower's ability to repay the loan and the adequacy of
the proposed security for the loan. The Banks generally obtain an appraisal of
real property securing a loan and information concerning the applicant's income,
financial condition, employment and credit history. The Banks require title
insurance insuring the priority of their liens on most loans secured by first
mortgages on real estate and on certain home equity loans, as well as fire and
extended coverage casualty insurance protecting the mortgaged properties. Under
the Banks' underwriting policies, loans must be approved by various levels of
management depending on the amount of the loan.
The Banks' underwriting standards with respect to commercial real estate
and multi-family residential loans are designed to ensure that the property
securing the loan will generate sufficient cash flow to cover operating expenses
and debt service requirements. The Banks review the property's operating history
and projections, comparable properties and the borrower's financial condition
and reputation. The Banks' general underwriting standards with respect to these
loans include: (1) inspecting each property before issuing a loan commitment and
before each disbursement; (2) requiring recourse to the borrower; (3) requiring
the personal guaranty of the borrower's principal(s); and (4) requiring an
appraisal of the property. The Banks monitor the performance of these loans by
inspecting the property securing each such loan.
The Banks limit real estate secured commercial loans to individuals and
organizations who and which demonstrate a capacity to generate cash flow
sufficient to repay indebtedness under varied economic conditions. The
borrower's cash flow is a critical component of the underwriting process for
these loans. The Banks monitor the performance of these loans by reviewing each
such loan at least annually.
The Banks seek to minimize risks of construction lending in a number of
ways, including: (1) generally requiring the borrower, and in most instances
their principal(s), to guarantee personally all or a portion of the loan; (2)
controlling the aggregate size of their construction loan portfolios; and (3)
generally requiring a certain level of equity in the property securing the loan.
Construction loans generally are made to borrowers who are experienced in the
type of construction for which the loan is made.
The Banks require first or junior mortgages to secure home equity loans.
Although this security influences the Banks' underwriting decisions, the Banks'
primary focus in underwriting these loans, as well as their other loans to
individuals, is on the applicant's financial ability to repay the loan. In the
underwriting process for these loans, the Banks obtain credit bureau reports and
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<PAGE>
verify employment and credit information provided by the borrower. On home
equity loans above a certain level, the Banks require an appraisal of the
property securing the loan and, in certain instances, title insurance insuring
the priority of their liens.
OTHER ACTIVITIES
Deposit accounts represent the most important source of the Banks' funds
for use in lending and investment activities, and for general business purposes.
The Banks also derive funds from, among other sources, borrowings, the
amortization and repayment of loans outstanding, earnings and maturities of
investment securities.
The Banks' deposit accounts include demand checking accounts, term
certificates of deposit, money market deposit accounts, NOW accounts and regular
savings and club accounts. Retirement plan accounts (including individual
retirement accounts, Keogh accounts and simplified employee pension plans) for
investment in the Banks' various deposit accounts also are offered. Consumer
deposits are attracted principally from the Banks' primary market areas. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity."
Interest and dividends on investments provide the Banks with a significant
source of revenue. At December 31, 1996, the Banks' investment securities,
including securities purchased under agreements to resell, totaled $1.3 billion,
or 23% of their total assets. The Banks' investment securities are used to meet
Federal liquidity requirements, among other purposes. Investment decisions are
made by designated members of the Bank's management. The Banks have established
limits on the types and amounts of investments they may make.
The Corporation, through its subsidiaries, also performs corporate trust
and custodial services for both institutional and individual clients. The Bank
serves as trustee in equipment leasing transactions and asset securitizations.
Each of the Banks acts as trustee, executor, administrator, guardian and
custodian. The Bank provides fiduciary services for employee benefit plan
trusts. The Corporation also assists corporate clients in establishing and
maintaining Delaware-chartered investment holding companies.
The Bank provides investment management services to corporate and
institutional clients. At December 31, 1996, the Bank's Asset Management
Department managed $6.1 billion in assets.
SUBSIDIARIES
The Bank was originally incorporated by an Act of the General Assembly of
the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee
and Trust Company," on March 2, 1901. On March 12, 1903, an amendment was filed
with the office of the Secretary of State to change the Bank's name to
Wilmington Trust Company.
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<PAGE>
The Bank has 19 wholly-owned subsidiaries, formed for various purposes.
Those subsidiaries' results of operations are consolidated with those of the
Corporation for financial reporting purposes. Those operating subsidiaries
provide additional services to the Corporation's customers. Among those
subsidiaries are the following:
1. Brandywine Insurance Agency, Inc., a licensed insurance agent and
broker for life, casualty and property insurance;
2. Brandywine Finance Corporation, a finance company;
3. Brandywine Life Insurance Company, Inc., a reinsurer of credit life
insurance written in connection with closed-end consumer loans which
the Bank makes;
4. Delaware Corporate Management, Inc., which maintains and provides
custodial and other services for Delaware holding companies holding
intangible assets in Delaware;
5. Rodney Square Distributors, Inc., a registered broker-dealer;
6. Rodney Square Management Corporation, a registered investment adviser
which performs mutual fund investment advisory, administration,
accounting and transfer agency services for the mutual funds described
below and other, non-proprietary, mutual funds;
7. WTC Corporate Services, Inc., a sales production office for trust
customers in the western United States; and
8. Wilmington Brokerage Services Company, a registered broker-dealer and a
registered investment adviser.
The Bank also is involved with the following mutual funds, for which Rodney
Square Distributors, Inc. serves as the distributor:
1. The Rodney Square Fund, a fund consisting of a money market portfolio
and a United States government securities portfolio;
2. The Rodney Square Tax-Exempt Fund, a fund investing in short-term
municipal obligations whose interest income is principally exempt from
Federal income tax;
3. The Strategic Fixed Income Fund, a fund consisting of the Diversified
Income Portfolio, which invests primarily in investment grade,
fixed-income securities, and the Municipal Income Portfolio, which
invests primarily in municipal securities exempt from Federal taxation;
and
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<PAGE>
4. The Rodney Square Multi-Manager Fund, a fund consisting of a growth
portfolio.
COMPETITION
The Corporation believes that the banking market in Delaware is different
from that in most states, in that the deposit and asset sizes of all of
Delaware's banking institutions do not disclose the true nature of competition
within the state. In the 1980s, Delaware's legislature enacted several banking
laws which invited out-of-state bank holding companies to organize banks located
in Delaware, as long as the holding companies did not operate those banks in
ways that competed to the substantial detriment of indigenous Delaware
institutions such as the Bank. During the nonbank phenomena of the 1980s, five
of Delaware's indigenous banks were acquired by entities which were not bank
holding companies. The Corporation, with assets of $5.6 billion at December 31,
1996, is the largest indigenous bank holding company in Delaware providing a
full range of commercial and personal banking services which is not controlled
by out-of-state interests.
The Banks have substantial competition for both deposits and loans. Many of
the Banks' competitors are substantially larger and have substantially greater
financial resources than the Corporation and the Banks. The most direct
competition for deposits historically has come from savings banks, savings and
loan associations and commercial banks located in the Banks' principal market
areas. Currently, additional competition for deposits is encountered from
dealers in government securities. The Banks compete for deposits by focusing on
customer service and offering a variety of deposit accounts at rates generally
competitive with those of other financial institutions. In addition, the Banks
historically have introduced new accounts when authorized by regulatory
authorities.
Competition for loans comes principally from savings banks, savings and
loan associations, commercial banks, mortgage banking companies, insurance
companies and other institutional lenders. The Banks compete for loans
principally by the services they provide to borrowers and through the interest
rates and loan fees they charge. See also "Regulation and Supervision of the
Corporation and the Banks."
ASSET QUALITY
Nonaccruing loans and other real estate owned, or nonperforming assets, can
result in credit losses and require the Corporation to establish provisions for
loan losses. Slow economic conditions or deterioration in commercial and real
estate markets may impair the ability of certain borrowers to repay their loans
in full on a timely basis. In that event, the Corporation would expect increased
levels of nonperforming assets, credit losses and the need to increase
provisions for loan losses.
To minimize the likelihood and impact of these conditions, the Corporation
regularly monitors the entire loan portfolio to identify potential problem loans
and avoid disproportionately high concentrations of loans to individual
borrowers and industries. An integral part of this process is a regular analysis
of all past due loans and the establishment of provisions for loan losses.
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Although the Corporation, like virtually all other financial institutions, has
experienced increased levels of past due and nonaccruing loans in recent
periods, the Corporation believes that its reserve for loan losses is adequate
based upon currently available information. The Corporation's determination of
the adequacy of its reserves is based upon an evaluation of classified loans and
other assets, past loss experience, current economic and real estate market
conditions, diversification of the loan portfolio, detailed loan reviews, the
financial and managerial strength of its borrowers, the adequacy of underlying
collateral and any regulatory recommendations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Asset Quality and
Loan Loss Provision."
CURRENT YEAR DEVELOPMENTS
In February 1996, Wilmington Trust FSB opened a trust agency office in
Easton, Maryland.
STAFF MEMBERS
On December 31, 1996, the Corporation and its wholly-owned subsidiaries had
2,418 full-time equivalent employees. The Corporation considers its and its
subsidiaries' relationships with these employees to be good. The Corporation and
the Banks provide a variety of benefit programs for these employees, including
pension, profit-sharing, incentive compensation, thrift savings, stock purchase,
group life, health and accident plans.
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<TABLE>
<CAPTION>
Industry Guide 3 Tables
The following table presents a rate/volume analysis of net interest income:
-------------------------------------------------------------
1996/1995 1995/1994
Increase (Decrease) Increase (Decrease)
due to change in due to change in
---------------------------- -----------------------------
1 2 1 2
(in thousands) Volume Rate Total Volume Rate Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Time deposits in other banks $ -- -- $ -- $ (6) $ -- $ (6)
Federal funds sold and securities
purchased under agreements to resell 528 (89) 439 (385) 265 (120)
- ---------------------------------------------------------------------------------------------- -------
Total short-term investments 528 (89) 439 (392) 266 (126)
-----------------------------------------------------------
U.S. Treasury and government agencies 13,599 730 14,329 8,052 2,867 10,919
State and municipal* (491) 243 (248) (826) (18) (844)
Preferred stock* (1,381) 1,574 193 (3,743) 2,602 (1,141)
Asset-backed securities (1,739) 956 (783) 3,118 1,629 4,747
Other* (52) (222) (274) 558 987 1,545
- ------------------------------------------------------------------------------------------------------
Total investment securities 9,550 3,667 13,217 6,625 8,601 15,226
------------------------------------------------------------
Commercial, financial and agricultural* 7,941 (4,009) 3,932 10,427 11,207 21,634
Real estate-construction 1,222 (811) 411 (1,510) 1,562 52
Mortgage - commercial* 5,413 (1,786) 3,627 5,309 13,405 18,714
Mortgage -residential 3,910 (703) 3,207 2,191 561 2,752
Installment loans to individuals 961 (1,161) (200) 6,673 5,039 11,712
- ------------------------------------------------------------------------------------------------------
Total loans 19,704 (8,727) 10,977 23,135 31,729 54,864
- ------------------------------------------------------------------------------------------------------
Total interest income $ 32,016 $ (7,383) $ 24,633 $ 29,697 $ 40,267 $ 69,964
============================================================
Interest expense:
Savings $ (12) $ (260) $ (272) $ (538) $ 529 $ (9)
Interest-bearing demand 704 (995) (291) (2,736) 4,027 1,291
Certificates under $100,000 9,160 1,395 10,555 1,768 9,864 11,632
Certificates $100,000 and over 6,547 112 6,659 (543) 2,456 1,913
- ------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 12,524 4,127 16,651 (4,045) 18,872 14,827
------------------------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase (2,511) (6,238) (8,749) 20,731 20,293 41,024
U.S. Treasury demand (107) (274) (381) (613) 839 226
- ------------------------------------------------------------------------------------------------------
Total short-term borrowings (2,619) (6,511) (9,130) 19,818 21,432 41,250
------------------------------------------------------------
Long-term debt 1,192 (61) 1,131 348 -- 348
- ------------------------------------------------------------------------------------------------------
Total interest expense $ 13,500 $ (4,848) $ 8,652 $ 12,438 $ 43,987 $ 56,425
============================================================
Changes in net interest income $ 15,981 $ 13,539
======== ========
- ------------------------------------------------------------------------------------------------------
* 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 a 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 for 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 total due to
changes in the mix of interest-earning assets and interest-bearing
liabilities from year to year.
</TABLE>
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<TABLE>
<CAPTION>
The maturity distribution of the Corporation's investment securities held to
maturity follows:
--------------------------------------
Amortized Cost Weighted
Market ------------------ average
December 31, 1996 (in thousands) value Amount Percent yield
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and government agencies:
After 1 but within 5 years $ 193,285 $ 194,195 41.53% 6.42%
After 5 but within 10 years 64,342 64,323 13.75 7.18
After 10 years 8,895 8,984 1.92 6.10
- --------------------------------------------------------------------------------------
Total (amortized cost of $236,444
in 1995 and $429,473 in 1994) 266,522 $ 267,502 57.20 6.59
- --------------------------------------------------------------------------------------
State and municipals:
Within 1 year 1,660 1,660 0.35 5.62
After 1 but within 5 years 3,593 3,510 0.75 5.75
After 5 but within 10 years 2,800 2,783 0.60 6.37
After 10 years 11,264 11,168 2.39 6.03
- --------------------------------------------------------------------------------------
Total (amortized cost of $20,822
in 1995 and $41,832 in 1994) 19,317 19,121 4.09 5.99
- --------------------------------------------------------------------------------------
Asset-backed securities:
After 1 but within 5 years 12,147 12,419 2.66 5.70
After 5 but within 10 years 54,885 55,062 11.77 5.61
After 10 years 113,892 113,528 24.28 6.26
- --------------------------------------------------------------------------------------
Total (amortized cost of $193,269
in 1995 and $228,902 in 1994) 180,924 181,009 38.71 6.02
- --------------------------------------------------------------------------------------
Total investment securities held to
maturity (amortized cost of $450,535
in 1995 and $731,938 in 1994)* $ 466,763 $ 467,632 100.00% 6.35%
======================================================================================
Note: Weighted average yields are NOT on a tax-equivalent basis.
* The amortized cost of other debt securities held to maturity was $31,731 as of
December 31, 1994
</TABLE>
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<TABLE>
<CAPTION>
The maturity distribution of the Corporation's investment securities available
for sale follows:
--------------------------------------
Amortized Cost Weighted
Market ------------------ average
December 31, 1996 (in thousands) value Amount Percent yield
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and government agencies:
Within 1 year $ 201,408 $ 201,057 25.23% 6.29%
After 1 but within 5 years 308,877 309,153 38.79 6.21
After 5 but within 10 years 20,120 20,138 2.53 6.79
After 10 years 15,367 14,982 1.88 6.52
- --------------------------------------------------------------------------------------
Total (amortized cost of $530,804
in 1995)* 545,772 545,330 68.43 6.27
- --------------------------------------------------------------------------------------
State and municipals:
Within 1 year 1,262 1,255 0.16 4.50
After 1 but within 5 years 6,131 6,175 0.77 4.20
After 5 but within 10 years 3,604 3,560 0.45 3.60
After 10 years 2,380 2,186 0.27 3.92
- --------------------------------------------------------------------------------------
Total (amortized cost of $18,533
in 1995 and $5,239 in 1994) 13,377 13,176 1.65 4.02
- --------------------------------------------------------------------------------------
Preferred stock:
Within 1 year 83,160 83,238 10.44 4.55
After 1 but within 5 years 42,746 42,177 5.29 7.51
After 5 but within 10 years 13,949 13,771 1.73 7.32
- --------------------------------------------------------------------------------------
Total (amortized cost of $153,894
in 1995 and $198,800 in 1994) 139,855 139,186 17.46 5.72
- --------------------------------------------------------------------------------------
Asset-backed securities:
After 1 but within 5 years 5,010 4,975 0.62 7.03
After 5 but within 10 years 2,170 2,193 0.28 5.36
After 10 years 8,956 8,928 1.12 7.68
- --------------------------------------------------------------------------------------
Total (amortized cost of $107,852
in 1995)* 16,136 16,096 2.02 7.16
- --------------------------------------------------------------------------------------
Other:
Within 1 year 50,880 50,827 6.38 3.47
After 1 but within 5 years 32,499 32,334 4.06 3.03
- --------------------------------------------------------------------------------------
Total (amortized cost of $92,317
in 1995 and $49,665 in 1994) 83,379 83,161 10.44 3.30
- --------------------------------------------------------------------------------------
Total investment securities available
for sale (amortized cost of $903,400
in 1995 and $253,704 in 1994) $ 798,519 $ 796,949 100.00% 5.84%
======================================================================================
Note: Weighted average yields are NOT on a tax-equivalent basis.
* There were no U.S. Treasury and government agencies or asset-backed
securities available for sale as of December 31, 1994.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
The following table is a summary of period-end loan balances by loan cateogry:
------------------ ----------------- ----------------- ----------------- ------------------
1996 1995 1994 1993 1992
------------------ ----------------- ----------------- ----------------- ------------------
% of loans % of loans % of loans % of loans % of loans
in each in each in each in each in each
category category category category category
of gross of gross of gross of gross of gross
December 31 (in thousands) Amount loans Amount loans Amount loans Amount loans Amount loans
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 1,237,061 33% $ 1,159,434 33% $ 1,006,630 31% $ 924,886 30% $ 870,771 29%
Real estate-construction 123,111 3 104,871 3 110,587 3 122,329 4 117,902 4
Mortgage-commercial 862,974 23 770,304 22 733,154 22 654,241 22 634,595 21
Mortgage-residential 678,800 18 669,658 19 618,211 19 609,108 20 688,179 23
Installment loans to
individuals 881,994 23 823,381 23 818,599 25 734,943 24 698,016 23
- --------------------------------------------------------------------------------------------------------------------------------
Total loans, gross 3,783,940 100% 3,527,648 100% 3,287,181 100% 3,045,507 100% 3,009,463 100%
Less: unearned income (12,456) (5,733) (2,948) (2,214) (2,516)
- --------------------------------------------------------------------------------------------------------------------------------
Total loans $ 3,771,484 $ 3,521,915 $ 3,284,233 $ 3,043,293 $ 3,006,947
================================================================================================================================
</TABLE>
12
<PAGE>
The following table sets forth the allocation of the Corporation's reserve for
loan losses for the past five years:
<TABLE>
<CAPTION>
------------------ ----------------- ----------------- ----------------- ----------------
1996 1995 1994 1993 1992
------------------ ----------------- ----------------- ----------------- ----------------
% of loans % of loans % of loans % of loans % of loans
in each in each in each in each in each
category category category category category
of net of net of net of net of net
December 31 (in thousands) Amount loans Amount loans Amount loans Amount loans Amount loans
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 22,770 33% $ 21,209 33% $ 21,777 31% $ 20,804 30% $ 18,484 29%
Real estate-construction 2,000 3 1,697 3 3,696 3 3,979 4 3,129 4
Mortgage-commercial 15,126 23 13,949 22 10,643 22 8,933 22 9,652 21
Mortgage-residential 700 18 668 19 608 19 605 20 694 23
Installment loans to
individuals 12,283 23 11,245 23 9,234 25 8,125 24 7,688 23
Unallocated 1,482 -- 1,099 -- 2,711 -- 8,917 -- 7,315 --
- -----------------------------------------------------------------------------------------------------------------------------
Total $ 54,361 100% $ 49,867 100% $ 48,669 100% $ 51,363 100% $ 46,962 100%
=============================================================================================================================
</TABLE>
13
<PAGE>
An analysis of loan maturities and interest rate sensitivity of the
Corporation's commercial and real estate construction loan portfolios follows:
<TABLE>
<CAPTION>
---------------------------------------------------
Less than One through Over Total
December 31, 1996 (in thousands) one year five years five years gross loans
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $ 738,359 $ 281,665 $ 217,037 $1,237,061
Real estate-construction 39,258 52,845 31,008 123,111
- --------------------------------------------------------------------------------------------
Total $ 777,617 $ 334,510 $ 248,045 $1,360,172
============================================================================================
Loans with predetermined rate $ 187,789 $ 117,756 $ 88,202 $ 393,747
Loans with variable rate 589,828 216,754 159,843 966,425
- --------------------------------------------------------------------------------------------
Total $ 777,617 $ 334,510 $ 248,045 $1,360,172
============================================================================================
</TABLE>
The following table presents a comparative analysis of the risk elements
contained in the Corporation's loan portfolio at year-end:
<TABLE>
<CAPTION>
---------------------------------------------------
December 31 (in thousands) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccruing $40,735 $33,576 $28,851 $21,983 $29,674
Restructured -- -- -- 3,352 --
Past due 90 days or more 20,440 19,346 21,027 14,153 12,152
- ---------------------------------------------------------------------------------------
Total $61,175 $52,922 $49,878 $39,488 $41,826
=======================================================================================
Percent of total loans at year-end 1.62% 1.50% 1.52% 1.30% 1.39%
=======================================================================================
Other real estate owned $ 5,131 $14,288 $17,601 $20,167 $25,883
=======================================================================================
</TABLE>
14
<PAGE>
The following table sets forth an analysis of the Corporation's reserve for loan
losses, together with chargeoffs and reserves for the five major portfolio
classifications included in the Corporation's statement of condition:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
For the year ended December 31 (in thousands) 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total loans:
Average $3,602,430 $3,390,782 $3,114,384 $2,949,909 $2,979,576
- ---------------------------------------------------------------------------------------------------------------------
Year-end $3,771,484 $3,521,915 $3,284,233 $3,043,293 $3,006,947
- ---------------------------------------------------------------------------------------------------------------------
Reserve for loan losses at beginning of period $ 49,867 $ 48,669 $ 51,363 $ 46,962 $ 44,996
- ---------------------------------------------------------------------------------------------------------------------
Reserve for loan losses of acquired company -- -- -- 3,054 --
- ---------------------------------------------------------------------------------------------------------------------
Loans charged off:
Commercial, financial and agricultural 3,811 4,333 5,878 2,960 5,179
Real estate-construction 94 444 46 55 394
Mortgage-commercial 2,475 2,484 934 1,547 701
Mortgage-residential 285 32 182 77 11
Installment loans to individuals 7,990 6,989 5,725 5,920 7,906
- ---------------------------------------------------------------------------------------------------------------------
Total loans charged off 14,655 14,282 12,765 10,559 14,191
-------------------------------------------------------------------
Recoveries on amounts previously charged off:
Commercial, financial and agricultural 1,160 992 3,126 471 587
Real estate-construction 4 1 -- -- --
Mortgage-commercial 17 25 161 16 296
Mortgage-residential 1 1 3 3 1
Installment loans to individuals 1,967 2,181 2,231 1,916 2,273
- ---------------------------------------------------------------------------------------------------------------------
Total recoveries 3,149 3,200 5,521 2,406 3,157
--------------------------------------------------------------------
Net loans charged off 11,506 11,082 7,244 8,153 11,034
- ---------------------------------------------------------------------------------------------------------------------
Current year's provision for loan losses 16,000 12,280 4,550 9,500 13,000
- ---------------------------------------------------------------------------------------------------------------------
Reserve for loan losses at end of period $ 54,361 $ 49,867 $ 48,669 $ 51,363 $ 46,962
=====================================================================================================================
Ratios:
Net loans charged off to:
Average loans 0.32% 0.33% 0.23% 0.28% 0.37%
Loans at year-end 0.31 0.31 0.22 0.27 0.37
Reserve for loan losses 21.17 22.22 14.88 15.87 23.50
Provision for loan losses 71.91 90.24 159.21 85.82 84.88
Reserve for loan losses to average loans 1.51 1.47 1.56 1.74 1.58
=====================================================================================================================
</TABLE>
15
<PAGE>
The following table presents a summary of the Corporation's deposits based on
average daily balances over the last three years:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
1996 1995 1994
-------------------- --------------------- ---------------------
For the year ended December 31, Average Average Average Average Average Average
(in thousands) amount rate amount rate amount rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Noninterest-bearing demand $ 633,066 -- $ 580,928 -- $ 559,574 --
Interest-bearing deposits:
Savings 356,542 2.36% 357,048 2.44% 380,543 2.29%
Interest-bearing demand 1,007,652 2.58 981,379 2.68 1,101,916 2.27
Certificates under $100,000 1,245,436 5.79 1,084,165 5.68 1,047,090 4.77
Certificates $100,000 and over 281,314 5.50 161,403 5.46 175,187 3.94
- --------------------------------------------------------------------------------------------------------
Total $ 3,524,010 $ 3,164,923 $ 3,264,310
========================================================================================================
</TABLE>
The maturity of all of the Corporation's time deposits of $100,000 or more is as
follows:
-----------------------------------
Certificates All other interest-
December 31, 1996 (in thousands) of deposit bearing deposits
- --------------------------------------------------------------------------------
Three months or less $ 307,747 $ 368,037
Over three through six months 28,855 --
Over six through twelve months 18,973 --
Over twelve months 32,582 --
- --------------------------------------------------------------------------------
Total $ 388,157 $ 368,037
================================================================================
16
<PAGE>
<TABLE>
<CAPTION>
An analysis of the Corporation's rate-sensitive assets and liabilities follows:
Repricing or Maturity (1)
-----------------------------------------------------------------------------
December 31, 1996 1-30 31-90 91-180 181-366
(in thousands) Total days days days days
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rate-sensitive assets:
Loans and leases $ 3,771,484 $ 1,914,204 $ 154,769 $ 204,135 $ 233,591
Money market assets 134,190 134,190 -- -- --
Investments 1,266,151 84,380 135,435 120,949 93,119
- ---------------------------------------------------------------------------------------------------------------
Total rate-sensitive assets $ 5,171,825 $ 2,132,774 $ 290,204 $ 325,084 $ 326,710
-------------------------------------------------------------------------
Rate-sensitive liabilities:
Savings and interest-bearing
demand $ 1,415,348 $ 1,415,348 $ -- $ -- $ --
Certificates under $100,000 1,269,206 115,576 192,436 219,300 157,604
Certificates $100,000 and over 388,157 89,192 218,555 28,855 18,973
Short-term borrowings 1,036,543 717,043 318,000 -- 1,500
Other interest-bearing liabilities 43,000 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Total rate-sensitive liabilities $ 4,152,254 $ 2,337,159 $ 728,991 $ 248,155 $ 178,077
-------------------------------------------------------------------------
Interest-rate swaps (2) $ 400,000 $ 275,000 $ 125,000 $ -- $ --
Interest-rate floors (2) 250,000 50,000 200,000 -- --
- ---------------------------------------------------------------------------------------------------------------
Rate-sensitive gap $ (529,385) $ (763,787) $ 76,929 $ 148,633
==========================================================
Cumulative gap $ (529,385) $ (1,293,172) $ (1,216,243) $ (1,067,610)
==========================================================
Cumulative gap as a percentage
of rate-sensitive assets (10.2)% (25.0)% (23.5)% (20.6)%
- ---------------------------------------------------------------------------------------------------------------
(1) Certain assumptions are made in assigning assets and liabilities to
specific periods, including use of estimated prepayments for
mortgage-backed securities, the exclusion of seasonal balances, and
adjustment of selected deposit accounts in which inflows and outflows have
not historically been affected by changes in interest rates.
(2) Interest-rate swaps and floors are used to hedge selected pools of assets
and have a weighted average remaining maturity of approximately 1.5 and 3.0
years, respectively.
17
<PAGE>
Repricing or Maturity (1)
------------------------------------------------
Total
December 31, 1996 1 year 1 - 5 Over 5
(in thousands) (Cont'd) or less years years
- -----------------------------------------------------------------------------------
Rate-sensitive assets:
Loans and leases $ 2,506,699 $ 614,087 $ 650,698
Money market assets 134,190 -- --
Investments 433,883 706,049 126,219
- -----------------------------------------------------------------------------------
Total rate-sensitive assets $ 3,074,772 $1,320,136 $ 776,917
-------------------------------------------
Rate-sensitive liabilities:
Savings and interest-bearing
demand $ 1,415,348 $ -- $ --
Certificates under $100,000 684,916 451,559 132,731
Certificates $100,000 and over 355,575 28,523 4,059
Short-term borrowings 1,036,543 -- --
Other interest-bearing liabilities -- -- 43,000
- -----------------------------------------------------------------------------------
Total rate-sensitive liabilities $ 3,492,382 $ 480,082 $ 179,790
-------------------------------------------
Interest-rate swaps (2) $ 400,000 $ -- $ --
Interest-rate floors (2) 250,000 -- --
- -----------------------------------------------------------------------------------
Rate-sensitive gap $ (1,067,610) $ 840,054 $ 597,127
===========================================
Cumulative gap $ (227,556) $ 369,571
============================================
Cumulative gap as a percentage
of rate-sensitive assets (4.4)% 7.1
- -----------------------------------------------------------------------------------
</TABLE>
(1) Certain assumptions are made in assigning assets and liabilities to
specific periods, including use of estimated prepayments for
mortgage-backed securities, the exclusion of seasonal balances, and
adjustment of selected deposit accounts in which inflows and outflows have
not historically been affected by changes in interest rates.
(2) Interest-rate swaps and floors are used to hedge selected pools of assets
and have a weighted average remaining maturity of approximately 1.5 and 3.0
years, respectively.
18
<PAGE>
<TABLE>
<CAPTION>
A summary of short-term borrowings at December 31 is as follows
(in thousands):
- -------------------------------------------------------------------------------------------------
Securities
sold under
Federal funds agreements U.S. Treasury
purchased to repurchase demand notes
- -------------------------------------------------------------------------------------------------
1996
<S> <C> <C> <C>
Balance at December 31 $ 781,900 $ 201,117 $ 53,526
Weighted average interest rate at
balance sheet date 5.5% 5.2% 5.3%
Maximum amount outstanding at any month-end $1,043,525 $ 230,906 $ 95,002
Approximate average amount outstanding
during the period $ 977,288 $ 184,233 $ 34,241
Weighted average interest rate for average
amounts outstanding during the period 5.6% 4.9% 5.2%
- ------------------------------------------------------------------------------------------------
1995
Balance at December 31 $1,006,012 $ 160,151 $ 29,389
Weighted average interest rate at
balance sheet date 5.8% 5.1% 4.8%
Maximum amount outstanding at any month-end $1,201,675 $ 230,427 $ 94,987
Approximate average amount outstanding
during the period $1,051,944 $ 151,428 $ 36,044
Weighted average interest rate for average
amounts outstanding during the period 6.1% 5.1% 6.0%
- -------------------------------------------------------------------------------------------------
1994
Balance at December 31 $ 770,643 $ 126,856 $ 37,308
Weighted average interest rate at
balance sheet date 5.6% 4.5% 5.0%
Maximum amount outstanding at any month-end $ 770,643 $ 162,405 $ 95,000
Approximate average amount outstanding
during the period $ 612,141 $ 110,236 $ 52,925
Weighted average interest rate for average
amounts outstanding during the period 4.4% 3.6% 3.6%
- -------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase
generally mature within 150 days. U.S. Treasury demand notes mature overnight.
</TABLE>
19
<PAGE>
The following table presents changes in the mix of the Corporation's funding
sources:
----------------------------------
(based on daily average balances) 1996 1995 1994
- --------------------------------------------------------------------------
Savings 7.55% 8.11% 9.42%
Interest-bearing demand 21.35 22.28 27.28
Certificates of deposits 32.35 28.28 30.26
Short-term borrowings 25.34 28.14 19.19
Demand deposits 13.41 13.19 13.85
- --------------------------------------------------------------------------
Total 100.00% 100.00% 100.00%
==========================================================================
The following table presents an analysis of the Corporation's return on assets
and return on equity over the last three years:
---------------------------------
1996 1995 1994
- ------------------------------------------------------------------------
Return on assets 1.83% 1.83% 1.88%
Return on stockholders' equity 21.38 20.70 20.84
Dividend payout 45.58 45.70 44.73
Equity to asset 8.57 8.82 9.04
========================================================================
20
<PAGE>
REGULATION AND SUPERVISION OF THE CORPORATION AND THE BANKS
The discussion in this section is a brief summary which does not purport to
be complete, and is qualified in its entirety by reference to applicable laws,
rules and regulations that impact on the business of the Corporation and the
Banks. Those laws, rules and regulations are subject to change from time to
time.
REGULATION OF THE CORPORATION
The Corporation is a bank holding company and a thrift holding company, and
therefore is subject to, among other things, the provisions of the Federal Bank
Holding Company Act (the "BHCA"), the regulations of the Federal Reserve Board
(the "FRB") and the Office of Thrift Supervision (the "OTS") and Delaware's
Banking Code.
FEDERAL LAW
Under the BHCA, the FRB's approval is required before a holding company may
acquire "control" of a bank. The BHCA defines "control" of a bank to include
ownership or the power to vote 25% or more of any class of voting stock of a
bank, the ability to otherwise control the election of a majority of a bank's
directors or the power to exercise, directly or indirectly, a controlling
influence over a bank's management or policies. A bank holding company must
register with the FRB as a bank holding company, and must thereafter file with
the FRB annual and periodic reports and other information which the FRB requires
from time to time. A bank holding company and its subsidiaries also are subject
to continuing regulation, supervision and examination by the FRB under the BHCA
and regulations promulgated thereunder.
Under the BHCA, the following transactions generally require the FRB's
prior approval: (1) any action which causes a bank or other company to become a
bank holding company; (2) any action which causes a bank to become a subsidiary
of a bank holding company; (3) the acquisition by a bank holding company of
direct or indirect ownership or control of any voting securities of a bank or
bank holding company if the acquisition results in the acquiring bank holding
company's control of more than five percent of the outstanding shares of any
class of voting securities of the target bank or bank holding company (including
acquisitions of additional securities through the exercise of preemptive rights,
but not including securities received in stock dividends or stock splits); (4)
the acquisition by a bank holding company or one of its subsidiaries, other than
a bank, of all or substantially all of a bank's assets; and (5) the merger or
consolidation of bank holding companies, including a merger through a purchase
of assets and assumption of liabilities.
A bank holding company and its subsidiaries generally may not, with certain
exceptions, engage in, acquire or control, directly or indirectly, voting
securities or assets of a company engaged in any activity other than (1) banking
or managing or controlling banks and other subsidiaries authorized under the
BHCA and (2) any BHCA activity which the FRB determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
These include any incidental activities which are necessary to carry on such
21
<PAGE>
activities, provided the bank holding company has obtained the FRB's prior
approval for the activity. Under the FRB's regulations, bank holding companies
and their subsidiaries generally are permitted to engage in such non-banking
activities as: (1) making, acquiring and servicing loans and other extensions of
credit (including issuing letters of credit and accepting drafts) similar to
that which might be done by consumer finance, credit card, mortgage, commercial
finance or factoring companies; (2) operating an industrial bank, Morris Plan
Bank or industrial loan company; (3) performing certain functions and activities
which may be performed by a trust company; (4) acting as an investment or
financial advisor; (5) leasing personal and real property and acting as agent,
broker or advisor in leasing that property; (6) making equity and debt
investments in corporations and projects designed primarily to promote community
welfare; (7) providing to others data processing and data transmission services,
facilities, data bases and access to those services, facilities and data bases;
(8) performing certain insurance agency and underwriting activities; (9) owning,
controlling or operating a savings association which engages only in
deposit-taking activities and lending and other permitted non-banking
activities; (10) providing certain courier services; (11) providing management
consulting advice to certain nonaffiliated bank and nonbank depository
institutions; (12) issuing and selling, at retail, money orders and similar
consumer-type payment instruments having a face value of not more than $1,000,
selling United States savings bonds and issuing and selling travelers' checks;
(13) performing appraisals of real estate and tangible and intangible personal
property, including securities; (14) acting as an intermediary for the financing
of commercial and industrial income-producing real estate; (15) providing
certain securities brokerage services; (16) underwriting and dealing in
government obligations and money market instruments; (17) providing foreign
exchange advisory and transactional services; (18) acting as a futures
commission merchant for unaffiliated persons; (19) providing investment advice
as a futures commission merchant or commodity trading advisor with respect to
certain commodity futures contracts and options; (20) providing consumer
financial counseling services; (21) providing tax planning and preparation
services; (22) providing check guaranty services to subscribing merchants: (23)
operating a collection agency; and (24) operating a credit bureau. A bank
holding company also may file an application for the FRB's approval to engage,
directly or through subsidiaries, in other non-bank activities which are so
closely related to banking as to be a proper incident thereto. The Corporation
has not determined which, if any, of the activities described above it might
seek to engage in other than those in which the Banks and the Bank's
subsidiaries presently engage. There is no assurance that the Corporation will
seek to, or acquire any subsidiaries which, engage in any of such other
activities or that, if the Corporation does so, its efforts will be successful.
In September 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Act") was enacted. Under the
Interstate Banking Act, adequately capitalized and managed bank holding
companies were permitted, subject to obtaining regulatory approval and
regardless of certain state law restrictions such as reciprocity requirements
and regional compacts, to acquire a bank in any state beginning on September 29,
1996. In general, no such acquisition will be permitted which would result in
the acquiring bank holding company owning 10% or more of insured deposits
nationwide or 30% or more of insured deposits in any state. Certain state law
restrictions, such as minimum age-of-existence requirements for targets of up to
five years, will continue to apply. States cannot "opt out" of these interstate
acquisition provisions.
22
<PAGE>
In addition, under the Interstate Banking Act, beginning June 1, 1997, bank
holding companies will be permitted, subject to obtaining regulatory approval,
to merge banks operating in different states. States may "opt out" of these
provisions before June 1, 1997, and may "opt in" earlier. If a state "opts out"
of these provisions, out-of-state banks generally will not be permitted to merge
with banks in that state, and banks headquartered in that state generally will
not be permitted to merge with banks in other states. As with interstate
banking, the Interstate Banking Act does not affect certain state laws setting
minimum age-of-existence requirements for banks to be merged of up to five
years. In addition, in general, no such interstate merger will be permitted
which would result in the acquiring bank holding company owning 10% or more of
insured deposits nationwide or 30% or more of insured deposits in any state.
Under the Interstate Banking Act, beginning June 1, 1997, states may, by
express legislation, permit DE NOVO branching of or acquisitions of existing
branches by out-of-state banks within their borders. In 1995, Delaware opted in
to the provisions of the Interstate Banking Act permitting banks operating in
different states to be merged, but opted out of DE NOVO branching.
Except as already pre-empted by Federal law, the Interstate Banking Act
generally does not affect state authority over interstate branching, community
reinvestment, consumer protection or fair lending, unless the Comptroller of the
Currency determines that those laws give state-chartered banks an unfair
advantage over national banks.
As a bank holding company, the Corporation is required to conduct its
operations in a safe and sound manner. If the FRB believes that an activity of a
bank holding company or control of a nonbank subsidiary, other than a nonbank
subsidiary of a bank, constitutes a serious risk to the financial safety,
soundness or stability of a subsidiary bank of the bank holding company and is
inconsistent with sound banking practices or the purposes of the BHCA or certain
other Federal banking statutes, the FRB may require the bank holding company to
terminate the activity or the holding company's control of the subsidiary.
As wholly-owned subsidiaries of the Corporation, the Banks are subject to
Section 106 of the Bank Holding Company Act Amendments of 1970 ("Section 106")
relating to tying arrangements. Under Section 106, the Banks may not extend
credit, sell or lease property, furnish any service to a customer or fix or vary
the consideration for any of the foregoing, on the condition or requirement that
the customer (1) obtains additional property, services or credit from the
Corporation, the Banks or any other subsidiary of the Corporation, (2) refrains
from obtaining any property, credit or services from any competitor of the
Corporation, the Banks or any other subsidiary of the Corporation or (3)
furnishes any credit, property or services to the Corporation, the Banks or any
other subsidiary of the Corporation. Under the FRB's regulations, a bank holding
company and any non-banking subsidiaries conducting activities authorized by
those regulations also are prohibited from engaging in transactions involving
tie-in arrangements which would be unlawful under Section 106 if imposed by a
bank.
Sections 23A and 23B of the Federal Reserve Act, applicable to the Banks,
establish standards for the terms of, limit the amount of and establish
collateral requirements with respect to, any loans or extensions of credit to
and investments in affiliates by the Banks. The Banks are "affiliates" for
23
<PAGE>
purposes of the Federal Reserve Act. In addition, the Federal Reserve Act and
the FRB's regulations limit the amounts of, and establish required procedures
and credit standards with respect to, loans and other extensions of credit to
directors, officers and principal shareholders of the Corporation and its
subsidiaries, as well as to related interests of those persons.
The FRB's "Policy Statement on the Payment of Cash Dividends by State
Member Banks and Bank Holding Companies" sets forth guidelines the FRB believes
a bank or bank holding company should follow in establishing dividend policy.
The FRB's policy generally is that banks and bank holding companies should not
pay dividends except from current earnings and provided the institution's
prospective rate of earnings retention is consistent with the institution's
capital needs, asset quality and overall financial condition at the time of
consideration. FRB policy also is that bank holding companies should be a source
of managerial and financial strength to their subsidiary banks. Accordingly, the
FRB believes that such subsidiary banks should not be compromised by a level of
cash dividends which places undue pressure on their capital or which is funded
through borrowings that weaken the holding company system.
The FRB has adopted "risk-based" capital standards to assist in assessing
the capital adequacy of bank holding companies and banks under its jurisdiction.
Those risk-based capital standards include both a definition of capital and a
framework for calculating "risk-weighted" assets by assigning assets and
off-balance-sheet items to broad, risk-weighted categories. An institution's
risk-based capital ratio is calculated by dividing its qualifying capital by its
risk-weighted assets. At least one-half of risk-based capital must consist of
Tier 1 capital. Additional, supplementary capital includes, among other things,
allowances for loan losses, subject to certain limits, cumulative perpetual and
long-term preferred stock, hybrid capital instruments such as mandatory
convertible debt and limited amounts of term subordinated debt and
intermediate-term preferred stock. The Corporation and Wilmington Trust of
Pennsylvania are subject to the FRB's risk-based capital standards. At December
31, 1996, the Corporation's and Wilmington Trust of Pennsylvania's risk-based
capital levels were $507.9 million and $16.7 million, respectively, or 12.01%
and 11.75%, respectively, of risk-weighted assets, well in excess of the level
of 8% required for adequately capitalized institutions.
