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, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number: 1-14659
WILMINGTON TRUST CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 51-0328154
- ------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890
-------------------------------------------------------------------------
(Address of principal executive offices)(Zip Code)
(302) 651-1000
-----------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Name of each exchange on which
Section 12(b) of the Act: registered:
Title of each class
Common Stock, $1.00 Par Value New York Stock Exchange
- ------------------------------ -----------------------
(Title of class)
<PAGE>
Securities registered pursuant to Section 12 (g) of the Act: None
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 1, 2000, the aggregate market value of voting and
non-voting stock held by non-affiliates* of the registrant was $1,239,260,676.
Indicate the number of shares outstanding of the registrant's class of common
stock, as of the latest practicable date.
Class Outstanding at February 1, 2000
- ----------------------------- -------------------------------
Common Stock, $1 Par Value 32,226,851
Documents Incorporated Part of Form 10-K in which
by Reference Incorporated
- ----------------------------- -------------------------------
(1) Portions of Proxy Statement for 2000 Part III
Annual Shareholders' Meeting
of Wilmington Trust Corporation
(2) Portions of Annual Report to Parts I, II, and IV
Shareholders for fiscal year ended
December 31, 1999
*For purposes of this calculation, Wilmington Trust's subsidiaries and its
directors and executive officers are deemed to be "affiliates."
<PAGE>
TABLE OF CONTENTS
-----------------
PART I
Item 1 Business........................................................1
Item 2 Properties.....................................................23
Item 3 Legal Proceedings..............................................24
Item 4 Submission of Matters to a Vote of Security Holders............24
PART II
Item 5 Market for Registrant's Common Stock and Related
Stockholder Matters............................................24
Item 6 Selected Financial Data........................................25
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operation.............................26
Item 7A Qualitative and Quantitative Disclosure About Market Risk......26
Item 8 Financial Statements and Supplementary Data....................26
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................27
PART III
Item 10 Directors and Executive Officers of the Registrant.............27
Item 11 Executive Compensation.........................................27
Item 12 Security Ownership of Certain Beneficial Owners and
Management.....................................................27
Item 13 Certain Relationships and Related Transactions.................27
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K....................................................27
<PAGE>
PART I
ITEM 1 - BUSINESS
General
-------
Wilmington Trust Corporation, a Delaware corporation ("Wilmington
Trust"), owns Wilmington Trust Company, a Delaware-chartered bank and trust
company and Wilmington Trust's principal subsidiary ("WTC"). WTC was formed in
1903 and is the largest full-service bank in Delaware, with 48 branch offices at
January 31, 2000. Wilmington Trust also owns two other financial institutions,
Wilmington Trust of Pennsylvania, a Pennsylvania-chartered bank and trust
company with seven branches ("WTPA"), and Wilmington Trust FSB, a
Federally-chartered savings bank with six branches in Maryland and Florida and
trust agency offices in New York, California, Maryland, and Nevada ("WTFSB").
(WTC, WTPA, and WTFSB sometimes are referred to herein as the "Banks").
Wilmington Trust also owns WT Investments, Inc., an investment holding company
with interests in three asset management firms ("WTI").
Wilmington Trust's principal place of business is Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890. Its telephone number is
(302) 651-1000. Its principal role is to supervise and coordinate the Banks' and
WTI's activities and provide them with capital and services. Virtually all of
Wilmington Trust's income historically has been from dividends from WTC.
Wilmington Trust's current staff principally consists of its management, who are
executive officers generally serving in similar capacities for WTC. Wilmington
Trust utilizes WTC's support staff.
As of December 31, 1999, Wilmington Trust had total assets of $7.2
billion and total shareholders' equity of $498.2 million. On that date,
32,352,775 shares of Wilmington Trust's common stock were issued and
outstanding, which were held by 9,617 shareholders of record. Wilmington Trust's
total loans outstanding were approximately $4.8 billion on that date.
Private Client Advisory Services
--------------------------------
Wilmington Trust is a major provider of trust and administrative
services in a wide variety of capital market transactions, many of which utilize
the benefits of Delaware's favorable tax and legal environment. Wilmington Trust
has long been recognized as a global leader in leveraged leasing transactions
for large capital equipment such as aircraft, vessels, and satellites, as well
as projects such as power generating facilities, sports arenas, entertainment
complexes, and corporate buildings. For decades, Wilmington Trust has provided
trust and administrative services in asset securitization and structured
financing transactions that permit companies seeking to move cash flow assets
(such as mortgages, loans, royalty streams, and movie rights) off their balance
sheets into special purpose entities. In addition, Wilmington Trust serves as
trustee in high-yield debt/Rule 144A transactions, and provides restructuring
services in workout situations. Wilmington Trust also services a variety of
special purpose entities such as passive investment companies, business trusts,
limited liability companies, and limited partnerships. These afford the
opportunity to cross-sell Wilmington Trust's custody and asset management
services. Wilmington Trust's Nevada office also provides these corporate trust
services. In addition, Wilmington Trust provides trust and custody services for
a variety of tax-qualified retirement plans and executive compensation
arrangements.
1
<PAGE>
Asset Management
----------------
Wilmington Trust provides institutional investment advisory services for
clients across the country, including tax-qualified defined benefit and defined
contribution plans, endowment and foundation funds, and taxable and tax-exempt
cash portfolios. It also offers the proprietary family of The Wilmington Funds,
which are mutual funds consisting of money market, bond, and small-cap and
large-cap equity portfolios.