The FRB also has adopted a minimum ratio of "Tier 1" leverage capital to
total assets to assist in assessing the capital adequacy of bank holding
companies and banks under its jurisdiction. These Tier 1 leverage capital
guidelines are used in the regulatory inspection and supervisory processes, as
well as in the FRB's analysis of applications it receives. The FRB has
established a level of Tier 1 leverage capital to total assets of 4% as a
minimum requirement for adequately capitalized institutions. Institutions with
financial or operational weaknesses are expected to maintain higher ratios. Tier
1 leverage capital includes, among other things, common stockholders' equity,
qualifying cumulative and noncumulative perpetual preferred stock and minority
interests in consolidated subsidiaries. At December 31, 1996, the Corporation's
and Wilmington Trust of Pennsylvania's Tier 1 leverage capital levels were
$455.0 million and $14.9 million, respectively, or 8.59% and 8.65%,
respectively, of total assets, well in excess of the level of 4.0% required for
adequately capitalized institutions on that date.
24
<PAGE>
The Corporation's status as a registered holding company under the BHCA
does not exempt it from certain Federal and state laws and regulations
applicable to corporations generally. These include, without limitation, certain
provisions of the Federal securities laws discussed below.
BANK REGULATION
The Bank is a bank and trust company chartered under Delaware law,
Wilmington Trust of Pennsylvania is a bank and trust company chartered under
Pennsylvania law and Wilmington Trust FSB is a Federally-chartered savings bank
with its headquarters in Maryland and with additional branches in Florida and
trust agency offices in Maryland and Nevada. Their deposits are insured by the
FDIC up to applicable limits. The Banks derive lending and investment
authorities primarily from their charters, Delaware's and Pennsylvania's Banking
Code, Maryland's Banking Code, Florida's Financial Institutions Code, the
Federal Home Owners' Loan Act ("HOLA") and applicable laws and regulations
promulgated by Delaware's Bank Commission, Pennsylvania's Department of Banking,
Maryland's Bank Commission, Florida's Financial Institutions Division and the
OTS, as applicable. Each of the Banks has both banking and trust powers. The
Banks are subject to regulation, examination and supervision by Delaware's Bank
Commission and the FDIC, in the case of the Bank, the FRB and Pennsylvania's
Department of Banking, in the case of Wilmington Trust of Pennsylvania, and the
OTS, in the case of Wilmington Trust FSB. Each of those agencies promulgates
regulations and requires that reports be filed describing the activities and
financial condition of banks under its jurisdiction. Each agency also conducts
periodic examinations to determine compliance with various regulatory
requirements and generally supervises the operations of those banks. The
Corporation also is subject to supervision and examination by the OTS and
Delaware's Bank Commission.
FDIC INSURANCE AND REGULATION
Deposits in the Banks are insured by the FDIC up to applicable limits.
Neither the Bank nor Wilmington Trust of Pennsylvania currently pays for FDIC
insurance; the annual premium Wilmington Trust FSB pays for FDIC insurance
currently is $.23 per $100 of insured deposits.
The FDIC's regulations require insured state non-member banks, such as the
Bank, to maintain a minimum Tier 1 leverage capital ratio of at least 4% of
total assets to constitute an adequately capitalized institution. For
FDIC-insured institutions, Tier 1 leverage capital includes, among other things,
common stockholders' equity, qualifying cumulative and noncumulative perpetual
preferred stock and minority interests in consolidated subsidiaries. As of
December 31, 1996, the Bank's Tier 1 leverage capital ratio was 8.24%.
In addition to the FDIC's minimum "core," or Tier 1, leverage capital
requirements, the FDIC has adopted a Statement of Policy on Risk-Based Capital
(the "Statement of Policy"). Under the Statement of Policy, the Bank generally
is required to maintain a minimum risk-based capital ratio of qualifying total
capital to risk-weighted assets of at least 8% of risk-weighted assets. At least
one-half of that capital must consist of Tier 1 capital. Additional,
supplementary capital includes, among other things, allowances for loan losses,
25
<PAGE>
subject to certain limits, cumulative perpetual and long-term preferred stock,
hybrid capital instruments such as mandatory convertible debt, and limited
amounts of term subordinated debt and intermediate-term preferred stock. Similar
to the FRB's risk-based capital standards, the Statement of Policy defines
risk-based capital and provides a system for calculating risk-weighted assets by
assigning assets and off-balance-sheet items to broad risk categories. The
Statement of Policy applies to, among other institutions, all FDIC-insured,
state-chartered banks which are not members of the Federal Reserve System, and
to all circumstances in which the FDIC must evaluate the capital of a banking
organization. The Statement of Policy is used in the regulatory examination and
supervisory process, as well as in the analysis of applications upon which the
FDIC must act. In light of these and other considerations, banks generally are
required to operate above the minimum risk-based capital levels. Banks
contemplating significant expansion plans, as well as institutions with high or
inordinate levels of risk, are expected to have capital commensurate with the
level and nature of those risks. As of December 31, 1996, the Bank's risk-based
capital ratio was 11.65%.
The FDIC may impose sanctions on any insured bank which does not operate in
accordance with the FDIC's regulations, policies or directives. Cease-and-desist
proceedings may be instituted against an insured bank or bank holding company
which is believed to be engaged in unsafe and unsound practices, including
violations of laws and regulations. The FDIC also has the authority to terminate
deposit insurance coverage, after notice and hearing, if it determines that the
insured institution is or has engaged in an unsafe or unsound practice which has
not been corrected, is in an unsafe or unsound condition to continue operation
or has violated any law, regulation, rule or order of, or condition imposed by,
the FDIC. The Corporation is not aware of any past or current practice,
condition or violation which might lead to termination of the deposit insurance
coverage of any of the Banks or to any proceeding against any of the Banks or
any of their respective directors, officers or staff members.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"Improvement Act"), among other things, requires annual on-site examinations of
insured depository institutions, and authorizes the Federal examining agency to
take prompt corrective action to resolve an institution's problems. The nature
and extent of the corrective action depends primarily on the institution's
capital level. Such actions could include requiring recapitalization of or a
capital restoration plan from the institution, restricting transactions between
the institution and its affiliates, restricting interest rates, asset growth,
activities and investments in the institution's subsidiaries, ordering a new
election of directors, dismissing directors or senior executive officers and
requiring the employment of qualified senior executive officers. The holding
company of a depository institution may be required to guarantee compliance with
an institution's capital restoration plan and provide assurance of performance
under such a plan. The Improvement Act also: (1) prohibits insured depository
institutions from making capital distributions (including dividends) if, after
the distribution, the institution would be undercapitalized; (2) directs the
Federal banking agencies to monitor closely the condition, plans, restrictions
and requirements of or applicable to undercapitalized institutions and restricts
such institutions' asset growth, branching and new lines of business; and (3)
expands the grounds for appointment of a conservator or receiver for an insured
institution. The Improvement Act generally requires that a receiver be appointed
if the institution does not have tangible equity of at least 2% of its total
assets.
26
<PAGE>
FEDERAL RESERVE BOARD REGULATION
Wilmington Trust of Pennsylvania is a member of the Federal Reserve System.
In addition, although neither the Bank nor Wilmington Trust FSB is a member of
the Federal Reserve System, as FDIC-insured depository institutions, each of the
Banks is subject to Section 19 of the Federal Reserve Act and the FRB's
regulations promulgated thereunder. These require that the Banks maintain
certain reserves against their transaction accounts (primarily checking and NOW
accounts), money market deposit accounts and non-personal time deposits. Since
reserves generally must be maintained in cash or in non-interest-bearing
accounts, the effect of these reserve requirements is to increase the Banks'
cost of funds.
OFFICE OF THRIFT SUPERVISION REGULATION
The OTS requires thrifts such as Wilmington Trust FSB to maintain a minimum
Tier 1 leverage capital ratio of at least 4% of total assets to constitute an
adequately capitalized institution. For OTS-regulated institutions, Tier 1
leverage capital includes, among other things, common stockholders' equity,
qualifying cumulative and noncumulative perpetual preferred stock and minority
interests in consolidated subsidiaries. As of December 31, 1996, Wilmington
Trust FSB's Tier 1 leverage capital ratio was 9.93%.
In addition to the OTS's minimum "core," or Tier 1, leverage capital
requirements, Wilmington Trust FSB generally is required to maintain a minimum
risk-based capital ratio of qualifying total capital to risk-weighted assets of
at least 8% of risk-weighted assets. At least one half of that capital must
consist of Tier 1 capital. Additional, supplementary capital includes, among
other things, allowances for loan losses, subject to certain limits, cumulative
perpetual and long-term preferred stock, hybrid capital instruments such as
mandatory convertible debt, and limited amounts of term subordinated debt and
intermediate-term preferred stock. Similar to the FRB's risk-based capital
standards, the OTS defines risk-based capital and provides a system for
calculating risk-weighted assets by assigning assets and off-balance-sheet items
to broad risk categories. Thrifts generally are required to operate above the
minimum risk-based capital levels. Thrifts contemplating significant expansion
plans, as well as institutions with high or inordinate levels of risk, are
expected to have capital commensurate with the level and nature of those risks.
As of December 31, 1996, Wilmington Trust FSB's risk-based capital ratio was
17.68%.
If a thrift fails to meet, in three out of four quarters and in two out of
three years, the "qualified thrift lender" ("QTL") test specified in HOLA and
the regulations promulgated thereunder, then that thrift would become subject to
restrictions regarding activities, branching and other aspects of its
operations. An SAIF-insured thrift seeking to comply with the QTL test must
maintain at least 65% of its tangible assets generally in investments which
relate to domestic residential real estate ("Qualified Assets"). Qualified
Assets include: (1) loans and securities which are related to domestic
residential real estate or manufactured housing; (2) subject to certain
percentage limitations, consumer loans, loans involving churches, schools,
nursing homes and hospitals, loans to acquire, develop and construct certain
single-family residences and investments in service corporations deriving at
least 80% of their annual gross revenues from refinancing, constructing,
improving or repairing residential real estate; (3) properties used by the
institution in its business; (4) subject to amount limitations, assets which
27
<PAGE>
qualify for liquidity purposes; and (5) subject to amount limitations, 50% of
residential mortgage loans originated by the institution and sold within 90
days.
An SAIF-insured thrift failing to meet the QTL test must either convert to
a commercial bank or be subject to penalties with respect to its operations.
Effective immediately upon failing to qualify as a QTL, a thrift generally may
not, among other things, engage in any new activity, branch or pay dividends not
permissible for national banks. In addition, beginning three years after failing
to so qualify, an SAIF-insured thrift may not retain any investment or engage in
any activity not permissible for national banks.
A thrift's aggregate investment in commercial loans, leases and letters of
credit is limited to 10% of its assets, while its aggregate investment in
consumer loans is limited to 30% of its assets.
CHANGE-IN-CONTROL REGULATION
Before obtaining "control" of the Corporation, a potential acquirer would
need to obtain the FRB's prior approval under either Section 3 of the BHCA or
the FRB's regulations promulgated under the Federal Bank Control Act. "Control"
of the Corporation for purposes of Section 3 of the BHCA means (1) ownership,
control or the power to vote, directly or indirectly, 25% or more of any class
of the Corporation's voting stock; (2) control in any manner over the power to
elect a majority of the Corporation's Board of Directors; (3) the power to
exercise, directly or indirectly, a controlling influence over the management or
policies of the Corporation; or (4) conditioning the transfer of 25% or more of
any class of the Corporation's voting securities upon the transfer of 25% or
more of the outstanding shares of any class of voting securities of another
company. With holdings or control of less than five percent, there is a
presumption that there is no controlling influence over a target's management or
policies. As part of an acquisition by a nonbank holding company, the acquiring
company would become a bank holding company. Its business activities thereby
would be limited to activities which the FRB determines to be so closely related
to banking as to be a proper incident thereto. As part of an acquisition of the
Corporation by another bank holding company, the FRB's approval would be
required for the acquisition of more than five percent of any class of the
Corporation's voting securities.
For acquisitions under the Federal Bank Control Act, the FRB's regulations
provide that any person acting directly or indirectly, or through or in concert
with one or more persons, would need to provide the FRB at least 60 days'
written notice before acquiring control of the Corporation, unless certain
exemptions, including acquisitions of the Corporation's voting securities
subject to the FRB's approval under Section 3 of the BHCA discussed above,
apply. The following transactions would constitute, or would be presumed to
constitute, the acquisition of control of the Corporation triggering the 60-day
notice requirement discussed in the preceding sentence: the acquisition of any
voting securities of the Corporation if, after the acquisition, the acquiring
person or persons acting in concert (1) owns, controls or holds the power to
vote 25% or more of any class of the Corporation's voting securities or (2)
owns, controls or holds the power to vote 10% or more, but less than 25%, of any
class of the Corporation's voting securities at a time that the Corporation has
securities registered under Section 12 of the Exchange Act or if no other person
will own a greater percentage of that class of voting securities immediately
after the acquisition.
28
<PAGE>
SECURITIES LAWS
The sale of the Corporation's securities is subject to the registration
requirements of the Securities Act of 1933 and a number of state securities
laws, unless an exemption therefrom is available. In general, those statutes
regulate the sale of securities by issuers and by persons deemed to be in
control of an issuer. In addition, the Corporation's common stock is registered
with the Securities and Exchange Commission, and is subject to the requirements
of the Securities Exchange Act of 1934 (the "Exchange Act") and the regulations
promulgated thereunder regarding periodic reporting to stockholders, proxy
solicitation and other matters. Any tender offer to acquire the Corporation's
securities would be subject to the Exchange Act's limitations and disclosure
requirements.
OTHER LAWS AND REGULATIONS
The lending and deposit-taking activities of the Corporation's subsidiaries
are subject to a variety of Federal and state consumer protection laws,
including the Equal Credit Opportunity Act (which prohibits discrimination in
all aspects of credit-granting), the Truth-in-Lending Act (which principally
mandates certain disclosures in connection with loans made for personal, family
or household purposes and imposes substantive restrictions with respect to home
equity loans), the Truth-in-Savings Act (which principally mandates certain
disclosures in connection with deposit-taking activities), the Fair Credit
Reporting Act (which, among other things, requires a lender to disclose the name
and address of the credit bureau from whom a lender obtains a report that
resulted in a denial of credit), the Real Estate Settlement Procedures Act
(which, among other things, requires residential mortgage lenders to provide
loan applicants with closing cost information shortly after the time of
application and prohibits referral fees in connection with real estate
settlement services), the Electronic Funds Transfer Act (which, among other
things, requires certain disclosures in connection with electronic funds
transactions) and the Expedited Funds Availability Act (which, among other
things, requires that deposited funds be made available for withdrawal in
accordance with a prescribed schedule and that that schedule be disclosed to
customers).
Under the Community Reinvestment Act (the "CRA") and the Fair Housing Act,
depository institutions are prohibited from certain discriminatory practices
which limit or withhold services to individuals residing in economically
depressed areas. In addition, the CRA imposes certain affirmative obligations to
provide lending and other financial services to such individuals. CRA
performance is considered by all of the Federal regulatory agencies in
connection with reviewing applications to relocate an office, mergers and
acquisitions of financial institutions and establishing new branch or deposit
facilities.
29
<PAGE>
Federal legislation has permanently pre-empted all state usury laws on
residential first mortgage loans made by insured depository institutions in any
state which did not override that preemption. Although some states overrode the
preemption, Delaware, Florida, Maryland and Pennsylvania did not. Accordingly,
there is currently no limit on the interest rate which could be charged on those
loans. In addition, those states' usury limitations apply to second mortgage
loans and consumer loans such as those the Banks offer. In today's interest rate
environment, those usury laws do not materially affect the Banks' lending
programs.
The remedies available to a lender upon a default or delinquency with
respect to certain mortgage loans secured by residential real property located
in Delaware, Florida, Maryland or Pennsylvania, and the procedures by which
those remedies may be exercised, also are subject to limitations imposed by the
laws of those states.
Delaware's business and legal environments historically have contributed to
the Bank's operating results. A substantial percentage of large pharmaceutical
and chemical companies and other Fortune 500 companies are headquartered in
Delaware. Delaware's Court of Chancery is well recognized for its
interpretations of corporate law.
In addition, Delaware law affords several advantages for trust
administration which have helped contribute to the Corporation's operating
results. In general, a trust governed by Delaware law can be administered more
economically, for a longer period of time and with a more flexible investment
philosophy than in many other jurisdictions. In addition, Delaware imposes no
tax on trusts with nonresident beneficiaries.
ITEM 2 - PROPERTIES
The Corporation, through the Banks and its other subsidiaries, owns and/or
leases buildings which are used in the normal course of their businesses. The
main office of the Corporation as well as of the Bank is located at Rodney
Square North, 1100 Market Street, Wilmington, Delaware 19890. The Corporation
and most of its subsidiaries occupy 265,000 square feet of space at this
location, known as the Wilmington Trust Center. This facility is owned by Rodney
Square Investors, L.P., in which the Bank, through one of its subsidiaries, has
a 50% ownership interest. The mortgage for this facility is carried by the Bank,
and had an outstanding balance at December 31, 1996 of $30,733,627.
A separate, unencumbered, 84,000-square foot operations facility known as
the Wilmington Trust Plaza is owned by a subsidiary of the Bank, and is located
at 82 Reads Way, New Castle, Delaware 19720. A new, 300,000-square foot
operations facility presently under construction in Wilmington, Delaware is
expected to be completed in 1997 and replace the Wilmington Trust Plaza.
30
<PAGE>
As of March 20, 1997, the Banks had 62 full-service branch locations.
Twenty-eight are in New Castle County, nine are in Kent County and 15 are in
Sussex County, Delaware, three are in Chester County and one is in Delaware
County, Pennsylvania, one is in Wicomico County and two are in Worcester County,
Maryland, and one is in Martin County, one is in Palm Beach County and one is in
Indian River County, Florida.
Certain of the Corporation's subsidiaries own a total of four additional
locations which are utilized for storage. Other subsidiaries lease and occupy an
additional eight locations.
ITEM 3 - LEGAL PROCEEDINGS
Neither the Corporation, the Banks nor any of the Bank's subsidiaries is
involved in any material legal proceeding other than ordinary routine litigation
incidental to its respective business.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders by solicitation of
proxies or otherwise during the fourth quarter of 1996.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Information required by this item is contained on page 35 of the
Management's Discussion and Analysis portion of the Corporation's Annual Report
to Stockholders, which is incorporated herein by reference.
31
<PAGE>
ITEM 6 - SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five years
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest income $ 402,850 $ 377,341 $ 307,882 $ 290,972 $ 315,511
Net interest income 214,221 197,364 184,330 174,847 165,214
Provision for loan losses 16,000 12,280 4,550 9,500 13,000
Net income 97,278 90,031 85,169 82,761 64,013
Per common share data:
Income before cumulative 2.83 2.56 2.37 2.24 2.09
effect of change in
accounting principle
Cumulative effect of change -- -- -- -- (0.39)
in accounting principle
Net income 2.83 2.56 2.37 2.24 1.70
Cash dividends declared 1.29 1.17 1.06 0.975 0.88
Balance sheet at year-end:
Assets $ 5,564,409 $ 5,372,198 $ 4,742,359 $ 4,637,756 $ 4,284,603
Long-term debt 43,000 28,000 -- -- --
==================================================================================================
</TABLE>
32
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The information required by this item is contained on pages 14 through 44
of the Corporation's Annual Report to Stockholders, which are incorporated
herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information required by this item is contained on the
respective pages indicated of the Corporation's 1996 Annual Report to
Stockholders, which are incorporated herein by reference.
Annual Report
to Stockholders
Page Number
Consolidated Statements of Condition as
of December 31, 1996 and 1995 45
Consolidated Statements of Income
for the years ended December 31,
1996, 1995 and 1994 46
Consolidated Statements of Changes in Stock-
holders' Equity for the years ended
December 31, 1996, 1995 and 1994 47
Consolidated Statements of Cash Flows
for the years ended December 31,
1996, 1995 and 1994 48
Notes to Consolidated Financial
Statements - December 31,
1996, 1995 and 1994 49-76
Report of Independent Auditors 77
Unaudited Selected Quarterly Financial Data 73
33
<PAGE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is contained on pages 3 through 10 of
the Corporation's proxy statement for its Annual Stockholders' Meeting to be
held on April 17, 1997 (the "Proxy Statement"), which are incorporated herein by
reference.
Information regarding delinquent filings under Section 16(a) of the
Exchange Act by the Corporation's directors and executive officers is contained
on pages 21 and 22 of the Proxy Statement, which are incorporated herein by
reference.
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item is contained on pages 11 through 21
of the Proxy Statement, which are incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required by this item is contained on pages 2 through 7 of
the Proxy Statement, which are incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained on page 23 of the Proxy
Statement, which is incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS. The following Consolidated Financial Statements
and Report of Independent Auditors of Wilmington Trust Corporation are
incorporated by reference in Item 8 above:
34
<PAGE>
Annual Report
to Stockholders
Page Number
Consolidated Statements of Condition as
of December 31, 1996 and 1995 45
Consolidated Statements of Income for
each of the years in the three-year period
ended December 31, 1996 46
Consolidated Statements of Changes in
Stockholders' Equity for each of the years
in the three year period ended December 31, 1996 47
Consolidated Statements of Cash Flows for
each of the years in the three-year period
ended December 31, 1996 48
Notes to Consolidated Financial Statements 49-76
Report of Independent Auditors 75
2. FINANCIAL STATEMENT SCHEDULES. No financial statement schedules are
required to be filed as part of this report.
3. FINANCIAL STATEMENT EXHIBITS. The exhibits listed below have been filed
or are being filed as part of this report. Any exhibit will be made
available to any shareholder upon receipt of a written request therefore,
together with payment of $.20 per page for duplicating costs.
35
<PAGE>
Exhibit
Number Exhibit
- ------- -------
3.1 Amended and Restated Certificate of Incorporation
of the Corporation (9)
3.2 Amended and Restated Bylaws of the Corporation (9)
4.1 1991 Employee Stock Purchase Plan (1)
4.2 1996 Employee Stock Purchase Plan (9)
4.3 1983 Employee Stock Option Plan (1)
4.4 1988 Long-Term Incentive Stock Option Plan (1)
4.5 1991 Long-Term Incentive Stock Option Plan (1)
4.6 1996 Long-Term Incentive Plan (9)
4.7 Thrift Savings Plan (1)
4.8 Employee Stock Ownership Plan (1)
4.9 Senior Executive Incentive Compensation Plan (6)
10.1 Purchase and Assumption Agreement dated June 18,
1991 by and between Wilmington Savings Fund Society (2)
10.2 Agreement of Reorganization and Merger dated as of
April 8, 1991 by and among Wilmington Trust Company,
Wilmington Trust Corporation and The Sussex Trust
Company (3)
10.3 Deposit Insurance and Transfer and Asset Purchase
Agreement among the Federal Deposit Insurance
Corporation in its capacity as receiver for
The Bank of the Brandywine Valley, the Federal
Deposit Insurance Corporation and Wilmington Trust
Company dated as of February 21, 1992 (4)
10.4 Agreement of Reorganization and Merger dated as of
March 18, 1993 between Wilmington Trust Corporation
and Freedom Valley Bank (5)
10.5 Rights Agreement dated as of January 19, 1996 between
Wilmington Trust Corporation and Harris Trust and
Savings Bank (7)
10.6 Supplemental Executive Retirement Plan (8)
10.7 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and Ted T. Cecala (8)
10.8 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
Robert J. Christian (8)
10.9 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and Howard K. Cohen (8)
10.10 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
William J. Farrell, II (8)
10.11 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
David R. Gibson (8)
10.12 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
Robert V.A. Harra, Jr. (8)
36
<PAGE>
Exhibit
Number Exhibit
- ------- -------
10.13 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
George W. Helme, IV (8)
10.14 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
Joseph M. Jacobs, Jr. (8)
10.15 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and John H. Kipp (8)
10.16 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
Hugh D. Leahy, Jr. (8)
10.17 Severance Agreement dated as of February 29, 1997
between Wilmington Trust Company and
Robert A. Matarese (8)
10.18 Severance Agreement dated as of July 18, 1996 between
Wilmington Trust Company and Rita C. Turner (9)
11 Statement re computation of per share earnings (9)
13 1996 Annual Report to Stockholders of Wilmington Trust
Corporation (9)
21 Subsidiaries of Wilmington Trust Corporation (9)
23 Consent of independent auditor (9)
27 Financial Data Schedule (9)
_____________________________
1 Incorporated by reference to the corresponding exhibit to Amendment No. 1
to the Report on Form S-8 of Wilmington Trust Corporation filed on October
31, 1991.
2 Incorporated by reference to the exhibit to the Current Report on Form 8-K
of Wilmington Trust Corporation filed on January 2, 1992.
3 Incorporated by reference to the exhibit to the Current Report on Form 8-K
of Wilmington Trust Corporation filed on February 3, 1992.
4 Incorporated by reference to the exhibit to the Current Report on Form 8-K
of Wilmington Trust Corporation filed on February 25, 1992.
5 Incorporated by reference to the corresponding exhibit to the Annual Report
on Form 10-K of Wilmington Trust Corporation filed on March 23, 1993.
6 Incorporated by reference to the corresponding exhibit to the Annual Report
on Form 10-K of Wilmington Trust Corporation filed on March 31, 1993.
7 Incorporated by reference to the exhibit to the Report on Form 8-A of
Wilmington Trust Corporation filed on January 31, 1995.
8 Incorporated by reference to the corresponding exhibit to the Annual Report
on Form 10-K of Wilmington Trust Corporation filed on March 30, 1996.
9 Filed herewith.
b. The Corporation did not file any reports on Form 8-K in 1996.
37
<PAGE>
Pursuant to the requirements of Sections 13 and 15(d) of the Securities
Exchange Act of 1934, this Form has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Ted T. Cecala
-------------------------------
Ted T. Cecala
Director, Chairman of the Board
and Chief Executive Officer
March 20, 1997
/s/ Robert V.A. Harra, Jr.
--------------------------------
Robert V.A. Harra, Jr.
Director, President
and Chief Operating Officer
March 20, 1997
/s/ Robert H. Bolling, Jr.
-------------------------------
Robert H. Bolling, Jr.
Director
March 20, 1997
/s/ Carolyn S. Burger
-------------------------------
Carolyn S. Burger
Director
March 20, 1997
/s/ Richard R. Collins
-------------------------------
Richard R. Collins
Director
March 20, 1997
/s/ Charles S. Crompton, Jr.
-------------------------------
Charles S. Crompton, Jr.
Director
March 20, 1997
38
<PAGE>
/s/ H. Stewart Dunn, Jr.
-------------------------------
H. Stewart Dunn, Jr.
Director
March 20, 1997
/s/ Edward B. du Pont
-------------------------------
Edward B. du Pont
Director
March 20, 1997
/s/ R. Keith Elliott
-------------------------------
R. Keith Elliott
Director
March 20, 1997
/s/ Robert C. Forney
-------------------------------
Robert C. Forney
Director
March 20, 1997
/s/ Andrew B. Kirkpatrick, Jr.
-------------------------------
Andrew B. Kirkpatrick, Jr.
Director
March 20, 1997
/s/ Rex L. Mears
-------------------------------
Rex L. Mears
Director
March 20, 1997
39
<PAGE>
/s/ Hugh E. Miller
-------------------------------
Hugh E. Miller
Director
March 20, 1997
/s/ Stacey J. Mobley
-------------------------------
Stacey J. Mobley
Director
March 20, 1997
/s/ Leonard W. Quill
-------------------------------
Leonard W. Quill
Director
March 20, 1997
/s/ David P. Roselle
-------------------------------
David P. Roselle
Director
March 20, 1997
/s/ Thomas P. Sweeney
-------------------------------
Thomas P. Sweeney
Director
March 20, 1997
/s/ Bernard J. Taylor, II
-------------------------------
Bernard J. Taylor, II
Director
March 20, 1997
40
<PAGE>
/s/ Mary Jornlin Theisen
-------------------------------
Mary Jornlin Theisen
Director
March 20, 1997
/s/ Robert W. Tunnell, Jr.
-------------------------------
Robert W. Tunnell, Jr.
Director
March 20, 1997
41
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
WILMINGTON TRUST CORPORATION
ARTICLE I
Name
The name of this corporation (the "Corporation") is:
Wilmington Trust Corporation
ARTICLE II
Definitions
For the purposes of this Restated Certificate of Incorporation:
A. "Affiliate" and "Associate" have the meanings set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on March 30, 1991.
B. A person shall be deemed to "Beneficially Own" shares of Voting Stock (1)
that such person or any of its Affiliates and Associates beneficially owns,
directly or indirectly, (2) that such person or any of its Affiliates or
Associates has (i) the right to acquire or to dispose of (whether such right
is exercisable immediately or only after the passage of time or only upon
the occurrence or nonoccurrence of a contingency or event), or to direct the
acquisition or disposition of, pursuant to any agreement, arrangement,
understanding or relationship or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii) the right to
vote or to direct the voting of pursuant to any agreement, arrangement,
understanding or relationship, or (3) that are beneficially owned, directly
or indirectly, by any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement, arrangement,
understanding or relationship for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the Corporation.
C. "Business Combination" means (a) any merger or consolidation of the
Corporation or any Subsidiary with or into (i) any Related Person or (ii)
any other corporation (whether or not itself a Related Person) that, after
such merger or consolidation, would be an Affiliate or Associate of a
Related Person, or (b) any sale, lease, exchange, mortgage, pledge, transfer
<PAGE>
or other disposition (in one transaction or a series of related
transactions) to or with any Related Person of any assets of the Corporation
or any Subsidiary having an aggregate Fair Market Value of $1,000,000 or
more, or (c) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions, and other than by
way of a pro rata distribution to all stockholders or a reclassification,
dividend or subdivision of such securities and other than in connection with
the exercise or conversion of securities exercisable for or convertible into
securities of the Corporation or a Subsidiary that have been distributed pro
rata to stockholders) of any securities of the Corporation or any Subsidiary
to any Related Person in exchange for cash, securities or other property (or
a combination thereof) having an aggregate Fair Market Value of $1,000,000
or more, or (d) the adoption of any plan or proposal proposed by or on
behalf of a Related Person for the liquidation or dissolution of the
Corporation, or (e) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or any merger
or consolidation of the Corporation with or into any of its Subsidiaries or
any similar transaction (whether or not with or into or otherwise involving
a Related Person) that has the effect, directly or indirectly, of increasing
by more than one percent (1%) the proportionate share of the outstanding
shares of any class of equity or convertible securities of the Corporation
or any Subsidiary that are directly or indirectly owned by any Related
Person.
D. "Continuing Director" means, as to any Related Person, any member of the
Board of Directors of the Corporation (the "Board") who (i) is unaffiliated
with and is not the Related Person and (ii) was a member of the Board of
Directors of WTC prior to the Effective Time or thereafter became a member
of the Board prior to the time that the Related Person became a Related
Person, and any successor of a Continuing Director who is recommended to
succeed a Continuing Director by a majority of Continuing Directors then on
the Board.
E. "Disinterested Shares" means, as to any Related Person, shares of Voting
Stock that are Beneficially Owned and owned of record by stockholders other
than such Related Person.
F. "Effective Time" means the time at which the merger between WTC and WTC
Interim Bank, a Delaware corporation and a then wholly-owned subsidiary of
the Corporation, becomes effective.
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G. "Fair Market Value" means: (a) in the case of shares of stock and other
securities, the highest closing sale price during the thirty (30) day period
immediately preceding and including the date in question of a share of such
stock or other security, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on which
such stock or other security is listed or admitted to trading, or, if such
stock or other security is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock or other
security during the thirty (30) day period preceding and including the date
in question on the National Association of Securities Dealers, Inc.
Automated Quotation System or any other quotation reporting system then in
general use, or, if no such quotations are available, the fair market value
on the date in question of a share of such stock or other security as
determined by the Board in good faith; and (b) in the case of property other
than stock or other securities, the fair market value of such property on
the date in question as determined by the Board in good faith.
H. A "person" shall mean any individual, firm, corporation, partnership or
other entity.
I. "Related Person" means and includes (1) any individual, corporation,
partnership or other person or entity, or any group of two or more of the
foregoing that act together or have agreed to act together, that, together
with its or their Affiliates and Associates, Beneficially Owns, directly or
indirectly, in the aggregate, ten percent (10%) or more of the combined
voting power of the then-outstanding shares of Voting Stock, and any
Affiliate or Associate of any such individual, firm, corporation,
partnership or other person or entity; (2) an Affiliate of the Corporation
that at any time within two years prior thereto Beneficially Owned, directly
or indirectly, ten percent (10%) or more of the combined voting power of the
outstanding shares of Voting Stock; or (3) an assignee of or successor to
any shares of capital stock of the Corporation that were at any time within
two years prior thereto Beneficially Owned by any Related Person, if such
assignment or succession shall have occurred other than pursuant to a
"public offering" within the meaning of the Securities Act of 1933, as
amended; provided, however, that the term "Related Person" shall not include
the Corporation, any Subsidiary, WTC, any employee benefit plan or employee
stock plan of the Corporation or of any Subsidiary, or any person or entity
organized, appointed, established or holding Voting Stock for or pursuant to
the terms of any such plan, nor shall such term encompass shares of Voting
Stock held by any of the foregoing (whether or not held in a fiduciary
capacity or otherwise).
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J. "Subsidiary" means any corporation or other entity of which the Corporation
owns, directly or indirectly, securities that entitle the Corporation to
elect a majority of the board of directors or other persons performing
similar functions of such corporation or entity or that otherwise give to
the Corporation the power to control such corporation or entity including,
but not limited to, WTC (after the Effective Time).
K. "Voting Stock" means all outstanding shares of capital stock of the
Corporation that pursuant to or in accordance with this Restated Certificate
of Incorporation are entitled to vote generally in the election of directors
of the Corporation, and each reference herein, where appropriate, to a
percentage or portion of shares of Voting Stock shall refer to such
percentage or portion of the voting power of such shares entitled to vote.
The outstanding shares of Voting Stock shall include shares owned through
application of Paragraph B of Article II of this Restated Certificate of
Incorporation, where applicable, but shall not otherwise include any other
shares of Voting Stock that may be issuable pursuant to any agreement, or
upon the exercise or conversion of any rights, warrants or options or
otherwise.
L. "WTC" shall mean Wilmington Trust Company, a Delaware banking corporation.
ARTICLE III
Registered Office
The address of the registered office of the Corporation in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New Castle,
19890, and the name of its registered agent at that address is Wilmington Trust
Corporation.
ARTICLE IV
Business
The nature of the business and the purposes to be conducted or promoted by the
Corporation are to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware (the
"General Corporation Law").
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ARTICLE V
Authorized Capital Stock
A. The Corporation shall be authorized to issue a total of One Hundred
Fifty-One Million (151,000,000) shares of capital stock divided into two
classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock"; the total number of shares of Common Stock that the
Corporation shall have authority to issue shall be One Hundred Fifty Million
(150,000,000), and each such share shall have a par value of $1.00; and the
total number of shares of Preferred Stock that the Corporation shall have
the authority to issue shall be One Million (1,000,000), and each such share
shall have a par value of $1.00.
B. Shares of Preferred Stock may be issued from time to time in one or more
series as may from time to time be determined by the Board, each of said
series to be distinctly designated. The voting powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions thereof, if any, of each such
series may differ from those of any and all other series of Preferred Stock
at any time outstanding, and the Board is hereby expressly granted authority
to fix or alter, by resolution or resolutions, the designation, number,
voting powers, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations and restrictions
thereof, of each such series, including, but without limiting the generality
of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock that shall constitute, such series, which number
(except where otherwise provided by the Board in the resolution
establishing such series) may be increased or decreased (but not below
the number of shares of such series then outstanding) from time to time
by like action of the Board;
(2) The rights in respect of dividends, if any, of such series of
Preferred Stock, the extent of the preference or relation, if any, of
such dividends to the dividends payable on any other class or classes
or any other series of the same or other class or classes of capital
stock of the Corporation, and whether such dividends shall be
cumulative or noncumulative;
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(3) The right, if any, of the holders of such series of Preferred
Stock to convert the same into, or exchange the same for, shares of any
other class or classes or of any other series of the same or any other
class or classes of capital stock of the Corporation, and the terms and
conditions of such conversion or exchange;
(4) Whether or not shares of such series of Preferred Stock shall be
subject to redemption, and the redemption price or prices and the time
or times at which, and the terms and conditions on which, shares of
such series of Preferred Stock may be redeemed;
(5) The rights, if any, of the holders of such series of Preferred
Stock upon the voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation or in the event of any merger or
consolidation of or sale of assets by the Corporation;
(6) The terms of any sinking fund or redemption or purchase account,
if any, to be provided for shares of such series of the Preferred
Stock; and
(7) The voting powers, if any, of the holders of any series of
Preferred Stock generally or with respect to any particular matter,
which may be less than, equal to or greater than one vote per share,
and which may, without limiting the generality of the foregoing,
include the right, voting as a series by itself or together with the
holders of any other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation generally or under such specific circumstances and on such
conditions, as shall be provided in the resolution or resolutions of
the Board adopted pursuant hereto, including, without limitation, in
the event there shall have been a default in the payment of dividends
on or redemption of any one or more series of Preferred Stock.
C. (1) After the provisions with respect to preferential dividends on any
series of Preferred Stock (fixed in accordance with the provisions of
Paragraph B of this Article V), if any, shall have been satisfied and after
the Corporation shall have complied with all the requirements, if any, with
respect to redemption of, or the setting aside of sums as sinking funds or
redemption or purchase accounts with respect to, any series of Preferred
Stock (fixed in accordance with the provisions of Paragraph B of this
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Article V), and subject further to any other conditions that may be fixed in
accordance with the provisions of Paragraph B of this Article V, then and
not otherwise the holders of Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board.
(2) In the event of the voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, after distribution in full of the
preferential amounts, if any (fixed in accordance with the provisions of
Paragraph B of this Article V), to be distributed to the holders of
Preferred Stock by reason thereof, the holders of Common Stock shall,
subject to the additional rights, if any (fixed in accordance with the
provisions of Paragraph B of this Article V), of the holders of any
outstanding shares of Preferred Stock, be entitled to receive all of the
remaining assets of the Corporation, tangible and intangible, of whatever
kind available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law, and subject to the
provisions of such resolution or resolutions as may be adopted by the Board
pursuant to Paragraph B of this Article V granting the holders of one or
more series of Preferred Stock exclusive voting powers with respect to any
matter, each holder of Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon by the stockholders.
(4) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the combined
voting power of the then-outstanding shares of Voting Stock, voting together
as a single class.
ARTICLE VI
Election of Directors
A. The business and affairs of the Corporation shall be conducted and managed
by, or under the direction of, the Board. Except as otherwise provided for
or fixed pursuant to the provisions of Article V of this Restated
Certificate of Incorporation relating to the rights of the holders of any
series of Preferred Stock to elect additional directors, the total number of
directors constituting the entire Board shall be not less than one (1) nor
more than twenty-five (25), with the then-authorized number of directors
being fixed from time to time by or pursuant to a resolution passed by the
Board.
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B. The Board, other than those directors elected by the holders of any series
of Preferred Stock as provided for or fixed pursuant to the provisions of
Article V of this Restated Certificate of Incorporation, shall be divided
into three classes, as nearly equal in number as the then-authorized number
of directors constituting the Board permits, with the term of office of one
class expiring each year and with each director serving for a term ending at
the third annual meeting of stockholders of the Corporation following the
annual meeting at which such director was elected.
C. Except as otherwise provided for or fixed pursuant to the provisions of
Article V of this Restated Certificate of Incorporation relating to the
rights of the holders of any series of Preferred Stock to elect additional
directors, and subject to the provisions hereof, newly created directorships
resulting from any increase in the authorized number of directors, and any
vacancies on the Board resulting from death, resignation, disqualification,
removal, or other cause, may be filled only by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class
of directors in which the new directorship was created or in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified, subject to his earlier death, disqualification,
resignation or removal. No decrease in the number of directors constituting
the Board shall shorten the term of any incumbent director.
D. During any period when the holders of any series of Preferred Stock have the
right to elect additional directors as provided for or fixed pursuant to the
provisions of Article V of this Restated Certificate of Incorporation, then
upon commencement and for the duration of the period during which such right
continues (i) the then otherwise total authorized number of directors of the
Corporation shall automatically be increased by such specified number of
directors, and the holders of such Preferred Stock shall be entitled to
elect the additional directors so provided for or fixed pursuant to said
provisions, and (ii) each such additional director shall serve until such
director's successor shall have been duly elected and qualified, or until
such director's right to hold such office terminates pursuant to said
provisions, whichever occurs earlier, subject to his earlier death,
disqualification, resignation or removal. Except as otherwise provided by
the Board in the resolution or resolutions establishing such series,
whenever the holders of any series of Preferred Stock having such right to
elect additional directors are divested of such right pursuant to the
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provisions of such stock, the terms of office of all such additional
directors elected by the holders of such stock, or elected to fill any
vacancies resulting from the death, resignation, disqualification or removal
of such additional directors, shall forthwith terminate and the total and
authorized number of directors of the Corporation shall be reduced
accordingly.
E. Except for such additional directors, if any, as are elected by the holders
of any series of Preferred Stock as provided for or fixed pursuant to the
provisions of Article V of this Restated Certificate of Incorporation, any
director may be removed from office only for cause and only by the
affirmative vote of the holders of seventy-five percent (75%) or more of the
combined voting power of the then-outstanding shares of Voting Stock at a
meeting of stockholders called for that purpose, voting together as a single
class.
ARTICLE VII
Meetings of Stockholders
A. Meetings of stockholders of the Corporation may be held within or without
the State of Delaware, as the Bylaws of the Corporation may provide. Except
as otherwise provided for or fixed pursuant to the provisions of Article V
of this Restated Certificate of Incorporation relating to the rights of the
holders of any series of Preferred Stock, special meetings of stockholders
of the Corporation may be called only by the Chairman of the Board, the
President or the Board pursuant to a resolution adopted by a majority of the
then-authorized number of directors of the Corporation; provided, however,
that where such special meeting of stockholders is called for the purpose of
acting upon a proposal made by or on behalf of a Related Person or, at any
time that one or more Related Persons exist, by or at the request of a
director who is not a Continuing Director as to all Related Persons, or
where a Related Person otherwise seeks action requiring approval of
stockholders, then, in addition to the aforesaid vote of directors, the
affirmative vote of a majority of the Continuing Directors, if any, shall
also be required to call such special meeting of stockholders. Special
meetings of stockholders may not be called by any other person or persons or
in any other manner. Elections of directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide.
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B. In addition to the powers conferred on the Board by this Restated
Certificate of Incorporation and by the General Corporation Law, and without
limiting the generality thereof, the Board is specifically authorized from
time to time, by resolution of the Board without additional authorization by
the stockholders of the Corporation, to adopt, amend or repeal the Bylaws of
the Corporation, in such form and with such terms as the Board may
determine, including, without limiting the generality of the foregoing,
Bylaws relating to (i) regulation of the procedure for submission by
stockholders of nominations of persons to be elected to the Board, (ii)
regulation of the attendance at annual or special meetings of the
stockholders of persons other than holders of record or their proxies, and
(iii) regulation of the business that may properly be brought by a
stockholder of the Corporation before an annual or special meeting of
stockholders of the Corporation.