In January 1998, WTI acquired a 24% interest in Cramer Rosenthal
McGlynn, LLC, an asset management firm with $4.5 billion under management and a
value orientation. Cramer's capabilities also include special equity, limited
partnerships, and high-yield investments. WTI has since increased its interest
in that firm to 34%. In July 1998, WTI acquired an interest in California-based
Roxbury Capital Management, LLC, an asset management firm with a growth
orientation and $6 billion under management.
Through its personal investment centers, Wilmington Trust offers
investment services throughout the Banks' branches.
As of December 31, 1999, Wilmington Trust in the aggregate had assets of
$135 billion under trust, custody, and administration. Of that total, Wilmington
Trust manages approximately $26 billion in discretionary assets and $109 billion
in non-discretionary assets. Personal trust assets totaled $29 billion.
Lending Activities
------------------
The Banks historically have concentrated the lending activities
described below in Delaware, Pennsylvania, Maryland, and Florida. 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.
Residential Mortgage Loans
--------------------------
The Banks directly originate or purchase residential first mortgage
loans. A third-party servicer generally services residential mortgage loans
that are not resold.
The Banks maintain excellent relationships with correspondent lenders in
their market areas from which they purchase residential mortgage loans. The
Banks also foster public awareness of their residential mortgage loan products
through television and newspaper advertising and direct mail. The Banks offer
both fixed and adjustable interest rates on residential mortgage loans, with
terms ranging up to 30 years.
Commercial Loans
----------------
The Banks also originate loans secured by mortgages on commercial real
estate and multi-family residential real estate. The Banks seek to minimize
risks of this lending in a number of ways, including:
2
<PAGE>
o Limiting the size of their individual commercial and multi-family
real estate loans;
o Monitoring the aggregate size of their commercial and multi-family
housing loan portfolios;
o Generally requiring equity in the property securing the loan equal
to a certain percentage of the appraised value or selling price;
o Requiring in most instances that the financed project generates
cash flow adequate to meet required debt service payments; and
o Requiring that the Banks have recourse to the borrower and
guarantees from the borrower's principals in most instances.
The Banks also make other types of commercial loans to businesses
located in their market areas. The Banks offer lines of credit, term loans, and
demand loans to finance working capital, accounts receivable, inventory and
equipment purchases. Typically, these loans have terms of up to seven years, and
bear interest either at fixed rates or at rates fluctuating with a designated
interest rate. These loans frequently are secured by the borrower's assets. In
many cases, they also are collateralized by guarantees of the borrower's owners
and their principal officers.
Construction Loans
------------------
The Banks make loans and participate in financing to construct
residences and commercial buildings. The Banks also originate loans for the
purchase of unimproved property for residential and commercial purposes. In
these cases, the Banks frequently provide the construction funds to improve the
properties.
The Banks' residential and commercial construction loans generally have
terms of up to 36 months, and interest rates that adjust from time to time in
accordance with changes in a designated interest rate. The Banks disburse loan
proceeds in increments as construction progresses and 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. The Banks may
underwrite and structure construction loans to convert to permanent loans at the
end of the construction period. Analyzing prospective construction loan projects
requires greater expertise than that required for residential mortgage lending
on completed structures. Residential and commercial construction loans afford
the Banks the opportunity to increase the interest rate sensitivity of their
loan portfolios and receive yields higher than those obtainable on permanent
residential mortgage loans.
Loans to Individuals
--------------------
The Banks offer both secured and unsecured personal lines of credit,
installment loans, home improvement loans, direct and indirect automobile loans,
and credit card facilities. The Banks develop public awareness of their consumer
loan products primarily through television and 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
3
<PAGE>
attempt to enhance the spread between their average loan yields and their cost
of funds, and their matching of assets and liabilities expected to mature or
reprice in the same periods.
Underwriting Standards
----------------------
In determining whether to originate or purchase a residential mortgage
loan, the Banks assess both the borrower's ability to repay the loan and the
adequacy of the proposed 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, as well as fire and extended coverage casualty
insurance protecting the mortgaged properties. Loans are approved by various
levels of management depending on the amount of the loan.
The Banks' underwriting standards relating 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. 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:
o Inspecting each property before issuing a loan commitment and
before each disbursement;
o Requiring an appraisal of the property;
o Requiring recourse to the borrower; and
o Requiring the personal guaranty of the borrower's principal(s).
The Banks monitor the performance of their construction loans by inspecting the
property securing each loan regularly.
The Banks limit real estate secured commercial loans to individuals and
organizations with a demonstrated 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
engage several experienced appraisers in connection with these loans.
The Banks require first or junior mortgages to secure home equity loans.
Although this security influences the Banks' underwriting decisions, their
primary focus in underwriting these loans, as well as their other loans to
individuals, is on the applicant's financial ability to repay. In the
underwriting process, the Banks obtain credit bureau reports and verify the
borrower's employment and credit information. 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.
Deposit Activities
------------------
Deposit accounts are the primary source of the Banks' funds for use in
lending and investment activities and general business purposes. The Banks also
obtain funds from borrowings, the amortization and repayment of outstanding
loans, earnings, and maturities of investment securities, among other sources.
4
<PAGE>
The Banks' deposit accounts include demand checking accounts, term
certificates of deposit, money market deposit accounts, NOW accounts, and
regular savings and club accounts. The Banks also offer retirement plan accounts
(including individual retirement accounts, Keogh accounts, and simplified
employee pension plans) for investment in the Banks' various deposit accounts.
The Banks attract consumer deposits principally from their primary market areas.