ARTICLE VIII
Stockholder Consent
Except as otherwise provided for or fixed pursuant to the provisions of Article
V of this Restated Certificate of Incorporation relating to the rights of the
holders of any series of Preferred Stock, no action required to be taken or that
may be taken at any annual or special meeting of stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders of the
Corporation to consent in writing, without a meeting, to the taking of any
action is specifically denied.
ARTICLE IX
Factors to Consider
The Board, when evaluating any proposed transaction that would result in a
person or entity becoming a Related Person, or in a Related Person increasing
his ownership of capital stock of the Corporation, or any transaction or any
proposed transaction with any other party, whether or not such other party is a
Related Person, that would constitute a Business Combination if the other party
to the transaction were or would thereby become a Related Person, may, to the
fullest extent permitted by law, give due consideration to the independence and
integrity of the Corporation's operations, and the social, economic and
environmental effects on the stockholders, employees, customers, suppliers and
other constituents of the Corporation and its Subsidiaries and on the
communities in which the Corporation and its Subsidiaries operate or are located
or that they serve.
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ARTICLE X
Limitation of Liability
A director of this Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law as the same exists or may hereafter
be amended.
Any repeal or modification of the foregoing paragraph shall not adversely affect
any right or protection of a director of the Corporation existing hereunder with
respect to any act or omission occurring prior to such repeal or modification.
ARTICLE XI
Executive Committee
The Board, pursuant to the Bylaws of the Corporation or by resolution passed by
a majority of the then-authorized number of directors, may designate any of
their number to constitute an Executive Committee, which Executive Committee, to
the fullest extent permitted by law and provided for in said resolution or in
the Bylaws of the Corporation, shall have and may exercise all of the powers of
the Board in the management of the business and affairs of the Corporation, and
shall have power to authorize the seal of the Corporation to be affixed to all
papers that may require it.
ARTICLE XII
Business Combinations
A. In addition to any affirmative vote required by law, and except as otherwise
expressly provided in Paragraph B of this Article XII, a Business
Combination shall require the affirmative vote of the holders of
seventy-five percent (75%) or more of the combined voting power of the
then-outstanding shares of Voting Stock, voting together as a single class.
Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that some lesser percentage may be specified, by
law or in any agreement with any national securities exchange or otherwise.
B. The provisions of Paragraph A of this Article XII shall not be applicable to
any particular Business Combination, and such Business Combination shall
require only such affirmative vote as is required by law and any other
provisions of this Restated Certificate of Incorporation or the Bylaws, if
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there are one or more Continuing Directors then in office and if such
Business Combination has been approved by the Board by (i) the affirmative
vote of at least a majority of the then-authorized number of directors and
(ii) the affirmative vote of at least a majority of the Continuing Directors
then in office.
ARTICLE XIII
Amendment Of Corporate Documents
A. RESTATED CERTIFICATE OF INCORPORATION. In addition to any affirmative vote
required by applicable law and in addition to any vote of the holders of any
series of Preferred Stock provided for or fixed pursuant to the provisions
of Article V of this Restated Certificate of Incorporation, any alteration,
amendment, repeal or rescission (a "Change") of any provision of this
Restated Certificate of Incorporation must be approved by at least a
majority of the then-authorized number of directors and by the affirmative
vote of the holders of at least a majority of the combined voting power of
the then-outstanding shares of Voting Stock, voting together as a single
class; provided, however, that if any such Change relates to Articles II, V,
VI, VII, VIII, IX, X or XII hereof or to this Article XIII, such Change must
also be approved by the affirmative vote of the holders of at least
seventy-five percent (75%) of the combined voting power of the
then-outstanding shares of Voting Stock, voting together as a single class
and, if at the time there exist one or more Related Persons, such Change
must also be approved by the affirmative vote of the holders of at least a
majority of the combined voting power of the Disinterested Shares; provided
further, however, that the vote(s) required by the immediately preceding
proviso shall not be required if such Change has been first approved by at
least two-thirds of the then-authorized number of directors and, if at the
time there exist one or more Related Persons, by a majority of the
Continuing Directors then in office, if any.
Subject to the provisions hereof, the Corporation reserves the right at any
time, and from time to time, to amend, alter, repeal or rescind any
provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by law, and other provisions authorized
by the laws of the State of Delaware at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
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directors or any other persons whomsoever by and pursuant to this Restated
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the rights reserved in this article.
B. BYLAWS. In addition to any affirmative vote required by law, any Change of
the Bylaws of the Corporation may be adopted either (i) by the Board by the
affirmative vote of at least a majority of the then-authorized number of
directors and, if at the time there exist one or more Related Persons, by
the affirmative vote of at least a majority of the Continuing Directors then
in office, if any, or (ii) by the stockholders by the affirmative vote of
the holders of at least seventy-five percent (75%) of the combined voting
power of the then-outstanding shares of Voting Stock, voting together as a
single class and, if at the time there exist one or more Related Persons, by
the affirmative vote of the holders of at least a majority of the combined
voting power of the Disinterested Shares.
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BY-LAWS
WILMINGTON TRUST CORPORATION
ARTICLE 1
STOCKHOLDERS' MEETINGS
Section 1. ANNUAL MEETING. The annual meeting of the stockholders shall be
held on the third Thursday in April in each year at the principal office of the
Corporation or at such other date, time or place as may be designated by
resolution of the Board of Directors.
Section 2. SPECIAL MEETINGS. Subject to the provisions of the Restated
Certificate of Incorporation (the "Restated Certificate"), special meetings of
the stockholders may be called only by the Chairman of the Board of Directors,
the President, or by the Board of Directors pursuant to a resolution adopted by
a majority of the then-authorized number of directors.
Section 3. NOTICE. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder, at least ten (10) days, or such greater
number of days as shall be required by law, before said meeting, at his last
known address, a written or printed notice fixing the time and place of such
meeting.
Section 4. QUORUM. The presence in person or by proxy of the holders of a
majority of the voting power of the then-outstanding shares of Voting Stock (as
defined in the Restated Certificate) on the record date, as herein determined,
shall constitute a quorum at all meetings of stockholders for the transaction of
any business, but, in the absence of a quorum, the holders of a smaller number
of shares of Voting Stock may adjourn a meeting from time to time, without
further notice (unless otherwise required herein or by law), until a quorum is
secured. Unless otherwise provided in the Restated Certificate, at each annual
or special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each share of Common Stock registered in
the stockholder's name on the books of the Corporation on the record date for
any such meeting as determined herein.
Section 5. ADJOURNMENT. Any meeting of stockholders, annual or special, may
adjourn from time to time to reconvene at the same or some other place, and,
unless otherwise required by law and subject to the provisions hereof, notice
need not be given of any such adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business that might have been
<PAGE>
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 6. PROCEDURES. Meetings of stockholders shall be presided over by
the Chairman of the Board or in his absence by the President, or in his absence
by a Vice President, or in the absence of the foregoing persons by a chairman
designated by the Board of Directors, or in the absence of such designation by a
chairman chosen at the meeting. The Secretary of the Corporation shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting by the person presiding over the meeting. The Board of Directors of
the Corporation may adopt by resolution such rules and regulations for the
conduct of the meeting of stockholders as it shall deem appropriate. Except to
the extent inconsistent with such rules and regulations as adopted by the Board
of Directors, the chairman of any meeting of stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) rules and procedures for maintaining
order at the meeting and the safety of those present; (iii) limitations on
attendance at or participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
Unless, and to the extent determined by the Board of Directors or the chairman
of the meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
Section 7. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy,
but no such proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. A duly executed proxy shall be
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irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the corporation. Voting at meetings of stockholders need not be by written
ballot. At all meetings of stockholders for the election of directors a
plurality of the voting power of the Voting Stock present at the meeting shall
be sufficient to elect. All other elections and questions shall, unless
otherwise provided by law, the Restated Certificate or these Bylaws, be decided
by the vote of the holders of shares of stock having a majority of the voting
power of the then-outstanding shares of Voting Stock.
Section 8. NOMINATIONS. Except for directors elected by the holders of any
series of Preferred Stock as provided for or fixed pursuant to the provisions of
Article V of the Restated Certificate, or for directors otherwise elected
pursuant to the provisions of Section C of Section VI of the Restated
Certificate, only individuals nominated for election to the Board of Directors
pursuant to and in accordance with the provision of this Section 8 may be
elected to and may serve upon the Board of Directors of the Corporation. Subject
to the rights of holders of any series of Preferred Stock of the Corporation to
elect directors under specified circumstances, nominations for the election of
directors may be made only (i) by or at the direction of the Board of Directors
or (ii) by any stockholder of record entitled to vote in the election of
directors generally who complies with the procedures set forth in this Section
8. Subject to the foregoing, only a stockholder of record entitled to vote in
the election of directors generally may nominate persons for election as a
director at a meeting of stockholders and only if written notice of such
stockholder's intent to make a nomination or nominations has been given, either
by personal delivery or by United States mail, postage prepaid, to the Secretary
of the Corporation and has been received by the Secretary not later than the
following dates: (i) with respect to an election to be held at an annual meeting
of stockholders, sixty (60) days in advance of such meeting if such meeting is
to be held on a day that is within thirty (30) days preceding the anniversary of
the previous year's annual meeting, or ninety (90) days in advance of such
meeting if such meeting is to be held on or after the anniversary of the
previous year's annual meeting; and (ii) with respect to an election to be held
at a special meeting of stockholders for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first mailed by the Corporation to stockholders.
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Each such notice shall set forth:
(a) the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice;
(c) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; and
(d) such other information regarding each nominee proposed by such stockholder
as would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the Board of Directors.
To be effective, each notice of intent to make a nomination given hereunder
shall be accompanied by the written consent of each nominee to serve as a
director of the Corporation if elected.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not properly brought before the
meeting in accordance with the provisions hereof and, if he should so determine,
he shall declare to the meeting that such nomination was not properly brought
before the meeting and shall not be considered.
For purposes of this Section 8, any adjournment(s) or postponement(s) of
the original meeting of stockholders whereby the meeting will reconvene within
thirty (30) days from the original date shall be deemed for purposes of notice
to be a continuation of the original meeting, and no nominations by a
stockholder of persons to be elected directors of the Corporation may be made at
any such reconvened meeting unless such notice of such nomination was timely
given to the Secretary of the Corporation for the meeting as originally
scheduled. Notwithstanding the foregoing, nothing in this Section 8 shall be
interpreted or construed to require the inclusion of information about any such
nominee in any proxy statement distributed by, at the direction of, or on behalf
of the Board or the Corporation.
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Section 9. PROPER BUSINESS. At a meeting of the stockholders, only such
business shall be conducted as shall be a proper subject for the meeting and
shall have been properly brought before the meeting. To be properly brought
before a meeting, business must (a) be specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise be properly brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise (i) be properly requested to be brought
before the meeting by a stockholder of record entitled to vote in the election
of directors generally in accordance with the provisions of this Section 9; and
(ii) constitute a proper subject to be brought before such meeting. For business
to be properly brought before a meeting of stockholders, any stockholder who
intends to bring any matter (other than the election of directors) before a
meeting of stockholders and is entitled to vote on such matter must deliver
written notice of such stockholder's intent to bring such matter before the
meeting of stockholders, either by personal delivery or by United States mail,
postage prepaid, to the Secretary of the Corporation. Such notice must be
received by the Secretary not later than, with respect to an annual meeting of
stockholders, sixty (60) days in advance of such meeting if such meeting is to
be held on a day which is within thirty (30) days preceding the anniversary of
the previous year's meeting, or ninety (90) days in advance of such meeting if
such meeting is to be held on or after the anniversary of the previous year's
meeting; and with respect to any other meeting of stockholders, the close of
business on the tenth day following the date of public disclosure of the date of
such meeting. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting of stockholders (a)
a brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the Corporation that are
owned by the stockholder, and (d) any material interest of the stockholder in
such business. No business shall be conducted at a meeting of stockholders
except in accordance with the procedures set forth in this Section 9.
The chairman of a meeting shall, if the facts warrant, determine and
declare to the meeting that (i) the business proposed to be brought before a
meeting is not a proper subject therefor and/or (ii) such business was not
properly brought before the meeting in accordance with the provisions hereof
and, if he should so determine, he shall declare to the meeting that (i) the
business proposed to be brought before a meeting is not a proper subject
therefor and/or (ii) such
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business was not properly brought before the meeting and shall not be
transacted.
For purposes of this Section 9, any adjournment(s) or postponement(s) of
the original meeting of stockholders whereby the meeting will reconvene within
thirty (30) days from the original date shall be deemed for purposes of notice
to be a continuation of the original meeting, and no business may be brought
before any reconvened meeting unless such notice of such business was timely
given to the Secretary of the Corporation for the meeting as originally
scheduled. Notwithstanding the foregoing, nothing in this Section 9 shall be
interpreted or construed to require the inclusion of information about any such
proposal in any proxy statement distributed by, at the direction of, or on
behalf of the Board or the Corporation.
Section 10. STOCKHOLDER LIST. The Secretary shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 11. PROPER BUSINESS - SPECIAL MEETING. At any special meeting of
stockholders, only such business shall be conducted as shall have been stated in
the notice of such meeting.
Section 12. INSPECTORS OF ELECTION. The Corporation shall, in advance of
any meeting of stockholders, appoint one or more inspectors of election, who may
be employees of the Corporation, to act at the meeting or any adjournment
thereof and to make a written report thereof. The Corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. In the event that no inspector so appointed or designated is able to act at
a meeting of stockholders, the person presiding at the meeting shall appoint one
or more inspectors to act at the meeting. Each inspector, before entering upon
the discharge of his or her duties, shall take and sign an oath to execute
faithfully the duties of inspector with strict impartiality and according to the
best of his or her ability.
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The inspector or inspectors so appointed or designated shall (i) ascertain
the number of shares of capital stock of the Corporation outstanding and the
voting power of each such share, (ii) determine the shares of capital stock of
the Corporation represented at the meeting and the validity of proxies and
ballots, (iii) count all votes and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors, and (v) certify their determination of the
number of shares of capital stock of the Corporation represented at the meeting
and such inspectors' count of all votes and ballots. Such certification and
report shall specify such other information as may be required by law. In
determining the validity and counting of proxies and ballots cast at any meeting
of stockholders of the Corporation, the inspectors may consider such information
as is permitted by applicable law. No person who is a candidate for an office at
an election may serve as an inspector at such election.
ARTICLE 2
Directors
---------
Section 1. MANAGEMENT. The affairs and business of the Corporation shall be
managed by or under the direction of the Board of Directors.
Section 2. NUMBER. The authorized number of directors that shall constitute
the Board of Directors shall be fixed from time to time by or pursuant to a
resolution passed by a majority of the Board within the parameters set by the
Restated Certificate.
Section 3. QUALIFICATION. Except as provided in these Bylaws or as
otherwise required by law, there shall be no qualifications for directors of the
Corporation. To be qualified for nomination for election or appointment to the
Board of Directors (i) each person shall own in his own right not less than one
hundred shares of Common Stock of the Corporation, and (ii) except for
individuals who were directors of Wilmington Trust Company on or prior to
September 16, 1971, each person must have not attained the age of seventy-two
years at the time of such nomination or appointment.
Section 4. MEETINGS. The Board of Directors shall meet at the principal
office of the Corporation or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Board of Directors or the President.
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Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board of Directors or by the
President, and shall be called upon the written request of a majority of the
then-authorized number of directors.
Section 6. QUORUM. Unless otherwise prohibited by law, a majority of the
directors elected and qualified shall be necessary to constitute a quorum for
the transaction of business at any meeting of the Board of Directors.
Section 7. NOTICE. Written notice of any special meeting of the Board of
Directors, and of any change in the time or place of any regular meeting of the
Board of Directors, shall be sent by mail to each director addressed to him at
his residence or usual place of business, which shall be mailed not less than
two days before the day such meeting is to be held, or shall be sent to him at
such place by telegram, cablegram or other means of electronic transmission, or
shall be given to him personally or by telephone, not later than the day before
the day on which the meeting is to be held. Such notice shall state the time and
place of such meeting, but need not state the purpose or purposes for which the
meeting is called, unless otherwise required by statute.
Section 8. VACANCIES. Subject to the provisions of the Restated
Certificate, newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal or other cause shall be filled only by
the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum. Any director elected pursuant hereto shall hold
office for the remainder of the full term of the class of directors in which the
new directorship was created or in which the vacancy occurred, and until such
director's successor shall have been elected and qualified.
Section 9. ORGANIZATION MEETING. The Board of Directors at its first
meeting after the annual stockholders meeting shall appoint an Executive
Committee, an Audit Committee, and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such meeting
a Secretary and a Treasurer who may be the same person and may appoint at any
time such other committees and elect or appoint such other officers as it may
deem advisable.
Section 10. REMOVAL. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
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Section 11. RESPONSIBILITY OF OFFICERS. The Board of Directors may
designate an officer to be in charge of such of the departments or divisions of
the Corporation as it may deem advisable.
ARTICLE 3
COMMITTEES OF THE BOARD OF DIRECTORS
Section 1. EXECUTIVE COMMITTEE.
(A) COMPOSITION. The Executive Committee shall be
composed of not more than nine members who shall be
selected by the Board of Directors from its own
members and who shall hold office at the pleasure of
the Board.
(B) POWERS. The Executive Committee shall have and
may exercise, to the fullest extent permitted by law,
all the powers of the Board of Directors when it is
not in session in the management of the business and
affairs of the Corporation to transact all business
for and on behalf of the Corporation that may be
brought before it.
(C) MEETINGS. The Executive Committee shall meet at
the principal office of the Corporation or elsewhere
in its discretion at such times to be determined by a
majority of its members. A majority of its members
shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the
Executive Committee may be held at any time when a
quorum is present.
(D) MINUTES. Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of
Directors at its next meeting.
(E) SUPERVISION OF INVESTMENT. The Executive
Committee shall advise and oversee all investments
that may be made of the funds of the Corporation and
shall direct all disposal of the same, in accordance
with such rules and regulations as the Board of
Directors may from time to time make.
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(F) EMERGENCY PROCEDURES. In the event of an
emergency of sufficient severity to prevent the
conduct and management of the affairs and business of
the Corporation by its directors and officers as
contemplated by these Bylaws, any two available
members of the Executive Committee as constituted
immediately prior to such emergency shall constitute
a quorum of that Committee for the full conduct and
management of the affairs and business of the
Corporation in accordance with the provisions of
Article 3 of these Bylaws. In the event of the
unavailability, at such time, of a minimum of two
members of such Executive Committee, any three
available directors shall constitute the Executive
Committee for the full conduct and management of the
affairs and business of the Corporation in accordance
with the foregoing provisions of this Section. This
Bylaw shall be subject to implementation by
resolutions of the Board of Directors presently
existing or hereafter passed from time to time for
that purpose, and any provisions of these Bylaws
(other than this Section) and any resolutions which
are contrary to the provisions of this Section or to
the provisions of any such implementory resolutions
shall be suspended during such emergency period until
it shall be determined by any interim Executive
Committee acting under this Section that it shall be
to the advantage of the Corporation to resume the
conduct and management of its affairs and business
under all of the other provisions of these Bylaws.
Section 2. AUDIT COMMITTEE
---------------
(A) COMPOSITION. The Audit Committee shall be
composed of five members who shall be selected by the
Board of Directors from its own members, none of whom
shall be an officer of the Corporation, and shall
hold office at the pleasure of the Board.
(B) POWERS. The Audit Committee shall have general
supervision over the Audit Division of the
Corporation in all matters however subject to the
approval of the Board of Directors. It shall consider
all matters brought to its attention by the officer
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in charge of the Audit Division, review all reports
of examination of the Corporation made by any
governmental agency or such independent auditor
employed for the purpose, and make such
recommendations to the Board of Directors with
respect thereto or with respect to any other matters
pertaining to auditing the Corporation as it shall
deem desirable.
(C) MEETINGS. The Audit Committee shall meet whenever
and wherever the majority of its members shall deem
it to be proper for the transaction of its business,
and a majority of the Committee shall constitute a
quorum.
Section 3. COMPENSATION COMMITTEE.
----------------------
(A) COMPOSITION. The Compensation Committee shall be
composed of not more than five (5) members who shall
be selected by the Board of Directors from its own
members who are not officers of the Corporation and
who shall hold office at the pleasure of the Board.
(B) POWERS. The Compensation Committee shall in
general advise upon all matters of policy concerning
the Corporation brought to its attention by the
management and from time to time review with the
management of the Corporation major organizational
matters, including salaries and employee benefits.
(C) MEETINGS. Meetings of the Compensation Committee
may be called at any time by the Chairman of the
Compensation Committee, the Chairman of the Board of
Directors, or the President and the Corporation.
Section 4. ASSOCIATE DIRECTORS.
-------------------
(A) ELIGIBILITY. Any person who has served as a
director of the Corporation or its principal
subsidiary may be elected by the Board of Directors
as an associate director, to serve during the
pleasure of the Board.
(B) POWERS. An associate director shall be entitled
to attend all meetings of directors and participate
in the discussion of all matters brought to the
Board, but will not have a right to vote.
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Section 5. ABSENCE OR DISQUALIFICATION OF ANY MEMBER OF A
COMMITTEE.
-------------------------------------------------
In the absence or disqualification of any member of
any Committee created under Article 3 of the Bylaws
of this Corporation, the member or members thereof
present at any meeting and not disqualified from
voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place
of any such absent or disqualified member.
ARTICLE 4
Officers
--------
Section 1. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors
shall preside at all meetings of the Board and shall have such further authority
and powers and shall perform such duties as the Board of Directors may from time
to time confer and direct. He shall also exercise such powers and perform such
duties as may from time to time be agreed upon between himself and the President
of the Corporation.
Section 2. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board of
Directors shall preside at all meetings of the Board of Directors at which the
Chairman of the Board shall not be present and shall have such further authority
and powers and shall perform such duties as the Board of Directors or the
Chairman of the Board may from time to time confer and direct.
Section 3. PRESIDENT. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors. In the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. DUTIES. The Chairman of the Board of Directors or the President,
as designated by the Board of Directors, shall carry on into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Corporation and perform all duties incident to his office.
Section 5. VICE PRESIDENTS. There may be one or more Vice Presidents,
however denominated by the Board of Directors (including, but not limited to,
one or more Senior Vice Presidents and one or more Executive Vice Presidents)
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who may at any time perform all the duties of the Chairman of the Board of
Directors and/or the President and such other powers and duties as may from time
to time be assigned to them by the Board of Directors, the Executive Committee,
the Chairman or the President and by the officer in charge of the department or
division to which they are assigned.
Section 6. SECRETARY. The Secretary shall attend to the giving of notice of
meetings of the stockholders and of the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Corporation. Subject to the
other notice requirements of these Bylaws and as may be practicable under the
circumstances, all such notices shall be in writing and to the extent
practicable mailed well in advance of the scheduled date of any such meeting.
The Secretary shall have custody of the corporate seal and shall affix the same
to any documents requiring such corporate seal and to attest the same.
Section 7. TREASURER. The Treasurer shall have general supervision over all
assets and liabilities of the Corporation. He shall be custodian of and
responsible for all monies, funds and valuables of the Corporation and for the
keeping of proper records of the evidence of property or indebtedness and of all
transactions of the Corporation. He shall have general supervision of the
expenditures of the Corporation and shall report to the Board of Directors at
each regular meeting the condition of the Corporation, and perform such other
duties as may be assigned to him from time to time by the Board of Directors,
the Executive Committee, the Chairman of the Board or the President.
Section 8. AUDIT OFFICERS. The officer designated by the Board of Directors
to be in charge of the Audit Division of the Corporation, with such title as the
Board of Directors shall prescribe, shall report to and be directly responsible
only to the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all duties of the Auditor and such duties
as may be prescribed by the officer in charge of the Audit Division.
Section 9. OTHER OFFICERS. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as shall be
determined from time to time by the Board of Directors, who shall ex officio
hold the office Assistant Secretary of this Corporation and who may perform such
duties as may be prescribed by the officer in charge of the department or
division to which they are assigned.
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Section 10. POWERS AND DUTIES OF OTHER OFFICERS. The powers and duties of
all other officers of the Corporation shall be those usually pertaining to their
respective offices, subject to the direction of the Board of Directors, the
Executive Committee, Chairman of the Board of Directors or the President and the
officer in charge of the department or division to which they are assigned.
ARTICLE 5
Stock and Stock Certificates
----------------------------
Section 1. TRANSFER. Shares of stock shall be transferable on the books of
the Corporation, and a transfer book shall be kept in which all transfers
of stock shall be recorded.
Section 2. CERTIFICATES. Every holder of stock shall be entitled to have a
certificate signed by or in the name of the Corporation by the Chairman or Vice
Chairman of the Board of Directors, if any, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the Corporation, certifying the number of shares
owned by him in the Corporation. The corporate seal affixed thereto, and any of
or all the signatures on the certificate, may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Section 3. RECORD DATE. The Board of Directors is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment of
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, which record date shall not, unless otherwise
required by law, be more than sixty (60) nor less than ten (10) days preceding
the date of any meeting of stockholders nor more than sixty (60) days preceding
the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect.
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ARTICLE 6
Seal
----
The corporate seal of the Corporation shall be in the following form: Between
two concentric circles the words "Wilmington Trust Corporation" and within the
inner circle the words "Delaware Corporate Seal."
ARTICLE 7
Fiscal Year
-----------
The fiscal year of the Corporation shall be the calendar year.
ARTICLE 8
Execution of Instruments of the Corporation
-------------------------------------------
The Chairman of the Board, the President or any Vice President, however
denominated by the Board of Directors, shall have full power and authority to
enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or
any Assistant Secretary shall have full power and authority to attest and affix
the corporate seal of the Corporation to any and all deeds, conveyances,
assignments, releases, contracts, agreements, bonds, notes, mortgages and all
other instruments incident to the business of this Corporation without any
specific authority, ratification, approval or confirmation by the Board of
Directors or the Executive Committee, and any and all such instruments shall
have the same force and validity as though expressly authorized by the Board of
Directors and/or the Executive Committee.
ARTICLE 9
Compensation of Directors and Members of Committees
---------------------------------------------------
Directors and associate directors of the Corporation, other than salaried
officers of the Corporation, shall be paid such reasonable honoraria or fees for
attending meetings of the Board of Directors or committees thereof as the Board
of Directors may from time to time determine. Directors and associate directors
may be employed by the Corporation for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.
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ARTICLE 10
Indemnification
---------------
Section 1. PERSONS COVERED. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation, or is
or was serving at the written request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall be required to
indemnify a person in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was authorized by the
Board of Directors.
Section 2. ADVANCE OF EXPENSES. The Corporation may pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance of
its final disposition, PROVIDED, HOWEVER, that the payment of expenses incurred
by a director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under this Article or
otherwise.
Section 3. CERTAIN RIGHTS. If a claim for indemnification or payment of
expenses under this Article is not paid in full within sixty (60) days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.
Section 4. NON-EXCLUSIVE. The rights conferred on any person by this
Article 10 shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Restated Certificate,
these Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise.
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Section 5. REDUCTION OF AMOUNT. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit entity.
Section 6. EFFECT OF MODIFICATION. Any amendment, repeal or modification of
the foregoing provisions of this Article 10 shall not adversely affect any right
or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such amendment, repeal or modification.
ARTICLE 11
Amendments to the Bylaws
------------------------
Subject to the provisions of the Restated Certificate, and in addition to any
affirmative vote required by law, any alteration, amendment, repeal or
rescission (any "Change") of these Bylaws must be approved either (i) by a
majority of the then-authorized number of directors and, if one or more Related
Persons (as defined in the Restated Certificate) exist, by a majority of the
Continuing Directors (as defined in the Restated Certificate) or (ii) by the
affirmative vote of the holders of not less than seventy-five percent (75%) or
more of the combined voting power of the then-outstanding shares of Voting
Stock, voting together as a single class and, if the Change is proposed by or on
behalf of a Related Person or, at any time that one or more Related Persons
exist, by a director who is not a Continuing Director as to all Related Persons,
such Change must also be approved by the affirmative vote of the holders of a
majority or more of the combined voting power of the Disinterested Shares (as
defined in the Restated Certificate).
Subject to the foregoing, the Board of Directors of the Corporation is expressly
authorized to make, alter, amend, repeal or rescind the Bylaws of the
Corporation.
17
EXHIBIT 4.2
WILMINGTON TRUST CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of the Wilmington Trust Corporation 1996 Employee
Stock Purchase Plan (the "Plan") is to provide all regular employees of
Wilmington Trust Corporation (the "Corporation") and all regular employees of
those of its subsidiaries which may be designated as participating companies by
the Corporation's Board of Directors from time to time, an opportunity to
purchase shares of the Corporation's common stock, par value $1 per share
("Common Stock"), through annual offerings to be made from time to time for the
duration of the Plan; and to foster interest in the Corporation's success,
growth and development. It is the Corporation's intention that the Plan qualify
as an "Employee Stock Purchase Plan" within the meaning of Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall, accordingly, be construed to extend and limit participation in a
manner consistent with the requirements of that Section of the Code.
2. DEFINITIONS.
Unless otherwise defined herein, capitalized terms used herein shall have
the following meanings:
(a) "BASE SALARY" means regular straight-time earnings, excluding payments
for overtime, incentive compensation, bonuses, and other special payments except
to the extent that the inclusion of any such item is specifically approved by
the Committee.
(b) "COMMITTEE" means the committee established pursuant to Paragraph 12
below to administer the Plan.
(c) "DATE OF OFFERING" shall be the first day of June of each Purchase
Period.
(d) "EMPLOYEE" means any person, including an officer, who is customarily
employed by an Employer for 15 hours or more per week and for more than five
months in a calendar year.
(e) "EMPLOYER" means the Corporation and any subsidiary company designated
as a participating company by the Corporation's Board of Directors, 25% or more
of the voting stock of which is owned directly or indirectly by the Corporation.
(f) "PARTICIPANT" means an Employee who has agreed to participate in an
offering and has met the requirements of Paragraph 5 below.
(g) "PURCHASE PERIOD" means each of the periods of 12 months beginning on
any June 1 and ending the following May 31 during which a Participant may
purchase Common Stock pursuant to any particular offering hereunder.
(h) "SECTION 16 OFFICERS" means officers of the Corporation and/or
Wilmington Trust Company, or of any subsidiary of either of those entities 25%
or more of the voting stock of which is owned directly or indirectly by the
Corporation and/or Wilmington Trust Company, designated as Section 16 Officers
by resolution of the Board of Directors of the respective companies from time
to time.
3. ELIGIBILITY.
(a) Any Employee shall be eligible to participate in the Plan as of June 1
coincident with or next following the completion of at least one month of
continuous service with one or more Employers, subject to the limitations
imposed by Section 423(b) of the Code.
(b) Any provision of the Plan to the contrary notwithstanding, no
Employee shall be granted an option:
(1) If, immediately after that grant, the Employee would own shares,
and/or hold outstanding options to purchase shares, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Corporation or of any subsidiary of the Corporation; or
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(2) Which permits an Employee rights to purchase shares under all
employee stock purchase plans of the Corporation and its subsidiaries to
accrue at a rate which exceeds $25,000 of the fair market value of the
Common Stock (determined at the time that option is granted) for each
calendar year in which those stock options are outstanding at any time.
4. OFFERINGS. The Corporation will make one or more annual offerings to
Employees to purchase stock hereunder. The terms and conditions of each such
offering shall specify the number of shares which may be purchased thereunder.
The fixed term of any offering shall include a Purchase Period of 12 months'
duration, during which (or during that period thereof during which an Employee
may elect to participate) the amounts received by an Employee as Base Salary
shall constitute the measure of that Employee's participation in the offering.
5. PARTICIPATION. An Employee who is, on the effective date of any
offering, eligible to participate in that offering, may so participate by
completing and forwarding a "Payroll Deduction Authorization for Purchase of
Wilmington Trust Corporation Stock" form to the designated payroll location.
Payroll deductions for a Participant shall commence on the date when the
authorization for a payroll deduction becomes effective and shall end on the
termination date of the offering to which that authorization applies, unless
terminated sooner by the Participant in accordance with Paragraph 9 below.
6. PAYROLL DEDUCTIONS. A Participant's payroll deduction authorization
shall authorize deductions each payday during a Purchase Period at a rate not to
exceed 10% of the Participant's Base Salary at the beginning of that Purchase
Period but, at a minimum, at a rate which will accumulate an amount equal to the
offering price of at least five shares by the end of the Purchase Period.
(a) All payroll deductions made for a Participant shall be credited to a
bookkeeping account under the Plan. A Participant may not make separate cash
payments into that account.
(b) A Participant may at any time prospectively decrease the amount
authorized to be deducted per pay period, provided the minimum deduction
required above is maintained. That change may not become effective sooner than
the next pay period ending after receipt of the form by the appropriate payroll
location. Notwithstanding anything to the contrary contained herein, a
Participant may reduce payroll deductions hereunder only once during any
Purchase Period.
(c) A Participant may discontinue participation in the Plan in accordance
with Paragraph 9 below.
7. GRANTING OF OPTION.
(a) In any offering hereunder, each Participant shall be granted an option,
on the Date of Offering, for as many full shares of Common Stock as is elected
to be purchased with the payroll deductions credited to the Participant's
account during the Purchase Period, based on the option price for the Purchase
Period, as described in Subparagraph 7(b) below.
(b) The option price per share of shares purchased with payroll deductions
made for a Participant during any Purchase Period shall be the lower of:
(1) Eighty-five percent of the last sale price of the Common Stock on
the first day of the Purchase Period or, if there was no such reported sale
of Common Stock on that date, on the next preceding date on which there was
such a reported sale; or
(2) Eighty-five percent of the last sale price of the Common Stock on
the last day of the Purchase Period or, if there was no such reported sale
of Common Stock on that date, on the next preceding date on which there was
such a reported sale.
8. EXERCISE OF OPTION.
(a) As of the last day of the Purchase Period for any offering, the account
of each Participant shall be totaled and the option price determined. If a
Participant has sufficient funds (including interest credited on his or her
account at the rate computed in accordance with Paragraph 10 below) to purchase
five or more full shares at the option price, that Participant shall be deemed
to have exercised the option to purchase the
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number of shares for which he or she has subscribed at that price, and his or
her account shall be charged for the number of shares so purchased.
(b) Participation in an offering will not bar an Employee from
participating in any subsequent offering hereunder. Payroll deductions may be
made under each offering to the extent the Employee authorizes, subject to the
maximum and minimum limitations for that offering imposed hereby. A separate
account shall be maintained for each Participant with respect to each offering.
Any unused balance in a Participant's account at the end of a Purchase Period
shall be refunded, with interest computed in accordance with Paragraph 10 below.
(c) If a Participant does not accumulate sufficient funds in his or her
account to purchase at least five shares during a Purchase Period, the
Participant thereupon shall be deemed to have withdrawn from that offering, and
his or her account will be refunded, with interest computed in accordance with
Paragraph 10 below.
(d) The shares of Common Stock purchased by a Participant upon the exercise
of his or her option in accordance herewith shall not include fractional shares.
Amounts credited to a Participant's account which would have been used to
purchase fractional shares shall be refunded to the Participant, with interest
computed in accordance with Paragraph 10 below.
9. WITHDRAWAL.
(a) A Participant may withdraw all payroll deductions credited to an
account hereunder at any time before the end of a Purchase Period by giving the
Corporation written notice. All payroll deductions credited to that account
shall be paid to the Participant, with interest computed in accordance with
Paragraph 10 below, promptly after receipt of notice of withdrawal, and no
further payroll deductions shall be made for that Participant in respect of that
offering.
(b) An Employee's withdrawal from the Plan shall not have any effect upon
his or her eligibility to participate in any succeeding offering hereunder;
provided that Section 16 Officers who make withdrawals or otherwise cease
participation in the Plan during any Purchase Period shall be precluded from
re-participation in the Plan until the next Purchase Period which begins at
least six months after that withdrawal or cessation of participation.
(c) In the event of an Employee's retirement or other termination of
employment, no payroll deduction shall be made from any pay due and owing at
that time, and the balance in the Employee's account shall be paid to the
Employee, with interest computed in accordance with Paragraph 10 below, or, at
the Employee's election, used to purchase Common Stock in accordance with
Paragraph 8 above.
(d) In the event of an Employee's death, that Employee's beneficiary may
elect to withdraw the balance in his or her account, with interest computed in
accordance with Paragraph 10 below, or apply it to the purchase of the
appropriate number of full shares of Common Stock at a price determined in
accordance with Paragraph 7 above, using the date of death as though it were the
last day of the Purchase Period. Any balance in that account remaining after
that purchase shall be paid, with interest computed in accordance with Paragraph
10 below, to the person or persons entitled thereto in accordance with Paragraph
13 below.
10. INTEREST. Each Participant's account shall be credited with interest
at the rate in effect from time to time on statement savings accounts of
Wilmington Trust Company which may not be accessed by check.
11. STOCK.
(a) The shares to be sold to Participants hereunder are to be authorized
and unissued shares of Common Stock, or issued shares of Common Stock which the
Corporation has reacquired and holds in its treasury. The maximum number of
shares which shall be made available for sale hereunder during all offerings
shall be 500,000 shares, subject to adjustment upon changes in the Corporation's
capitalization as provided in Paragraph 15 below.
(b) None of the rights or privileges of a stockholder of the Corporation
shall exist with respect to shares purchased hereunder until the end of the
Purchase Period with respect to which those shares were acquired.
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(c) If in any offering Employees subscribe for more shares than remain
available under the Plan, the shares in that offering shall be allocated pro
rata among employees by multiplying the number of shares remaining under the
Plan by a fraction, the numerator of which is the number of shares the Employee
subscribed for in that offering and the denominator of which is the number of
shares all Employees subscribed for in that offering.
(d) Shares to be delivered to an Employee hereunder will be registered in
the Employee's name or, if directed by written notice to Wilmington Trust
Company's Personnel Division before the end of a Purchase Period, in the names
of the Employee and one other person, as joint tenants with rights of
survivorship, to the extent permitted by applicable law.
(e) Shares of Common Stock acquired by Section 16 Officers hereunder in
respect of any Purchase Period shall be held by those officers for at least six
months after the end of that Purchase Period.
12. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") consisting of not less than three members who shall be appointed by
the Corporation's Board of Directors. Each member of the Committee shall be
either a director, an officer or an Employee of an Employer. The Committee shall
be vested with full authority to make, administer and interpret rules and
regulations which it deems necessary or desirable to administer the Plan. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application hereof shall be
final, conclusive and binding upon all Participants and any and all persons
claiming under or through any Participant.
13. DESIGNATION OF BENEFICIARY. A Participant may file with Wilmington
Trust Company's Personnel Division a written designation of a beneficiary who is
to receive any shares and/or cash for the Participant's credit hereunder in the
event of that Participant's death before the delivery of those shares and/or
cash. The Participant may change that designation at any time by providing
written notice to Wilmington Trust Company's Personnel Division. Upon the death
of a Participant and receipt by Wilmington Trust Company's Personnel Division of
proof of the Participant's death and the identity and existence of a beneficiary
validly designated hereunder, the Corporation shall deliver those shares and/or
cash to that beneficiary as provided herein. In the event of a Participant's
death without a beneficiary validly designated hereunder who is living at the
time of the Participant's death, the Corporation shall deliver those shares
and/or that cash to the executor or administrator of the Participant's estate
or, if no such executor or administrator has been appointed to the Corporation's
knowledge, the Corporation may, in its discretion and in such form as the
Committee may prescribe, deliver those shares and/or that cash to the
Participant's spouse or to any one or more dependents or relatives of the
Participant or, if no spouse, dependent or relative is known to the Corporation,
then to such other person as the Committee may designate. No such designated
beneficiary shall, before the death of the Participant by whom the beneficiary
has been designated, acquire any interest in the shares and/or cash credited to
the Participant hereunder.
14. TRANSFERABILITY. No rights with respect to the exercise of an option or
to receive shares hereunder may be assigned, transferred, pledged or otherwise
disposed of by an Employee. Options granted hereunder are not transferable by an
Employee otherwise than by will or the laws of descent and distribution, and are
exercisable during an Employee's lifetime only by the Employee.
15. CHANGES IN CAPITALIZATION. The number and kind of shares subject to
outstanding options hereunder, the purchase price of those options and the
number and kind of shares available for options subsequently made available
hereunder shall be adjusted appropriately to reflect any stock dividend, stock
split, combination or exchange of the Corporation's shares, merger,
consolidation or other change in the Corporation's capitalization with a similar
substantive effect upon the Plan or options granted or to be granted hereunder.
The Committee shall have the power and sole discretion to determine the nature
and amount of the adjustment to be made in each case.
16. USE OF FUNDS. All payroll deductions received or held by an Employer
hereunder may be used by the Employer for any corporate purpose, and the
Employer shall not be obligated to segregate those payroll deductions.
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17. GOVERNMENT REGULATIONS. The Corporation's obligations to sell and
deliver the Corporation's stock hereunder are subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of that stock. The Corporation's Board of Directors may, in its
discretion, require as conditions to the exercise of any option granted
hereunder that the shares of Common Stock reserved for issuance upon the
exercise of the option have been duly listed, upon official notice of issuance,
on a stock exchange or the National Association of Securities Dealers Automated
Quotation System, and that either:
(a) A Registration Statement with respect to those shares is effective
under the Securities Act of 1933, as amended; or
(b) The Participant has represented at the time of purchase, in form and
substance satisfactory to the Corporation, that it is his or her intention to
purchase those shares for investment and not for resale or distribution.
18. AMENDMENT OR TERMINATION. Unless terminated sooner by the Corporation's
Board of Directors, the Plan shall terminate automatically as of May 31, 2000.
The Corporation's Board of Directors may terminate or amend the Plan at any
time. No such termination shall affect options previously granted hereunder. No
such amendment may make any change in any option theretofore granted hereunder
which would adversely affect the rights of any Participant, nor be made without
the prior approval of a majority of the shares of the Corporation's outstanding
stock if such approval would be required by law, including if such amendment
would:
(a) Permit the sale of more shares than are authorized under Paragraph 11
above; or
(b) Permit payroll deductions at a rate in excess of 10% of a
Participant's Base Salary.
19. NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly, create
any right for the benefit of any Employee or class of Employees to purchase any
shares hereunder, or create in any Employee or class of Employees any right with
respect to continuation of employment by the Corporation or any direct or
indirect subsidiary thereof. The Plan shall not be deemed to interfere in any
way with the right of the Corporation or any direct or indirect subsidiary
thereof to terminate, or otherwise modify, an Employee's employment at any time.