Other Activities
----------------
Interest and dividends on investments provide the Banks with a
significant source of revenue. At December 31, 1999, the Banks' investment
securities, including securities purchased under agreements to resell, totaled
$1.7 billion, or 24% of their total assets. The Banks' investment securities are
used to meet Federal liquidity requirements, among other purposes. Designated
members of the Bank's management make investment decisions. The Banks have
established limits on the types and amounts of investments they may make.
Financial information about Wilmington Trust's reporting segments is
contained in Note 18 to the Consolidated Financial Statements contained in
Wilmington Trust's Annual Report to Shareholders for 1999.
Subsidiaries
------------
WTC has 16 active wholly-owned subsidiaries, formed for various
purposes. Those subsidiaries' results of operations are consolidated with
Wilmington Trust for financial reporting purposes. They provide additional
services to Wilmington Trust's customers, and include:
o Brandywine Insurance Agency, Inc., a licensed insurance agent and
broker for life, casualty, and property insurance;
o Brandywine Finance Corporation, a finance company;
o Brandywine Life Insurance Company, Inc., a reinsurer of credit life
insurance written in connection with closed-end consumer loans WTC
makes;
o Delaware Corporate Management, Inc., which provides services for
special purpose entities using Delaware's favorable tax and legal
environment;
o Nevada Corporate Management, Inc., which provides services for special
purpose entities using Nevada's favorable tax and legal environment;
o Rodney Square Management Corporation, a registered investment adviser
that performs investment advisory services for certain of the mutual
funds described above;
5
<PAGE>
o WTC Corporate Services, Inc., a sales production company for corporate
trust customers;
o Wilmington Brokerage Services Company, a registered broker-dealer and
a registered investment adviser; and
o Wilmington Trust Global Services, Ltd., a sales production company for
corporate trust customers.
Staff Members
-------------
On December 31, 1999, Wilmington Trust and its subsidiaries had 2,434
full-time equivalent employees. Wilmington Trust considers its and its
subsidiaries' relationships with these employees to be good. Wilmington Trust
and the Banks provide a variety of benefit programs for these employees,
including pension, profit-sharing, incentive compensation, thrift savings, stock
purchase, and group life, health, and accident plans.
Risk Factors
------------
o Principal Interest Rate and Credit Risks Associated with Consumer and
----------------------------------------------------------------------
Commercial Lending.
-------------------
The Banks offer fixed and adjustable interest rates on loans, with terms
of up to 30 years. Although the majority of residential mortgage loans the Banks
originate are fixed-rate, adjustable rate mortgage 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. Accordingly, they may be less profitable than fixed-rate loans
during the initial interest rate period. In addition, since they are more
responsive to changes in market interest rates than fixed-rate loans, ARM loans
can increase the possibility of delinquencies in periods of high interest rates.
The Banks also originate loans secured by mortgages on commercial real
estate and multi-family residential real estate. Since these loans usually are
larger than one-to-four family residential mortgage loans, they generally
involve greater risks than one-to-four family residential mortgage loans. In
addition, since customers' ability to repay those loans often is dependent on
operating and managing those properties successfully, adverse conditions in the
real estate market or the economy generally can impact repayment more severely
than loans secured by one-to-four family residential properties. Moreover, the
commercial real estate business is subject to downturns, overbuilding, and local
economic conditions.
The Banks also make construction loans for residences and commercial
buildings, as well as on unimproved property. While these loans also enable the
Banks to increase the interest rate sensitivity of their loan portfolios and
receive higher yields than those obtainable on permanent residential mortgage
loans, the higher yields correspond to the higher risks perceived to be
associated with construction lending. Those include risks associated generally
with loans on the type of property securing the loan. Consistent with industry
practice, the Banks sometimes fund the interest on a construction loan by
including the interest as part of the total loan. Moreover, commercial
6
<PAGE>
construction lending often involves disbursing substantial funds with repayment
dependent largely on the success of the ultimate project instead of the
borrower's or guarantor's ability to repay. Again, adverse conditions in the
real estate market or the economy generally can impact repayment more severely
than loans secured by one-to-four family residential properties.
In the event of slow economic conditions or deterioration in commercial
and real estate markets, we would expect increased nonperforming assets, credit
losses, and provisions for loan losses.
o Increasing Competition for Deposits, Loans, and Assets Under
------------------------------------------------------------
Management.
-----------
The Banks compete for deposits, loans, and assets under management. Many
of the Banks' competitors are larger and have greater financial resources than
Wilmington Trust. These disparities have been accelerated with increasing
consolidation in the financial services industry. Savings banks, savings and
loan associations, and commercial banks located in the Banks' principal market
areas historically have provided the most direct competition for deposits.
Dealers in government securities and deposit brokers also provide competition
for deposits. Savings banks, savings and loan associations, commercial banks,
mortgage banking companies, insurance companies, and other institutional lenders
provide the principal competition for loans. This competition can increase the
rates the Banks pay to attract deposits and reduce the interest rates they can
charge on loans, and impact the Banks' ability to retain existing customers and
attract new customers.
Banks, trust companies, investment advisers, mutual fund companies, and
insurance companies provide the Banks' principal competition for trust and asset
management business.
o Regulatory Restrictions.
------------------------
Wilmington Trust and its subsidiaries are subject to a variety of
regulatory restrictions in conducting business by Federal and state authorities.
These include restrictions imposed by the Bank Holding Company Act, the Federal
Deposit Insurance Act, the Federal Reserve Act, the Home Owners' Loan Act, and a
variety of Federal and state consumer protection laws. See "Regulatory Matters."
7
<PAGE>
<TABLE>
<CAPTION>
Industry Guide 3 Tables
- -----------------------
The following table presents a rate/volume analysis of net interest income:
--------------------------------------------------------------------------------
1999/1998 1998/1997
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 $ -- $ -- $ -- $ -- $ -- $ --
Federal funds sold and securities
purchased under agreements to resell 24 (123) (99) 498 (113) 385
- -------------------------------------------------------------------------------------------------------------------------------
Total short-term investments 24 (123) (99) 498 (113) 385
--------------------------------------------------------------------------------
U.S. Treasury and government agencies (1,713) (3,502) (5,215) 6,874 (1,826) 5,048
State and municipal* (180) (12) (192) (901) (44) (945)
Preferred stock* 1,243 (811) 432 1,041 (101) 940
Asset-backed securities 1 (1,529) (1,528) 5,470 69 6,168
Other* 1,484 81 1,565 1,067 (271) 796
- -------------------------------------------------------------------------------------------------------------------------------
Total investment securities 835 (5,773) (4,938) 13,551 (1,544) 12,007
--------------------------------------------------------------------------------
Commercial, financial, and agricultural* 13,587 (7,409) 6,178 4,512 (3,231) 1,281
Real estate-construction 8,239 (1,417) 6,822 4,835 (862) 3,973
Mortgage - commercial* (778) (5,045) (5,823) (1,291) (929) (2,220)
Mortgage - residential 4,512 (5,830) (1,318) 5,575 1,214 6,789
Installment loans to individuals 6,888 (2,922) 3,966 7,074 (3,983) 3,091
- -------------------------------------------------------------------------------------------------------------------------------
Total loans 32,448 (22,623) 9,825 20,705 (7,791) 12,914
- -------------------------------------------------------------------------------------------------------------------------------
Total interest income $ 33,307 $ (28,519) $ 4,788 $ 34,754 $ (9,448) $ 25,306
================================================================================
Interest expense:
Savings $ 119 $ (1,896) $ (1,777) $ 214 $ 462 $ 676
Interest-bearing demand 3,903 (5,033) (1,130) 3,662 (255) 3,407
Certificates under $100,000 (3,855) (5,159) (9,014) (85) (3,587) (3,672)
Certificates $100,000 and over 7,993 (2,314) 5,679 19,000 149 19,149
- -------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 8,160 (14,402) (6,242) 22,791 (3,231) 19,560
--------------------------------------------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 4,073 (3,794) 279 (6,355) (1,185) (7,540)
U.S. Treasury demand (660) 129 (531) 172 (245) (73)
- -------------------------------------------------------------------------------------------------------------------------------
Total short-term borrowings 3,413 (3,665) (252) (6,183) (1,430) (7,613)
--------------------------------------------------------------------------------
Long-term debt 2,523 992 3,515 1,682 4,990 6,672
- -------------------------------------------------------------------------------------------------------------------------------
Total interest expense $ 14,096 $ (17,075) $ (2,979) $ 18,290 $ 329 $ 18,619
================================================================================
Changes in net interest income $ 7,767 $ 6,687
========= ========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Variances are calculated on a fully tax-equivalent basis, which includes
the effects of any disallowed interest expense deduction.
1 Changes attributable to volume are defined as 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.
8
<PAGE>
The maturity distribution of Wilmington Trust's investment securities held to
maturity follows:
<TABLE>
CAPTION>
------------------------------------------------
Market Amortized Weighted
December 31, 1999 (in thousands) Value Cost Average Yield
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury and government agencies:
After 1 but within 5 years $ 9,791 $ 10,000 6.04%
After 10 years 1,956 1,960 6.30
- --------------------------------------------------------------------------------------------------------------------------
Total 11,747 11,960 6.08
- --------------------------------------------------------------------------------------------------------------------------
State and municipals:
Within 1 year 402 400 5.48
After 1 but within 5 years 1,346 1,322 5.82
After 5 but within 10 years 2,939 2,907 6.05
After 10 years 2,718 2,615 6.22
- --------------------------------------------------------------------------------------------------------------------------
Total 7,405 7,244 6.04
- --------------------------------------------------------------------------------------------------------------------------
Asset-backed securities:
After 1 but within 5 years 264 259 8.69
After 5 but within 10 years 7,765 7,788 6.25
After 10 years 2,969 2,981 5.53
- --------------------------------------------------------------------------------------------------------------------------
Total 10,998 11,028 6.11
- --------------------------------------------------------------------------------------------------------------------------
Other:
After 10 years 1,000 1,000 3.70
- --------------------------------------------------------------------------------------------------------------------------
Total 1,000 1,000 3.70
- --------------------------------------------------------------------------------------------------------------------------
Total investment securities held to maturity $ 31,150 $ 31,232 6.08%
==========================================================================================================================
Note: Weighted average yields are NOT on a tax-equivalent basis and are calculated using balances based on amortized cost.
Time categories not shown above indicate there are no investment securities maturing in that respective timeframe.