20. GOVERNING LAW. Delaware law, other than the conflict-of-laws provisions
of such law, shall govern all matters relating to the Plan, except as that law
is superseded by the laws of the United States.
5
EXHIBIT 4.6
1996 LONG-TERM INCENTIVE PLAN OF
WILMINGTON TRUST CORPORATION
1. DEFINITIONS. As used herein, capitalized terms have the following
meanings:
a. "ANNUAL RETAINER" means the payment(s) the Company's Board of
Directors determines from time to time to be the annual retainer payable
each year to each non-employee director thereof.
b. "AWARD" means any grant to a Participant of any one or a
combination of Incentive Stock Options or Non-Statutory Stock Options
described in Paragraph 6 below, Performance Awards described in Paragraph 7
below, non-employee director awards described in Paragraph 9 below or any
other award granted hereunder.
c. "AWARD AGREEMENT" means a written agreement between the Corporation
and a Participant or a written acknowledgement from the Corporation
specifically setting forth the terms and conditions of an Award granted to
a Participant hereunder.
d. "AWARD PERIOD" means, with respect to an Award, the period of time,
if any, set forth in the Award Agreement during which specified target
performance goals must be achieved or other conditions set forth in the
Award Agreement must be satisfied.
e. "BANK" means Wilmington Trust Company, a Delaware-chartered bank
and trust company which is a wholly-owned subsidiary of the Corporation.
f. "BENEFICIARY" means an individual, trust or estate who or which, by
a written designation of the Participant filed with the Corporation or by
operation of law, succeeds to a Participant's rights and obligations
hereunder and under any Award Agreement(s) upon the Participant's death.
g. "CHANGE IN CONTROL" means any of the events described below,
directly or indirectly or in one or more series of transactions; provided,
however, that the Committee may, in its sole discretion, specify in any
Award Agreement a more restrictive definition of Change in Control. In that
event, the definition of Change in Control set forth in that Award
Agreement shall apply to the Award granted thereunder:
(1) Approval by the Bank's or the Corporation's stockholders of a
consolidation or merger of the Bank or the Corporation with any third
party (which includes a single person or entity or a group of persons or
entities acting in concert) not wholly-owned, directly or indirectly, by
the Bank or the Corporation (a "Third Party"), unless the Bank or the
Corporation is the entity surviving that merger or consolidation;
(2) Approval by the Bank's or the Corporation's stockholders of a
transfer of all or substantially all of the assets of the Bank or the
Corporation to a Third Party or of a complete liquidation or dissolution
of the Bank or the Corporation;
(3) Any person, entity or group which is a Third Party, without the
prior approval of the Bank's or the Corporation's Board of Directors, as
the case may be, through one or more subsidiaries:
(a) Acquires beneficial ownership of 15% or more of any class of
the Bank's or the Corporation's voting stock;
(b) Acquires irrevocable proxies representing 15% or more of any
class of the Bank's or the Corporation's voting stock;
(c) Acquires any combination of beneficial ownership of voting
stock and irrevocable proxies representing 15% or more of any class
of the Bank's or the Corporation's voting stock;
(d) Acquires the ability to control in any manner the election
of a majority of the Bank's or the Corporation's directors; or
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(e) Acquires the ability to directly or indirectly exercise a
controlling influence over the management or policies of the Bank or
the Corporation;
(4) Any election occurs of persons to the Corporation's Board of
Directors which causes a majority of the Corporation's Board of
Directors to consist of persons other than (a) persons who were members
of the Corporation's Board of Directors on February 29, 1996 (the
"Effective Date") and/or (b) persons who were nominated for election as
members of that Board of Directors by the Corporation's Board of
Directors (or a committee thereof) at a time when the majority of that
Board of Directors (or that committee) consisted of persons who were
members of the Corporation's Board of Directors on the Effective Date;
provided, however, that any person nominated for election by the
Corporation's Board of Directors (or a committee thereof), a majority of
whom are persons described in clauses (a) and/or (b), or are persons who
were themselves nominated by that Board of Directors (or a committee
thereof), shall for this purpose be deemed to have been nominated by a
Board of Directors composed of persons described in clause (a) above; or
(5) A determination is made by any regulatory agency supervising
the Bank or the Corporation that a change in control, as defined in the
banking, insurance or securities laws or regulations then applicable to
the Bank or the Corporation, has occurred.
Notwithstanding any provision herein to the contrary, a Change in
Control shall not include any of the events described above if they (x) are
related to or occur in connection with the appointment of a receiver or
conservator for the Bank or the Corporation, provision of assistance under
Section 13(c) of the Federal Deposit Insurance Act (the "FDI Act"), the
approval of a supervisory merger, a determination that the Bank is in
default as defined in Section 3(x) of the FDI Act, insolvent or in an
unsafe or unsound condition to transact business or, with respect to any
Participant, the suspension, removal and/or temporary or permanent
prohibition by a regulatory agency of that Participant from participation
in the conduct of the Bank's or the Corporation's business or (y) are the
result of a Third Party inadvertently acquiring beneficial ownership or
irrevocable proxies or a combination of both for 15% or more of any class
of the Bank's or the Corporation's voting stock, and that Third Party as
promptly as practicable thereafter divests itself of the beneficial
ownership or irrevocable proxies for a sufficient number of shares so that
the Third Party no longer has beneficial ownership or irrevocable proxies
or a combination of both for 15% or more of any class of the Bank's or the
Corporation's voting stock.
h. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto. References to a section of the Code
include that section and any comparable section or sections of any future
legislation which amends, supplements or supersedes that section.
i. "COMMITTEE" means a committee designated by the Directors. The
Committee shall have the power and authority to administer the Plan in
accordance with Paragraph 3 below.
j. "COMPANY" means Wilmington Trust Corporation, a Delaware-chartered
bank holding company and thrift holding company, and such other
corporations and entities which, from time to time, are members of the
group of corporations affiliated with Wilmington Trust Corporation and are
designated from time to time by the Directors to participate in the Plan.
k. "CORPORATION" means Wilmington Trust Corporation, a Delaware-
chartered bank holding company and thrift holding company.
l. "DATE OF GRANT" means the date the Committee designates as the date
as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of that Award.
m. "DIRECTORS" means the Corporation's Board of Directors.
n. "DISABILITY" means any physical or mental injury or disease of a
permanent nature which renders a Participant incapable of meeting the
requirements of the employment that Participant performed immediately
before that disability commenced. The determination of whether a
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Participant is disabled and when a Participant becomes disabled shall be
made by the Committee in its sole and absolute discretion.
o. "DISABILITY DATE" means the date which is six months after the date
on which a Participant is first absent from active employment with the
Company due to a Disability.
p. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor thereto.
q. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
r. "INCENTIVE STOCK OPTION" means an Option designated as an incentive
stock option and which meets the requirements of Section 422 of the Code.
s. "MARKET VALUE PER SHARE" means, with respect to the date an Award
is granted or exercised hereunder, the last sale price of the Shares on a
given date, as reported by a responsible reporting service(s) the Committee
selects or, if there was no such sale on that date, on the next preceding
date on which there was such a reported sale.
t. "NON-STATUTORY STOCK OPTION" means an Option which is not an
Incentive Stock Option.
u. "NORMAL RETIREMENT DATE" means the date on which a Participant
terminates active employment with the Company on or after attaining age 65,
but does not include termination by the Company for cause.
v. "OPTIONS" means any option to purchase Shares granted under
Paragraph 6 below.
w. "OTHER RETIREMENT DATE" means a date, on or after a Participant
attains the age of 55 but earlier than the Participant's Normal Retirement
Date, which the Committee specifically approves and designates in writing
to be the date upon which a Participant retires for purposes hereof.
x. "PARTICIPANT" means any person the Committee selects to receive an
Award hereunder.
y. "PERFORMANCE AWARD" means an Award, granted in accordance with
Paragraph 7 below, of the right to receive an Award, payable in cash or
Shares or a combination thereof at the end of a specified performance
period.
z. "PLAN" means the 1996 Long-Term Incentive Plan of the Corporation.
aa. "RULE 16B-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as amended, and
any successor rule.
bb. "SHARES" means the Corporation's common stock.
cc. "TERMINATION OF EMPLOYMENT" means the voluntary or involuntary
termination of a Participant's employment with the Company for any reason,
including death, Disability, retirement or due to the sale or other
divestiture of the Participant's employer or any similar transaction in
which the Participant's employer ceases to be the Company.
2. PURPOSE. The Plan is designed principally to encourage and facilitate
ownership of the Shares by, and provide additional incentive compensation based
on appreciation of the Shares to, key employees and directors of the Company,
thereby providing a potential proprietary interest as additional incentive for
the efforts of those key employees and directors in promoting the continued
growth and success of the Company's business, and in aiding the Company in
attracting and retaining professional and managerial personnel.
3. ADMINISTRATION. The Plan shall be administered by the Committee, which
shall have exclusive and final authority in each determination, interpretation
or other action affecting the Plan and Participants. The Committee shall have
the sole and absolute discretion to interpret the Plan, establish and modify
administrative rules for the Plan, select persons to whom Awards may be granted,
determine all claims for benefits
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hereunder, impose conditions and restrictions on Awards it determines to be
appropriate and take such steps in connection with the Plan and Awards granted
hereunder as it deems necessary or advisable.
A majority of the Committee's members shall constitute a quorum thereof,
and an act of a majority of such a quorum shall constitute the act of the
Committee. One or more members of the Committee may participate in meetings
thereof by conference telephone or by other similar communications equipment by
means of which all members participating in the meeting can hear each other. Any
decision or determination reduced to writing and signed by all of the
Committee's members shall be fully effective as if that action had been taken by
a vote at a meeting of the Committee duly called and held.
4. THE SHARES. The Shares which may be issued hereunder will be Shares not
exceeding, except as otherwise provided in Subparagraph 10(i) below, an
aggregate of 1,200,000 shares, which may be either authorized and unissued
Shares or previously issued Shares reacquired by the Company. The Shares covered
by any unexercised portions of terminated Options granted under Paragraph 6 and
Shares subject to any Awards which are otherwise surrendered by the Participant
without receiving any payment or other benefit with respect thereto may again be
subject to new Awards hereunder. If the purchase price of an Option is paid in
whole or in part by the delivery of Shares, the number of Shares issuable in
connection with the exercise of the Option shall not again be available for the
grant of Awards hereunder. Shares used to measure the amount payable to a
Participant in respect of earned Performance Awards shall not again be available
for the grant of Awards hereunder. Shares issued in payment of Performance
Awards which are denominated in cash amounts shall not again be available for
the grant of Awards hereunder.
5. PARTICIPATION. Participants in the Plan shall be persons the Committee,
in its sole discretion, designates from time to time. The Committee's
designation of a Participant in any year shall not require it to designate that
person to receive Awards in any other year. The designation of a Participant to
receive Awards under one portion hereof shall not require the Committee to
include that Participant under any other portion hereof. The Committee shall
consider those factors it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards. More than one type
of Award may be granted to a Participant at one time or at different times.
6. OPTIONS.
a. GRANT OF OPTIONS. Options granted hereunder shall be subject to the
following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms hereof, as
the Committee deems desirable. Options may be granted either alone or in
addition to other Awards granted hereunder. Any Option granted hereunder
shall be in the form the Committee approves from time to time, and the
terms and conditions of Option Awards need not be the same with respect to
each Participant. The Committee may grant to any Participant one or more
Incentive Stock Options, Non-Statutory Stock Options or both types of
Options. To the extent any Option does not qualify as an Incentive Stock
Option (whether because of its provisions, the time or manner of its
exercise or otherwise), that Option or the portion thereof which does not
so qualify shall constitute a separate Non-Statutory Stock Option.
b. INCENTIVE STOCK OPTIONS. In the case of any grant of an Incentive
Stock Option, whenever possible, each provision hereof and in any related
Award Agreement shall be interpreted to entitle the holder thereof to the
tax treatment afforded by Section 422 of the Code, except in connection
with the exercise of Options following a Participant's Termination of
Employment. If any provision hereof or that Award Agreement is held not to
comply with requirements necessary to entitle that Option to that tax
treatment, then except as otherwise provided in the preceding sentence: (1)
that provision shall be deemed to have contained from the outset such
language as is necessary to entitle the Option to the tax treatment
afforded under Section 422 of the Code; and (2) all other provisions hereof
and that Award Agreement remain in full force and effect. Except as
otherwise specified in the first sentence of this Subparagraph 6(b), if any
Award Agreement covering an Option the Committee designates to be an
Incentive Stock Option hereunder does not explicitly include any term
required to entitle that Incentive Stock Option to the tax treatment
afforded by Section 422 of the Code, all such terms shall be deemed
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<PAGE>
implicit in the designation of that Option, and that Option shall be deemed
to have been granted subject to all such terms.
c. OPTION PRICE. The Committee will determine the price of each
Option, which shall not be less than 100% of the Market Value Per Share of
the Shares on the date that Option is granted, nor less than the par value
per Share.
d. OPTION TERM. The Committee shall fix the term of each Option, but
no Option shall be exercisable more than ten years after the date it is
granted.
e. EXERCISABILITY. An Award Agreement with respect to Options may
contain such performance targets, waiting periods, exercise dates and other
restrictions on exercise as the Committee may determine at the time of
grant.
f. METHOD OF EXERCISE. Subject to any waiting period provisions which
may apply under Subparagraph 6(e) above, Options may be exercised in whole
or in part at any time during the Award Period by the Participant's giving
written notice of exercise to the Corporation specifying the number of
Shares to be purchased. That notice shall be accompanied by payment in full
of the purchase price in such form as the Committee may accept, including
payment in accordance with a cashless exercise program. If and to the
extent the Committee determines in its sole discretion at or after grant,
payment in full or in part may also be made in the form of Shares duly
owned by the Participant (and for which the Participant has good title,
free and clear of any liens or encumbrances) or Shares otherwise issuable
upon exercise of the Option based, in either case, on the Market Value Per
Share of the Shares on the date the Option is exercised; provided, however,
that the right to make payment of the purchase price of an Incentive Stock
Option in the form of already-owned Shares or Shares otherwise issuable
upon exercise of the Option may be authorized only at the time of grant.
Except as otherwise provided herein, no Shares shall be issued until
payment therefor has been made as provided herein.
g. ACCELERATION OR EXTENSION OF EXERCISE TIME. The Committee may, in
its sole discretion, at or after the Date of Grant, permit the purchase of
Shares subject to any Option before that Option would otherwise become
exercisable under the Award Agreement. In addition, the Committee may, in
its sole discretion, at or after the Date of Grant, permit any Option
granted hereunder to be exercised after its expiration date, subject to the
limitation in Subparagraph 6(d) above.
h. TERMINATION OF EMPLOYMENT. Unless the Committee provides otherwise,
if the employment of a Participant who has received an Option hereunder
terminates on other than that Participant's Normal Retirement Date or Other
Retirement Date or other than due to that Participant's death or
Disability, all Options previously granted to that Participant hereunder
but not exercised before the date of that Termination of Employment shall
expire as of that date.
i. DEATH, DISABILITY OR RETIREMENT OF A PARTICIPANT. If a Participant
dies while in the Company's employ, an Option theretofore granted to that
Participant shall not be exercisable after the earlier of the expiration
date of that Option or more than three years after the date of that
Participant's death, and only (1) by the person or persons to whom the
Participant's rights under that Option passed under the Participant's will
or by the laws of descent and distribution and (2) if and to the extent
that Participant was entitled to exercise that Option at the date of his or
her death.
If a Participant's employment with the Company terminates due to
Disability or on the Participant's Normal Retirement Date or Other
Retirement Date, an Option theretofore granted to that Participant shall
not be exercisable after the earlier of the expiration date of that Option
or more than three years after the date of that Disability or retirement,
as the case may be. If the Participant has died before then, an Option
theretofore granted to that Participant shall be exercisable (1) only by
the person or persons to whom the Participant's rights under that Option
passed under the Participant's will or by the laws of descent and
distribution and (2) if and to the extent that Participant was entitled to
exercise that Option on the date of his or her death.
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7. PERFORMANCE AWARDS.
a. GRANT OF PERFORMANCE AWARDS. The Committee may grant Performance
Awards hereunder. These shall consist of the right to receive payment
(measured by (1) a specified number of Shares at the end of an Award
Period, (2) the Market Value Per Share of a specified number of Shares at
the end of an Award Period, (3) the increase in the Market Value Per Share
of a specified number of Shares during an Award Period or (4) a fixed cash
amount payable at the end of an Award Period), contingent upon the extent
to which certain pre-determined performance targets are met during the
Award Period. The Committee shall determine the Participants, if any, to
whom Performance Awards are awarded, the number of Performance Awards
awarded to any Participant, the duration of the Award Period during which
any Performance Award will be vested and the other terms and conditions of
Performance Awards.
b. PERFORMANCE TARGETS. Performance targets for Performance Awards may
include individual performance standards or specified levels of revenues
from operations, earnings per Share, return on shareholders' equity and/or
such other goals related to the Company's performance as the Committee may
establish in its sole discretion. The Committee may, in its sole
discretion, in circumstances in which events or transactions occur to cause
the established performance targets to be an inappropriate measure of
achievement, change the performance targets for any Award Period at any
time before the final determination of a Performance Award.
c. EARNED PERFORMANCE AWARDS. The Committee may, upon the grant of a
Performance Award, prescribe a formula to determine the percentage of the
Performance Award to be earned based upon the degree of attainment of
performance targets. The degree of attainment of performance targets shall
be determined as of the last day of the Award Period.
d. PAYMENT OF EARNED PERFORMANCE AWARDS. Payment of earned Performance
Awards granted under Subparagraph 7(a)(2) or 7(a)(3) above shall be made in
cash or Shares based on the Market Value Per Share of a Share on the last
day of an Award Period, or a combination of cash and Shares at the
Committee's sole discretion. Payment normally will be made as soon as
practicable following the end of an Award Period. Notwithstanding the
foregoing, the Committee may permit deferral of payment of all or a portion
of a Performance Award payable in cash upon a Participant's request made on
a timely basis in accordance with rules the Committee prescribes. Such
deferred amounts may earn interest for the Participant under the conditions
of a separate agreement the Committee approves and the Participant
executes. The Committee may, in its sole discretion, define in the Award
Agreement other conditions of payment of earned Performance Awards as it
may deem desirable to carry out the purposes hereof.
e. TERMINATION OF EMPLOYMENT. Unless the Committee provides otherwise
in the Award Agreement or as otherwise provided below, in the case of a
Participant's Termination of Employment before the end of an Award Period,
the Participant will not be entitled to any Performance Award.
f. DISABILITY, DEATH OR RETIREMENT. Unless the Committee provides
otherwise in the Award Agreement, if a Participant's Disability Date or the
date of a Participant's Termination of Employment due to death or
retirement on or after his or her Normal Retirement Date or Other
Retirement Date occurs before the end of an Award Period, the Participant
or that Participant's beneficiary, as the case may be, shall be entitled to
receive a pro-rata share of his or her Award determined in accordance with
Subparagraph 7(g) below.
g. PRO-RATA PAYMENT. The amount of any payment made to a Participant,
or that Participant's beneficiary, under circumstances described in
Subparagraph 7(f) above, shall be the amount determined by multiplying the
amount of the Performance Award which would have been earned, determined at
the end of the Award Period, if that Participant's employment had not been
terminated, by a fraction, the numerator of which is the number of whole
months that Participant was employed during the Award Period and the
denominator of which is the total number of months in the Award Period. Any
such payment shall be made as soon as practicable after the end of that
Award Period, and shall relate to attainment of the applicable performance
targets over the entire Award Period.
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h. OTHER EVENTS. Notwithstanding anything to the contrary contained in
this Paragraph 7, the Committee may, in its sole discretion, determine to
pay all or any portion of a Performance Award to a Participant who has
terminated employment before the end of an Award Period under certain
circumstances, including a material change in circumstances arising after
the date the Performance Award is granted, and subject to terms and
conditions the Committee deems appropriate.
8. OTHER STOCK-BASED AWARDS.
a. GRANT OF OTHER AWARDS. The Committee may grant other Awards, valued
in whole or in part by reference to, or otherwise based on, Shares. Subject
to the provisions hereof, the Committee shall have the sole discretion to
determine the persons to whom and the time or times at which those Awards
are made, the number of Shares, if any, to be granted pursuant thereto, and
all other conditions of those Awards. Any such Award shall be confirmed by
an Award Agreement executed by the Corporation and the Participant, which
shall contain provisions the Committee determines to be necessary or
appropriate to carry out the intent hereof with respect to that Award.
b. TERMS OF OTHER AWARDS. In addition to the terms and conditions
specified in the Award Agreement, Awards made under this Paragraph 8 shall
be subject to the following:
(1) Any Shares subject to Awards made under this Paragraph 8 may
not be sold, assigned, transferred, pledged or otherwise encumbered
before the date on which those Shares are issued or, if later, the date
on which any applicable restriction, performance or deferral period
lapses;
(2) If specified in the Award Agreement, the recipient of an Award
under this Paragraph 8 shall be entitled to receive, currently or on a
deferred basis, dividends or dividend equivalents with respect to the
Shares covered by that Award, and the Committee may, in its sole
discretion, provide in that Award Agreement that those amounts be
reinvested in additional Shares;
(3) The Award Agreement with respect to any Award shall contain
provisions dealing with the disposition of that Award in the event of a
Termination of Employment before the exercise, realization or payment of
that Award, whether that termination occurs because of retirement,
Disability, death or other reason, with provisions to take account of
the specific nature and purpose of the Award regarding acceleration of
exercise or realization or payment of that Award upon a Change in
Control, and the Committee, in its sole discretion, may waive any or all
of the restrictions imposed with respect to any such Award under this
Paragraph 8; and
(4) Shares issued as a bonus pursuant to this Paragraph 8 shall be
issued for the consideration the Committee determines is appropriate, in
its sole discretion, but rights to purchase Shares shall be priced at at
least 100% of the Market Value Per Share on the date the Award is
granted.
9. PAYMENT OF ANNUAL RETAINER. During the term hereof, each non-employee
director of each Company the Directors designate to participate in this
Paragraph 9 shall be paid the first half of his or her Annual Retainer in
Shares, and may elect to receive the second half of his or her Annual Retainer
in cash or Shares, or a combination of both. The Committee shall establish rules
with respect to electing the form of payment provided for in the second clause
of the preceding sentence to facilitate compliance with Rule 16b-3. The number
of Shares to be issued to a non-employee director who receives Shares pursuant
to this Paragraph 9 shall be determined by dividing the dollar amount of the
portion of the Annual Retainer payable in Shares by the Market Value Per Share
of a Share on the business day immediately preceding the date that installment
of the Annual Retainer is otherwise paid to the Company's directors. The
Corporation shall not be required to issue fractional Shares. Whenever under the
terms of this Paragraph 9 a fractional Share would otherwise be required to be
issued, an amount in lieu thereof shall be paid in cash based upon the Market
Value Per Share of that fractional Share.
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<PAGE>
10. TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN.
a. EFFECT OF CHANGE IN CONTROL. Upon a Change in Control, unless
otherwise specifically prohibited by Rule 16b-3:
(1) Any and all Options shall become exercisable immediately; and
(2) The target values attainable under all Performance Awards shall
be deemed to have been fully earned for the entire Award Period as of
the effective date of the Change in Control.
b. LIMITATION. No person may be granted Awards in respect of more than
100,000 Shares in any calendar year during the term hereof.
c. PLAN PROVISIONS CONTROL AWARD TERMS. The terms of the Plan shall
govern all Awards granted hereunder. The Committee shall not have the power
to grant a Participant any Award which is contrary to any provision hereof.
If any provision of any Award conflicts with the Plan as constituted on the
Date of Grant, the terms hereof shall control. Except as provided in
Subparagraph 7(b) above, or unless the Committee provides otherwise in its
sole discretion in the Award Agreement, the terms of any Award may not be
changed after the date it is granted to materially decrease the value of
the Award without the express written approval of the holder thereof. No
person shall have any rights under any Award Agreement unless and until the
Corporation and the Participant to whom the Award has been granted have
executed and delivered an Award Agreement or received any other Award
acknowledgement the Committee authorizes expressly granting the Award to
that person and containing provisions setting forth the terms thereof.
d. LIMITATIONS ON TRANSFER. The rights and interests of a Participant
with respect to Awards may not be assigned or transferred other than by
will, the laws of descent and distribution or pursuant to a qualified
domestic relations order, as defined by the Code, Title I of ERISA or the
rules thereunder. Except as otherwise specifically provided herein, a
Participant's Beneficiary may exercise the Participant's rights only to the
extent they were exercisable hereunder at the date of the Participant's
death and are otherwise currently exercisable.
e. TAXES. The Corporation shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from a Participant
in lieu of withholding) the amount of any withholding or other tax required
by law to be withheld or paid by the Corporation with respect to any amount
payable and/or Shares issuable under that Participant's Award, with respect
to any income recognized upon the lapse of restrictions applicable to an
Award or upon a disqualifying disposition of Shares received upon the
exercise of any Incentive Stock Option. The Corporation may defer payment
or issuance of the cash or Shares upon the grant, exercise or vesting of an
Award unless indemnified to its satisfaction against any liability for that
tax. The amount of that withholding or tax payment shall be determined by
the Committee or its delegate, and shall be payable by the Participant at
the time the Committee determines. The Committee shall prescribe in each
Award Agreement one or more methods by which the Participant will be
permitted to satisfy his or her tax withholding obligation, which may
include, without limitation, the payment of cash or Shares by the
Participant to the Corporation and the withholding from the Award, at the
appropriate time, of a number of Shares sufficient, based upon the Market
Value Per Share of those Shares, to satisfy those tax withholding
requirements. The Committee shall be authorized, in its sole discretion, to
establish rules and procedures relating to any such withholding methods it
deems necessary or appropriate (including, without limitation, rules and
procedures relating to elections by Participants who are subject to the
provisions of Section 16 of the Exchange Act to have Shares withheld from
an Award to meet those withholding obligations).
f. AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Income a Participant
recognizes pursuant to the provisions hereof shall not be included in
determining benefits under any employee pension benefit plan (as that term
is defined in Section 3(2) of ERISA), group insurance or other benefit
plans applicable to the Participant which the Company maintains, except as
those plans or the Directors provide otherwise.
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g. COMPLIANCE WITH RULE 16B-3. Except as otherwise provided in
Subparagraph 10(h)(1) below, the Directors are authorized to amend the Plan
and make any such modifications to Award Agreements to comply with Rule
16b-3, as it may be amended from time to time, and to make any other such
amendments or modifications deemed necessary or appropriate to better
accomplish the purposes hereof in light of any amendments to Rule 16b-3.
h. AMENDMENT AND TERMINATION.
(1) AMENDMENT. The Directors shall have complete power and
authority to amend the Plan at any time they deem it necessary or
appropriate; provided, however, that the Directors shall not, without
the affirmative approval of the Corporation's stockholders, make any
amendment which requires stockholder approval under Rule 16b-3, the
Code, any other applicable law or the rules of the National Association
of Securities Dealers Automated Quotation System or any stock exchange
on which the Shares are listed, unless the Directors determine that
compliance with Rule 16b-3, the Code or such laws or rules is no longer
desired. No termination or amendment hereof may, without the consent of
the Participant to whom any Award has been granted hereunder, adversely
affect the right of that individual under that Award; provided, however,
that the Committee may make provision in the Award Agreement for
amendments which, in its sole discretion, it deems appropriate.
(2) TERMINATION. The Directors may terminate the Plan at any time.
No Award shall be granted hereunder after the termination hereof, but
that termination shall not have any other effect, and any Award
outstanding at the time of the termination hereof may be exercised after
the termination hereof at any time before the expiration date of that
Award to the same extent that that Award would have been exercisable if
the Plan had not terminated.
i. CHANGES IN THE CORPORATION'S CAPITAL STRUCTURE. The existence of
outstanding Awards shall not affect the right of the Corporation or its
stockholders to make or authorize any and all adjustments,
recapitalizations, reclassifications, reorganizations and other changes in
the Corporation's capital structure, the Corporation's business, any merger
or consolidation of the Corporation, any issue of bonds, debentures or
preferred stock of the Corporation, the Corporation's liquidation or
dissolution, any sale or transfer of all or any part of the Corporation's
assets or business, or any other corporate act or proceeding, whether of a
similar nature or otherwise.
The number and kind of Shares subject to outstanding Awards, the
purchase price or exercise price of those Awards and the number and kind of
Shares available for Awards subsequently granted hereunder shall be
adjusted appropriately to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan or Awards
granted hereunder. The Committee shall have the power and sole discretion
to determine the nature and amount of the adjustment to be made in each
case.
If the Corporation is merged with or into or consolidated with another
corporation or entity under circumstances in which the Corporation is not
the surviving corporation or other entity, or if the Corporation is
liquidated or sells or otherwise disposes of all or substantially all of
its assets to another corporation or other entity while unexercised Awards
remain outstanding hereunder, then (i) subject to the provisions of
Subparagraph 10(i)(ii) below, after the effective date of that merger,
consolidation or sale, as the case may be, each holder of an outstanding
Award shall be entitled, upon exercise of that Award, to receive, in lieu
of Shares, the number and type of such other stock or other securities as
the holders of Shares received pursuant to the merger, consolidation or
sale; and (ii) all outstanding Awards may be cancelled by the Committee as
of the effective date of that merger, consolidation or sale, provided that
(x) notice of those cancellations shall be given to each holder of an Award
and (y) in addition to any rights he or she may have under Subparagraph
10(a) above, each holder of an Award shall have the right to exercise that
Award in full, without regard to any limitations set forth in or imposed
pursuant to Paragraph 6 or 7 above, during a 30-day period preceding the
effective date of that merger, consolidation
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or sale. The exercise and/or vesting of any Award which was permissible
solely because of this Subparagraph 10(i)(ii)(y) shall be conditioned on
consummation of the merger, consolidation or sale. Any Awards not exercised
as of the date of the merger, consolidation or sale shall terminate
effective as of the date of the merger, consolidation or sale.
If the Corporation is merged with or into or consolidated with another
corporation or entity under circumstances in which the Corporation is the
surviving corporation, and the outstanding Shares are converted into shares
of stock of a third corporation or entity, it shall be a condition to the
merger or consolidation that that third corporation or entity succeed to
the Corporation's rights and obligations hereunder, and that the Plan be
administered by a committee of the board of directors of that third
corporation or entity.
Except as expressly provided herein, the Corporation's issuance of
Shares, any class of securities convertible into Shares or any other class
of its securities for cash, property, labor or services, either upon direct
sale, the exercise of rights or warrants to subscribe therefor or
conversion of shares or obligations of the Corporation convertible into
Shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number, class or price of Shares
then subject to Awards outstanding hereunder.
j. PERIOD OF APPROVAL AND TERM OF PLAN. The Plan shall be submitted to
the Corporation's stockholders at their annual meeting scheduled to be held
on or about April 18, 1996 or at any adjournment or postponement thereof.
The Plan shall be adopted and become effective only if and when approved by
the Corporation's stockholders. Awards may be granted hereunder at any time
up to and including April 18, 2000, at which time the Plan will terminate,
except with respect to Awards then outstanding, which shall remain in
effect until their exercise, expiration or termination in accordance
herewith.
k. COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES. No Award
shall be exercisable, and no Shares shall be delivered hereunder, except in
compliance with all applicable Federal and state laws and regulations
(including, without limitation, compliance with the Securities Act of 1933,
as amended, state "blue sky" laws, tax withholding requirements and the
rules of the National Association of Securities Dealers Automated Quotation
System and all domestic stock exchanges on which the Shares may be listed).
Any share certificate evidencing Shares issued hereunder may bear such
legends which the Committee deems advisable to ensure compliance with
Federal and state laws and regulations. No Award shall be exercisable, and
no Shares shall be delivered hereunder, until the Corporation has obtained
such consent or approval from Federal and state regulatory bodies which
have jurisdiction over such matters as the Committee deems advisable.
In the case of the exercise of an Award by a Beneficiary, the
Committee may require reasonable evidence with respect to the ownership of
the Award and such consents, rulings or determinations from taxing
authorities as the Committee deems advisable.
l. NO RIGHT OF EMPLOYMENT. Neither the adoption of the Plan nor its
operation, nor any document describing or referring to the Plan or any part
hereof, shall confer upon any Participant any right to continue in the
Company's employ, nor in any other way affect the right or power of the
Company to terminate the employment of any Participant at any time, with or
without assigning a reason therefor, to the same extent as might have been
done if the Plan had not been adopted.
m. USE OF PROCEEDS. Funds the Corporation receives upon the exercise
of Awards shall be used for the Corporation's general corporate purposes.
n. SEVERABILITY. Whenever possible, each provision hereof and of every
Award at any time granted hereunder shall be interpreted in a manner as to
be effective and valid under applicable law. If any provision hereof or of
any Award at any time granted hereunder is held to be prohibited by or
invalid under applicable law, then (1) that provision shall be deemed
amended to accomplish the objectives of the provision as originally written
to the fullest extent permitted by law and (2) all other provisions hereof
and every other Award at any time granted hereunder shall remain in full
force and effect.
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o. CONSTRUCTION OF THE PLAN. The place of administration of the Plan
shall be in Delaware, and the validity, construction, interpretation,
administration and effect hereof and its rules and regulations and rights
relating hereto shall be determined solely in accordance with Delaware law,
except as that law is superseded by the laws of the United States.
p. INTERPRETATION OF THE PLAN. Headings are given to the sections
hereof solely as a convenience for reference. These headings and the
numbering and paragraphing hereof shall not be deemed in any way material
or relevant to the construction of any provision hereof. The use of a
singular shall also include within its meaning the plural, and vice versa,
where appropriate.
11
SEVERANCE AGREEMENT
THIS AGREEMENT is made as of the 18th day of July, 1996 between
WILMINGTON TRUST COMPANY, a Delaware-chartered bank and trust company (the
"Bank"), and RITA C. TURNER ("Employee").
BACKGROUND
A. Bank currently employs Employee and considers Employee a key
employee.
B. Bank desires to retain Employee's services.
C. Bank has from time to time made payments and provided benefits to
employees who have terminated employment with Bank (the "Prior Severance
Arrangements").
D. Bank and Employee desire to set forth the amounts payable and
benefits Bank will provide Employee in the event of a termination of Employee's
employment with Bank under the circumstances set forth herein after a Change in
Control (as that term is defined in Subparagraph 4(e) below).
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants contained herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. CONTINUED EMPLOYMENT. In reliance upon Bank's promises contained
herein, Employee agrees that, for a period of not less than six months
commencing on the date first set forth above, and subject to reasonable absences
for illness, holiday and vacation pursuant to Bank's policies and practices in
effect on the date hereof, and from time to time hereafter, Employee shall
continue her employment with Bank and devote her best efforts to duties which
may be assigned to her by Bank from time to time.
2. PRIOR SEVERANCE ARRANGEMENTS. Except as set forth herein, if
Employee's employment with Bank is terminated under circumstances in which Bank
is required to make payment to her pursuant to Paragraph 5 below, Employee shall
make no claim or demand arising or alleged to arise from any severance plan,
program, policy or arrangement (including, without limitation, any Prior
Severance Arrangement) which Bank may have had in effect, currently sponsors or
adopts hereafter. Notwithstanding the preceding sentence, if Employee's
employment with Bank is terminated under circumstances in which Bank is required
to make payment to her pursuant to Paragraph 5 below, Employee or Employee's
spouse, heirs, estate or personal representative, as the case may be, shall be
entitled to receive any benefits payable under any employee benefit plan,
program, policy or arrangement which may then be in effect and which is not a
severance plan, program, policy or arrangement.
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3. EFFECTIVE DATE. This Agreement shall be effective as of the date
first written above (the "Effective Date") and continue and remain in full force
and effect until the termination of Employee's employment with Bank, unless
terminated earlier by the parties in writing. The completion of six months of
employment with Bank by Employee in accordance with Paragraph 1 above shall not
be a condition precedent to the effectiveness hereof or to the payment of
amounts or the provision of benefits hereunder if Employee's employment with
Bank is terminated under the circumstances described in Subparagraph 4(b) below.
4. TERMINATION OF EMPLOYMENT.
a. REQUIRING NO PAYMENTS UNDER PARAGRAPH 5. If Employee's employment
with Bank is terminated under any of the following circumstances, no payments
shall be or become due and owing hereunder, and Bank shall have no other
obligation under Paragraph 5 below:
(1) By either party for any reason before a Change in Control,
except as otherwise provided in Subparagraph 4(b)(3) below.
(2) By either party for any reason at any time more than two
years after a Change in Control.
(3) By Bank at any time, whether contemporaneous with or
subsequent to a Change in Control, due to "Cause" (as that
term is defined in Subparagraph 4(c) below) or upon
Employee's death or Disability. For purposes hereof, the
term "Disability" means any physical or mental injury or
disease of a permanent nature which makes Employee
incapable of meeting the requirements of the employment
performed immediately before the commencement of that
disability.
(4) By Employee at any time, whether contemporaneous with or
subsequent to a Change in Control, upon her retirement or
resignation for reasons other than "Good Reason" (as that
term is defined in Subparagraph 4(d) below).
b. REQUIRING PAYMENTS UNDER PARAGRAPH 5. If Employee's employment
with Bank is terminated under any of the following circumstances, Bank shall
make the payments and provide the benefits set forth in Paragraph 5 below:
(1) By Bank contemporaneously with or within two years after a
Change in Control for any reason other than (a) for Cause
or (b) upon Employee's death or Disability;
(2) By Employee, contemporaneously with or within two years
after a Change in Control, for Good Reason; or
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(3) Before a Change in Control occurs either (1) by Bank other
than for Cause or (2) by Employee for Good Reason, and in
either case it is reasonably demonstrated that that
termination of employment (x) was at the request of a Third
Party (as that term is defined in Subparagraph 4(e) below)
which has taken steps reasonably calculated to effect a
Change in Control or (y) otherwise arose in connection with
or in anticipation of a Change in Control.
c. DEFINITION OF "CAUSE". For purposes hereof, the term "Cause"
shall mean Employee's personal dishonesty, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or a final cease-and-desist order or a material
violation of any provision hereof.
d. DEFINITION OF "GOOD REASON". For purposes hereof, the term "Good
Reason" shall, absent Employee's written consent to the contrary, mean:
(1) Any material violation by Bank of its obligations
hereunder;
(2) The assignment to Employee of any duties inconsistent with
the status of her position with Bank on the day immediately
preceding a Change in Control, or an alteration in the
nature or status of Employee's duties and responsibilities
which renders Employee's position to be of less
responsibility or scope than that which existed on the day
immediately preceding the Change in Control;
(3) A reduction by Bank in Employee's annual base salary in
effect on the day immediately preceding a Change in
Control, as the same may be increased from time to time
thereafter, except for proportional, across-the-board
salary reductions similarly affecting all of Bank's
employees;
(4) The relocation of Bank's principal executive offices to a
location more than 25 miles from Wilmington, Delaware, or
Bank's requiring Employee to be based anywhere other than
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Bank's principal executive offices, except for required
travel on Bank's business to an extent substantially
consistent with Employee's present business travel
obligations; or
(5) Any material reduction by Bank or Wilmington Trust
Corporation ("Parent") of the benefits enjoyed by Employee
under any of Bank's or Parent's pension, retirement,
profit-sharing, savings, life insurance, medical,
health-and-accident, disability or other employee benefit
plans, programs or arrangements in effect from time to
time, the taking of any action by Bank or Parent which
would directly or indirectly materially reduce any of those
benefits or deprive Employee of any material fringe
benefits, or the failure by Bank to provide Employee with
the number of paid vacation days to which she is entitled
on the basis of years of service with Bank in accordance
with Bank's normal vacation policy; provided, however, that
this Subparagraph 4(d)(5) shall not apply to any
proportional, across-the-board reduction or action
similarly affecting all employees of Bank or Parent.
e. DEFINITION OF "CHANGE IN CONTROL". For purposes hereof, a "Change
in Control" shall mean the occurrence, after the Effective Date, of any of the
following events, directly or indirectly or in one or more series of
transactions:
(1) A consolidation or merger of Bank or Parent with any third
party (which includes a single person or entity or a group
of persons or entities acting in concert) not wholly-owned,
directly or indirectly, by Bank or Parent (a "Third
Party"), unless Bank or Parent is the entity surviving that
merger or consolidation;
(2) A transfer of all or substantially all of the assets of
Bank or Parent to a Third Party or a complete liquidation
or dissolution of Bank or Parent;
(3) A Third Party, without the prior approval of Bank's or
Parent's Board of Directors, as the case may be, through
one or more subsidiaries:
(a) Acquires beneficial ownership of 15% or more of any
class of Bank's or Parent's voting stock;
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(b) Acquires irrevocable proxies representing 15% or more
of any class of Bank's or Parent's voting stock;
(c) Acquires any combination of beneficial ownership of
voting stock and irrevocable proxies representing 15%
or more of any class of Bank's or Parent's voting
stock;
(d) Acquires the ability to control in any manner the
election of a majority of Bank's or Parent's
directors; or
(e) Acquires the ability to directly or indirectly
exercise a controlling influence over the management
or policies of Bank or Parent;
(4) Any election occurs of persons to Parent's Board of
Directors which causes a majority of Parent's Board of
Directors to consist of persons other than (a) persons who
were members of Parent's Board of Directors on February 29,
1996 (the "Board Date") and/or (b) persons who were
nominated for election as members of that Board of
Directors by Parent's Board of Directors (or a committee
thereof) at a time when the majority of that Board of
Directors (or that committee) consisted of persons who were
members of Parent's Board of Directors on the Board Date;
provided, however, that any person nominated for election
by Parent's Board of Directors (or a committee thereof), a
majority of whom are persons described in clauses (a)
and/or (b), or are persons who were themselves nominated by
that Board of Directors (or a committee thereof), shall for
this purpose be deemed to have been nominated by a Board of
Directors composed of persons described in clause (a)
above; or
(5) A determination is made by any regulatory agency
supervising Bank or Parent that a change in control, as
defined in the banking, insurance or securities laws or
regulations then applicable to Bank or Parent, has
occurred.