</TABLE>
9
<PAGE>
The maturity distribution of Wilmington Trust's investment securities available
for sale follows:
<TABLE>
<CAPTION>
------------------------------------------------
Market Amortized Weighted
December 31, 1999 (in thousands) Value Cost Average Yield
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury and government agencies:
Within 1 year $ 136,517 $ 136,746 5.10%
After 1 but within 5 years 364,572 372,644 5.78
After 5 but within 10 years 244,101 258,529 6.16
After 10 years 252,609 262,906 6.04
- --------------------------------------------------------------------------------------------------------------------------
Total 997,799 1,030,825 5.85
- --------------------------------------------------------------------------------------------------------------------------
State and municipals:
Within 1 year 3,101 3,097 4.11
After 5 but within 10 years 171 170 7.54
After 10 years 1,460 1,298 2.46
- --------------------------------------------------------------------------------------------------------------------------
Total 4,732 4,565 3.77
- --------------------------------------------------------------------------------------------------------------------------
Preferred stock:
Within 1 year 59,761 52,431 5.65
After 1 but within 5 years 33,179 34,745 8.09
After 5 but within 10 years 49,537 64,378 8.20
- --------------------------------------------------------------------------------------------------------------------------
Total 142,477 151,554 7.29
- --------------------------------------------------------------------------------------------------------------------------
Asset-backed securities:
After 1 but within 5 years 5,546 5,552 6.41
After 5 but within 10 years 18,055 18,065 6.86
After 10 years 327,221 339,169 6.21
- --------------------------------------------------------------------------------------------------------------------------
Total 350,822 362,786 6.25
- --------------------------------------------------------------------------------------------------------------------------
Other:
Within 1 year 90,283 90,373 3.41
After 1 but within 5 years 19,279 19,582 6.81
After 5 but within 10 years 514 500 7.50
After 10 years 80,361 80,451 7.01
- --------------------------------------------------------------------------------------------------------------------------
Total 190,437 190,906 5.28
- --------------------------------------------------------------------------------------------------------------------------
Total investment securities available for sale $ 1,686,267 $ 1,740,636 5.99%
==========================================================================================================================
Note: Weighted average yields are not on a tax-equivalent basis.
Time categories not shown above indicate that there are no investment
securities maturing in that respective timeframe.
</TABLE>
10
<PAGE>
The following is a summary of period-end loan balances by loan category:
<TABLE>
<CAPTION>
December 31 (in thousands) 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial, financial, and
agricultural $ 1,521,336 $ 1,370,566 $ 1,207,930 $ 1,237,061 $ 1,159,434
Real estate-construction 303,734 211,733 145,097 123,111 104,871
Mortgage-commercial 919,297 869,442 884,146 862,974 770,304
Mortgage-residential 968,259 857,626 813,116 678,800 669,658
Installment loans to
individuals 1,108,945 1,015,056 954,486 881,994 823,381
- ---------------------------------------------------------------------------------------------------------------------------
Total loans, gross 4,821,571 4,324,423 4,004,775 3,783,940 3,527,648
Less: unearned income (1,492) (4,790) (10,840) (12,456) (5,733)
- ---------------------------------------------------------------------------------------------------------------------------
Total loans $ 4,820,079 $ 4,319,633 $ 3,993,935 $ 3,771,484 $ 3,521,915
===========================================================================================================================
</TABLE>
11
<PAGE>
The following table sets forth the allocation of Wilmington Trust's
reserve for loan losses for the past five years:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------- ----------------- ----------------- ------------------ --------------------
% of % of % of % of % of
loans in loans in loans in loans in loans in
each each each each 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 $27,463 32% $27,083 32% $27,023 30% $22,770 33% $21,209 33%
Real estate-construction 3,327 6 2,407 5 1,977 4 2,000 3 1,697 3
Mortgage-commercial 15,901 19 13,574 20 12,645 22 15,126 23 13,949 22
Mortgage-residential 1,202 20 1,141 20 710 20 700 18 668 19
Installment loans to
individuals 15,559 23 15,797 23 12,440 24 12,283 23 11,245 23
Unallocated 13,473 -- 11,904 -- 9,010 -- 1,482 -- 1,099 --
- ------------------------------------------------------------------------------------------------------------------------------
Total $76,925 100% $71,906 100% $63,805 100% $54,361 100% $49,867 100%
==============================================================================================================================
</TABLE>
12
<PAGE>
<TABLE>
An analysis of loan maturities and interest rate sensitivity of Wilmington Trust's commercial and real estate
construction loan portfolios follows:
<CAPTION>
------------------------------------------------------------------------
Less than One through Over Total
December 31, 1999 (in thousands) one year five years five years gross loans
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial, and agricultural $ 925,202 $ 380,547 $ 215,587 $ 1,521,336
Real estate-construction 151,480 92,542 59,712 303,734
- ----------------------------------------------------------------------------------------------------------------
Total $ 1,076,682 $ 473,089 $ 275,299 $ 1,825,070
================================================================================================================
Loans with predetermined rate $ 213,771 $ 228,338 $ 168,125 $ 610,234
Loans with variable rate 862,911 244,751 107,174 1,214,836
- ----------------------------------------------------------------------------------------------------------------
Total $ 1,076,682 $ 473,089 $ 275,299 $ 1,825,070
================================================================================================================
</TABLE>
<TABLE>
The following table presents a comparative analysis of the risk elements contained in Wilmington Trust's
loan portfolio at year-end(1):
<CAPTION>
-----------------------------------------------------------------------------
December 31 (in thousands) 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccruing $ 29,184 $ 30,598 $ 28,669 $ 40,735 $ 33,576
Past due 90 days or more 16,520 18,558 15,523 20,440 19,346
- --------------------------------------------------------------------------------------------------------------------
Total $ 45,704 $ 49,156 $ 44,192 $ 61,175 $ 52,922
====================================================================================================================
Percent of total loans at year-end 0.95% 1.14% 1.11% 1.62% 1.50%
====================================================================================================================
Other real estate owned $ 576 $ 1,532 $ 3,738 $ 5,131 $ 14,288
====================================================================================================================
(1) The Corporation's policy for placing loans in nonaccrual status is discussed in footnote 1 to the
Consolidated Financial Statements contained in the Corporation's Annual Report to Shareholders for the fiscal
year ended December 31, 1999, which is incorporated by reference herein. Credits to a borrower in the amount
of $15.9 million included in the loans about which Wilmington Trust had serious doubt at December 31, 1999
were placed in nonaccrual status in March of 2000.
</TABLE>
13
<PAGE>
<TABLE>
The following table sets forth an analysis of Wilmington Trust's provision for loan losses, together with
chargeoffs and reserves for the five major portfolio classifications included in its statement of
condition(1):
<CAPTION>
-------------------------------------------------------------------------------
For the year ended December 31 (in thousands) 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve for loan losses at beginning of period $ 71,906 $ 63,805 $ 54,361 $ 49,867 $ 48,669
- ---------------------------------------------------------------------------------------------------------------------------------
Loans charged off:
Commercial, financial, and agricultural 3,737 2,189 6,105 3,811 4,333
Real estate-construction 129 -- 184 94 444
Mortgage - commercial 335 148 187 2,475 2,484
Mortgage - residential 493 166 236 285 32
Installment loans to individuals 11,806 13,427 9,475 7,990 6,989
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans charged off 16,500 15,930 16,187 14,655 14,282
-------------------------------------------------------------------------------
Recoveries on amounts previously charged off:
Commercial, financial, and agricultural 791 961 891 1,160 992
Real estate-construction 23 3 1 4 1
Mortgage-commercial 56 35 948 17 25
Mortgage-residential 123 3 1 1 1
Installment loans to individuals 3,026 3,029 2,290 1,967 2,181
- ---------------------------------------------------------------------------------------------------------------------------------
Total recoveries 4,019 4,031 4,131 3,149 3,200
-------------------------------------------------------------------------------
Net loans charged off 12,481 11,899 12,056 11,506 11,082
- ---------------------------------------------------------------------------------------------------------------------------------
Current year's provision for loan losses 17,500 20,000 21,500 16,000 12,280
- ---------------------------------------------------------------------------------------------------------------------------------
Reserve for loan losses at end of period $ 76,925 $ 71,906 $ 63,805 $ 54,361 $ 49,867
=================================================================================================================================
Ratio of net loans charged off to average loans 0.28% 0.29% 0.31% 0.32% 0.33%
(1) The factors the Corporation considers in determining the amount of additions to its allowance for loan losses are
discussed on pages 26 and 27 of its Annual Report to Shareholders for the fiscal year ended December 31, 1999, which are
incorporated by reference herein.
</TABLE>
14
<PAGE>
<TABLE>
The following table presents a summary of Wilmington Trust's deposits based on average daily balances over the
last three years:
<CAPTION>
--------------------------------------------------------------------------------
1999 1998 1997
------------------------ ------------------------ ------------------------
Average Average Average Average Average Average
For the year ended December 31 (in thousands) amount rate amount rate amount rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand $ 856,171 -- $ 747,791 -- $ 678,683 --
Interest-bearing deposits:
Savings 411,352 1.79% 406,060 2.25% 397,179 2.41%
Interest-bearing demand 1,377,749 2.15 1,222,866 2.52 1,078,685 2.54
Certificates under $100,000 1,137,764 5.01 1,208,244 5.47 1,209,750 5.67
Certificates $100,000 and over 983,340 5.43 842,368 5.67 506,089 5.65
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 4,766,376 $ 4,427,329 $ 3,870,386
==================================================================================================================================
</TABLE>
The maturity of Wilmington Trust's time deposits of $100,000 or more is as
follows:
-----------------------------------------
Certificates All other interest-
December 31, 1999 (in thousands) of deposit bearing deposits
- -------------------------------------------------------------------------------
Three months or less $ 793,999 $ 429,671
Over three through six months 665,723 --
Over six through twelve months 33,706 --
Over twelve months 22,360 --
- -------------------------------------------------------------------------------
Total $ 1,515,788 $ 429,671
================================================================================
15
<PAGE>
A summary of short-term borrowings at December 31 is as follows (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Securities sold
Federal funds under agreements U.S. Treasury
purchased to repurchase demand notes
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31 $ 726,720 $ 269,138 $ 95,000
Weighted average interest rate at balance sheet date 5.8% 4.3% 4.2%
Maximum amount outstanding at any month-end $ 1,040,095 $ 269,138 $ 95,000
Approximate average amount outstanding during the period $ 919,074 $ 183,396 $ 35,643
Weighted average interest rate for average amounts
outstanding during the period 5.2% 4.2% 5.2%
- -----------------------------------------------------------------------------------------------------------------------------
1998
Balance at December 31 $ 668,200 $ 264,146 $ 18,944
Weighted average interest rate at balance sheet date 5.2% 4.1% 4.0%
Maximum amount outstanding at any month-end $ 1,121,850 $ 264,146 $ 99,350
Approximate average amount outstanding during the period $ 821,144 $ 206,040 $ 49,338
Weighted average interest rate for average amounts
outstanding during the period 5.6% 4.7% 4.8%
- -----------------------------------------------------------------------------------------------------------------------------
1997
Balance at December 31 $ 1,041,511 $ 204,776 $ 61,290
Weighted average interest rate at balance sheet date 5.9% 4.8% 5.2%
Maximum amount outstanding at any month-end $ 1,041,511 $ 253,111 $ 95,000
Approximate average amount outstanding during the period $ 946,161 $ 195,945 $ 46,108
Weighted average interest rate for average amounts
outstanding during the period 5.7% 4.8% 5.3%
- -----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase generally mature within 60 days.
U.S. Treasury demand notes mature overnight.