Notwithstanding any provision herein to the contrary, a Change in
Control shall not include any of the events described above if they (x) are
related to or occur in connection with the appointment of a receiver or
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conservator for Bank or Parent, provision of assistance under Section 13(c) of
the Federal Deposit Insurance Act (the "FDI Act"), the approval of a supervisory
merger, a determination that Bank is in default as defined in Section 3(x) of
the FDI Act, insolvent or in an unsafe or unsound condition to transact business
or the suspension, removal and/or temporary or permanent prohibition by a
regulatory agency of Employee from participation in the conduct of Bank's or
Parent's business or (y) are the result of a Third Party inadvertently acquiring
beneficial ownership of or irrevocable proxies for or a combination of both for
15% or more of any class of Bank's or Parent's voting stock, and that Third
Party as promptly as practicable thereafter divests itself of the beneficial
ownership of or irrevocable proxies for a sufficient number of shares so that
that Third Party no longer has beneficial ownership or irrevocable proxies or a
combination of both for 15% or more of any class of Bank's or Parent's voting
stock.
5. OBLIGATIONS OF BANK UPON TERMINATION OF EMPLOYMENT. Upon termination
of Employee's employment with Bank under the circumstances set forth in
Subparagraph 4(b) above, notwithstanding that termination, Employee shall be
entitled to receive the following payments and provided the following benefits:
a. BASE SALARY. Bank shall pay Employee within ten days after the
termination of her employment a lump sum payment equal to the aggregate of 115%
of the future base salary payments Employee would have received if she had
continued in Bank's employ until 36 months after the termination of her
employment (unless a reduction in compensation preceded Employee's resignation
or retirement for Good Reason, in which case Bank shall pay her a lump sum
payment equal to the aggregate amount of 115% of the future base salary payments
Employee would have received at her highest base salary in effect during the
twelve-month period before the Termination of Employee's employment if she had
continued in Bank's employ until 36 months after the termination of her
employment), in either case discounted to present value at a discount rate equal
to the per annum rate offered on that termination date (or the next preceding
date on which that rate is published) on U.S. Treasury bills with maturities of
one and one-half years.
b. BENEFITS. For three years after the termination of Employee's
employment, at Bank's expense, Employee shall participate in and be covered by
all employee benefit plans, programs, policies and arrangements of Bank
applicable to executive employees, whether funded or unfunded; provided,
however, that, if any administrator or insurance carrier contests Employee's
participation in or coverage under that plan, program, policy or arrangement,
then in respect of insurance arrangements, Bank shall, at its own cost or
expense, cause equivalent insurance coverage to be provided and, in respect of
arrangements other than insurance, make cash payments to Employee in an amount
equal to the amount which would have been contributed by Bank with respect to
Employee at the times those amounts would have been contributed; and provided
6
<PAGE>
further that, to the extent Bank has an obligation to provide continuation
coverage under Section 4980(B)(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), the period for which benefits are provided under this
Subparagraph 5(b) constitutes a portion of that continuation coverage.
Notwithstanding the foregoing, any payments made to Employee pursuant hereto, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Sec. 1828(k) and any regulations promulgated thereunder.
c. LIMITATIONS.
(1) Notwithstanding the foregoing or any other provision hereof
to the contrary, if Bank's tax counsel determines that any
portion of any payment hereunder would constitute an
"excess parachute payment," then the payments to be made to
Employee hereunder shall be reduced so that the value of
the aggregate payments that Employee is entitled to receive
hereunder and under any other agreement, plan or program of
Bank or Parent shall be one dollar less than the maximum
amount of payments which Employee may receive without
becoming subject to the tax imposed by Section 4999 of the
Code.
(2) The parties intend that this Agreement shall govern the
rights and obligations of the parties with respect to
severance payments payable upon a termination of Employee's
employment under circumstances described in Subparagraph
4(b) above. If the Internal Revenue Service assesses an
excise tax against Employee pursuant to Sections 280G and
4999 of the Code, Bank shall be under no obligation to
Employee with respect to the amount of (a) that excise tax
or (b) any additional Federal income tax due from and
payable by Employee as the result of her receipt of any
payment hereunder.
6. NO DUTY TO MITIGATE. Employee shall not be required to mitigate the
amount of any payment required hereunder by seeking other employment or
otherwise, nor shall the amount paid hereunder be reduced or offset by any
compensation earned or received by Employee as a result of employment with
another employer, self-employment or any amount received from any of Bank's
other plans, programs, policies or arrangements; provided that benefits provided
under Subparagraph 5(b) above shall be reduced to the extent that comparable
benefits are actually received by Employee from or through another employer.
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<PAGE>
7. MISCELLANEOUS.
a. GENERAL CREDITOR. All payments required hereunder shall be made
from Bank's general assets, and Employee shall have no rights greater than the
rights of a general creditor of Bank.
b. NOTICES. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by certified mail, return
receipt requested, first-class postage prepaid, or by a nationally recognized
overnight mail carrier, to the parties hereto at the following addresses:
(1) If to Bank, at:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Chairman of the Board
(2) If to Employee, at the address set forth at the end
hereof,
or to such other address as either party hereto has last designated by notice to
the other. All such notices and communications shall be deemed to have been
received on the earlier of the date of receipt, the first business day after
mailing by a nationally-recognized overnight mail carrier or the third business
day after the date of other mailing.
c. BINDING EFFECT; BENEFITS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Nothing contained herein, express or implied, is intended or shall
be construed to give any person, other than the parties hereto and their
respective successors and assigns, any legal or equitable right, remedy or claim
under or in respect of any agreement or provision herein.
d. COSTS OF ENFORCEMENT. If Employee retains legal counsel to
enforce any or all of her rights to severance benefits under Paragraph 5 above
and she substantially prevails in enforcing those rights, Employee shall be
entitled to recover from Bank Employee's reasonable attorneys' fees, costs and
expenses in connection with the enforcement of her rights.
e. WAIVER. Either party may, by written notice to the other: (1)
extend the time for performance of any obligation or other action of the other
hereunder; (2) waive compliance with any condition or covenant of the other
herein; or (3) waive or modify performance of any obligation of the other
hereunder. Except as provided in the preceding sentence, no action taken
pursuant hereto, including, without limitation, any investigation by or on
8
<PAGE>
behalf of any party, shall be deemed to constitute a waiver by that party of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party of a violation of any provision hereof shall not
operate or be construed as a waiver of any preceding or succeeding violation,
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of that party's rights or privileges hereunder or that
party's rights to exercise that right or privilege at any subsequent time
hereunder.
f. AMENDMENT. This Agreement may be terminated, amended, modified or
supplemented only by a written instrument executed by Employee and Bank.
g. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability hereunder or arising by reason hereof shall be
assignable by either Bank or Employee without the prior written consent of the
other.
h. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with Delaware law, regardless of what law might be applied under
principles of conflicts of laws, except as that law is superseded by the laws of
the United States.
i. SECTION AND OTHER HEADINGS. The section and other headings herein
are for reference purposes only, and shall not affect the meaning or
interpretation hereof.
j. WITHHOLDING OF TAXES. Bank may withhold from amounts required to
be paid to Employee hereunder any applicable Federal, state, local and other
taxes with respect thereto; provided, however, that Bank shall promptly pay over
the amounts so withheld to the appropriate taxing authorities and provide
Employee with appropriate statements on forms prescribed for those purposes on
the amounts so withheld.
k. SEVERABILITY. If, for any reason, any provision hereof is held
invalid, that invalidity shall not affect any other provision hereof not so held
invalid, and each such other provision hereof shall, to the full extent
consistent with law, continue in full force and effect. If any provision hereof
is held invalid in part, that invalidity shall in no way affect the rest of that
provision not held invalid, and the rest of that provision, together with all
other provisions hereof, shall, to the full extent consistent with law, continue
in full force and effect.
l. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, Bank has executed this Agreement and caused its
seal to be affixed hereto by its officers thereunto duly authorized, and
Employee has signed this Agreement, all as of the date first written above.
ATTEST: WILMINGTON TRUST COMPANY
By: /s/ Ted C. Cecala
- ----------------------------------- -----------------------------
[Assistant] Secretary Chairman of the Board
WITNESS: EMPLOYEE:
/s/ Rita C. Turner
- ----------------------------------- ---------------------------------
Name:
Addess:_________________________
--------------------------------
<PAGE>
EXHIBIT 11
Earnings per share of $2.83 for 1996 were computed by dividing net
income of $97,278,342 by the weighted average number of shares of common stock
outstanding during 1996 of 34,399,042.
EXHIBIT 13
WILMINGTON TRUST CORPORATION
1996 ANNUAL REPORT
A VISION FOR THE FUTURE
A STRATEGY FOR GROWTH
[WILMINGTON TRUST LOGO.]
<PAGE>
TABLE OF CONTENTS
The Year in Brief.............................................................1
Letter to Stockholders........................................................3
Significant Events............................................................7
Feature Section...............................................................8
Management's Discussion and Analysis.........................................14
Consolidated Financial Statements............................................45
Notes to Consolidated Financial Statements...................................49
Organizational Listings......................................................79
Stockholder Information......................................................85
<PAGE>
[OUR MISSION]
Helping our customers succeed.
<PAGE>
THE YEAR IN BRIEF
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
Increase
FOR THE YEAR (in thousands) 1996 1995 (Decrease)
- ----------------------------------------------------------------------------
Net interest income $ 214,221 $ 197,364 8.5%
Provision for loan losses 16,000 12,280 30.3
Other income 138,237 127,640 8.3
Net interest and other income 336,458 312,724 7.6
Other expense 192,339 181,004 6.3
Income before income taxes 144,119 131,720 9.4
Applicable income taxes 46,841 41,689 12.4
Net income 97,278 90,031 8.0
PER SHARE*
- ----------------------------------------------------------------------------
Net income $ 2.83 $ 2.56 10.5%
Dividends paid 1.29 1.17 10.3
Book value at December 31 13.71 13.09 4.7
AT YEAR END (in thousands)
- ----------------------------------------------------------------------------
Assets $5,564,409 $5,372,198 3.6%
Loans 3,771,484 3,521,915 7.1
Reserve for loan losses 54,361 49,867 9.0
Investment securities 1,266,151 1,360,778 (7.0)
Deposits 3,913,698 3,587,585 9.1
Stockholders' equity 464,717 459,371 1.2
* ALL PER SHARE AMOUNTS THROUGHOUT THIS REPORT HAVE BEEN ADJUSTED TO REFLECT THE
FOUR 100% STOCK DIVIDENDS (2-FOR-1 SPLITS) EFFECTED SINCE 1983. NOTE: PRIOR
PERIOD AMOUNTS THROUGHOUT THIS REPORT HAVE BEEN RESTATED TO REFLECT THE
ACQUISITIONS IN 1992 OF THE SUSSEX TRUST COMPANY AND IN 1990 OF WILMINGTON
CAPITAL MANAGEMENT, INC. AND THE PEOPLES BANK OF HARRINGTON UNDER THE POOLING OF
INTERESTS METHOD.
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[GRAPH OF NET INCOME FOR EACH YEAR FROM 1986 TO 1996,
WITH THE FOLLOWING PLOT POINTS, IN MILLIONS:
1986 - $39.01
1987 - $46.72
1988 - $55.61
1989 - $61.19
1990 - $68.53
1991 - $72.76
1992 - $64.01
1992A- $78.76 BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - $82.76
1994 - $85.17
1995 - $90.03
1996 - $97.28
GRAPH OF RETURN ON STOCKHOLDERS' EQUITY FOR EACH YEAR
FROM 1986 TO 1996, WITH THE FOLLOWING PLOT POINTS:
1986 - 21.24%
1987 - 21.92%
1988 - 23.38%
1989 - 22.08%
1990 - 22.67%
1991 - 21.09%
1992 - 17.44%
1992A- 20.62% BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - 21.12%
1994 - 20.84%
1995 - 20.70%
1996 - 21.38%
GRAPH OF RETURN ON ASSETS FOR EACH YEAR FROM 1986
TO 1996, WITH THE FOLLOWING PLOT POINTS:
1986 - 1.35%
1987 - 1.50%
1988 - 1.73%
1989 - 1.70%
1990 - 1.72%
1991 - 1.75%
1992 - 1.55%
1992A- 1.90% BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - 1.96%
1994 - 1.88%
1995 - 1.83%
1996 - 1.83%]
2
<PAGE>
[PICTURE OF TED T. CECALA, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER.]
TO OUR STOCKHOLDERS
As your new Chairman and Chief Executive Officer, I am pleased to report that
Wilmington Trust Corporation continued to achieve record performance for the
year 1996.
Earnings per share were $2.83, up 11% from the $2.56 reported for the previous
year. Net income reached a record $97.3 million, up 8% from the $90.0 million
reported for 1995.
Total revenues for the year reached $352.5 million, up 8% from the $325.0
million reported in 1995. These higher revenues were the result of a 9% increase
in net interest income, up to $214.2 million from the $197.4 million reported
last year, combined with an 8% increase in total other income, up to $138.2
million from the $127.6 million reported last year.
Return on stockholders' equity was 21.38% and return on assets for the year was
1.83%, compared to 20.70% and 1.83%, respectively, reported a year ago.
Wilmington Trust continues to rank among the top financial institutions in the
nation in these key indices of financial performance.
THE STORY BEHIND THE PERFORMANCE.
As our financial results indicate, Wilmington Trust continues to build on its
long and proud history of outstanding performance. But the numbers only begin to
tell the story of where the company stands today and where it is headed
tomorrow.
Today, Wilmington Trust holds the dominant market share in our home state and is
also among the nation's ten largest personal trust companies, with
responsibility for $100 billion in assets on behalf of customers in 50 states
and 17 foreign countries.
We operate at one of the highest levels of efficiency in our industry and have
completed our 15th consecutive year of record performance. Not coincidentally,
our market value has grown over the past 15 years from just $82 million to over
$1.4 billion.
These are impressive accomplishments and they provide a solid foundation to
build our future.
PLANNING FOR CONTINUED GROWTH.
Wilmington Trust strives to be an organization that applies its resources to
pursuing the best interests of its customers. That is why our corporate mission
is "Helping our customers succeed." Experience has shown that this is the
clearest path to our own success and growth.
3
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To achieve this mission, we have established a clear vision for the future and a
clear direction for how we will reach our goals. Our vision for Wilmington Trust
is an organization that includes:
. FOCUS ON CORE BUSINESSES: All of us at Wilmington Trust believe we will
continue to be a leader in the banking and investment services industry. One
that is positioned to capitalize on major economic trends such as the rapid
growth in the number of entrepreneurs and professionals and a transfer of
generational wealth that promises to be the largest in the history of the
world.
We continue to grow our banking business, with our disciplined credit
practices and emphasis on relationships, in Delaware, Pennsylvania, Maryland
and Florida.
Building on our long tradition of providing exceptional service to wealthy
individuals and families, we are currently expanding our asset management,
trust, and estate planning services. We are expanding our banking and trust
franchises into geographic areas where wealth is concentrated. Our plans
call for opening new offices in New York and California while increasing our
presence in both Pennsylvania and Florida.
Also, we will leverage our core capabilities through alliances that we will
forge with other lending institutions that will augment our own business
development efforts.
. TECHNOLOGICAL EXCELLENCE: Wilmington Trust is an organization that
emphasizes technology-based solutions that offer operational efficiency to
our organization while providing the high level of service that customers
expect.
Our new trust administration system provides our customers with one of the
most advanced workstations available in the industry. The system supports
our significant trust and asset management business and provides us a
technological foundation we can expand to keep pace with ever-changing laws,
securities and financial markets.
We are also actively involved in developing banking delivery systems that
complement our traditional sales offices that are cost-effective and
convenient for our customers.
4
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. ORGANIZATIONAL STRENGTH: To fulfill our mission, we must continue to develop
a strong, highly focused organization, structured in a manner that
encourages responsiveness to customer needs.
That is why a company-wide effort has been initiated to streamline our
organization, improve internal communication and focus on four key goal
areas.
. SHAREHOLDER VALUE: Above all, Wilmington Trust is an organization that
provides stockholders with superior long-term value.
[GRAPH OF NET INCOME PER SHARE FOR EACH YEAR
FROM 1986 TO 1996, WITH THE FOLLOWING PLOT POINTS:
1986 - $1.02
1987 - $1.21
1988 - $1.45
1989 - $1.59
1990 - $1.81
1991 - $1.92
1992 - $1.70
1992A- $2.09 BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - $2.24
1994 - $2.37
1995 - $2.56
1996 - $2.83]
We actively manage our balance sheet, remaining averse to excessive risk while
building revenues and controlling costs. At the same time, we strive to achieve
high returns on our capital by investing in our businesses and maintaining a
prudent level of capital. We manage the growth of capital through our stock
buyback program and dividends.
Efforts like these help Wilmington Trust to consistently rank as one of the
strongest financial institutions in America-a well-capitalized company, with
excellent performance and a tradition of providing increasing shareholder value.
[PICTURE OF ROBERT V. A. HARRA, JR., PRESIDENT,
CHIEF OPERATING OFFICER AND TREASURER]
A TIME OF CHALLENGES AND OPPORTUNITIES.
Looking ahead, I see many challenges for our organization--but many more
opportunities.
Wilmington Trust has a unique heritage, reputation for service and culture that
sets us apart from the competition in the rapidly changing financial services
industry.
5
<PAGE>
We provide a competitive array of financial services including traditional
deposit accounts, relationship-oriented lending, mutual funds, and trust
services.
Our infrastructure of information technology provides us with the ability to
understand and serve our customers better.
We have a geographic presence in several of the nation's most promising markets
and plans for expanding into others.
Our staff of talented and dedicated professionals gives us an important
competitive edge.
And we enjoy the confidence of customers who have come to rely on us for
long-term solutions to their financial needs.
This is a period of exciting growth for Wilmington Trust. I am looking forward
to reporting the results of our efforts in the months and years ahead. I thank
you for your continued confidence in our organization.
/s/ Ted T. Cecala
Ted T. Cecala
Chairman and Chief Executive Officer
6
<PAGE>
SIGNIFICANT EVENTS
. Robert V. A. Harra, Jr. was named President in January of 1996. He has been
with the company since 1971. Bob was elected Vice President and Commercial
Loan Division Manager in 1983, Senior Vice President, Personal Banking
Department, and a member of the Senior Management Committee in 1984 and
Executive Vice President in 1992. In July, he was elected Chief Operating
Officer.
. Wilmington Trust was listed on the Keefe, Bruyette & Woods "1996 Honor
Roll." There were only seven banks to share the distinction of reporting
earnings per share increases for at least ten consecutive years. We have
been on this Honor Roll since 1991.
. The Board of Directors authorized the buyback of four million shares of
Wilmington Trust common stock. Since 1987 we have had several buyback
programs and have purchased an average of 860,000 shares each year.
. The company acquired 24% ownership of Clemente Capital, Inc., a global and
international equity and fixed-income investment management firm that is
headquartered in New York City. This strategic alliance allows us to broaden
the range of investment expertise that we offer to our clients.
. Wilmington Trust was named one of the 10 Best Earners in the U.S. Banker
magazine "Top 100 Performance Ranking." The company was ranked as the sixth
most profitable bank, based on return on equity. We have consistently ranked
near the top of the list in this important measure of performance.
. Ted T. Cecala was elected Chairman and Chief Executive Officer in June of
1996. Ted joined the company in 1979 as Controller. He was named Senior Vice
President, Corporate Development Department, and a member of the Senior
Management Committee in 1985 and Executive Vice President and Chief
Financial Officer in 1990.
. Early in 1997, Thomas L. Gossage resigned from our Board of Directors,
having served since 1992. We thank Tom for his years of service. Also in
1997, R. Keith Elliott became the newest member of our Board. We look
forward to having Keith's energy and experience to help guide us into the
future.
[PICTURE OF LEONARD W. QUILL, DIRECTOR AND FORMER CHAIRMAN
OF THE BOARD AND CHIEF EXECUTIVE OFFICER.]
39 YEARS OF DEDICATED SERVICE
Leonard Quill retired as Chairman of Wilmington Trust on June 30, 1996 after a
four-year term as Chairman. During that period, Wilmington Trust continued its
growth with record profits each year. Leonard joined Wilmington Trust in 1957
and served for ten years in various bank departments before being named Vice
President and Commercial Loan Manager. Ten years later, he became Senior Vice
President, Commercial Banking Department. In 1990, Leonard was elected to the
Board of Directors and named President and Chief Operating Officer. Two years
later, he was elected Chairman and Chief Executive Officer. Leonard is a member
of the Wilmington Trust Board of Directors and active in the many community
organizations with which he has been associated.
7
<PAGE>
[PICTURE INCLUDING A PERSONAL COMPUTER, WILMINGTON TRUST CREDIT
AND DEBIT CARDS, A PORTABLE TELEPHONE, A PEN AND
APPOINTMENT BOOK AND A NEWSPAPER.]
THE STRATEGIC PRIORITIES OF THE ORGANIZATION
During 1996, Wilmington Trust set four strategic priorities to guide our growth
and align our resources as we enter the new millennium. In the pages ahead these
priorities are described in more detail.
BUSINESS
From our foundation of strength, we will channel future sales and service
activities to build key businesses that combine the best mix of customer value,
competitive positioning and profitability for the company.
INFORMATION
Taking advantage of new technological solutions, we will concentrate our systems
development on increasing ease, speed, flexibility and responsiveness in the
flow of information and service to our customers and within the company.
FINANCIAL
Taking into account the dynamics of market opportunity, prudent diversity and
risk management, we will accelerate investments in businesses that can produce
sustained earnings growth and reduce investments in businesses that hold only
limited potential for sustainable returns.
ORGANIZATION
We will cultivate our highly motivated staff's understanding of our customers to
continually enhance the value we deliver from every point in the
company--whether it be through sales, service or support operations.
Major initiatives have been set in motion to support the achievement of these
strategic directions. Virtually every senior manager in the company is involved
in these initiatives, ensuring the commitment of the entire enterprise. This
coordinated effort means Wilmington Trust can put plans into action more
quickly, effectively and responsively than companies of larger size. The result
is an enhanced ability to be successful in our very competitive marketplace.
8
<PAGE>
[PICTURE INCLUDING A MAP OF NORTHERN DELAWARE AND EASTERN MARYLAND,
A MAP OF SOUTHERN PENNSYLVANIA, WILMINGTON TRUST CREDIT AND DEBIT
CARDS AND BROCHURES DESCRIBING WILMINGTON TRUST PRODUCTS.]
BUSINESS
[BUILDING KEY BUSINESSES.]
Wilmington Trust's record of success has been the result of the strong
relationships we have built with a diverse and loyal customer base--ranging from
the majority of consumers in Delaware to over half of the Fortune 500 companies
in the United States. Nonetheless, we recognize that markets change over time,
and we must change with them. This has pointed to several major initiatives to
be undertaken over the years ahead as we implement our strategic plan.
[PICTURE OF COMPUTER TERMINAL.]
FORGING CUSTOMER RELATIONSHIPS.
Our current customers represent an opportunity to broaden the services we
provide to them as well as extend relationships to include their business or
personal interests, their family members and their heirs.
Additionally, we have the opportunity to build newer business lines that offer
attractive returns to the company. These include investment services to the
consumer market, employee benefits and electronic cash management services to
middle market companies, and private banking services to professionals and
owners of closely held businesses, to name a few. Our estimates suggest the
opportunities to build relationships with existing customers are significant,
customer reception is predictably high and our competitive advantages are real.
To realize these opportunities, our plan calls for specific emphasis on building
customer loyalty and retention through service improvement measures, staff
incentives to cross-sell services across lines of responsibility and marketing
programs to increase the number of services we provide to each of our most
valued customers.
ENTERING NEW MARKETS.
Wilmington Trust's strong presence and share of business in Delaware provide a
foundation of strength to support the company's selective expansion into new
markets. To build from this base, our plan calls for expansion into markets
where we can capitalize on competitive advantages and establish relationships
with customer groups that offer significant opportunities to the company.
Specifically, we look to the contiguous areas of Maryland, New Jersey and
Pennsylvania as offering very attractive opportunities to build our commercial
banking, private banking and trust businesses, particularly as local firms are
disrupted by acquisition activities.
Beyond our local region, we plan to enter centers of commerce and wealth to
market trust and asset management services. We believe Wilmington Trust's image,
reputation and leading position in the nation's corporate capital provide unique
opportunities in markets requiring the more sophisticated financial arrangements
in which we specialize.
9
<PAGE>
In addition to geographic expansion, our plan focuses on taking advantage of the
presence we have built over the last 13 years in Florida as well as alliances we
have established for marketing investment and trust services.
FOCUSING INVESTMENTS TO BUILD SUSTAINED EARNINGS GROWTH.
Wilmington Trust's entry into new markets, as well as our sustained leadership
in our local market, will require increased investments in people, technology
and marketing--the foundations of our enterprise. As we look into the future, we
expect the competitive environment to increase in intensity. It is critical that
we carefully target our investments to those businesses and markets that offer
the greatest potential for sustainable, long-term earnings growth. In support of
our plans, we have initiatives under way to restructure our business mix to add
emphasis to businesses that provide the greatest market potential, sustainable
advantage and profitability and form the basis on which we channel investments
for growth.
INFORMATION
[UNLOCKING THE POWER OF INFORMATION.]
[PICTURE OF SATELLITE DISHES.]
Information is one of Wilmington Trust's most important assets. This rich source
of knowledge about our customers and their relationship with us allows us to
deliver new and innovative services.
Our goal is to continually make information more accessible to those who need it
most--both staff members and customers.
INFORMATION STRATEGIC PLAN.
Our plan draws on input from every area of the organization, including sales,
marketing, product development, finance, and customer service, and consists of
four objectives:
. Long-Term Planning: The long-range plan for our organization's information
needs enables us to project future requirements and evaluate emerging
technologies within a context of how effectively they can help us achieve
those requirements.
. Needs Identification Process: We are enhancing this process to help us
quickly recognize the ever-changing information needs and expectations of
our staff and our customers. This process will include market research,
internal surveys, and other tools that will help us stay attuned to how
technology can serve people.
10
<PAGE>
. Customer Access: We will continue to implement friendly, easy-to-use systems
that provide our individual and business customers with access to
information important to them. Currently, our systems include a variety of
resourceful telephone and on-line banking services. In the future, our
services will be expanded to put more information and more control in the
hands of those who can best use it.
[PICTURE OF A DESK WITH A COMPUTER TERMINAL, WILMINGTON TRUST
CHECKS AND ACCOUNT STATEMENTS, A CLOCK RADIO AND KEYS.]
. A Technology Continuum: Knowing that technology is evolving at an extremely
rapid pace, we will work to incorporate new systems into existing ones
smoothly. This will help us maximize the value of our investments, while
helping to create a seamless level of service.
[PICTURE OF WILMINGTON TRUST "SELF-SERVICE BANKER" AUTOMATED TELLER MACHINE.]
A TRADITION OF LEADERSHIP.
Information is so important that many customers already choose their financial
services provider on the basis of how quickly and efficiently information-based
solutions can be delivered.
Wilmington Trust has traditionally been a leader in this area, having developed
systems that have met with great success in the marketplace. Through the
vigorous implementation of our information plan, we are demonstrating our
commitment to remaining a leader in the future.
FINANCIAL
[PICTURE INCLUDING WILMINGTON TRUST NOTE PAD, MISCELLANEOUS
DOMESTIC AND INTERNATIONAL CURRENCY AND A CALCULATOR.]
[BUILDING ON FINANCIAL STRENGTH.]
Ultimately, financial performance is the yardstick by which all of our
activities are measured. After all, it is our financial strength that fuels
future growth.
We are proud that Wilmington Trust is already among the top-performing financial
institutions in America, with a long track record of net income growth. And as
we move into the next century, our commitment to continued growth is stronger
than ever.
11
<PAGE>
FOCUSING RESOURCES.
To achieve our ambitious goals for financial performance, Wilmington Trust is
focusing its resources on those opportunities that will have the greatest impact
on future profitability.
That means expanding our presence in market areas that offer opportunities for
increased income, such as asset management and other fee-based services. It also
means discontinuing marginal activities that consume resources without
contributing their fair share to our earnings or growth.
We continue to refine our ability to distinguish profitable businesses from less
profitable ones, by using tools that measure the contribution of products,
markets, and customer relationships. These tools will allow all new ideas to be
judged within the context of their true business value.
However, our financial professionals recognize that not all decisions can be
made solely by the numbers, and that some of the best ideas take time to deliver
results. Therefore, they continue to act as facilitators of, not barriers to,
innovation.
A COMPANY-WIDE COMMITMENT TO EFFICIENCY.
Building profitability also means looking for efficiencies that will decrease
our overhead expenses. Currently, our goal is to reduce our operating budget by
at least $2 million annually by streamlining processes and controlling costs.
[PICTURE OF A HAND ON A CALCULATOR.]
The entire Wilmington Trust staff supports this effort by providing a steady
flow of ideas on how our organization can work more intelligently and
efficiently.
12
<PAGE>
A STRONG AVERSION TO RISK.
Our goal is to protect our organization against excessive forms of financial
risk, including those related to credit, fluctuating interest rates, and
business activities. The safeguarding of our capital position has long been a
hallmark of our company, and we continue to make it a top priority.
[PICTURE INCLUDING MISCELLANEOUS WILMINGTON TRUST
PUBLICATIONS, A PORTABLE TELEPHONE, EYEGLASSES
AND A WILMINGTON TRUST COFFEE MUG.]
ORGANIZATION
[STRENGTHENING A UNIFIED ORGANIZATION.]
The success of our strategic plan, and the initiatives that support our
priorities, depend on a unified and diverse staff. Wilmington Trust enjoys a
strong spirit of cooperation and has embraced working principles that include
empowerment with accountability, honesty and integrity, teamwork, respect and
courage. With an ability to anticipate and respond to the needs of our
customers, we are working together to achieve our mission.
[PICTURE OF SEVERAL BROCHURES DESCRIBING WILMINGTON TRUST
PRODUCTS AND PROGRAMS.]
A VISION OF THE FUTURE.
Wilmington Trust's strategic plan calls for major initiatives that touch
virtually every aspect of our business. Over the next several years, we plan to
double the size of our commercial and private banking loan portfolios as well as
add significant growth to our fee-based businesses. Concurrently, we plan to
keep a diligent watch on risk management and expense control.
Beyond the targets, our staff has adopted a renewed commitment to nurturing a
productive, motivating culture at Wilmington Trust. These commitments are
critical to our success as we must maintain an environment within our company
that enables us to maneuver effectively and efficiently in a very competitive
marketplace. This commitment must be evident in all that we do as we help our
customers succeed and continue to position Wilmington Trust for continued
success well into the 21st century.
[PICTURE OF DESK WITH WILMINGTON TRUST BUSINESS CARDS AND DAYTIMER CALENDAR.]
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
SUMMARY
1996 marked the fifteenth consecutive year in which the Corporation has posted
record earnings.1 Net income for 1996 reached a record $97.3 million, or $2.83
per share. This was an 8% increase over the $90 million, or $2.56 per share,
reported for 1995.
The improvement was attributable to growth in both of the major components of
the Corporation's income. Net interest income increased 9% to $214.2 million, an
increase of $16.9 million over the $197.4 million reported for 1995. Noninterest
revenues increased 8% to $138.2 million, an increase of $10.6 million over the
$127.6 million reported for 1995.
The provision for loan losses for 1996 was $16 million, an increase of $3.7
million, or 30%, over the $12.3 million provision for 1995.
Operating expenses for 1996 were $192.3 million. This was an increase of $11.3
million, or 6%, over the $181 million reported for 1995. The provision for
income taxes was $46.8 million, an increase of $5.2 million, or 12%, over the
$41.7 million reported for 1995. These results produced a return on average
stockholders' equity of 21.38%, above the 20.70% reported for last year, and
marked the twelfth consecutive year that return on equity1 has exceeded 20%. The
return on average assets for 1996 was 1.83%, unchanged from a year ago.
The Corporation maintained its high level of productivity during 1996. The net
profit margin (measured by net income as a percentage of the sum of net interest
and noninterest income) for 1996 was 27.6%, down slightly from the 27.7%
reported for 1995. Productivity for 1996, as measured by net income per staff
member, was $40,000, up from the $39,000 reported for 1995.
Statistical disclosures required of bank holding companies by Industry Guide 3
are included in the Corporation's Annual Report on Form 10-K for 1996.
________________________________
1 BASED UPON INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.
14
<PAGE>
The following table presents comparative five-year average balance sheets and
income statements, as well as interest income and expense and respective yields
and costs of funds for those years.
[GRAPH OF NET INCOME PER STAFF MEMBER FOR EACH YEAR FROM 1986 TO 1996,
WITH THE FOLLOWING PLOT POINTS, IN THOUSANDS:
1986 - $20.63
1987 - $23.38
1988 - $25.45
1989 - $28.16
1990 - $31.45
1991 - $32.88
1992 - $29.26
1992A- $36.00 BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - $36.72
1994 - $36.98
1995 - $38.61
1996 - $40.23]
[GRAPH OF NET PROFIT MARGIN (NET INCOME AS A PERCENTAGE OF
OPERATING REVENUES) FOR EACH YEAR FROM 1986 TO
1996, WITH THE FOLLOWING PLOT POINTS:
1986 - 25.61%
1987 - 26.13%
1988 - 28.72%
1989 - 28.53%
1990 - 29.34%
1991 - 28.51%
1992 - 23.24%
1992A- 28.59% BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - 28.69%
1994 - 28.64%
1995 - 27.70%
1996 - 27.60%]
15
<PAGE>
FIVE-YEAR ANALYSIS OF EARNINGS AND CONSOLIDATED STATEMENT OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
1996 1995
------------------------------ -------------------------------------
(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>
Time deposits in other banks $ __ $ __ __% $ __ $ __ __%
Federal funds sold and securities
purchased under agreements to resell 26,459 1,475 5.57 17,522 1,036 5.91
- --------------------------------------------------------------- -----------------------
Total short-term investments 26,459 1,475 5.57 17,522 1,036 5.91
-------------------------------------------------------------------------
U.S. Treasury and government agencies 818,585 51,511 6.30 598,501 37,182 6.21
State and municipal(1) 35,473 2,829 8.00 42,099 3,077 7.31
Preferred stock (1) 133,322 10,058 7.51 155,632 9,865 6.34
Asset-backed securities 259,071 15,163 5.85 290,779 15,946 5.48
Other(1) 96,556 5,321 5.53 96,991 5,595 5.76
- --------------------------------------------------------------- ------------------------
Total investment securities 1,343,007 84,882 6.33 1,184,002 71,665 6.05
------------------------------------------------------------------------
Commercial, financial and
agricultural 1,160,899 103,131 8.88 1,074,860 99,199 9.23
Real Estate---construction 114,827 11,150 9.71 103,104 10,739 10.42
Mortgage--commercial 806,782 77,871 9.65 751,937 74,244 9.87
Mortgage--residential 683,095 53,563 7.84 633,852 50,356 7.94
Installment loans to individuals 836,827 80,941 9.67 827,029 81,141 9.81
- --------------------------------------------------------------- ------------------------
Total loans(1)(2) 3,602,430 326,656 9.07 3,390,782 315,679 9.31
------------------------------------------------------------------------
Total earning assets 4,971,896 413,013 8.31 4,592,306 388,380 8.46
Other assets 335,467 340,560
- ----------------------------------------------------- ----------
Total assets $5,307,363 $4,932,866
========================================================================
Savings $ 356,542 8,431 2.36 $ 357,048 8,703 2.44
Interest-bearing demand 1,007,652 25,962 2.58 981,379 26,253 2.68
Certificates under $100,000 1,245,436 72,095 5.79 1,084,165 61,540 5.68
Certificates $100,000 and over 281,314 15,467 5.50 161,403 8,808 5.46
- --------------------------------------------------------------- ------------------------
Total interest-bearing deposits 2,890,944 121,955 4.22 2,583,995 105,304 4.08
-----------------------------------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1,161,521 63,429 5.46 1,203,372 72,178 6.00
U.S. Treasury demand 34,241 1,766 5.16 36,044 2,147 5.96
- --------------------------------------------------------------- ------------------------
Total short-term borrowings 1,195,762 65,195 5.45 1,239,416 74,325 6.00
----------------------------------------------------------------------
Long-term debt 30,910 1,479 4.78 6,981 348 4.98
- --------------------------------------------------------------- ------------------------
Total interest-bearing liabilities 4,117,616 188,629 4.58 3,830,392 179,977 4.70
Demand deposits 633,066 580,928
Other noninterest funds 221,214 180,986
- ------------------------------------------------------------------------------------------------------------------
Total funds used to support 4,971,896 188,629 3.80 4,592,306 179,977 3.92
earning assets
Stockholders' equity 454,917 434,843
Equity used to support earning assets (221,214) (180,986)
Other liabilities 101,764 86,703
- ----------------------------------------------------- ----------
Total liabilities and stockholders'
equity $5,307,363 $4,932,866
========================================================================
16
<PAGE>
1996 1995
------------------------------ -------------------------------------
(In thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
- -------------------------------------------------------------------------------------------------------------------
Net interest income/yield 224,384 4.51 208,403 4.54
Tax-equivalent adjustment (10,163) (11,039)
-------------------------------------------------------------
Net interest income 214,221 197,364
Provision for loan losses (16,000) (12,280)
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 198,221 185,084
- --------------------------------------------------------------------------------------------------------------------
Other income
Trust and investment management
fees 98,247 87,982
Service charges on deposit
accounts 19,038 17,497
Other operating income 19,764 19,894
Securities gains/(losses) 1,188 2,267
- --------------------------------------------------------------------------------------------------------------------
Total other income 138,237 127,640
-------------------------------------------------------------
Net interest and other income 336,458 312,724
-------------------------------------------------------------
Other expense
Salaries and employment benefits 119,574 110,670
Net occupancy 11,111 10,706
Furniture and equipment 14,413 14,067
Other operating expense 47,241 45,561
- --------------------------------------------------------------------------------------------------------------------
Total other expense 192,339 181,004
------------------------------------------------------------
Income before income taxes and
cumulative effect of change
in accounting principle 144,119 131,720
Applicable income taxes 46,841 41,689
- --------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 97,278 90,031
Cumulative effect of change in accounting
principle (net of income tax
benefit of $8,296) -- --
- --------------------------------------------------------------------------------------------------------------------
Net income $97,278 $90,031
============================================================
Per share data:
Income before cumulative effect of
change in accounting principle $2.83 $2.56
Cumulative effect of change in
accounting principle -- --
------------------------------------------------------------
Net income per share $2.83 $2.56
============================================================
</TABLE>
(1) TAX ADVANTAGED INCOME HAS BEEN ADJUSTED TO A TAX-EQUIVALENT BASIS USING
COMBINED STATUTORY FEDERAL AND STATE INCOME TAX RATES OF 38.2% IN 1996,
1995, 1994 AND 1993 AND 37.2% IN 1992.
(2) LOAN BALANCES INCLUDE NONACCRUAL LOANS. AMORTIZATION OF DEFERRED LOAN FEES
HAS BEEN INCLUDED IN INTEREST INCOME.
NOTE: AVERAGE RATES ARE CALCULATED USING AVERAGE BALANCES BASED ON HISTORICAL
COST AND DO NOT REFLECT THE MARKET VALUATION ADJUSTMENT REQUIRED BY STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES," EFFECTIVE JANUARY 1, 1994.
17
<PAGE>
<TABLE>
<CAPTION>
1994 1993
--------------------------------------- -------------------------------------
(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>
Time deposits in other banks $ 152 $ 7 3.95% $ 1,856 $ 83 4.47%
Federal funds sold and securities
purchased under agreements to resell 26,273 1,155 4.40 19,392 645 3.33
- ---------------------------------------------------------------------- ----------------------
Total short-term investments 26,425 1,162 4.40 21,248 728 3.43
--------------------------------------------------------------------------------
U.S. Treasury and government agencies 457,961 26,263 5.73 427,900 27,433 6.41
State and municipal(1) 53,335 3,921 7.35 82,036 6,851 8.35
Preferred stock (1) 235,773 11,006 4.67 302,032 11,168 3.70
Asset-backed securities 227,415 11,199 4.92 75,729 3,929 5.19
Other(1) 85,531 4,050 4.74 58,355 1,777 3.05
- ---------------------------------------------------------------------- ----------------------
Total investment securities 1,060,015 56,439 5.33 946,052 51,158 5.41
--------------------------------------------------------------------------------
Commercial, financial and
agricultural 947,544 77,565 8.19 854,720 72,887 8.53
Real Estate---construction 120,067 10,687 8.90 124,438 9,293 7.47
Mortgage--commercial 686,307 55,530 8.09 641,554 46,943 7.32
Mortgage--residential 605,971 47,604 7.86 623,738 55,495 8.90
Installment loans to individuals 754,495 69,429 9.20 705,459 65,734 9.32
- ---------------------------------------------------------------------- ----------------------
Total loans(1)(2) 3,114,384 260,815 8.37 2,949,909 250,352 8.49
--------------------------------------------------------------------------------
Total earning assets 4,200,824 318,416 7.58 3,917,209 302,238 7.72
Other assets 321,221 304,603
- -------------------------------------------------------- ----------
Total assets $4,522,045 $4,221,812
================================================================================
Savings $ 380,543 8,712 2.29 $ 333,423 8,727 2.62
Interest-bearing demand 1,101,916 24,962 2.27 1,069,309 25,501 2.38
Certificates under $100,000 1,047,090 49,908 4.77 1,114,884 56,317 5.05
Certificates $100,000 and over 175,187 6,895 3.94 201,269 8,249 4.10
- ---------------------------------------------------------------------- ------------------------
Total interest-bearing deposits 2,704,736 90,477 3.35 2,718,885 98,794 3.63
--------------------------------------------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 722,377 31,154 4.31 480,575 15,516 3.23
U.S. Treasury demand 52,925 1,921 3.63 64,437 1,815 2.82
- ---------------------------------------------------------------------- ----------
Total short-term borrowings 775,302 33,075 4.27 545,012 17,331 3.18
--------------------------------------------------------------------------------
Long-term debt -- -- -- -- -- --
- ---------------------------------------------------------------------- ------------------------
Total interest-bearing liabilities 3,480,038 123,552 3.55 3,263,897 116,125 3.56
Demand deposits 559,574 500,396
Other noninterest funds 161,212 152,916
- -----------------------------------------------------------------------------------------------------------------------------
Total funds used to support
earning assets 4,200,824 123,552 2.94 3,917,209 116,125 2.97
Stockholders' equity 408,647 391,782
Equity used to support earning assets (161,212) (152,916)
Other liabilities 73,786 65,737
---------- ----------
Total liabilities and stockholders'
equity $4,522,045 $4,221,812
================================================================================
18
<PAGE>
1994 1993
----------------------------------- ---------------------------------
(In thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
- ----------------------------------------------------------------------------------------------------------------------
Net interest income/yield 194,864 4.64 186,113 4.75
Tax-equivalent adjustment (10,534) (11,266)
-----------------------------------------------------------
Net interest income 184,330 174,847
Provision for loan losses (4,550) (9,500)
- ----------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 179,780 165,347
- ----------------------------------------------------------------------------------------------------------------------
Other income
Trust and investment management
fees 82,542 78,313
Service charges on deposit
accounts 16,648 16,424
Other operating income 16,048 18,662
Securities gains/(losses) (2,157) 268
- ----------------------------------------------------------------------------------------------------------------------
Total other income 113,081 113,667
----------------------------------------------------------
Net interest and other income 292,861 279,014
----------------------------------------------------------
Other expense
Salaries and employment benefits 101,813 95,849
Net occupancy 10,232 9,317
Furniture and equipment 12,302 11,380
Other operating expense 47,680 45,240
- ----------------------------------------------------------------------------------------------------------------------
Total other expense 172,027 161,786
----------------------------------------------------------
Income before income taxes and
cumulative effect of change
in accounting principle 120,834 117,228
Applicable income taxes 35,665 34,467
- ----------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 85,169 82,761
Cumulative effect of change in accounting
principle (net of income tax
benefit of $8,296) -- --
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 85,169 $ 82,761
===========================================================
Per share data:
Income before cumulative effect of
change in accounting principle $ 2.37 $ 2.24
Cumulative effect of change in
accounting principle -- --
-----------------------------------------------------------
Net income per share $ 2.37 $ 2.24
===========================================================
(1) TAX ADVANTAGED INCOME HAS BEEN ADJUSTED TO A TAX-EQUIVALENT BASIS USING
COMBINED STATUTORY FEDERAL AND STATE INCOME TAX RATES OF 38.2% IN 1996,
1995, 1994 AND 1993 AND 37.2% IN 1992.
(2) LOAN BALANCES INCLUDE NONACCRUAL LOANS. AMORTIZATION OF DEFERRED LOAN FEES
HAS BEEN INCLUDED IN INTEREST INCOME.
NOTE: AVERAGE RATES ARE CALCULATED USING AVERAGE BALANCES BASED ON HISTORICAL
COST AND DO NOT REFLECT THE MARKET VALUATION ADJUSTMENT REQUIRED BY STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES," EFFECTIVE JANUARY 1, 1994.
</TABLE>
19
<PAGE>
1992
-------------------------------
(In thousands; rates on Average Income/ Average
tax-equivalent basis) balance expense rate
- -----------------------------------------------------------------------------
Time deposits in other banks $ 3,770 $ 159 4.22%
Federal funds sold and securities
purchased under agreements to resell 69,017 2,441 3.54
- -------------------------------------------------------------------
Total short-term investments 72,787 2,600 3.57
-------------------------------
U.S. Treasury and government agencies 275,190 21,633 7.86
State and municipal(1) 88,612 7,718 8.71
Preferred stock (1) 287,470 12,311 4.28
Asset-backed securities 96,053 8,237 8.58
Other(1) 56,611 2,433 4.30
- -------------------------------------------------------------------
Total investment securities 803,936 52,332 6.51
-------------------------------
Commercial, financial and
agricultural 813,491 75,144 9.24
Real Estate---construction 120,428 9,618 7.99
Mortgage--commercial 631,981 48,742 7.71
Mortgage--residential 714,929 67,448 9.43
Installment loans to individuals 698,747 71,747 10.27
- -------------------------------------------------------------------
Total loans(1)(2) 2,979,576 272,699 9.15
-------------------------------
Total earning assets 3,856,299 327,631 8.50
Other assets 279,496
- --------------------------------------------------------
Total assets $4,135,795
===============================
Savings $ 259,925 9,410 3.62
Interest-bearing demand 976,028 33,065 3.39
Certificates under $100,000 1,235,310 74,570 6.04
Certificates $100,000 and over 307,505 14,948 4.86
- -------------------------------------------------------------------
Total interest-bearing deposits 2,778,768 131,993 4.75
-------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 417,344 16,202 3.88
U.S. Treasury demand 62,233 2,102 3.38
- -------------------------------------------------------------------
Total short-term borrowings 479,577 18,304 3.82
-------------------------------
Long-term debt -- -- --
- -------------------------------------------------------------------
Total interest-bearing liabilities 3,258,345 150,297 4.61
Demand deposits 443,205
Other noninterest funds 154,749
- -----------------------------------------------------------------------------
Total funds used to support
earning assets 3,856,299 150,297 3.90
Stockholders' equity 367,144
Equity used to support earning assets (154,749)
Other liabilities 67,101
- --------------------------------------------------------
Total liabilities and stockholders'
equity $4,135,795
===============================
20
<PAGE>
1992
-----------------------------
(In thousands; rates on Average Income/ Average
tax-equivalent basis) balance expense rate
- ---------------------------------------------------------------------------
Net interest income/yield 177,334 4.60
Tax-equivalent adjustment (12,120)
Net interest income 165,214
Provision for loan losses (13,000)
- ---------------------------------------------------------------------------
Net interest income after provision
for loan losses 152,214
- ---------------------------------------------------------------------------
Other income
Trust and investment management
fees 77,002
Service charges on deposit
accounts 15,109
Other operating income 15,897
Securities gains/(losses) 2,259
- ---------------------------------------------------------------------------
Total other income 110,267
-------------------
Net interest and other income 262,481
-------------------
Other expense
Salaries and employment benefits 90,419
Net occupancy 8,581
Furniture and equipment 11,179
Other operating expense 43,602
- ---------------------------------------------------------------------------
Total other expense 153,781
-------------------
Income before income taxes and
cumulative effect of change
in accounting principle 108,700
Applicable income taxes 29,938
- ---------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 78,762
Cumulative effect of change in accounting
principle (net of income tax
benefit of $8,296) (14,749)
- ---------------------------------------------------------------------------
Net income $ 64,013
==================
Per share data:
Income before cumulative effect of
change in accounting principle $ 2.09
Cumulative effect of change in
accounting principle (0.39)
------------------
Net income per share $ 1.70
==================
(1) TAX ADVANTAGED INCOME HAS BEEN ADJUSTED TO A TAX-EQUIVALENT BASIS USING
COMBINED STATUTORY FEDERAL AND STATE INCOME TAX RATES OF 38.2% IN 1996,
1995, 1994 AND 1993 AND 37.2% IN 1992.
(2) LOAN BALANCES INCLUDE NONACCRUAL LOANS. AMORTIZATION OF DEFERRED LOAN FEES
HAS BEEN INCLUDED IN INTEREST INCOME.
NOTE: AVERAGE RATES ARE CALCULATED USING AVERAGE BALANCES BASED ON HISTORICAL
COST AND DO NOT REFLECT THE MARKET VALUATION ADJUSTMENT REQUIRED BY STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES," EFFECTIVE JANUARY 1, 1994.
21
<PAGE>
STATEMENT OF CONDITION
Total assets for 1996 increased, on average, $374.5 million, or 8%, to $5.31
billion. A $379.6 million, or 8%, increase in the average level of earning
assets was primarily responsible for this increase.
Average total earning assets for 1996 were $4.97 billion. This was a $379.6
million, or 8%, increase over the $4.59 billion reported for 1995. Growth in the
level of loans outstanding was responsible for 56% of this increase, while
growth in the investment portfolio was responsible for 42% of this increase. The
loan portfolio grew $211.6 million, or 6%, to $3.6 billion. Contributing to this
increase was an $86 million, or 8%, increase in commercial loans, a $54.8
million, or 7%, increase in commercial mortgage loans, a $49.2 million, or 8%,
increase in residential mortgage loans, an $11.7 million, or 11%, increase in
real estate construction loans, and a $9.8 million, or 1%, increase in consumer
loans. Approximately 20% of this 1996 loan growth was a direct result of the
Corporation's marketing and sales efforts in its expansion markets in
southeastern Pennsylvania, Maryland and Florida.
The average level of investment securities for 1996 increased $159 million, or
13%, as the Corporation took steps to maintain its overall leverage position and
to pre-invest anticipated maturities. Contributing to this increase were higher
levels of U.S. Treasury and government agency securities, which increased $220.1
million, or 37%, to $818.6 million. This increase was offset, in part, by lower
levels of asset-backed securities, preferred stocks and municipal bonds which
paid down, were sold or matured during the year.
On the liability side of the balance sheet, total liabilities increased $354.4
million, or 8%, on average. A $359.1 million increase in total deposits and a
$23.9 million increase in long-term debt were offset, in part, by a $43.7
million, or 4%, decrease in short-term borrowings. Total deposits for 1996
reached $3.52 billion. This was an increase of $359.1 million, or 11%, over the
$3.16 billion reported for 1995. The growth in retail deposits was primarily due
to the Corporation's marketing efforts during 1996 in both Delaware and its
expansion markets of Pennsylvania and Maryland. A premium-rate certificate of
deposit program was offered for establishing a relationship banking account. As
a result, all categories of retail interest-bearing deposits other than savings
accounts increased on average during the year. Certificates of deposit under
$100,000 increased $161.3 million, or 15%. Noninterest-bearing demand accounts
increased $52.1 million, or 9%, to $633.1 million. The average level of
short-term borrowings fell $43.7 million, or 4%, to $1.2 billion due, in part,
to the increase in the level of certificates of deposit $100,000 and over. These
increased, on average, $120 million, or 74%. The average level of long-term debt
increased $24 million. The Corporation obtained funding from the Federal Home
Loan Bank of Pittsburgh to construct its new operations center in Wilmington,
Delaware. If further funding needs arise that exceed funding provided by retail
deposits, the Corporation anticipates that it would be able to meet those
funding needs in a timely and cost-effective manner. See "Liquidity."
22
<PAGE>
Average total stockholders' equity during 1996 increased $20.1 million, or 5%,
to $454.9 million. Additions to equity from earnings for the year were offset in
part by higher levels of dividend payments and the Corporation's ongoing stock
repurchases. See "Capital Resources."
SOURCES OF LOANS
[PIE CHART OF LOAN PORTFOLIOS, WITH THE FOLLOWING PLOT POINTS:
CONSUMER LOANS
PERSONAL - 17.9%
RESIDENTIAL MORTGAGE-FIXED RATE - 12.2%
RESIDENTIAL MORTGAGE-FLOATING RATE - 5.8%
HOME EQUITY - 3.6%
CREDIT CARDS - 1.9%
LEASES - 2.6%
TOTAL CONSUMER LOANS - 44.0%
COMMERCIAL LOANS
PERMANENT MORTGAGE - 12.6%
REAL ESTATE DEVELOPMENT - 5.2%
REAL ESTATE INTERIM PROJECT - 3.9%
BUSINESS - 34.3%
TOTAL COMMERCIAL LOANS - 56.0%]
NET INTEREST INCOME
The Corporation's net interest income for 1996, on a fully tax-equivalent
("FTE") basis, was $224.4 million, an increase of $16 million, or 8%, over the
$208.4 million reported for 1995. This was a result of a $24.6 million increase
in interest revenues offset, in part, by an $8.7 million increase in interest
expense. The Corporation's net interest margin for 1996 declined three basis
points, to 4.51% from 4.54% reported for 1995.
23
<PAGE>
Interest income (FTE) for 1996 totaled $413 million, an increase of $24.6
million, or 6%, over the $388.4 million reported for 1995. Interest revenues
increased $32 million due to a $379.6 million increase in the average level of
earning assets. This increase was offset, in part, by a $7.4 million decrease in
interest revenues as a result of the lower interest rate environment. The
average interest rate earned on the Corporation's assets for 1996 was 8.31%, a
15-basis point decrease from the 8.46% earned for 1995. This decrease in
interest income attributable to the declining rate environment was partially
offset by the Corporation's investment in interest rate swap and interest rate
floor contracts. Swaps of $400 million, on which the Corporation is making
variable-rate payments and is receiving fixed-rate payments, increased interest
income $2.2 million during 1996. This compares with $450 million of swaps
outstanding during 1995, which reduced interest income $1.2 million. Interest
rate floors of $250 million, on which the Corporation receives payments when the
floating rate index is below the strike price, contributed $955,000 to interest
revenues during 1996, compared with $200 million in floors which contributed
$85,000 to interest revenues during 1995. These numbers were offset, in part, by
amortized acquisition costs of $320,000 and $313,000 in 1996 and 1995,
respectively. During the second quarter of 1995, the sale of $200 million of
floors resulted in a $4.3 million gain, which is being deferred and accreted
into income over the remaining lives of the floors sold. The accreted gain for
1996 and 1995 was $1.2 million and $892,000, respectively. The net result of the
swaps and floors was an increase of eight basis points in the Corporation's net
interest margin during 1996, compared to a one-basis point reduction in the
Corporation's net interest margin for 1995.
Interest expense for 1996 was $188.6 million, an increase of $8.7 million, or
5%, over the $180 million reported for 1995. Interest expense increased $13.5
million due to a $287.2 million increase in interest-bearing liabilities.
Offsetting this increase, in part, was a $4.8 million decrease in interest
expense due to the lower interest rate environment. The average rate of interest
paid on the Corporation's liabilities for 1996 was 3.8%, a 12-basis point
decrease from the 3.92% paid during 1995. The Corporation's prime lending rate
(the rate at which banks lend to their most creditworthy customers) and the
discount rate (the rate at which the Federal Reserve Banks lend money to their
member banks) declined during the year. The average prime rate for 1996 was
8.27%, while the discount rate was 5.02%, compared with corresponding average
rates for 1995 of 8.83% and 5.2%, respectively.
[GRAPH OF NET INTEREST MARGIN FOR EACH YEAR FROM 1986 TO 1996,
WITH THE FOLLOWING PLOT POINTS:
1986 - 4.54%
1987 - 4.30%
1988 - 4.41%
1989 - 4.46%
1990 - 4.23%
1991 - 4.37%
1992 - 4.62%
1993 - 4.76%
1994 - 4.64%
1995 - 4.54%
1996 - 4.51%]
24
<PAGE>
NONINTEREST REVENUES AND OPERATING EXPENSES
[GRAPH OF OPERATING REVENUES (NET INTEREST INCOME BEFORE PROVISION
FOR LOAN LOSSES PLUS NONINTEREST INCOME) FOR EACH YEAR FROM
1986 TO 1996, WITH THE FOLLOWING PLOT POINTS, IN MILLIONS:
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES
1986 - $ 85.00
1987 - $ 99.40
1988 - $112.10
1989 - $128.03
1990 - $137.57
1991 - $152.89
1992 - $165.21
1993 - $174.85
1994 - $184.33
1995 - $197.36
1996 - $214.22
NONINTEREST INCOME
1986 - $ 67.29
1987 - $ 79.36
1988 - $ 81.53
1989 - $ 86.43
1990 - $ 95.97
1991 - $102.31
1992 - $110.27
1993 - $113.67
1994 - $113.08
1995 - $127.64
1996 - $138.24
25
<PAGE>
TOTAL OPERATING REVENUES
1986 - $152.29
1987 - $178.76
1988 - $193.63
1989 - $214.46
1990 - $233.54
1991 - $255.20
1992 - $275.48
1993 - $288.52
1994 - $297.41
1995 - $325.00
1996 - $352.46]
[GRAPH OF EFFICIENCY RATIO (TOTAL OTHER EXPENSES
AS A PERCENTAGE OF OPERATING REVENUES ON A
TAX-EQUIVALENT BASIS) FOR EACH YEAR
FROM 1986 TO 1996, WITH THE FOLLOWING PLOT POINTS:
1986 - 52.23%
1987 - 53.23%
1988 - 53.69%
1989 - 53.60%
1990 - 53.21%
1991 - 52.71%
1992 - 53.47%
1993 - 53.97%
1994 - 55.86%
1995 - 53.86%
1996 - 53.04%]
Revenues from noninterest sources for 1996 were $138.2 million, an increase of
$10.6 million, or 8%, over the $127.6 million reported for 1995.
Trust and asset management fees during 1996 increased $10.3 million, or 12%, to
$98.2 million. All three components--personal trust fees, corporate financial
services fees and asset management fees--reflected increases over 1995. These
results are attributable in part to the establishment of a highly competitive
incentive-based compensation program and expanded sales efforts. The
contribution of these fees to net income was approximately the same as the
percentage of trust and asset management fees to total operating revenues.
Personal trust fees in 1996 were $47.5 million, or 13% of operating revenues.
This was a $6.1 million, or 15%, increase over the $41.4 million reported for
1995. These fees are primarily earned from principal, income and distribution
commissions on assets held in personal trust accounts. Estate settlement,
private banking and personal tax return preparation also contributed to these
fees. During 1996, higher levels of fee income were reported from all components
of this business line.
26
<PAGE>
Corporate financial services fees for 1996 were $28.1 million, or 8% of
operating revenues. This was a $946,000, or 3%, increase over the $27.1 million
reported for 1995. These fees are generated by providing trust and custody
services to corporate clients and financial intermediaries. The Corporation also
acts as trustee for leased capital equipment, collateralized securities, bond
financings, corporate restructurings, bankruptcy liquidations and fiduciary
services for all types of employee benefit trusts. Services as a corporate
custodian include all aspects of establishing and administering Delaware
investment holding companies. During 1996, income from each of these fee sources
improved over 1995 levels, except for equipment leasing and corporate agency
fees, which remained level with 1995.
Asset management fees for 1996 were $22.7 million, or 6% of operating revenues.
This was a $3.3 million, or 17%, increase over the $19.5 million reported for
1995. The Corporation offers a broad range of institutional portfolio management
services, including domestic and foreign entities, fixed-income investments and
short-term cash management, and manages a variety of mutual funds. In addition,
the Corporation provides discount brokerage services through Wilmington
Brokerage Services Company, a subsidiary of Wilmington Trust Company, the
Corporation's principal banking subsidiary (the "Bank"), providing convenience
and efficiency to both customers and correspondent banks. During 1996, higher
fee income was generated by mutual fund administration, equity management and
the discount brokerage subsidiary, while fixed-income management fees were the
same as in 1995.
Service charges on deposit accounts for 1996 were $19 million, an increase of
$1.5 million, or 9%, over the $17.5 million reported for 1995. This increase was
due to higher returned item and overdraft fees, automated teller machine fees,
checkbook fees and checking account balance fees, all of which benefited from a
pricing increase in the middle of 1995. Other operating income for 1996 was
$19.8 million, a $130,000, or 0.7%, decrease from the $19.9 million reported for
1995. Higher credit card fees and loan origination fees and gains on residential
mortgage loan sales were responsible for this increase.
Securities gains of $1.2 million were recognized in 1996, compared with $2.3
million of such gains in 1995.
Noninterest (operating) expenses for 1996 were $192.3 million, an increase of
$11.3 million, or 6%, over the $181 million reported for 1995. Personnel
expenses for 1996 were $119.6 million, an $8.9 million, or 8%, increase over the
$110.7 million reported for 1995. Higher salaries, bonuses, incentives, payroll
taxes and health insurance costs were partially offset by lower pension expense.
Salaries and wages were $82.2 million, an increase of $4.9 million, or 6%, over
the $77.3 million reported for 1995. To incent its employees and pay for
performance, the Corporation offers its employees highly competitive sales
incentives and a profit-sharing bonus. Bonuses and incentives earned in 1996
were $17.6 million, an increase of $2.6 million, or 17%, over the $15 million
earned in 1995. No salary or employment benefit costs associated with the
development of the Corporation's new trust system were capitalized during 1996.
This compares with $845,000 of such capitalized personnel costs for 1995.
27
<PAGE>
Net occupancy and furniture and equipment expenses during 1996 increased
modestly due, in part, to higher depreciation and maintenance expense on
electronic data processing equipment. Other operating expenses in 1996 were
$41.3 million, a $1.6 million, or 4%, increase over the $39.7 million reported
for 1995. Higher advertising, telephone, legal and travel expense were offset,
in part, by lower FDIC deposit insurance premiums. The Corporation's commitment
to growth in its expansion markets, deposit generation and enhancing its
recognition as one of the nation's premier trust companies was evidenced by a
$1.1 million, or 26%, increase in advertising expense for 1996 to $5.4 million.
The provision for income taxes for 1996 was $46.8 million, a $5.2 million, or
12%, increase over the $41.7 million reported for 1995. The Corporation's
effective tax rate for the year was 32.5%, compared with 31.6% in 1995.
INTEREST RATE SENSITIVITY
[GRAPH OF TRUST AND ASSET MANAGEMENT FEES FOR EACH YEAR FROM 1986
TO 1996, WITH THE FOLLOWING PLOT POINTS, IN MILLIONS:
PERSONAL TRUST FEES
1986 - $20.7
1987 - $20.8
1988 - $21.5
1989 - $25.3
1990 - $32.0
1991 - $33.4
1992 - $35.3
1993 - $36.0
1994 - $37.5
1995 - $41.4
1996 - $47.4
CORPORATE TRUST FEES
1986 - $12.0
1987 - $16.8
1988 - $19.7
1989 - $19.3
1990 - $21.9
1991 - $22.8
1992 - $23.7
1993 - $23.9
1994 - $25.8
1995 - $27.1
1996 - $28.1
28
<PAGE>
ASSET MANAGEMENT FEES
1986 - $11.6
1987 - $13.9
1988 - $13.9
1989 - $14.2
1990 - $14.6
1991 - $16.5
1992 - $18.0
1993 - $18.4
1994 - $19.2
1995 - $19.5
1996 - $22.7
TOTAL TRUST AND ASSET MANAGEMENT FEES
1986 - $44.3
1987 - $51.5
1988 - $55.1
1989 - $58.8
1990 - $68.5
1991 - $72.7
1992 - $77.0
1993 - $78.3
1994 - $82.5
1995 - $88.0
1996 - $98.2]
Net interest income is an important determinant of the Corporation's financial
performance. Through interest rate sensitivity management, the Corporation seeks
to maximize the growth of net interest income on a consistent basis by
minimizing the effects of fluctuations associated with changing market interest
rates.
The composition of assets, liabilities and off-balance-sheet instruments and
their respective repricing and maturity characteristics are evaluated in
assessing the Corporation's exposure to changes in interest rates. Gap analysis,
used to measure the difference between volumes of 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. Instead, it
assumes that all rate-sensitive balances reprice at the same time and to the
same extent. Because of these inherent limitations, the Corporation also employs
simulation models to measure dynamic changes in rate-sensitive assets,
liabilities and off-balance-sheet instruments caused by variations in interest
rates.
29
<PAGE>
The Corporation's interest rate sensitivity, as measured by gap analysis, was
liability-sensitive at the end of 1996. Liability sensitivity indicates that
liabilities reprice faster than assets and, therefore, if interest rates
decline, net interest income would rise, assuming all other variables remained
constant. Conversely, if interest rates rise, net interest income would decline.
The Corporation's one-year gap as a percentage of total rate-sensitive assets as
of December 31, 1996 was (20.6%), down from the (22.7%) reported at year-end
1995. A significant portion of the Corporation's current liability-sensitivity
is attributable to the repricing characteristics of certain of its liability
products, including savings, interest-bearing demand and money market accounts,
which typically do not reprice to the same extent as market interest rates.
Contributing to the smaller year-end gap position were increases in money market
investments.
During 1996, the Corporation sold certain fixed-rate residential mortgage loans
into the secondary market. The primary goal of this program was to eliminate the
risk that the average lives of these fixed-rate residential mortgage loans would
extend beyond their anticipated durations, as frequently occurs during periods
of rising interest rates. Total mortgage loans sold during 1996 were $57.3
million.
Management reviews the Corporation's rate sensitivity regularly, and uses a
variety of strategies as needed to adjust that sensitivity. These include
changing the relative proportions of fixed-rate and floating-rate assets and
liabilities, as well as utilizing off-balance-sheet measures such as swaps and
floors.
At December 31, 1996, the Corporation was committed to swaps with a total
notional amount of $400 million, down from the $450 million at year-end 1995.
The swaps have remaining maturities of between one and 40 months, with a
weighted average maturity of 18 months. At December 31, 1996, the Corporation
was committed to floors with a total notional amount of $250 million, as
compared to $200 million at year-end 1995. The floors have remaining maturities
of between 31 and 45 months, with a weighted average maturity of 36 months. The
net interest differential, and the amortization of the initial fees associated
with the purchase of the floors and any gains recorded on sale, are reported
under the caption "Interest and fees on loans" and are recognized over the lives
of the respective instruments. See "Net Interest Income."
LIQUIDITY
A financial institution's liquidity represents its ability to meet, in a timely
manner, cash flow requirements that may arise from increases in demand for loans
and other assets or from decreases in deposits or other funding sources.
Liquidity management, therefore, contains both asset and liability components.
Liquidity of the asset side of the balance sheet is provided by the maturity and
marketability of loans and investments. In addition, all time deposits at other
banks, federal funds sold and securities purchased under agreements to resell
are considered liquid.
30
<PAGE>
Liquidity of the liability side of the balance sheet is usually provided
primarily through a stable, growing base of core deposits. The stability of core
deposits limits the amount of liquidity required to satisfy the demand for loans
and short-term and intermediate-term customer withdrawals. Additional funding
sources include the Corporation's internally generated capital, large
certificates of deposit, federal funds purchased and securities sold under
agreements to repurchase.
The changing market for deposits has shifted the mix of the Corporation's
funding sources. In 1996, the proportion of funding provided by retail deposits
and certificates of deposit greater than $100,000 increased. This increase
allowed the Corporation to reduce its reliance on federal funds purchased and
securities sold under agreements to repurchase. The Corporation believes that
its acceptance in the national markets will permit it to obtain additional
funding if the need arises in the future. In addition, the Bank is a member of
the Federal Home Loan Bank of Pittsburgh, which provides an additional source of
funds.
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
Net chargeoffs for 1996 were $11.5 million, an increase of $424,000, or 4%, over
the $11.1 million reported for 1995. The Corporation's provision for loan losses
for 1996 was $16 million. This was $3.7 million, or 30%, higher than the $12.3
million provision for 1995. The reserve for loan losses at December 31, 1996 was
$54.4 million, a 9% increase over the $49.9 million at the corresponding date a
year ago. The reserve at year-end, as a percentage of loans outstanding, was
1.44%, an increase over the 1.42% reported at year-end 1995. Loans past due 90
days or more, nonaccruing loans and restructured loans at December 31, 1996
totaled $61.2 million. This represented an increase of $8.3 million, or 16%,
above the $52.9 million reported at year-end 1995. Loans past due 90 days or
more at December 31, 1996 totaled $20.4 million, a $1.1 million, or 6%, increase
over the $19.3 million reported at year-end 1995. Nonaccruing loans at year-end
1996 were $40.7 million, a $7.2 million, or 21%, increase over the $33.6 million
reported at year-end 1995. No loans were classified as restructured at either
year-end.
Other real estate owned ("OREO") at December 31, 1996 was $5.1 million, a $9.2
million, or 64%, decrease from the $14.3 million reported at year-end 1995. Net
activity within the OREO portfolio during 1996 included the addition of $7.3
million of properties securing nonperforming loans. Loans and real estate
totaling $16.5 million were removed from the portfolio through chargeoffs and
sales. Chargeoffs within the portfolio during 1996 were $1.1 million. The
balance was liquidated through sales, which resulted in net losses of $386,000.
Expenses incurred to carry this portfolio during 1996 were $500,000.
31
<PAGE>
The overall level of nonperforming loans increased during 1996. Slow economic
conditions or any further deterioration in markets the Corporation serves may
further impair the ability of some borrowers to repay their loans in full on a
timely basis. In that event, management would expect increased levels of
nonperforming assets, credit losses and provisions for loan losses. To minimize
the likelihood and impact of such conditions, management continually monitors
the entire loan portfolio to identify potential problem loans and avoid
disproportionately high concentrations of loans to individual borrowers and
industries. An integral part of this process is a regular analysis of all past
due loans. At December 31, 1996, an analysis of loans 90 days or more past due,
which totaled $20.4 million, indicated approximately 60% of those loans were in
the Corporation's commercial loan portfolio, 22% in the residential mortgage
loan portfolio and 18% in the consumer loan portfolio. This compares with
corresponding levels of 75%, 11% and 10%, respectively, at December 31, 1995.
The Corporation's analysis of these loans indicates that the businesses and/or
the incomes supporting their repayment are well-diversified.
As a result of the Corporation's ongoing monitoring of its loan portfolios, at
December 31, 1996, approximately $12 million in loans were identified that are
either currently performing in accordance with their terms or 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 on a timely basis. In
light of the current levels of past due, nonaccruing and potential problem
loans, management believes that the Corporation's reserve for loan losses 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
conditions, real estate market conditions and regulatory recommendations. The
total amount and allocation of the loan loss reserve among the various loan
portfolios is based primarily on an evaluation of the loss potential of
individual credits and previous credit loss experience, considering management's
assessment of current and future economic conditions. It is not necessarily
indicative of the actual loss amounts by loan category that may ultimately
occur.
[GRAPHS OF RESERVE FOR LOAN LOSSES AND OF NONACCRUING LOANS
FOR EACH YEAR FROM 1986 TO 1996, WITH
THE FOLLOWING PLOT POINTS, IN MILLIONS:
RESERVE FOR LOAN LOSSES
1986 - $27.394
1987 - $28.389
1988 - $34.282
1989 - $38.595
1990 - $42.405
1991 - $44.996
1992 - $46.962
1993 - $51.363
1994 - $48.669
1995 - $49.867
1996 - $54.361
32
<PAGE>
NONACCRUING LOANS
1986 - $ 2.997
1987 - $ 9.872
1988 - $11.687
1989 - $12.248
1990 - $13.932
1991 - $53.962
1992 - $29.674
1993 - $21.983
1994 - $28.851
1995 - $33.576
1996 - $40.735]
CAPITAL RESOURCES
A strong capital position provides a margin of safety for depositors and
stockholders, and enables a financial institution to take advantage of
profitable opportunities and provide for future growth. The Corporation's
capital increased in 1996 over 1995 due primarily to increases in earnings,
reflected by the 11.51% rate of capital generation in 1996, down slightly from
the rate of 11.67% in 1995. The Corporation's capital increase was offset, in
part, by an increase in cash dividends paid of $3.2 million and the
Corporation's ongoing common stock buyback program, in which $51.8 million was
used to purchase the Corporation's common stock on the open market. These
factors resulted in a 1.2% increase in total stockholders' equity to $464.7
million at year-end, compared with $459.4 million at year-end 1995.
The Federal Reserve Board's risk-based capital guidelines establish the minimum
levels of capital a bank holding company must hold. The guidelines are intended
to reflect the varying degrees of risk associated with different balance sheet
and off-balance-sheet items. The Corporation has reviewed its balance sheet and
off-balance-sheet items and calculated its capital position under the risk-based
capital guidelines. As of December 31, 1996, the Corporation's total risk-based
capital ratio was 12.01%, down from the 12.06% reported at the corresponding
date a year ago. The Corporation's Tier 1 risk-based capital ratio at that date
was 10.76%, down from the 10.84% reported at year-end 1995, and its Tier 1
leverage capital ratio was 8.59%, down from the 8.98% reported a year ago. Each
of these ratios exceeded the minimum levels required for adequately capitalized
institutions of 8%, 4% and 4%, respectively, and the levels required for "well
capitalized" institutions of 10%, 6% and 5%, respectively.
On April 18, 1996, the Corporation's Board of Directors increased the quarterly
dividend to $.33 per share. This marked the fifteenth consecutive year of
increased cash dividends. Dividends paid for 1996 totaled $1.29 per share, a 10%
increase over the $1.17 per share paid in 1995. The Corporation's dividend
payout ratio for 1996 was 45.6%, down slightly from the 45.7% payout for 1995.
33
<PAGE>
On April 18, 1996, the Corporation's Board of Directors also authorized the
buyback of four million additional shares of the Corporation's common stock.
This program commenced in May 1996 upon the completion of the three million
share buyback program that began in October 1993. A total of 722,707 shares at a
cost of $23.2 million were purchased in 1996 under the previous program. At
December 31, 1996, 814,367 shares had been bought under the current program at a
cost of $28.6 million. Total shares purchased during 1996 were 1,537,074, at a
cost of $51.8 million.
Management will continue to review the Corporation's capital position, and will
make adjustments as needed to assure that the Corporation's capital base will be
sufficient to satisfy existing and impending regulatory requirements, as well as
meet appropriate standards of safety and provide for future growth.
[GRAPH OF EQUITY TO ASSET RATIO FOR EACH YEAR FROM 1986
TO 1996, WITH THE FOLLOWING PLOT POINTS:
1986 - 6.36%
1987 - 6.86%
1988 - 7.39%
1989 - 7.71%
1990 - 7.58%
1991 - 8.30%
1992 - 8.88%
1993 - 9.28%
1994 - 9.04%
1995 - 8.82%
1996 - 8.57%]
The Corporation's common stock is traded over-the-counter under the symbol
"WILM", and is listed in the Nasdaq National Market System. The following table
summarizes the price ranges of the Corporation's common stock and its quarterly
dividends.
34
<PAGE>
Common Stock Price Range and Dividend Rate By Quarter
- --------------------------------------------------------------------------------
1996 1995
----------------------------- -----------------------------
Quarter High Low Dividend High Low Dividend
- --------------------------------------------------------------------------------
1 $35.00 $30.25 $0.30 $25.75 $22.75 $0.27
2 $34.25 $31.25 $0.33 $28.875 $24.25 $0.30
3 $36.25 $30.75 $0.33 $31.50 $28.25 $0.30
4 $41.75 $35.25 $0.33 $32.50 $28.75 $0.30
==============================================================
- --------------------------------------------------------------------------------
INFLATION
The Corporation's asset and liability structure is substantially different from
that of an industrial company, since virtually all assets and liabilities of a
financial institution are monetary in nature. Accordingly, changes in interest
rates may have a significant impact on a bank's performance. Interest rates do
not necessarily move in the same direction or in the same magnitude as the
prices of goods and services. Therefore, the impact of inflation on a bank's
financial performance is indeterminable.
FINANCIAL ANALYSIS 1995/1994
Net income for 1995 was $90 million, or $2.56 per share. This was a 6% increase
over the $85.2 million, or $2.37 per share, reported for 1994.
Earning assets in 1995 increased, on average, $391.5 million, or 9%, to $4.6
billion. This increase was primarily attributable to a $276.4 million, or 9%,
increase in the average level of the loan portfolio to $3.4 billion.
Contributing to this increase was a $127.3 million, or 13%, increase in
commercial loans, a $65.6 million, or 10%, increase in commercial mortgage
loans, a $72.5 million, or 10%, increase in consumer loans and a $27.9 million,
or 5%, increase in residential mortgage loans. These increases were offset, in
part, by a $17 million, or 14%, decrease in real estate construction loans. The
average level of investment securities during 1995 increased $124 million, or
12%, to $1.2 billion. U.S. Treasury and government agency securities increased
$140.5 million, or 31%, to $598.5 million. Asset-backed securities increased
$63.4 million, or 28%, to $290.8 million. These increases were offset, in part,
by an $80.1 million, or 34%, decline in money market preferred stock to $155.6
million.
35
<PAGE>
Interest-bearing liabilities in 1995 increased, on average, $350.4 million, or
10%, to $3.83 billion. Short-term borrowings, on average, increased $464
million, or 60%, to $1.24 billion. Total deposits for 1995, on average, were
$3.16 billion, a decrease of $99.4 million, or 3%, from the $3.26 billion
reported for 1994. A decrease of $85.6 million in the average level of retail
deposits accounted for virtually all of this decrease. Savings deposits
declined, on average, $23.5 million, or 6%, to $357 million, while
interest-bearing demand accounts declined, on average, $120.5 million, or 11%,
to $981.4 million. Partially offsetting these decreases were increases in the
average levels of certificates of deposit under $100,000, which increased $37.1
million, or 4%, to $1.1 billion and demand deposits, which increased $21.4
million, or 4%, to $581 million. Stockholders' equity during 1995 increased, on
average, $26.2 million, or 6.4%, to $434.8 million on the strength of $90
million in earnings for the year, offset in part by higher levels of dividend
payments and the Corporation's ongoing stock buyback program.
Net interest income (FTE) in 1995 increased $13.5 million, or 7%, to $208.4
million from $194.9 million in 1994. A $70 million increase in interest revenues
was offset, in part, by a $56.4 million increase in interest expense. The higher
interest rate environment was responsible for $40.3 million, or 58%, of the
increase in interest revenues, while a $391.5 million increase in the average
level of earning assets was responsible for the other $29.7 million of this
increase. The average rate earned on the Corporation's assets for 1995 was
8.46%, an 88-basis point increase over the 7.58% earned for 1994. This increase
in interest income was partially offset by the Corporation's investment in swaps
and floors. The $450 million in swaps reduced interest income during 1995 $1.2
million, while the $300 million of swaps outstanding during 1994 increased
interest revenues $2.4 million. The $200 million in floors contributed $85,000
to interest revenue during 1995. However, this was more than offset by $313,000
of amortized acquisition expense for the original $400 million of floors. During
1995, $200 million of those floors were sold, resulting in a $4.3 million gain
which is being deferred and accreted into income over the remaining lives of the
floors sold. The gain accreted during 1995 was $892,000. There were no floors
during 1994. The swaps and floors reduced the Corporation's net interest margin
one basis point in 1995, compared with a six-basis point decrease in 1994.
Interest expense for 1995 increased $56.4 million, or 46%, to $180 million from
$123.6 million for 1994. Approximately $44 million, or 78%, of this increase was
attributable to the higher interest rate environment. A $350.4 million increase
in the average level of interest-bearing liabilities was responsible for the
remaining $12.4 million of the increase. The average rate of interest paid on
the Corporation's liabilities during 1995 was 3.92%, a 98-basis point increase
over the 2.94% paid during 1994.
36
<PAGE>
[GRAPH OF DIVIDENDS PER SHARE PAID FOR EACH YEAR FROM 1986
TO 1996, WITH THE FOLLOWING PLOT POINTS:
1986 - $0.32
1987 - $0.39
1988 - $0.46
1989 - $0.59
1990 - $0.72
1991 - $0.80
1992 - $0.88
1993 - $0.98
1994 - $1.06
1995 - $1.17
1996 - $1.29]
The provision for loan losses for 1995 was $12.3 million. This was $7.7 million
higher than the $4.6 million provision for 1994. The reserve for loan losses at
December 31, 1995 was $49.9 million, or 1.42% of loans outstanding. This
compares with corresponding levels of $48.7 million, and 1.48% of loans
outstanding, reported at year-end 1994. Loans past due 90 days or more,
nonaccruing loans and restructured loans at December 31, 1995 totaled $52.9
million. This was a $3 million, or 6%, increase over the $49.9 million reported
at December 31, 1994. Nonaccruing loans at year-end 1995 were $33.6 million, a
$4.7 million, or 16%, increase over the $28.9 million reported at year-end 1994.
No loans were classified as restructured at either year-end. The OREO portfolio
totaled $14.3 million, a decrease of $3.3 million, or 19%, from the $17.6
million reported at year-end 1994. Approximately $3.9 million of properties
securing nonperforming loans were added to this portfolio during 1995, while
$7.2 million were removed through chargeoffs and sales. Chargeoffs in this
portfolio during 1995 were $607,000. The remainder were liquidated through
sales, which resulted in net losses of $213,000. Expenses of $81,000 were
incurred to carry this portfolio during 1995.
Revenues from noninterest sources in 1995 increased $14.6 million, or 13%, to
$127.6 million, over the $113.1 million reported for 1994. Trust and asset
management fees increased $5.4 million, or 7%, to $88 million. All three
components of this revenue source contributed to this increase. Personal trust
fees were $41.4 million, or 13% of operating revenues. This was a $3.9 million,
or 10%, increase over the $37.5 million reported for 1994. Corporate financial
services fees for 1995 were $27.1 million, or 8% of operating revenues. This was
a $1.3 million, or 5%, increase over the $25.8 million reported for 1994. Asset
management fees in 1995 were $19.5 million, or 6% of operating revenues. This
was a $276,000, or 1%, increase over the $19.2 million reported for 1994.
Service charges on deposit accounts in 1995 were $17.5 million, an increase of
$849,000, or 5%, over the $16.6 million reported for 1994, due primarily to
higher returned item and overdraft fees, automated teller machine fees,
checkbook fees and checking account balance fees, all of which benefited from a
mid-year pricing increase. Other operating income increased $3.8 million, or
24%, to $19.9 million due to higher credit card fees, gains on residential
mortgage loan sales and the disposition of other real estate owned. Securities
gains of $2.3 million were recognized in 1995, compared with $2.2 million of
securities losses in 1994. In December 1995, the Corporation reclassified
approximately 50% of its investment portfolio into the "available for sale"
category as permitted under Financial Accounting Standard No. 115--"Accounting
for Certain Investments in Debt and Equity Securities." Subsequent to that
transfer, $46.5 million in securities were sold at a gain of approximately $2.1
million.
37
<PAGE>
Operating expenses for 1995 increased $9 million, or 5%, to $181 million.
Personnel expenses increased $8.9 million, or 9%, to $110.7 million due to
higher levels of salaries, bonuses, incentives, payroll taxes and health
insurance costs. Approximately $845,000 in salary and benefit costs associated
with the development of the Corporation's new trust system were capitalized in
1995, compared with $1.7 million of such costs in 1994. Net occupancy and
furniture and equipment expenses during 1995 increased $474,000, or 5%, and $1.8
million, or 14%, respectively, due to the acquisition by Wilmington Trust FSB of
three branch locations in Maryland during the latter part of 1994, the opening
of a new trust office in downtown Philadelphia by Wilmington Trust of
Pennsylvania, the Corporation's Pennsylvania bank subsidiary, and higher levels
of depreciation and maintenance expense on electronic data processing equipment.
Other operating expense in 1995 declined $2.6 million, or 6%, due primarily to
FDIC deposit insurance premiums, which decreased $3.7 million, or 48%, from the
$7.7 million paid in 1994. Offsetting this decrease, in part, were higher levels
of expense for servicing, consulting and advertising.
The provision for income taxes for 1995 increased $6 million, or 17%, to $41.7
million. Higher levels of pre-tax income were primarily responsible for this
increase. The Corporation's effective tax rate for 1995 was 31.6%, compared with
29.5% for 1994.
OTHER INFORMATION
ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 125--"Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." This
Statement establishes new rules for determining whether a transfer of financial
assets constitutes a sale and, if so, the determination of any resulting gain or
loss. The Statement is effective for transactions entered into after December
31, 1996. Based upon current circumstances, the Statement will not have a
material impact on the Corporation's financial position or results of
operations.