</TABLE>
16
<PAGE>
The following table presents the percentage of Wilmington Trust's funding
sources by deposit type:
-------------------------------------
(based on daily average balances) 1999 1998 1997
- -----------------------------------------------------------------------------
Savings 6.97% 7.38% 7.85%
Interest-bearing demand 23.33 22.22 21.32
Certificates of deposit 35.92 37.26 33.92
Short-term borrowings 19.28 19.56 23.49
Demand deposits 14.50 13.58 13.42
- ------------------------------------------------------------------------------
Total 100.00% 100.00% 100.00%
==============================================================================
The following table presents an analysis of Wilmington Trust's return on assets
and return on equity over the last three years:
--------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------
Return on assets 1.60% 1.83% 1.87%
Return on stockholders' equity 20.18 21.70 22.15
Dividend payout 50.61 44.87 44.76
Equity to asset 7.95 8.42 8.43
==============================================================================
17
<PAGE>
Regulatory Matters
------------------
The following is a summary of laws and regulations applicable to
Wilmington Trust and the Banks. It does not purport to be complete, and is
qualified by reference to those laws and regulations.
General
-------
Wilmington Trust is a bank holding company and a thrift holding
company, and the Banks are depository institutions whose deposits are insured by
the Federal Deposit Insurance Corporation (the "FDIC"). Federal statutes
applicable to Wilmington Trust and the Banks include the Federal Reserve Act,
the Federal Deposit Insurance Act, and the Bank Holding Company Act (the
"BHCA"). Wilmington Trust and the Banks are regulated and supervised at the
Federal level by the Federal Reserve Board, the FDIC, and the Office of Thrift
Supervision (the "OTS"). In addition, Wilmington Trust, WTC, and WTPA are
subject to supervision and regulation by state authorities.
BHCA
----
Under the BHCA and the Federal Reserve Board's (the "FRB's")
regulations, the FRB's approval is required before a bank 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 a bank's voting
stock, the ability to otherwise control the election of a majority of a bank's
directors or the power to exercise a controlling influence over a bank's
management or policies. In addition, the FRB's prior approval is required for:
o Any action that causes a bank or other company to become a
bank holding company;
o Any action that causes a bank to become a subsidiary of a bank
holding company;
o The acquisition by a bank holding company of ownership or
control of any voting securities of a bank or bank holding
company, if that 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;
o 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; or
o The merger or consolidation of bank holding companies,
including a merger through a purchase of assets and assumption
of liabilities.
Accordingly, before obtaining "control" of Wilmington Trust, a potential
bank holding company would need to obtain the FRB's prior approval under the
BHCA or the FRB's regulations under the Federal Bank Control Act.
18
<PAGE>
A bank holding company and its subsidiaries generally may not, with
certain exceptions, engage in, acquire, or control 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 the FRB determines to be so closely related to banking or managing
or controlling banks to be a proper incident thereto. These include any
incidental activities necessary to carry on those activities, as long as the
bank holding company has obtained the FRB's prior approval. The FRB has approved
a lengthy list of activities permissible for bank holding companies and their
non-banking subsidiaries. Those include:
o Making, acquiring, and servicing loans and other extensions of
credit;
o Performing functions a trust company can perform;
o Acting as an investment or financial advisor;
o Performing certain insurance agency and underwriting
activities directly related to extensions of credit by the
holding company or its subsidiaries and engaging in insurance
agency activities in towns of 5,000 or less;
o Performing appraisals of real estate and tangible and
intangible personal property;
o Acting as an intermediary for the financing of commercial and
industrial income-producing real estate;
o Providing certain securities brokerage services;
o Underwriting and dealing in government obligations and money
market instruments; and
o Providing tax planning and preparation services.
Financial Services Modernization Legislation
--------------------------------------------
The Gramm-Leach-Bliley Act, which was enacted in November 1999 and
most provisions of which became effective in March 2000 (the "Act"), permits
greater affiliation among banks, securities firms, insurance companies, and
other companies under a new type of financial services company known as a
"financial holding company." A financial holding company essentially is a bank
holding company with significantly expanded powers. Financial holding companies
can offer most types of financial services, including banking, securities
underwriting, insurance, and merchant banking. The Act also permits the Federal
Reserve and the Treasury Department to authorize additional activities for
financial holding companies if they are "financial in nature" or "incidental" to
financial activities. To become a financial holding company, each of a company's
bank or thrift subsidiaries must be well-capitalized and well-managed and have a
Community Reinvestment Act rating of at least "satisfactory."
A financial holding company may engage immediately in several
activities previously deemed to be impermissible or subject to significant
limitations, including:
o Underwriting and dealing in all types of securities;
o Selling and underwriting insurance;
o Organizing and sponsoring mutual funds; and
o Merchant banking.
A financial holding company must provide notice to the Federal
Reserve within 30 days after commencing activities the Federal Reserve
previously has determined to be permissible. The Act establishes the Federal
Reserve as the primary regulator of financial services companies, but provides
functional regulation for the constituent parts of financial holding companies.
Interstate Banking Act
----------------------
Under the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the Interstate Banking Act"), adequately capitalized and managed
bank holding companies are permitted to acquire a bank in any state, subject to
regulatory approval and certain limitations, and regardless of certain state law
restrictions such as reciprocity requirements and regional compacts. States
cannot "opt out" of these interstate acquisition provisions.
In addition, under the Interstate Banking Act, bank holding
companies are permitted to merge banks operating in different states, subject to
regulatory approval and certain limitations, as long as neither bank is
headquartered in a state that "opted out" of those provisions before June 1,
1997.