38
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE STATEMENT OF CONDITION
(in thousands) 1996 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 187,473 $ 194,224 $ 202,777 $ 194,808 $ 180,747 $ 167,438
Short-term investments 26,459 17,522 26,425 21,248 72,787 73,258
Investment securities 1,343,007 1,184,002 1,060,015 946,052 803,936 901,273
Loans 3,602,430 3,390,782 3,114,384 2,949,909 2,979,576 2,932,963
Reserve for loan losses (50,768) (47,895) (50,258) (48,619) (45,615) (43,724)
- -------------------------------------------------------------------------------------------------------------------------
Net loans 3,551,662 3,342,887 3,064,126 2,901,290 2,933,961 2,889,239
-------------------------------------------------------------------------------
Other 198,762 194,231 168,702 158,414 144,364 126,486
- -------------------------------------------------------------------------------------------------------------------------
Total $5,307,363 $4,932,866 $4,522,045 $4,221,812 $4,135,795 $4,157,694
===============================================================================
Liabilities and stockholders'
equity:
Demand deposits (noninterest-
bearing) $ 633,066 $ 580,928 $ 559,574 $ 500,396 $ 443,205 $ 393,260
Deposits (interest-bearing) 2,890,944 2,583,995 2,704,736 2,718,885 2,778,768 2,858,595
Short-term borrowings 1,195,762 1,239,416 775,302 545,012 479,577 499,083
Other 101,764 86,703 73,786 65,737 67,101 61,705
Long-term debt 30,910 6,981 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total 4,852,446 4,498,023 4,113,398 3,830,030 3,768,651 3,812,643
Stockholders' equity 454,917 434,843 408,647 391,782 367,144 345,051
- -------------------------------------------------------------------------------------------------------------------------
Total $5,307,363 $4,932,866 $4,522,045 $4,221,812 $4,135,795 $4,157,694
===============================================================================
.........................................................................................................................
CONSOLIDATED STATEMENT OF INCOME
Net interest income $ 214,221 $ 197,364 $ 184,330 $ 174,847 $ 165,214 $ 152,891
- -------------------------------------------------------------------------------------------------------------------------
Trust and asset management fees 98,247 87,982 82,542 78,313 77,002 72,605
Other noninterest revenues 38,802 37,391 32,696 35,086 31,006 29,132
Securities gains/(losses) 1,188 2,267 (2,157) 268 2,259 574
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest income 138,237 127,640 113,081 113,667 110,267 102,311
-------------------------------------------------------------------------------
Operating revenues 352,458 325,004 297,411 288,514 275,481 255,202
-------------------------------------------------------------------------------
Provision for loan losses (16,000) (12,280) (4,550) (9,500) (13,000) (15,702)
-------------------------------------------------------------------------------
Salaries and employment benefits 119,574 110,670 101,813 95,849 90,419 85,204
Other operating expenses 72,765 70,334 70,214 65,937 63,362 58,380
- -------------------------------------------------------------------------------------------------------------------------
Total other expense 192,339 181,004 172,027 161,786 153,781 143,584
-------------------------------------------------------------------------------
Income before income taxes and
cumulative effect of change in
accounting principle 144,119 131,720 120,834 117,228 108,700 95,916
Applicable income taxes 46,841 41,689 35,665 34,467 29,938 23,155
- -------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 97,278 90,031 85,169 82,761 78,762 72,761
Cumulative effect of change in
accounting principle (net of
income tax benefit of $8,296)* -- -- -- -- (14,749) --
- -------------------------------------------------------------------------------------------------------------------------
39
<PAGE>
Net income $ 97,278 $ 90,031 $ 85,169 $ 82,761 $ 64,013 $ 72,761
================================================================================
Per share data:
Income before cumulative effect
of change in accounting principle $ 2.83 $ 2.56 $ 2.37 $ 2.24 $ 2.09 $ 1.92
Cumulative effect of change in
accounting principle* -- -- -- -- (0.39) --
- --------------------------------------------------------------------------------------------------------------------------
Net income per share $ 2.83 $ 2.56 $ 2.37 $ 2.24 $ 1.70 $ 1.92
================================================================================
Percentage change from prior year 11% 8% 6% 32% (11)% 6%
..........................................................................................................................
SELECTED FINANCIAL RATIOS AND STATISTICS
Net income as a percentage of:
Average stockholders' equity(3) 21.38% 20.70% 20.84% 21.12% 20.62% 21.09%
Average total assets(3) 1.83 1.83 1.88 1.96 1.90 1.75
- --------------------------------------------------------------------------------------------------------------------------
Loan quality:
Percentage of average total
loans:
Net chargeoffs 0.32% 0.33% 0.23% 0.28% 0.37% 0.45%
Nonaccruing loans 1.13 0.99 0.93 0.75 1.00 1.84
Percentage of total loans:
Reserve for loan losses** 1.44 1.42 1.48 1.69 1.56 1.48
- --------------------------------------------------------------------------------------------------------------------------
Selected per share data:
Dividends paid $ 1.29 $ 1.17 $ 1.06 $ 0.975 $ 0.88 $ 0.80
Book value** 13.71 13.09 11.80 10.87 10.12 9.79
Stock price** 39.50 30.88 22.75 26.25 26.50 29.00
- --------------------------------------------------------------------------------------------------------------------------
Staff members (full-time equivalents)** 2,418 2,332 2,303 2,254 2,188 2,213
Stockholders** 10,241 9,000 9,097 8,880 8,261 7,477
- --------------------------------------------------------------------------------------------------------------------------
Net income per staff member(3) $ 40,231 $ 38,607 $ 36,982 $ 36,717 $ 35,997 $ 32,879
Overhead ratio(1) 53.04% 53.86% 55.86% 53.97% 53.47% 52.71%
Capital generation rate(2)(3) 11.51% 11.68% 11.88% 12.35% 12.18% 13.43%
Risk-based capital ratio** 12.00% 12.06% 12.51% 12.36% 12.36% 12.13%
Price/earnings multiple** 13.96 12.06 9.60 11.72 15.59 15.10
- --------------------------------------------------------------------------------------------------------------------------
* EFFECTIVE JANUARY 1, 1992, SFAS NO. 106, "EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS," WAS ADOPTED.
** AT YEAR-END
1 TOTAL OTHER EXPENSES AS A PERCENTAGE OF OPERATING REVENUE.
2 NET INCOME LESS DIVIDENDS PAID AS A PERCENTAGE OF PRIOR YEAR-END STOCKHOLDERS' EQUITY.
3 BASED UPON INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA (cont'd)
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE STATEMENT OF CONDITION
(in thousands) 1990 1989 1988 1987 1986
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 183,859 $ 181,126 $ 183,921 $ 178,185 $ 152,013
Short-term investments 79,830 102,531 151,387 320,669 271,715
Investment securities 874,955 698,246 600,629 510,253 599,714
Loans 2,768,890 2,531,576 2,204,212 2,029,865 1,795,569
Reserve for loan losses (41,045) (36,959) (31,668) (28,052) (24,200)
- -------------------------------------------------------------------------------------------------------------
Net loans 2,727,845 2,494,617 2,172,544 2,001,813 1,771,369
-----------------------------------------------------------------
Other 124,370 117,951 112,029 96,615 92,370
- -------------------------------------------------------------------------------------------------------------
Total $3,990,859 $3,594,471 $3,220,510 $3,107,535 $2,887,181
=================================================================
Liabilities and stockholders'
equity:
Demand deposits (noninterest-
bearing) $ 399,668 $ 421,994 $ 422,441 $ 482,499 $ 446,823
Deposits (interest-bearing) 2,593,897 2,319,031 2,185,029 2,080,553 1,895,549
Short-term borrowings 629,995 514,418 315,999 270,662 305,250
Other 64,971 61,830 59,195 60,693 55,891
Long-term debt -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------
Total 3,688,531 3,317,273 2,982,664 2,894,407 2,703,513
Stockholders' equity 302,328 277,198 237,846 213,128 183,668
- -------------------------------------------------------------------------------------------------------------
Total $3,990,859 $3,594,471 $3,220,510 $3,107,535 $2,887,181
=================================================================
.............................................................................................................
CONSOLIDATED STATEMENT OF INCOME
Net interest income $ 137,569 $ 128,033 $ 112,101 $ 99,403 $ 85,001
- -------------------------------------------------------------------------------------------------------------
Trust and asset management fees 68,527 58,714 55,131 51,507 44,335
Other noninterest revenues 26,644 24,812 23,632 25,218 21,683
Securities gains/(losses) 802 2,904 2,768 2,633 1,273
- -------------------------------------------------------------------------------------------------------------
Total noninterest income 95,973 86,430 81,531 79,358 67,291
-----------------------------------------------------------------
Operating revenues 233,542 214,463 193,632 178,761 152,292
-----------------------------------------------------------------
Provision for loan losses (12,487) (13,644) (11,569) (12,650) (9,517)
-----------------------------------------------------------------
Salaries and employment benefits 80,214 76,462 67,611 62,746 58,017
Other operating expenses 54,639 49,539 46,120 44,951 40,364
- -------------------------------------------------------------------------------------------------------------
Total other expense 134,853 126,001 113,731 107,697 98,381
-----------------------------------------------------------------
41
<PAGE>
1990 1989 1988 1987 1986
- -------------------------------------------------------------------------------------------------------------
Income before income taxes and
cumulative effect of change in
accounting principle 86,202 74,818 68,332 58,414 44,394
Applicable income taxes 17,673 13,624 12,718 11,695 5,385
- --------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 68,529 61,194 55,614 46,719 39,009
principle
Cumulative effect of change in
accounting principle (net of
income tax benefit of $8,296)* -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Net income $ 68,529 61,194 $ 55,614 $ 46,719 $ 39,009
==================================================================
Per share data:
Income before cumulative effect
of change in accounting principle $ 1.81 1.59 $ 1.45 $ 1.21 $ 1.02
Cumulative effect of change in
accounting principle* -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------
Net income per share $ 1.81 1.59 $ 1.45 $ 1.21 $ 1.02
=================================================================
Percentage change from prior year 14% 10% 20% 19% 23%
SELECTED FINANCIAL RATIOS AND STATISTICS
Net income as a percentage of:
Average stockholders' equity(3) 22.67% 22.08% 23.38% 21.92% 21.24%
Average total assets(3) 1.72 1.70 1.73 1.50 1.35
- -------------------------------------------------------------------------------------------------------------
Loan quality:
Percentage of average total loans:
Net chargeoffs 0.31% 0.37% 0.26% 0.57% 0.22%
Nonaccruing loans 0.50 0.48 0.53 0.49 0.17
Percentage of total loans:
Reserve for loan losses** 1.46 1.42 1.43 1.36 1.43
- -------------------------------------------------------------------------------------------------------------
Selected per share data:
Dividends paid $ 0.72 $ 0.59 $ 0.46 $ 0.39 $ 0.32
Book value** 8.58 7.61 6.76 5.84 5.13
Stock price** 20.00 18.88 13.63 13.00 11.50
- --------------------------------------------------------------------------------------------------------------
Staff members (full-time equivalents)** 2,179 2,173 2,185 1,998 1,891
Stockholders** 7,444 7,332 7,209 7,268 6,767
- -------------------------------------------------------------------------------------------------------------
Net income per staff member(3) $ 31,450 $ 28,161 $ 25,453 $ 23,383 $ 20,629
Overhead ratio(1) 53.21% 53.60% 53.69% 53.23% 52.23%
Capital generation rate(2)(3) 14.53% 15.07% 16.99% 16.03% 15.96%
Risk-based capital ratio** 11.52% 11.19% -- -- --
Price/earnings multiple** 11.05 11.87 9.40 10.74 11.27
* EFFECTIVE JANUARY 1, 1992, SFAS NO. 106, "EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS," WAS ADOPTED.
** AT YEAR-END
1 TOTAL OTHER EXPENSES AS A PERCENTAGE OF OPERATING REVENUE.
2 NET INCOME LESS DIVIDENDS PAID AS A PERCENTAGE OF PRIOR YEAR-END STOCKHOLDERS' EQUITY.
3 BASED UPON INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.
</TABLE>
42
<PAGE>
CONSOLIDATED ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA (CONT'D)
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE STATEMENT OF CONDITION
(in thousands) Compound Growth Rates
------------------------------
1986 to 1996 1991 to 1996
------------- ------------
Assets:
Cash and due from banks 2.12% 2.29%
Short-term investments (20.78) (18.43)
Investment securities 8.40 8.30
Loans 7.21 4.20
Reserve for loan losses 7.69 3.03
- -----------------------------------------------------------------------
Net loans 7.20 4.21
------------------------
Other 7.96 9.46
- -----------------------------------------------------------------------
Total 6.28 5.00
========================
Liabilities and stockholders'
equity:
Demand deposits (noninterest- 3.55 9.99
bearing)
Deposits (interest-bearing) 4.31 0.23
Short-term borrowings 14.63 19.10
Other 6.18 10.52
Long-term debt -- --
- -----------------------------------------------------------------------
Total 6.02 4.94
Stockholders' equity 9.49 5.68
- -----------------------------------------------------------------------
Total 6.28 5.00
========================
.......................................................................
CONSOLIDATED STATEMENT OF INCOME
Net interest income 9.68 6.98
- -----------------------------------------------------------------------
Trust and asset management fees 8.28 6.24
Other noninterest revenues 5.99 5.90
Securities gains/(losses) (0.69) 15.66
------------------------
Total noninterest income 7.46 6.20
------------------------
Operating revenues 8.75 6.67
------------------------
Provision for loan losses 5.33 0.38
------------------------
Salaries and employment benefits 7.50 7.01
Other operating expenses 6.07 4.50
- -----------------------------------------------------------------------
Total other expense 6.93 6.02
------------------------
43
<PAGE>
Compound Growth Rates
-----------------------------
1986 to 1996 1991 to 1996
------------ ------------
Income before income taxes and
cumulative effect of change in
accounting principle 12.50 8.48
Applicable income taxes 24.15 15.13
- -----------------------------------------------------------------------
Income before cumulative effect
of change in accounting
principle 9.57 5.98
Cumulative effect of change in
accounting principle (net of
income tax benefit of $8,296)* -- --
---------------------------------------------------------------------
Net income 9.57 5.98
========================
Per share data:
Income before cumulative effect
of change in accounting
principle 10.74 8.07
Cumulative effect of change in
accounting principle* -- --
- -----------------------------------------------------------------------
Net income per share 10.74 8.07
========================
Percentage change from prior year
________________________________________________________________________________
* EFFECTIVE JANUARY 1, 1992, SFAS NO. 106, "EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS," WAS ADOPTED.
** AT YEAR-END
1 TOTAL OTHER EXPENSES AS A PERCENTAGE OF OPERATING REVENUE.
2 NET INCOME LESS DIVIDENDS PAID AS A PERCENTAGE OF PRIOR YEAR-END
STOCKHOLDERS' EQUITY.
3 BASED UPON INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE.
44
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
- ------------------------------------------------------------------------------------------
December 31 (in thousands) 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 231,233 $ 252,831
--------------------------
Interest-bearing time deposits in other banks -- --
--------------------------
Federal funds sold and securities purchased
under agreements to resell 134,190 78,866
--------------------------
Investment securities available for sale 798,519 910,243
--------------------------
Investment securities held to maturity (market value
of $466,763 in 1996 and $453,323 in 1995) 467,632 450,535
--------------------------
Loans:
Commercial, financial and agricultural 1,237,061 1,159,434
Real estate--construction 123,111 104,871
Mortgage--commercial 862,974 770,304
Mortgage--residential 678,800 669,658
Installment loans to individuals 881,994 823,381
Unearned income (12,456) (5,733)
- -----------------------------------------------------------------------------------------
Total loans net of unearned income 3,771,484 3,521,915
Reserve for loan losses (54,361) (49,867)
- -----------------------------------------------------------------------------------------
Net loans 3,717,123 3,472,048
--------------------------
Premises and equipment, net 94,387 79,734
Other assets 121,325 127,941
- -----------------------------------------------------------------------------------------
Total assets $5,564,409 $5,372,198
==========================
.........................................................................................
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 840,987 $ 721,400
Interest-bearing:
Savings 352,431 340,581
Interest-bearing demand 1,062,917 1,007,009
Certificates under $100,000 1,269,206 1,230,045
Certificates $100,000 and over 388,157 288,550
- -----------------------------------------------------------------------------------------
Total deposits 3,913,698 3,587,585
--------------------------
Short-term borrowings:
Federal funds purchased and securities sold under
agreements to repurchase 983,017 1,166,163
U.S. Treasury demand 53,526 29,389
- -----------------------------------------------------------------------------------------
Total short-term borrowings 1,036,543 1,195,552
--------------------------
Other liabilities 106,451 101,690
Long-term debt 43,000 28,000
- -----------------------------------------------------------------------------------------
Total liabilities 5,099,692 4,912,827
--------------------------
Stockholders' equity:
Common stock ($1.00 par value) authorized 150,000,000
shares--1996 and 50,000,000 shares--1995 39,107 39,013
Capital surplus 59,463 58,111
Retained earnings 515,072 462,215
Net unrealized gain on investment securities available
for sale, net of taxes 1,004 4,379
- -----------------------------------------------------------------------------------------
Total contributed capital and retained earnings 614,646 563,718
Less: Treasury stock (shares at cost) (149,929) (104,347)
- -----------------------------------------------------------------------------------------
Total stockholders' equity 464,717 459,371
--------------------------
Total liabilities and stockholders' equity $5,564,409 $5,372,198
==========================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------------
For the year ended December 31 (in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $320,499 $308,487 $254,806
Interest and dividends on investment securities:
Taxable interest 70,728 57,473 40,546
Tax-exempt interest 1,826 2,042 2,586
Dividends 8,322 8,303 8,782
Interest on time deposits in other banks -- -- 7
Interest on federal funds sold and securities
purchased under agreements to resell 1,475 1,036 1,155
- -------------------------------------------------------------------------------------------
Total interest income 402,850 377,341 307,882
------------------------------------
Interest on deposits 121,955 105,304 90,477
Interest on short-term borrowings 65,195 74,325 33,075
Interest on long-term debt 1,479 348 --
- -------------------------------------------------------------------------------------------
Total interest expense 188,629 179,977 123,552
------------------------------------
Net interest income 214,221 197,364 184,330
Provision for loan losses (16,000) (12,280) (4,550)
- -------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 198,221 185,084 179,780
------------------------------------
...........................................................................................
OTHER INCOME
Trust and asset management fees:
Personal trust 47,468 41,395 37,503
Corporate financial services 28,059 27,113 25,841
Asset management 22,720 19,474 19,198
- -------------------------------------------------------------------------------------------
Total trust and asset management fees 98,247 87,982 82,542
-----------------------------------
Service charges on deposit accounts 19,038 17,497 16,648
Merchant discount fees 5,353 4,849 4,213
Other operating income 14,411 15,045 11,835
Securities gains/(losses) 1,188 2,267 (2,157)
- -------------------------------------------------------------------------------------------
Total other income 138,237 127,640 113,081
------------------------------------
Net interest and other income 336,458 312,724 292,861
------------------------------------
............................................................................................
OTHER EXPENSE
Salaries and employment benefits 119,574 110,670 101,813
Net occupancy 11,111 10,706 10,232
Furniture and equipment 14,413 14,067 12,302
Stationery and supplies 5,985 5,907 5,415
FDIC insurance 670 3,947 7,655
Other operating expense 40,586 35,707 34,610
- -------------------------------------------------------------------------------------------
Total other expense 192,339 181,004 172,027
--------------------------------------
...........................................................................................
NET INCOME
Income before income taxes 144,119 131,720 120,834
Applicable income taxes 46,841 41,689 35,665
- -------------------------------------------------------------------------------------------
Net income $ 97,278 $ 90,031 $ 85,169
=====================================
Net income per share $ 2.83 $ 2.56 $ 2.37
=====================================
Weighted average shares outstanding 34,399 35,213 35,990
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
- ----------------------------------------------------------------------------------------------------------------------
Common Stock
------------------ Capital Retained Valuation Treasury
(in thousands) Shares Amount surplus earnings reserve Stock
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994
Balance, January 1 36,346 $ 38,826 $ 56,679 $ 366,431 $ -- $ (66,761)
Adjustment to beginning balance for
change in accounting method, net of
income taxes of $340 -- -- -- -- 605 --
Net income -- -- -- 85,169 -- --
Cash dividends paid--$1.06 per share -- -- -- (38,225) -- --
Common stock issued under employment
benefit plans 138 95 1,438 -- -- 1,105
Acquisition of treasury stock (1,035) -- -- -- -- (26,240)
Adjustments to net unrealized gain/(loss)
on investment securities available for
sale, net of income taxes of $506 -- -- -- -- (900) --
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31 35,449 38,921 58,117 413,375 (295) (91,896)
----------------------------------------------------------------------
.....................................................................................................................
1995
Net income -- -- -- 90,031 -- --
Cash dividends paid--$1.17 per share -- -- -- (41,191) -- --
Common stock issued under employment
benefit plans 404 92 (6) -- -- 8,044
Acquisition of treasury stock (763) -- -- -- -- (20,495)
Adjustments to net unrealized gain/(loss)
on investment securities available for
sale, net of income taxes of $2,629 -- -- -- -- 4,674 --
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31 35,090 39,013 58,111 462,215 4,379 (104,347)
----------------------------------------------------------------------
.....................................................................................................................
1996
Net income -- -- -- 97,278 -- --
Cash dividends paid--$1,29 per share -- -- -- (44,421) -- --
Common stock issued under employment
benefits plans 340 94 1,352 -- -- 6,204
Acquisition of treasury stock (1,537) -- -- -- -- (51,786)
Adjustments to net unrealized gain/(loss)
on investment securities available for
sale, net of income taxes of $1,898 -- -- -- -- (3,375) --
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31 33,893 $ 39,107 $ 59,463 $ 515,072 $ 1,004 $(149,929)
======================================================================
_____________________________________________________________________________________________________________________
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
- -----------------------------------------------------------------------------------------------------------------
For the year ended December 31 (in thousands) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 97,278 $ 90,031 $ 85,169
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 16,000 12,280 4,550
Provision for depreciation 10,218 9,850 8,694
Amortization of investment securities available
for sale discounts and premiums 3,032 332 11
Accretion/amortization of investment securities held to maturity
discounts and premiums (32) 3,432 5,054
Deferred income taxes 2,605 497 601
Securities (gains)/losses (1,188) (2,267) 2,157
Losses/(gains) on sales of loans 43 (868) 1,654
Decrease/(increase) in other assets 6,616 (12,988) (3,938)
Increase in other liabilities 4,054 17,984 6,068
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 138,626 118,283 110,020
---------------------------------------
................................................................................................................
INVESTING ACTIVITIES
Proceeds from sales of investment securities available for sale 270,246 107,964 125,432
Proceeds from maturities of investment securities available for sale 951,787 1,265,103 1,912,600
Proceeds from maturities of investment securities held to maturity 101,321 246,061 272,560
Purchases of investment securities available for sale (1,151,119) (1,386,526) (1,951,858)
Purchases of investment securities held to maturity (84,693) (602,393) (258,138)
Net decrease in interest-bearing time deposits in other banks -- -- 496
Gross proceeds from sales of loans 57,262 29,274 27,116
Net increase in loans (318,380) (277,170) (276,954)
Net increase in premises and equipment (24,871) (18,806) (13,981)
- ----------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (198,447) (636,493) (162,727)
---------------------------------------
................................................................................................................
FINANCING ACTIVITIES
Net increase/(decrease) in demand, savings and interest-bearing
demand deposits 187,345 (71,384) 49,056
Net increase/(decrease) in certificates of deposit 138,768 350,219 (131,752)
Net (decrease)/increase in federal funds purchased and securities
sold under agreements to repurchase (183,146) 268,664 215,441
Net increase/(decrease) in U.S. Treasury demand 24,137 (7,919) (57,692)
Proceeds from issuance of long-term debt 15,000 28,000 --
Cash dividends (44,421) (41,191) (38,225)
Proceeds from common stock issued under employment benefit plans 7,650 8,130 2,638
Payments for common stock acquired through buybacks (51,786) (20,495) (26,240)
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 93,547 514,024 13,226
-----------------------------------------
Increase/(decrease) in cash and cash equivalents 33,726 (4,186) (39,481)
Cash and cash equivalents at beginning of year 331,697 335,883 375,364
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 365,423 $ 331,697 $ 335,883
=========================================
................................................................................................................
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 186,701 $ 170,906 $ 113,480
Taxes 47,221 35,999 39,454
Loans transferred during the year:
To other real estate owned $ 16,148 $ 9,037 $ 6,496
From other real estate owned 25,305 12,350 9,062
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES
NOTE 1:
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
BUSINESS
Wilmington Trust Corporation (the "Corporation") is a bank and thrift holding
company organized under the General Corporation Law of Delaware. It holds all of
the outstanding capital stock of Wilmington Trust Company, a Delaware-chartered
bank and trust company engaged in commercial and trust banking activities since
1903 ("WTC"). WTC is the largest full-service bank in Delaware, with 56 branch
offices and eight principal operating subsidiaries through which it engages in
various lines of business.
The Corporation also owns two other financial institutions, Wilmington Trust of
Pennsylvania, a Pennsylvania-chartered bank and trust company acquired in 1993
("WTPA"), and Wilmington Trust FSB, a Federally-chartered savings bank organized
in 1994 ("WTFSB").
Through its subsidiaries, the Corporation engages in residential, commercial and
construction lending, deposit taking, insurance, travel, investment advisory and
broker-dealer services and mutual fund administration.
The Corporation presently conducts its banking activities principally in
Delaware, Pennsylvania, Maryland and Florida. The Corporation and its
subsidiaries are subject to competition from other financial institutions. They
also are subject to the regulations of certain federal and state regulatory
agencies and undergo periodic examination by those authorities.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles and include, after
elimination of material intercompany balances and transactions, the accounts of
the Corporation, WTC, WTPA, WTFSB and WTC's subsidiaries. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Estimates that are particularly susceptible to change in
the near term relate to the determination of the reserve for loan losses.
CASH FLOWS
The Corporation has defined cash and cash equivalents as those amounts included
in the balance sheet captions "Cash and due from banks" and "Federal funds sold
and securities purchased under agreements to resell."
INVESTMENT SECURITIES
Debt securities that the Corporation has the intent and ability to hold until
maturity are classified as "held to maturity" and are carried at historical
cost, adjusted for any amortization of premium or accretion of discount. Trading
securities are carried at fair value, with unrealized gains and losses included
in earnings. Marketable equity securities and debt securities that are not
classified as held to maturity or trading are classified as "available for sale"
and are carried at fair value, with the unrealized gains and losses, net of tax,
reported as a separate component of stockholders' equity.
49
<PAGE>
Realized gains and losses and declines in value judged to be other than
temporary are included in earnings. The specific identification method is
utilized in determining the cost of a security that has been sold. Premiums and
discounts are amortized and accreted, respectively, as an adjustment of the
securities' yield using the interest method, adjusted for the effects of
prepayments on the underlying collateral.
LOANS
Loans are generally stated at their outstanding unpaid principal balance net of
any deferred fees or costs on originated loans, and net of any unamortized
premiums or discounts on purchased loans. Interest income is accrued and
recognized as income based upon the principal amount outstanding. Loan
origination and commitment fees net of certain direct origination costs are
being deferred, and the net amounts are being amortized over the contractual
life of the loans as adjustments to the yield.
The accrual of interest income is discontinued when a reasonable doubt exists as
to the collectibility of interest or principal. A loan is determined to be
impaired when it is probable that a borrower will be unable to pay all amounts
due according to the contractual terms of the loan agreement. Loans, including
those determined impaired under SFAS No. 114, as amended, "Accounting by
Creditors for Impairment of a Loan," are generally placed on nonaccrual status
after they have become 90 days past due. For installment and revolving consumer
loans, the accrual of interest income continues until the loan is charged off,
which is generally 120 days past due for installment loans and 180 days past due
for revolving consumer loans. A nonaccrual loan is not necessarily deemed to be
uncollectible.
RESERVE FOR LOAN LOSSES
The reserve for loan losses has been established through provisions for loan
losses charged against income. Loans deemed to be uncollectible are charged
against the reserve, and subsequent recoveries, if any, are credited to the
reserve. Effective January 1, 1995, the Corporation adopted SFAS No. 114 and
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosures." Under the new standards, the 1995 reserve for loan
losses related to loans that are identified for evaluation in accordance with
SFAS No. 114 is based on discounted cash flows using the loan's effective
interest rate at the date the loan is determined to be impaired or the fair
value of the collateral for collateral-dependent loans. Prior to 1995, the
reserve for loan losses related to these loans was based on undiscounted cash
flows or the fair value of the collateral for collateral-dependent loans. For
collateral-dependent loans, management obtains appraisals for all significant
properties. The reserve is maintained at a level considered adequate to provide
for potential loan losses. In making this determination, management takes into
consideration the results of internal review procedures, prior loan loss
experience, an assessment of the effect of current and anticipated future
economic conditions on the loan portfolio, the financial condition of the
borrower and such other factors that, in management's judgment, deserve
consideration. The determination of the adequacy of the reserve is inherently
subjective as it requires material estimates including the amounts and timing of
future cash flows expected to be received on impaired loans that may be
susceptible to significant change.
50
<PAGE>
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation expense is computed on the straight-line basis over the estimated
useful life of the asset. Improvements are capitalized and depreciated over
their useful lives. Gains or losses on dispositions of property and equipment
are included in income as realized.
INCOME TAXES
The Corporation accounts for income taxes using the liability method under which
deferred tax assets and liabilities are determined based upon the differences
between financial statement carrying amounts and the tax bases of existing
assets and liabilities. These temporary differences are measured at prevailing
enacted tax rates that will be in effect when the differences are settled or
realized.
The Corporation and its subsidiaries, except for Brandywine Life Insurance
Company and Rodney Square Investors, L.P., a 50%-owned partnership, file a
consolidated federal income tax return. Brandywine Life Insurance Company and
Rodney Square Investors, L.P. file separate returns.
TRUST AND ASSET MANAGEMENT FEES
Trust income is recognized when payments are received, except for certain
amounts that are recorded on the accrual basis. Recording income on a cash basis
does not have a material effect on net income.
PER-SHARE DATA
Net income per share is based on the weighted average number of shares
outstanding during each year. Shares issuable under stock option plans are
excluded from the computation of net income per share, since the effect of those
shares is immaterial.
DERIVATIVE INTEREST RATE CONTRACTS
The Corporation enters into interest rate swap and interest rate floor contracts
in managing interest rate risk in order to reduce the impact of fluctuations in
interest rates of identifiable asset categories, principally floating rate
commercial loans and commercial mortgage loans.
Swaps are contracts to exchange, at specified intervals, the difference between
fixed and floating interest amounts computed on contractual notional principal
amounts. The Corporation has entered into swaps in which it receives a fixed
rate and pays a floating rate. The net interest differential is reported in
"Interest and fees on loans" in the Consolidated Statements of Income and is
recognized over the lives of the contracts. No fees were received or paid. There
have been no swap terminations.
Floors are contracts which generate interest payments to the Corporation based
on the difference between the floating rate index and a predetermined strike
rate of the specific floor when the index is below the strike rate. When the
index is equal to or above the strike rate, no payments are made or received by
51
<PAGE>
the Corporation. The net interest differential, the amortization of the initial
fees associated with the purchase of the floors and any gains recorded on the
sale of the floors are reported in "Interest and fees on loans" in the
Consolidated Statements of Income and recognized over the lives of the
contracts. During 1995, floors with a total notional value of $200 million were
sold at a gain of $4.3 million. The gain is being deferred and accreted to
income over the lives of the original floors sold.
The Corporation does not hold or issue derivative financial instruments for
trading purposes.
OTHER REAL ESTATE OWNED
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
through foreclosure or acceptance of a deed in lieu of foreclosure and loans
classified as in-substance foreclosures. In accordance with SFAS No. 114, a loan
is classified as an in-substance foreclosure when the Corporation has taken
possession of the collateral regardless of whether formal foreclosure
proceedings take place. These assets are recorded on the books of the
Corporation at the lower of their cost or estimated fair value less cost to
sell, adjusted periodically based upon current appraisals.
- ------------------------------------------------------------------------------
NOTE 2:
RESTRICTIONS ON CASH
AND DUE FROM BANKS
The Federal Reserve Board requires banks to maintain cash reserves against
certain categories of average deposit liabilities. Such reserves averaged
$14,438,296 during the year ended December 31, 1996.
52
<PAGE>
NOTE 3:
INVESTMENT SECURITIES
The amortized cost and estimated market value of securities are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Amortized cost Gross Gross Estimated market value
Balance, December 31, 1995 (in ----------------- unrealized unrealized -----------------------
thousands) Debt Equity gains losses Debt Equity
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment securities available for sale:
U.S. Treasury and government agencies $530,804 $ -- $6,483 $,(292) $536,995 $ --
Obligations of state and political
subdivisions 18,533 -- 99 (5) 18,627 --
Other securities:
Preferred stock -- 153,894 79 (124) -- 153,849
Asset-backed securities 107,852 -- 433 (720) 107,565 --
Other debt securities 35,951 -- 757 (79) 36,629 --
Other marketable equity securities -- 56,366 217 (5) -- 56,578
- ---------------------------------------------------------------------------------------------------------------
Total $693,140 $ 210,260 $8,068 $(1,225) $699,816 $210,427
====================================================================
Investment securities held to maturity:
U.S. Treasury and government agencies $236,444 $ -- $3,361 $ (445) $239,360 $ --
Obligations of state and political
subdivisions 20,822 -- 280 (16) 21,086 --
Other securities:
Asset-backed securities 193,269 -- 1,276 (1,668) 192,877 --
- ---------------------------------------------------------------------------------------------------------------
Total $450,535 $ -- $4,917 $(2,129) $453,323 $ --
=====================================================================
Balance, December 31, 1996 (in thousands)
- ---------------------------------------------------------------------------------------------------------------
Investment securities available for sale:
U.S. Treasury and government agencies $545,330 $ -- $1,951 $(1,509) $545,772 $ --
Obligations of state and political
subdivisions 13,176 -- 253 (52) 13,377 --
Other securities:
Preferred stock -- 139,186 756 (87) -- 139,885
Asset-backed securities 16,096 -- 63 (23) 16,136 --
Other debt securities 21,665 -- 192 (79) 21,778 --
Other marketable equity securities -- 61,496 105 -- -- 61,601
- ---------------------------------------------------------------------------------------------------------------
Total $596,267 $ 200,682 $3,320 $(1,750) $597,063 $201,456
=====================================================================
Investment securities held to maturity:
U.S. Treasury and government agencies $267,502 $ -- $ 784 $(1,764) $266,522 $ --
Obligations of state and political
subdivisions 19,121 -- 209 (13) 19,317 --
Other securities:
Asset-backed securities 181,009 -- 1,054 (1,139) 180,924 --
- ---------------------------------------------------------------------------------------------------------------
Total $467,632 $ -- $2,047 $(2,916) $466,763 $ --
=====================================================================
</TABLE>
53
<PAGE>
The amortized cost and estimated market value of debt securities at December 31,
1996 by contractual maturity are shown below (in thousands). Expected maturities
will differ from contractual maturities because the issuers may have the right
to call or prepay obligations without penalties.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Debt securities available
for sale Debt securities held to maturity
------------------------------- --------------------------------
Amortized cost Market value Amortized cost Market value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 208,471 $ 208,821 $ 1,660 $ 1,660
Due after one year through five years 335,809 335,645 210,124 209,025
Due after five years through ten years 25,891 25,894 122,168 122,027
Due after ten years 26,096 26,703 133,680 134,051
- -----------------------------------------------------------------------------------------------------------
$ 596,267 $ 597,063 $ 467,632 $ 466,763
=================================================================
</TABLE>
Proceeds from the sales of investment securities available for sale during 1996,
1995 and 1994 were $270,246,485, $107,964,359 and $125,432,437, respectively.
Gross gains of $1,100,858, $2,066,312 and $682,281 in 1996, 1995 and 1994,
respectively, were realized on those sales with no offsetting losses. Securities
with an aggregate book value of $851,841,227 at December 31, 1996 were pledged
to secure deposits and other commitments. The Corporation's preferred stock
portfolio consists of auction-rate, cumulative and non-cumulative preferred
stocks. Auction-rate preferred stock is preferred stock with a floating-rate
dividend that is paid and reset every 49 days through an auction process in
which investors determine the yield through bidding. This pricing mechanism
should help assure that the stock will trade at or near par.
At December 31, 1996, the Corporation's asset-backed securities portfolio
consisted primarily of collateralized mortgage obligations ("CMOs"). The
portfolio has an approximate average life of 1.56 years. The portfolio's
aggregate average yield-to-maturity was 5.96%.
At December 31, 1996, the Corporation did not hold state and municipal
securities for any one state in excess of 10% of stockholders' equity.
During 1995, the Financial Accounting Standards Board granted companies a
one-time opportunity to restructure their investment portfolios without calling
into question their intent to hold other debt securities to maturity. The
Corporation restructured its investment portfolio to provide a more evenly
distributed series of future cash flows and to allow greater flexibility in
asset/liability and investment management. The amortized cost of securities held
to maturity that were transferred to the available-for-sale portfolio was
$708,098,186, with a net unrealized gain of $8,732,941.
54
<PAGE>
- ------------------------------------------------------------------------------
NOTE 4:
CONCENTRATIONS
OF LOANS
The Corporation's lending activity is primarily focused within Delaware,
Pennsylvania, Maryland and Florida. The Corporation makes no foreign loans. At
December 31, 1996, approximately 3% of the Corporation's total loan portfolio
consisted of real estate construction loans, while approximately 33% represented
commercial loans, 23% represented commercial mortgage loans, which were secured
by income-producing properties, and approximately 18% and 23%, respectively,
represented residential mortgage loans and installment loans to individuals.
Each of these ratios was virtually unchanged from that reported at December 31,
1995.
In addition to these loans outstanding, at December 31, 1996 and 1995, unfunded
commitments to lend in the real estate sector were approximately $219,194,000
and $140,621,000, respectively. The Corporation generally requires collateral on
all real estate exposure and a loan-to-value ratio of no greater than 80% when
underwritten. Management believes the Corporation's mortgage portfolio is
well-diversified when measured by industry classification statistics.
- ------------------------------------------------------------------------------
NOTE 5:
RESERVE FOR LOAN LOSSES
The following is an analysis of the reserve for loan losses:
- -------------------------------------------------------------------------------
(in thousands) 1996 1995 1994
- -------------------------------------------------------------------------------
Balance, January 1 $ 49,867 $ 48,669 $ 51,363
------------------------------------------
Charge-offs (14,655) (14,282) (12,765)
Recoveries 3,149 3,200 5,521
- --------------------------------------------------------------------------------
Net charge-offs (11,506) (11,082) (7,244)
------------------------------------------
Provision charged to operations 16,000 12,280 4,550
- --------------------------------------------------------------------------------
Balance, December 31 $ 54,361 $ 49,867 $ 48,669
==========================================
55
<PAGE>
Information with respect to loans that are considered to be impaired under SFAS
#114 for the year ended December 31 is as follows:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Average recorded investment in impaired loans $36,139 $32,987
------------------------
Recorded investment in impaired loans at
year-end subject to a reserve for loan losses
(1996 reserve-$10,058; 1995 reserve-$5,979) $39,002 $31,562
Recorded investment in impaired loans at year-end
requiring no reserve for loan losses 2,801 2,779
------------------------
Recorded investment in impaired loans at year-end $41,803 $34,341
========================
Recorded investment in impaired loans at year-end
classified as nonaccruing $39,976 $33,039
------------------------
Interest income recognized 1,906 1,818
Interest income recognized using the cash
basis method of income recognition 1,718 1,725
56
<PAGE>
The following is an analysis of interest on nonaccruing loans:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Nonaccruing loans at December 31 $40,735 $33,576 $28,851
---------------------------
Interest income which would have been recognized
under original terms $ 2,757 $ 3,511 $ 2,929
Interest accrued or received 1,736 1,741 1,526
- --------------------------------------------------------------------------------
NOTE 6:
PREMISES
AND EQUIPMENT
A summary of premises and equipment at December 31 is as follows:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Land $ 12,491 $ 12,503
Buildings and improvements 87,045 72,799
Furniture and equipment 78,312 71,872
- --------------------------------------------------------------------------------
177,848 157,174
Accumulated depreciation (83,461) (77,440)
- --------------------------------------------------------------------------------
Premises and equipment, net $ 94,387 $ 79,734
====================================
- --------------------------------------------------------------------------------
57
<PAGE>
NOTE 7:
SHORT-TERM
BORROWINGS
A summary of securities sold under agreements to repurchase at December 31 is as
follows:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Maximum amount outstanding at any month-end $230,906 $230,427
Daily average amount outstanding during the period 184,233 151,428
The securities underlying the agreements are under the Corporation's control.
- --------------------------------------------------------------------------------
NOTE 8:
LONG-TERM DEBT
WTC has obtained advances from the Federal Home Loan Bank of Pittsburgh to
finance the Wilmington Trust Operations Center. Monthly interest payments are
due on the first of each month at a fixed interest rate, with the principal due
on the maturity date. Any payment of the principal prior to the originally
scheduled maturity date is subject to a prepayment fee. Information with respect
to the advances is as follows:
- --------------------------------------------------------------------------------
Principal Amount Term Fixed
(in thousands) (years) Interest Rate Maturity Date
- --------------------------------------------------------------------------------
$28,000 15 6.55% October 4, 2010
7,500 10 6.41 November 6, 2006
7,500 5 6.20 October 9, 2001
- --------------------------------------------------------------------------------
NOTE 9:
CONTINGENT LIABILITIES
The Corporation and its subsidiaries, at times and in the ordinary course of
business, are subject to legal actions that include specified and unspecified
damage claims. Management does not believe the outcome of these matters will
have a material adverse effect on the financial condition of the Corporation.
- --------------------------------------------------------------------------------
58
<PAGE>
NOTE 10:
FAIR VALUE OF
FINANCIAL INSTRUMENTS
The following discloses the fair value of financial instruments held by the
Corporation as of December 31, 1996 and 1995, whether or not recognized in the
Consolidated Statements of Condition. In cases in which quoted market prices
were not available, fair values were based upon estimates using present value or
other valuation techniques. These techniques were significantly affected by the
assumptions used, including the discount rate and estimates of cash flows.
Consequently, these fair values cannot be substantiated by comparisons with
independent markets and, in many cases, may not be realized upon the immediate
sale of the instrument. Since generally accepted accounting principles exclude
certain financial instruments and all nonfinancial instruments from this
presentation, the aggregated fair value amounts do not represent the underlying
value of the Corporation.
CASH AND SHORT-TERM INVESTMENTS
The carrying amounts reported for "Cash and due from banks," "Interest-bearing
time deposits in other banks" and "Federal funds sold and securities purchased
under agreements to resell" approximate the fair value of those assets.
INVESTMENT SECURITIES
The fair values of investment securities are based upon quoted market prices
when available. If quoted market prices are not available, fair values are based
upon quoted market prices of comparable instruments.
LOANS
The fair values of fixed and variable-rate loans that reprice within one year
with no significant credit risk are based upon their carrying amounts. The fair
values of all other loans are estimated using discounted cash flow analysis,
which utilizes interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality. The reserve for loan losses is
allocated among the various components of the loan portfolio in determining the
fair values of those loans. The carrying amount of accrued interest receivable
approximates its fair value. The fair value of outstanding letters of credit and
loan commitments approximate the fees charged for providing such services.
DEPOSITS AND SHORT-TERM BORROWINGS
The fair values for demand deposits are, by definition, equal to the amount
payable on demand at the reporting date. The carrying amounts for variable-rate
deposits approximate their fair values at the reporting date. Fair values for
fixed-rate certificates of deposit are estimated using discounted cash flow
analysis that applies interest rates currently being offered on certificates.
The carrying amounts of federal funds purchased and securities sold under
agreements to repurchase and other short-term borrowings approximate their fair
values.
59
<PAGE>
LONG-TERM DEBT
The fair value of long-term debt is based on the borrowing rate currently
available to WTC for debt with similar terms and remaining maturities.
DERIVATIVE INTEREST RATE CONTRACTS
The fair values of swaps and floors are based upon pricing models using current
assumptions.
The carrying values and estimated fair values of the Corporation's financial
assets, liabilities and off-balance-sheet financial instruments as of December
31, are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
1996 1995
--------------------------- ----------------------------------
Carrying Fair Carrying Fair
(in thousands) Value Value Value Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 231,233 $ 231,233 $ 252,831 $ 252,831
Short-term investments 134,190 134,190 78,866 78,866
Investment securities (see
note 3) 1,264,581 1,265,282 1,353,935 1,363,566
Loans, net of reserves 3,717,123 3,712,701 3,472,048 3,493,500
Accrued interest receivable 37,382 37,382 37,616 37,616
Financial liabilities:
Deposits 3,913,698 3,913,185 3,587,585 3,586,608
Short-term borrowings 1,036,543 1,036,543 1,195,552 1,195,552
Accrued interest payable 64,771 64,771 62,844 62,844
Long-term debt 43,000 43,246 28,000 28,266
Contractual Fair Contractual Fair
(in thousands) Amount Value Amount Value
- -------------------------------------------------------------------------------------------------
Off-balance-sheet financial
instruments:
Unrefunded commitments to extend
credit $1,255,959 $ (3,140) $ 976,573 $ (2,441)
Standby and commercial letters of
credit 58,631 (879) 44,090 (661)
Interest rate swap contracts 400,000 787 450,000 5,179
Interest rate floor contracts 250,000 3,632 200,000 6,956
- -------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
NOTE 11:
OFF-BALANCE-SHEET
FINANCIAL AGREEMENTS
In the normal course of business, the Corporation engages in off-balance-sheet
financial agreements in order to meet the needs of its customers and to reduce
its own exposure to fluctuations in interest rates. A summary of
off-balance-sheet financial agreements at December 31 is as follows:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Commitments to extend credit (contractual amount) $1,255,959 $976,573
Letters of credit (contractual amount) 58,631 44,090
Interest rate swaps (notional value) 400,000 450,000
Interest rate floors (notional value) 250,000 200,000
The Corporation's exposure to credit risk is represented by the contractual
amount of both the commitments to extend credit and letters of credit, while the
notional amount of the swaps and floors far exceeds any credit risk exposure.
Commitments to extend credit are agreements to lend to a customer. Generally,
they have fixed expiration dates or termination clauses and may require payment
of a fee. Many commitments expire without ever having been drawn upon. Letters
of credit are conditional commitments issued by the Corporation to guarantee the
performance of a customer to a third party. Maturities normally are for terms
shorter than five years. Many letters of credit expire unfunded. The credit risk
for both of these instruments is essentially the same as that involved in
extending loans. The Corporation evaluates each customer's creditworthiness on a
case-by-case basis. Collateral (i.e., securities, receivables, inventory,
equipment and residential and commercial properties) is obtained depending on
management's credit assessment of the customer.
Swaps represent an exchange of interest payments computed on contractual
notional principal amounts. Swaps subject the Corporation to market risk
associated with changes in interest rates, as well as the risk that the
counterparty may fail to perform. At December 31, 1996, swaps with a total
notional principal of $400 million were in effect. This compares with $450
million at December 31, 1995. The weighted average variable interest rate that
the Corporation paid was 5.54% and 5.91% on December 31, 1996 and 1995,
respectively, while the weighted average fixed interest rate that the
Corporation received was 6.12% and 5.94% on December 31, 1996 and 1995,
respectively. The swaps have a weighted average original and remaining term to
maturity of approximately 3.0 and 1.5 years, respectively.
Floors reduce the risk associated with a declining interest rate environment and
result in receipts only if current interest rates fall below a predetermined
strike rate. Floors subject the Corporation to the risk that the counterparty
61
<PAGE>
may fail to perform. At December 31, 1996, floors with a total notional
principal of $250 million were in effect. This compares with $200 million at
December 31, 1995. The weighted average strike rate was 6% on December 31, 1996
and 1995. The floors have a weighted average original and remaining term to
maturity of approximately 4.6 and 3.0 years, respectively.
- --------------------------------------------------------------------------------
NOTE 12:
CAPITAL REQUIREMENTS
The Corporation is subject to various regulatory capital requirements by the
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory--and possibly additional discretionary--actions by
regulators that, if undertaken, could have a direct material effect on the
Corporation's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Corporation must meet
specific capital guidelines that involve quantitative measures of the
Corporation's assets, liabilities and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Corporation's capital
amounts and classification also are subject to qualitative judgments by the
regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Corporation to maintain minimum amounts and ratios (set forth in the
following table) of total and tier 1 capital to risk-weighted assets, and tier 1
capital to average assets. Management believes that, as of December 31, 1996,
the Corporation meets all capital adequacy requirements to which it is subject.
As of the most recent notification from the federal regulators, the Corporation
and each of its subsidiaries were categorized as well capitalized under the
regulatory framework for prompt corrective action. There are no conditions or
events since that notification that management believes could change the
Corporation's category.
62
<PAGE>
A summary of the Corporation's risk-based capital ratios and the levels to be
categorized as adequately and well-capitalized as of December 31 is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
To be well-
capitalized
under
prompt
For capital corrective
adequacy action
purposes provisions
---------------- ------------------
Amount- Ratio Amount Ratio
Actual Greater Greater Greater Greater
---------------- Than or Than or Than or Than or
(in thousands) Amount Ratio Equal To Equal To Equal To Equal To
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total capital (to risk-weighted assets):
Wilmington Trust Corporation $507,863 12.01%
Wilmington Trust Company 477,459 11.65 $327,903 8.0% $409,879 10.0%
Tier 1 capital (to risk-weighted assets):
Wilmington Trust Corporation 455,013 10.76
Wilmington Trust Company 426,224 10.40 163,952 4.0 245,927 6.0
Tier 1 capital (to average assets):
Wilmington Trust Corporation 455,013 8.59
Wilmington Trust Company 426,224 8.24 206,983 4.0 258,728 5.0
As of December 31, 1995:
Total capital (to risk-weighted assets):
Wilmington Trust Corporation 491,499 12.06
Wilmington Trust Company 455,717 11.41 319,427 8.0 399,284 10.0
Tier 1 capital (to risk-weighted assets):
Wilmington Trust Corporation 441,632 10.84
Wilmington Trust Company 408,054 10.22 159,713 4.0 239,570 6.0
Tier 1 capital (to average assets):
Wilmington Trust Corporation 441,632 8.98
Wilmington Trust Company 408,054 8.17 199,741 4.0 249,676 5.0
</TABLE>
The primary source of funds for payment of dividends by the Corporation is
dividends received from WTC. The ability to pay dividends is limited by Delaware
law, which requires capital surplus at least equal to the par value of
outstanding common stock.
In October 1993, the Corporation, after obtaining approval of its Board of
Directors, announced a plan to buy back 3,000,000 shares of stock. The
repurchased shares are held as treasury stock. During the years ended December
31, 1996, 1995 and 1994, 722,707 shares, 762,772 shares and 1,034,911 shares,
respectively, were acquired, completing this program. The total cost was
$83,337,792.
In April 1996, the Corporation, after obtaining approval of its Board of
Directors, announced a plan to buy back an additional 4,000,000 shares of stock
for the same purposes. During the year ended December 31, 1996, 814,367 shares
were acquired under this program at a cost of $28,611,096.
- --------------------------------------------------------------------------------
63
<PAGE>
NOTE 13:
RELATED PARTY
TRANSACTIONS
In the ordinary course of banking business, loans are made to officers and
directors of the Corporation and its affiliates as well as to their associates.
In the opinion of management, these loans are consistent with sound banking
practices and do not involve more than the normal risk of collectibility. At
December 31, 1996 and 1995, loans to executive officers and directors of the
Corporation and its principal affiliates, including loans to their associates,
totaled $31,419,050 and $28,433,267, respectively. During 1996, loan additions
were $11,920,700, loan repayments were $9,308,248 and other changes were
$373,331. Other changes represent the loan activity of newly elected and retired
executive officers and directors.
- --------------------------------------------------------------------------------
NOTE 14:
EMPLOYMENT
BENEFIT PLANS
STOCK-BASED COMPENSATION PLANS
At December 31, 1996, the Corporation had two types of stock-based compensation
plans, which are described below. The Corporation applies Accounting Principles
Board Opinion ("APB") No. 25 and related Interpretations in accounting for these
plans. No compensation cost has been recognized in the accompanying Consolidated
Financial Statements for those plans. If compensation cost for the Corporation's
two types of stock-based compensation plans had been determined based on the
fair value at the grant dates for awards under those plans consistent with the
methods outlined in SFAS No. 123, "Accounting for Stock-Based Compensation," the
Corporation's net income would have been as follows:
- --------------------------------------------------------------
1996 1995
- --------------------------------------------------------------
Net Income
As Reported $97,278 $90,031
Pro Forma 95,614 88,945
- --------------------------------------------------------------
1996 LONG-TERM INCENTIVE PLAN
Under the 1996 Long-Term Incentive Plan, the Corporation may grant incentive
stock options, non-statutory stock options and other stock-based awards to
officers and other key staff members for up to 1,200,000 shares of common stock.
Under the plan, the exercise price of each option equals the last sale price of
the Corporation's stock on the date of grant and an option's maximum term is 10
years. Information with respect to that plan and the Corporation's prior stock
option plans is as follows:
- --------------------------------------------------------------------------------
64
<PAGE>
- ------------------------------------------------------------------------------
1996 1995
------------------------- ----------------------
Weighted Weighted
average average
Options exercise Options exercise
outstanding price outstanding price
- ------------------------------------------------------------------------------
Balance, January 1 1,449,901 $23.52 1,573,521 $22.26
Options granted 337,281 31.69 208,850 25.25
Options exercised (241,920) 19.74 (311,420) 18.10
Options forfeited (1,950) 31.50 (21,050) 26.25
- ------------------------------------------------------------------------------
Balance, December 31 1,543,312 25.89 1,449,901 23.52
==============================================
Options exercisable,
December 31 1,207,981 1,252,201
==============================================
Weighted average fair value of
options granted during the year $ 5.10 $ 4.07
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model. The following weighted average assumptions
were used:
- --------------------------------------------------------------
1996 1995
- --------------------------------------------------------------
Dividend yield 3.72% 3.72%
Expected volatility 17.64-19.65 17.64-19.65
Risk-free interest rate 5.80-5.95 5.80-5.95
Expected option life (years) 3-5 3-5
A summary of the stock options outstanding at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Options outstanding Options exercisable
----------------------------- -----------------------
Weighted
average Weighted Weighted
remaining average average
Range of Options contractual exercise Options exercise
exercise prices outstanding life (years) price exercisable price
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.75-20.50 311,220 2.2 $18.90 311,220 $18.90
20.75-25.25 382,811 6.2 24.11 382,811 24.11
26.50-33.00 849,281 7.6 29.25 513,950 27.66
- -----------------------------------------------------------------------------------
10.75-33.00 1,543,312 6.2 25.89 1,207,981 24.28
===================================================================================
</TABLE>
1996 EMPLOYEE STOCK PURCHASE PLAN
Under the Corporation's 1996 Employee Stock Purchase Plan, substantially all
staff members may elect to participate in purchasing the Corporation's common
stock at the beginning of the plan year through payroll deductions of up to the
lesser of 10% of their annual base pay or $21,250, and may terminate
participation at any time. The price per share is the lower of 85% of fair
market value at time of election to participate or at the end of the plan year,
which is May 31. Information with respect to that plan and the Corporation's
prior employee stock purchase plans is as follows:
65
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Shares
reserved
for future Subscriptions Price per
subscriptions outstanding share
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1994 588,209 84,893
-------------------------
Subscriptions entered into on June 1, 1994 (96,733) 96,733 $ 21.89
Forfeitures 4,024 (4,024) 21.89-22.75
Shares issued - (82,792) 21.89
- -----------------------------------------------------------------------------------------------
Balance, December 31, 1994 495,500 94,810
-------------------------
Subscriptions entered into on June 1, 1995 (98,205) 98,205 22.10
Forfeitures 4,391 (4,391) 21.89-30.88
Shares issued - (92,169) 21.89
- -----------------------------------------------------------------------------------------------
Balance, December 31, 1995 401,686 96,455
-------------------------
Subscriptions entered into on June 1, 1996 (88,412) 88,412 28.05
Forfeitures 3,995 (3,995) 22.10-39.50
Shares issued - (94,550) 22.10
- -----------------------------------------------------------------------------------------------
Balance, December 31, 1996 317,269 86,322
=========================
</TABLE>
PENSION PLAN
The Wilmington Trust Pension Plan is a non-contributory, defined benefit plan
for substantially all staff members of the Corporation and its subsidiaries, and
provides for retirement and death benefits. The Corporation has agreed to
contribute such amounts as are necessary to provide assets sufficient to meet
the benefits to be paid to the plan's members. Annual contributions are designed
to fund the plan's current service costs and past service costs plus interest
over 10 years.
Costs of the plan are determined actuarially by the projected unit credit
method. Plan benefits are based on years of service and a modified career
average formula. The plan's assets are invested primarily in collective trust
funds managed by WTC. Participation in the collective trust funds of WTC was
$91,217,213 and $83,522,723 at December 31, 1996 and 1995, respectively.
A table of the plan's funded status and amounts recognized in the Consolidated
Statements of Condition at December 31 is as follows:
66
<PAGE>
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of benefits
obligations:
Accumulated benefit obligations:
Vested $(65,749) $(62,804)
Nonvested (3,011) (2,585)
- ------------------------------------------------------------------------------
$(68,760) $(65,389)
===============================
Projected benefit obligation $(72,602) $(68,416)
Plan assets at fair value 87,859 82,085
-------------------------------
Excess of plan assets over projected
benefit obligation 15,257 13,669
Unrecognized prior service cost 8,717 9,511
Unrecognized net (gain)/loss (19,691) (17,614)
Unrecognized net transition cost (6,729) (7,570)
- ------------------------------------------------------------------------------
Accrued pension costs recognized in the
consolidated statements of condition $ (2,446) $ (2,004)
=============================
<TABLE>
<CAPTION>
Net pension cost includes the following components:
- ---------------------------------------------------------------------------------------------------
(in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 1,983 $ 1,515 $ 2,622
Interest cost on projected benefit obligation 5,372 5,115 4,376
Actual return on plan assets (8,527) (13,212) (4,309)
Net amortization and deferral 1,614 6,798 (1,708)
- ---------------------------------------------------------------------------------------------------
Net periodic pension cost $ 442 $ 216 $ 981
================================================
- ---------------------------------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------
Assumptions used in determining the projected benefit
obligations were as follows:
Discount rate 7.75% 7.50%
Average rate of compensation increase 4.50 4.50
Assumptions used in determining net pension
cost were as follows:
Long-term rate of return on plan assets 9.50% 9.50% 9.00%
Discount rate 7.50 8.50 7.25
Average rate of compensation increase 4.50 5.50 5.50
67
</TABLE>
<PAGE>
POST-EMPLOYMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
In addition to providing pension benefits, the Corporation makes available
certain health care and life insurance benefits for substantially all retired
staff members. Staff members who retire from the Corporation are eligible to
receive up to $7,000 each year toward the premium for medical coverage if they
are under age 65 and up to $4,000 toward the premium if they are age 65 or over.
Staff members who retire also are eligible for $7,500 of life insurance
coverage. In accordance with SFAS No. 106, "Employers" Accounting for
Postretirement Benefits Other Than Pensions," and SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," the cost of providing those benefits is
being recognized on an accrual basis.
The components of the net periodic post-employment benefit costs for the years
ended December 31 were as follows:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Service cost $ 509 $ 369 $ 468
Interest cost 1,712 1,807 1,898
Net amortization and deferral -- (73) 4
- -------------------------------------------------------------------------------
Net post-employment benefit cost $2,221 $2,103 $2,370
======================================
68
<PAGE>
A table of the plan's funded status and amounts recognized in the Consolidated
Statements of Condition at December 31 is as follows:
- --------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------
Accumulated post-employment benefit
obligation:
Retirees $(15,411) $(15,980)
Active employees (8,292) (7,968)
- --------------------------------------------------------------------
(23,703) (23,948)
Plan assets at fair value -- --
-----------------------
Funded status (23,703) (23,948)
Unrecognized prior service cost -- --
Unrecognized net (gain)/loss (2,464) (1,915)
Unrecognized transition obligation -- --
- --------------------------------------------------------------------
Accrued post-employment benefit cost $(26,167) $(25,863)
==========================
69
<PAGE>
The following assumptions were utilized in the calculation of the accumulated
post-employment benefit obligation. These assumptions are applicable to
employees who elected to retire by December 31, 1993. Beginning in 1994, the
Corporation capped the amount of premiums that it contributes to this plan.
Premium costs in excess of these caps are borne by the plan's participants.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
1996 1995 1994
-------------------------- ------------------------- -------------------------
Claims Claims Claims
Less Than Claims Less Than Claims Less Than Claims
or Equal to Greater Than or Equal to Greater Than or Equal to Greater Than
Age 65 Age 65 Age 65 Age 65 Age 65 Age 65
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Significant actuarial assumptions
used for other post-employment
benefits were as follows:
Discount rate 7.75% 7.75% 7.50% 7.50% 8.50% 8.50%
Health care cost trend rate,
current year 6.70 6.70 7.60 7.60 9.40 8.50
Health care cost trend rate,
ultimate year 4.25 4.25 4.00 4.00 5.00 5.00
Trend rate decreases to the
ultimate rate in the year 2000 2000 2000 2000 1998 1998
Effect of a 1% increase in the
trend rate (in-thousands):
Increase in accumulated post-
employment benefit obligation $1,199 $1,289 $1,317
Increase in net periodic
post-employment benefit cost 95 97 115
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
THRIFT SAVINGS PLAN
The Wilmington Trust Thrift Savings Plan covers all full-time staff members who
elect to participate in the plan. Eligible staff members may contribute from 1%
to 15% of their annual base pay. The first 6% of each staff member's pay is
eligible for matching contributions from the Corporation of $.50 on each $1.00.
The amounts contributed by the Corporation to this plan were $1,945,386,
$1,583,027 and $1,613,229 in 1996, 1995 and 1994, respectively.
- --------------------------------------------------------------------------------
NOTE 15:
INCOME TAXES
A reconciliation of the statutory income tax to the income tax expense included
in the Consolidated Statements of Income for each of the three years ended
December 31 is as follows:
- --------------------------------------------------------------------------------
(in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Income before taxes and cumulative effect
of change in accounting principle $144,119 $131,720 $120,834
================================
Income tax at statutory rate of 35% $ 50,442 $ 46,102 $ 42,292
Tax effect of tax-exempt income (4,804) (5,578) (4,938)
Tax effect of dividend income (1,790) (1,800) (1,959)
State taxes, net of federal tax benefit 2,534 2,373 2,298
Other 459 592 (2,028)
- -------------------------------------------------------------------------------
Total income taxes $ 46,841 $ 41,689 $ 35,665
================================
Taxes currently payable:
Federal $ 40,337 $ 37,542 $ 31,528
State 3,899 3,650 3,536
Deferred taxes:
Federal 2,605 497 601
- -------------------------------------------------------------------------------
Total income taxes $ 46,841 $ 41,689 $ 35,665
================================
Taxes from securities gains/(losses) $ 416 $ 794 $ (755)
71
<PAGE>
The significant components of the deferred tax liabilities and assets at
December 31 are as follows:
- --------------------------------------------------------------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------
Deferred tax liabilities:
Tax depreciation $ 2,112 $ 1,951
Partnerships 1,141 1,143
Prepaid VEBA costs 6,073 6,090
Automobile and equipment leases 7,432 3,590
System development costs 2,129 2,199
Market valuation on investment securities 565 2,463
Other 4,084 3,598
- --------------------------------------------------------------------------
Total deferred tax liabilities 23,536 21,034
--------------------------
Deferred tax assets:
Loan loss provision 19,035 17,413
OPEB obligation 9,158 9,052
Loan fees 2,745 2,787
Other 3,061 2,952
- --------------------------------------------------------------------------
Total deferred tax assets 33,999 32,204
---------------------------
Net deferred tax assets $10,463 $11,170
===========================
No valuation allowance was recognized for the deferred tax assets at December
31, 1996 and 1995.
72
<PAGE>
NOTE 16:
CONSOLIDATED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of the unaudited quarterly results of operations for the years ended
December 31 is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1996 1995
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(in thousands) Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
- --------------------------------------------------------------------------------------------------------
Interest income $103,483 $101,442 $ 99,162 $ 98,763 $99,607 $96,620 $94,294 $86,820
Interest expense 47,281 47,122 46,698 47,528 47,817 46,226 45,473 40,461
- --------------------------------------------------------------------------------------------------------
Net interest income 56,202 54,320 52,464 51,235 51,790 50,394 48,821 46,359
Provision for loan
losses (5,000) (4,000) (3,500) (3,500) (5,000) (3,000) (2,520) (1,760)
- --------------------------------------------------------------------------------------------------------
Net interest income
after provision for
loan losses 51,202 50,320 48,964 47,735 46,790 47,394 46,301 44,599
Other income 37,077 33,453 34,086 32,433 33,174 30,850 31,646 29,703
Securities gains/
(losses) 682 519 (10) (3) 2,192 30 38 7
- --------------------------------------------------------------------------------------------------------
Net interest and
other income 88,961 84,292 83,040 80,165 82,156 78,274 77,985 74,309
Other expense 51,598 47,313 47,319 46,109 47,699 43,602 45,344 44,359
- --------------------------------------------------------------------------------------------------------
Income before income
taxes 37,363 36,979 35,721 34,056 34,457 34,672 32,641 29,950
Applicable income
taxes 12,083 12,117 11,604 11,037 11,282 11,284 10,143 8,980
- --------------------------------------------------------------------------------------------------------
Net income $25,280 $ 24,862 $ 24,117 $ 23,019 $23,175 $23,388 $22,498 $20,970
==================================================================================
Net income per share $ 0.74 $ 0.73 $ 0.70 $ 0.66 $ 0.66 $ 0.66 $ 0.64 $ 0.60
==================================================================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
NOTE 17:
PARENT COMPANY ONLY FINANCIAL STATEMENTS
The Statements of Condition, Income and Cash Flows for the parent company are
as follows:
STATEMENTS OF CONDITION
- --------------------------------------------------------------------------
December 31 (in thousands) 1996 1995
- --------------------------------------------------------------------------
Assets
Cash and due from banks $ 17 $ 1
Investment in subsidiaries 457,839 442,109
Investment securities available for sale 6,278 16,634
Other assets 1,039 999
- --------------------------------------------------------------------------
Total assets $465,173 $459,743
=======================
Liabilities and Stockholders' Equity
Liabilities $ 456 $ 372
Stockholders' equity 464,717 459,371
- --------------------------------------------------------------------------
Total liabilities and stockholders' equity $465,173 $459,743
=======================
74
<PAGE>
STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
For the year ended December 31 (in thousands) 1996 1995 1994
- ------------------------------------------------------------------------------
Income
Dividend from subsidiary $ 78,743 $ 72,230 $ 67,778
Management fees from subsidiary 28 -- 9
Interest 261 289 39
- ------------------------------------------------------------------------------
Total income 79,032 72,519 67,826
------------------------------
Expense
Salaries and employment benefits 60 105 107
Net occupancy 4 5 3
Stationery and supplies -- 1 1
Other operating expense 1,084 1,088 985
- ------------------------------------------------------------------------------
Total expense 1,148 1,199 1,096
------------------------------
Income before income tax benefit and equity in
undistributed income of subsidiaries 77,884 71,320 66,730
Applicable income tax benefit (289) (311) (312)
Equity in undistributed income of subsidiaries 19,105 18,400 18,127
- ------------------------------------------------------------------------------
Net income $ 97,278 $ 90,031 $ 85,169
=============================
75
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------
For the year ended December 31 (in thousands) 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 97,278 $ 90,031 $ 85,169
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed income of subsidiaries (19,105) (18,400) (18,127)
(Increase)/decrease in other assets (40) (363) 199
Increase/(decrease) in other liabilities 84 (378) 380
- -----------------------------------------------------------------------------------------------
Net cash provided by operating activities 78,217 70,890 67,621
---------------------------------
Investing activities
Proceeds from sales of investment securities available
for sale 34,745 18,242 6,533
Proceeds from maturity of investment securities
held to maturity -- 1,290 500
Purchases of investment securities available for sale (24,389) (34,876) (6,533)
Purchases of investment securities held to maturity -- -- (1,290)
Capital contribution to subsidiaries -- (2,000) (2,000)
Formation of subsidiary -- -- (3,000)
- -----------------------------------------------------------------------------------------------
Net cash provided by/(used for) investing activities 10,356 (17,344) (5,790)
--------------------------------
Financing activities
Cash dividends (44,421) (41,191) (38,225)
Proceeds from common stock issued under employment
benefit plans 7,650 8,130 2,638
Payments for common stock acquired through buybacks (51,786) (20,495) (26,240)
- ----------------------------------------------------------------------------------------------
Net cash used for financing activities (88,557) (53,556) (61,827)
-------------------------------
Increase/(decrease) in cash and cash equivalents 16 (10) 4
Cash and cash equivalents at beginning of year 1 11 7
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 17 $ 1 $ 11
===============================
</TABLE>
76
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To The Board of Directors and Stockholders:
We have audited the accompanying consolidated statements of condition of
Wilmington Trust Corporation and subsidiaries as of December 31, 1996 and 1995
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Wilmington Trust
Corporation and subsidiaries at December 31, 1996 and 1995 and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 24, 1997
77
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of Wilmington Trust Corporation is responsible for the financial
statements and the other financial information included in this Annual Report.
The financial statements have been prepared in accordance with generally
accepted accounting principles and include amounts based upon management's best
judgment where necessary.
Management maintains a system of internal controls and procedures designed to
provide reasonable assurance as to the integrity and reliability of financial
records and the protection of assets. The system of internal control is
continually reviewed for its effectiveness and is revised, when appropriate, due
to changing circumstances and requirements.
Independent auditors are appointed by the Board of Directors and ratified by the
Corporation's stockholders to audit the financial statements in accordance with
generally accepted auditing standards and to independently assess the fair
presentation of the Corporation's financial position, results of operations and
cash flows. Their report appears in this Annual Report.
The Audit Committee of the Board of Directors, composed exclusively of outside
directors, is responsible for reviewing and monitoring the Corporation's
accounting and reporting practices. The Audit Committee meets periodically with
management, internal auditors and the independent auditors to discuss specific
accounting, financial reporting and internal control matters. Both the internal
auditors and the independent auditors have direct access to the Audit Committee.
/s/Ted T. Cecala /s/Robert V. A.Harra, Jr. /s/David R. Gibson
- ------------------------- ------------------------- -----------------------
Ted T. Cecala Robert V. A.Harra, Jr. David R. Gibson
Chairman and President and Chief Senior Vice President
Chief Executive Officer Operating Officer and Chief Financial
Officer
78
<PAGE>
WILMINGTON TRUST CORPORATION
BOARD OF DIRECTORS
ROBERT H. BOLLING, JR. ANDREW B. KIRKPATRICK, JR.
Retired Consulting Electrical Attorney, Counsel,
Engineer Law Firm of Morris, Nichols, Arsht
and Tunnell
CAROLYN S. BURGER
Principal, CB Associates, Inc.; REX L. MEARS
Director, BetzDearborn Inc. President, Ray S. Mears and Sons,
Inc.
TED T. CECALA
Chairman and Chief Executive WALTER D. MERTZ*
Officer Retired Senior Vice President
RICHARD R. COLLINS HUGH E. MILLER
Retired Chief Executive Officer Retired Vice Chairman,
and Chief Operating Officer, ICI Americas Incorporated;
American Life Insurance Company Director MGI PHARMA, Inc.
CHARLES S. CROMPTON, JR. STACEY J. MOBLEY
Attorney, Partner, Senior Vice President, External
Law Firm of Potter, Anderson and Affairs,
Corroon E. I. du Pont de Nemours and
Company;
H. STEWART DUNN, JR. Director, DuPont Canada
Attorney, Partner,
Law Firm of Ivins, Phillips and G. BURTON PEARSON, JR.*
Barker Retired Senior Vice President
EDWARD B. DU PONT LEONARD W. QUILL
Private Investor; Retired Chairman of the Board
Director, Atlantic Aviation
Corporation; DAVID P. ROSELLE
Director, E. I. du Pont de Nemours President, University of Delaware
and Company
THOMAS P. SWEENEY
R. KEITH ELLIOTT Attorney, Member,
Chairman and Chief Executive Law Firm of Richards, Layton and
Officer, Finger, P.A.
Hercules Incorporated
BERNARD J. TAYLOR, II
ENDSLEY P. FAIRMAN* Retired Chairman of the Board
Retired Senior Vice President
79
<PAGE>
ROBERT C. FORNEY MARY JORNLIN THEISEN
Retired Executive Vice President Former New Castle County Executive
and Director,
E. I. du Pont de Nemours and ROBERT W. TUNNELL, JR.
Company; Managing Partner, Tunnell Companies, L.P.
Director, UGI, Inc. And Amerigas
Propane, Inc.
ROBERT V. A. HARRA, JR.
President, Chief Operating Officer
and Treasurer
* ASSOCIATE DIRECTOR.
80
<PAGE>
WILMINGTON TRUST CORPORATION
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL OFFICERS TED T. CECALA DAVID R. GIBSON
Chairman and Chief Executive Senior Vice President
Officer and Chief Financial Officer
ROBERT V. A. HARRA, JR. THOMAS P. COLLINS
President, Chief Operating Vice President, Legal, and
Officer and Treasurer Secretary
RONALD K. PENDLETON
Auditor
- ------------------------------------------------------------------------------------------------
STANDING COMMITTEES EXECUTIVE COMMITTEE TRUST COMMITTEE
Ted T. Cecala, CHAIRMAN (WILMINGTON TRUST COMPANY)
Carolyn S. Burger Robert V. A. Harra, Jr.,
Robert C. Forney CHAIRMAN
Robert V. A. Harra, Jr. George W. Helme, IV, VICE
Hugh E. Miller CHAIRMAN
Thomas P. Sweeney Robert H. Bolling, Jr.
Robert J. Christian
AUDIT COMMITTEE Howard K. Cohen
Charles S. Crompton, Jr., H. Stewart Dunn, Jr.
CHAIRMAN Edward B. du Pont
Richard R. Collins Endsley P. Fairman
David P. Roselle Walter D. Mertz
Mary Jornlin Theisen G. Burton Pearson, Jr.
Robert W. Tunnell, Jr.
COMPENSATION COMMITTEE
Robert C. Forney, CHAIRMAN
Richard R. Collins
Charles S. Crompton, Jr.
Hugh E. Miller
Stacey J. Mobley
- ------------------------------------------------------------------------------------------------
OPERATING SUBSIDIARIES WILMINGTON TRUST COMPANY
Brandywine Finance Corporation
Brandywine Insurance Agency, Inc.
Brandywine Life Insurance Company, Inc.
Delaware Corporate Management, Inc.
Holiday Travel Agency, Inc.
Rodney Square Distributors, Inc.
Rodney Square Management Corporation
WTC Corporate Services, Inc.
Wilmington Brokerage Services Company
WILMINGTON TRUST OF PENNSYLVANIA
WILMINGTON TRUST FSB
</TABLE>
81
<PAGE>
WILMINGTON TRUST COMPANY
PRINCIPAL OFFICERS
TED T. CECALA JOSEPH M. JACOBS
Chairman, and Chief Executive Officer Senior Vice President,
Administration
ROBERT V. A. HARRA, JR.
President, Chief Operating Officer JOHN H. KIPP
and Treasurer Senior Vice President,
Information Technology
ROBERT J. CHRISTIAN
Senior Vice President, Asset Management HUGH D. LEAHY, JR.
Senior Vice President,
HOWARD K. COHEN Personal Banking
Senior Vice President,
Corporate Financial Services ROBERT A. MATARESE
Senior Vice President,
WILLIAM J. FARRELL, II Commercial Banking
Senior Vice President,
Trust Operations and Systems Development RITA C. TURNER
Senior Vice President,
DAVID R. GIBSON Marketing
Senior Vice President, Finance
THOMAS P. COLLINS
GEORGE W. HELME, IV Vice President, Legal,
Senior Vice President, and Secretary
Personal Trust and Private Banking
RONALD K. PENDLETON
Auditor
82
<PAGE>
WILMINGTON TRUST COMPANY
DELAWARE John E. Burris, CHAIRMAN Milton C. Manlove
ADVISORY BOARD John L. Allen, Sr. Ernest E. Megee, Jr.
Joseph R. Bateman Marion W. Moore
Leland Berry R. Byron Palmer
Alfred G. Best William J. Paskey, Jr.
A. Dean Betts R. James Quillen, Jr.
W. Cecil Carpenter William C. Robertson, Jr.
Crawford J. Carroll John M. Short
W. Pierce Ellis Charles P. Spicer
Robert N. Emory J. Edward Taylor
Ralph G. Faries, Jr. Harry K. F. Terry
James A. Flood, Sr. Robert L. Thompson
R. Clay Foltz W. Pierce Thompson
Robert H. George Ebe Stephen Townsend, Jr.
Jackie Hickman Robert W. Tunnell
John Janosik William W. Vanderwende
John W. Jardine, Jr. James C. White
Claude E. Lester John E. Wiley, Jr.
T. William Lingo W. Robert Williams
83
<PAGE>
WILMINGTON TRUST OF PENNSYLVANIA
BOARD OF DIRECTORS
TED T. CECALA, CHAIRMAN ROBERT V. A. HARRA, JR.
GERARD A. CHAMBERLAIN HUGH E. MILLER
ROBERT C. FORNEY LEONARD W. QUILL
________________________________________________________________________________
PRINCIPAL OFFICERS
TED T. CECALA ROBERT A. MATARESE
Chairman Senior Vice President
ROBERT V. A. HARRA, JR. GERARD A. CHAMBERLAIN
President Secretary
GEORGE W. HELME, IV MARTIN B. MCDONOUGH, JR.
Senior Vice President Treasurer
HUGH D. LEAHY, JR.
Senior Vice President
WILMINGTON TRUST FSB
BOARD OF DIRECTORS
GEORGE W. HELME, IV, CHAIRMAN ROBERT V. A. HARRA, JR.
MICHAEL K. BLOXHAM BERNARD B. ISAACSON
WERNER C. BROWN HUGH D. LEAHY, JR.
TED T. CECALA W. CRAIG MARSHALL
THOMAS P. COLLINS JOHN W. PARTRIDGE
EDWARD B. DU PONT WALTER F. WILLIAMS
THOMAS L. DU PONT
________________________________________________________________________________
PRINCIPAL OFFICERS
GEORGE W. HELME, IV HUGH D. LEAHY, JR.
Chairman and Chief Executive Officer Senior Vice President and Treasurer
MICHAEL K. BLOXHAM ROBERT A. MATARESE
President, Maryland Senior Vice President
W. CRAIG MARSHALL THOMAS P. COLLINS
President, Florida Vice President and Secretary
84
<PAGE>
WILMINGTON TRUST CORPORATION
Stockholder CORPORATE HEADQUARTERS
Information Wilmington Trust Center
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
(302) 651-1000
(800) 441-7120
COMMON STOCK
Wilmington Trust Corporation common stock is traded under the
symbol WILM and is listed on the Nasdaq National Market
System.
DIVIDENDS
Dividends usually are declared in the first month of each
quarter to stockholders of record as of the first business
day in February, May, August and November. Dividend payment
dates usually are two weeks later. Wilmington Trust has paid
cash dividends on its common stock since 1914.
STOCK TRANSFER AGENT, DIVIDEND REINVESTMENT AGENT AND
REGISTRAR OF STOCK
Inquiries relating to stockholder records, stock transfers,
changes of ownership, changes of address, duplicate mailings,
dividend payments and the dividend reinvestment plan should
be directed to the stock transfer agent:
NORWEST BANK MINNESOTA, N.A.
SHAREOWNER SERVICES
TELEPHONE:
(800) 999-9867
MAILING ADDRESS:
P.O. Box 64854
St. Paul, MN 55164-0854
STREET ADDRESS:
161 North Concord Exchange
South St. Paul, MN 55075
85
<PAGE>
DIVIDEND REINVESTMENT AND VOLUNTARY STOCK PURCHASE PLAN
The corporation offers a plan under which participating
stockholders can purchase additional shares of Wilmington
Trust Corporation common stock through automatic reinvestment
of their regular quarterly cash dividends and/or voluntary
cash payments. All commissions and fees connected with the
purchase and safekeeping of the shares are paid by the
corporation. For details of the plan, contact the stock
transfer agent.
DUPLICATE MAILINGS
You may receive more than one copy of the Annual Report due
to multiple accounts within your household. Wilmington Trust
is required to mail an Annual Report to each name on our
stockholder list unless the stockholder requests that
duplicate mailings be eliminated. To eliminate duplicate
mailings, please send a written request to the stock transfer
agent.
ANNUAL MEETING
The annual meeting of Wilmington Trust Corporation
stockholders will be held in the Rodney Square Club on the
12th floor of the Wilmington Trust Center, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware, at
10:00 a.m. on Thursday, April 17, 1997.
INFORMATION REQUESTS
Analysts, investors, news media representatives and others
seeking financial information, including requests for the
Annual Report on Form 10-K filed with the Securities and
Exchange Commission, should contact Charles W. King, Vice
President, (302) 651-8069.
86
<PAGE>
THIS ANNUAL REPORT WAS DESIGNED BY REESE, TOMASES & ELLICK, INC. AND PRINTED BY
CEDAR TREE PRESS. PHOTOGRAPHY BY HAROLD ROSS AND ED ECKSTEIN.
* PAGES 13 THROUGH 56 WERE PRINTED ON RECYCLED PAPER UTILIZING 50% RECYCLED
FIBERS AND 20% POST-CONSUMER WASTE.
<PAGE>
(BACK COVER WITH WILMINGTON TRUST LOGO AT BOTTOM)
EXHIBIT 21
Wilmington Trust Corporation has only three direct subsidiaries,
Wilmington Trust Company, a Delaware-chartered bank and trust company,
Wilmington Trust of Pennsylvania, a Pennsylvania-chartered bank and trust
company, and Wilmington Trust FSB, a Federally-chartered savings bank
headquartered in Maryland. Wilmington Trust Company has the following
subsidiaries:
NAME JURISDICTION
1. Brandywine Insurance Agency, Inc. Delaware
2. Brandywine Finance Corporation Delaware
3. Brandywine Life Insurance Company, Inc. Delaware
4. Compton Realty Corporation Delaware
5. Drew-I, Ltd. Delaware
6. Drew-VIII, Ltd. Delaware
7. Delaware Corporate Management, Inc. Delaware
8. Holiday Travel Agency, Inc. Delaware
9. 100 West Tenth Street Corporation Delaware
10. Rockland Corporation Delaware
11. Rodney Square Distributors, Inc. Delaware
12. Rodney Square Management Corporation Delaware
13. Siobain VI, Ltd. Delaware
14. WTC Corporate Services, Inc. Delaware
15. WTC Pennsylvania Corp. Pennsylvania
16. W.T. Investments, Inc. Delaware
17. Wilmington Brokerage Services Company Delaware
18. Wilmington Capital Management, Inc. Delaware
19. Wilmington Trust Commercial Services Company Maryland
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-43675) pertaining to the Thrift Savings Plan, the 1991 Long-Term
Incentive Stock Option Plan, the 1988 Long-Term Incentive Stock Option Plan, and
the 1983 Employee Stock Option Plan and in the Registration Statement (Form S-8
No. 333-04042) pertaining to the 1996 Long-Term Incentive Plan and the Employee
Stock Purchase Plan, of our report dated January 24, 1997, with respect to the
consolidated financial statements of Wilmington Trust Corporation and
subsidiaries incorporated by reference in the Annual Report (Form 10-K) for the
year ended December 31, 1996.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
March 25, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CORPORATION'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 231,233
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 134,190
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 798,519
<INVESTMENTS-CARRYING> 467,632
<INVESTMENTS-MARKET> 466,763
<LOANS> 3,771,484
<ALLOWANCE> 54,361
<TOTAL-ASSETS> 5,564,409
<DEPOSITS> 3,913,698
<SHORT-TERM> 1,036,543
<LIABILITIES-OTHER> 106,451
<LONG-TERM> 43,000
0
0
<COMMON> 39,107
<OTHER-SE> 425,610
<TOTAL-LIABILITIES-AND-EQUITY> 5,564,409
<INTEREST-LOAN> 320,499
<INTEREST-INVEST> 80,876
<INTEREST-OTHER> 1,475
<INTEREST-TOTAL> 402,850
<INTEREST-DEPOSIT> 121,955
<INTEREST-EXPENSE> 188,629
<INTEREST-INCOME-NET> 214,221
<LOAN-LOSSES> 16,000
<SECURITIES-GAINS> 1,188
<EXPENSE-OTHER> 192,339
<INCOME-PRETAX> 144,119
<INCOME-PRE-EXTRAORDINARY> 97,278
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,278
<EPS-PRIMARY> 2.83
<EPS-DILUTED> 2.83
<YIELD-ACTUAL> 4.51
<LOANS-NON> 39,520
<LOANS-PAST> 20,440
<LOANS-TROUBLED> 1,215
<LOANS-PROBLEM> 11,997
<ALLOWANCE-OPEN> 49,867
<CHARGE-OFFS> 14,655
<RECOVERIES> 3,149
<ALLOWANCE-CLOSE> 54,361
<ALLOWANCE-DOMESTIC> 54,361
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