Under the Interstate Banking Act, states may permit DE NOVO
branching 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.
19
<PAGE>
Safety and Soundness Limitations
--------------------------------
As a bank holding company, Wilmington Trust 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, presents 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.
Sections 23A and 23B of the Federal Reserve Act establish standards
for the terms of, limit the amount of, and establish collateral requirements
with respect to, loans and other extensions of credit to and investments in
affiliates by the Banks. The Banks are "affiliates" of Wilmington Trust and each
other for 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 Wilmington Trust
and its subsidiaries, and to related interests of those persons.
Capital Standards
-----------------
The FRB and the other Federal banking agencies have adopted
"risk-based" capital standards to assist in assessing the capital adequacy of
bank holding companies and banks under those agencies' 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 (generally including common stockholders' equity, qualifying
cumulative and noncumulative perpetual preferred stock, and minority interests
in consolidated subsidiaries). The FRB also adopted minimum leverage ratios of
"Tier 1" capital to total assets. At December 31, 1999, Wilmington Trust and the
Banks were all well-capitalized, with capital levels in excess of applicable
risk-based and leverage thresholds.
FDIC Insurance and Regulation
-----------------------------
The FDIC insures deposits in the Banks up to applicable limits.
Neither Wilmington Trust nor its subsidiaries are required to pay FDIC insurance
premiums.
`The FDIC may impose sanctions on any insured depository institution
that does not operate in accordance with the FDIC's regulations, policies, or
directives. The FDIC may institute cease-and-desist proceedings against an
insured institution or holding company it believes 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 an insured institution is or has engaged in an
unsafe or unsound practice that 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. Wilmington Trust is not
aware of any past or current practice, condition, or violation that might lead
to termination of the deposit insurance coverage of any of the Banks or any
proceeding against any of the Banks or any of their respective directors,
officers, or staff members.
20
<PAGE>
The Federal Deposit Insurance Corporation Improvement Act of 1991
(the "Improvement Act") 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. Options available include:
o Requiring recapitalization of or a capital restoration plan
from the institution;
o Restricting transactions between the institution and its
affiliates;
o Restricting interest rates, asset growth, activities, and
investments in the institution's subsidiaries; and
o 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 the institution's capital restoration plan and provide
assurance of performance under such a plan.
Dividend Limitations
--------------------
The FRB's policy generally is that banks and bank holding companies
should not pay dividends unless the institution's prospective earnings retention
rate is consistent with its capital needs, asset quality, and overall financial
condition. 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 those subsidiary banks should not be compromised by a level of
cash dividends that places undue pressure on their capital.
The FDIC can prohibit a bank from paying dividends if it believes
the dividend payment would constitute an unsafe or unsound practice. Federal law
also prohibits dividend payments that would result in a bank failing to meet its
applicable capital requirements. Delaware law restricts WTC from declaring
dividends that would impair its stated capital.
OTS regulations limit capital distributions by a savings
institution. A savings institution must give notice to the OTS at least 30 days
before a proposed capital distribution. A savings institution that has capital
in excess of all of its regulatory capital requirements before and after a
proposed capital distribution and that is not otherwise restricted in making
capital distributions may, after that prior notice but without the OTS's
approval, make capital distributions during a calendar year equal to the greater
of (1) 100% of its net income to date during the calendar year plus an amount
that would reduce by one-half its "surplus capital ratio" (I.E., its excess
capital over its capital requirements) at the beginning of the calendar year or
(2) 75% of its net income for the previous four quarters. Any additional capital
distributions require prior OTS approval.
21
<PAGE>
Other Laws and Regulations
--------------------------
The lending and deposit-taking activities of the Banks are subject
to a variety of Federal and state consumer protection laws, including:
o 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 lines of credit);
o The Truth-in-Savings Act (which principally mandates certain
disclosures in connection with deposit-taking activities);
o The Equal Credit Opportunity Act (which prohibits
discrimination in all aspects of credit-granting);
o The Fair Credit Reporting Act (which requires a lender to
disclose the name and address of the credit bureau from whom
the lender obtained a report that resulted in a denial of
credit);
o The Real Estate Settlement Procedures Act (which 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);
o The Electronic Funds Transfer Act (which requires certain
disclosures in connection with electronic funds transactions);
o The Expedited Funds Availability Act (which requires that
deposited funds be made available for withdrawal in accordance
with a prescribed schedule and that the schedule be disclosed
to customers).
Under the Community Reinvestment Act and the Fair Housing Act,
depository institutions are prohibited from certain discriminatory practices
that 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 those individuals. CRA
performance is considered by all of the Federal regulatory agencies in reviewing
applications to relocate an office, mergers and acquisitions of financial
institutions, and establishing new branch or deposit facilities.
Federal legislation has permanently pre-empted all state usury laws
on residential first mortgage loans made by insured depository institutions in
any state that did not override that preemption. Although some states overrode
that preemption, Delaware, Florida, Maryland, and Pennsylvania did not.
Accordingly, there is currently no limit on the interest rate that the Banks can
charge on loans governed by the laws of these states. In addition, the usury
limitations of the Banks' respective home states apply to all other loans the
22
<PAGE>
Banks offer nationwide. In today's interest rate environment, those usury laws
do not materially affect the Banks' lending programs.
Delaware Law
------------
Delaware's business and legal environments historically have
contributed to the Banks' 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 widely recognized for
its interpretations of corporate law.
In addition, Delaware law affords several advantages for trust
administration that have helped contribute to Wilmington Trust'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, although some
jurisdictions have attempted to impose taxes on Delaware trusts with
beneficiaries resident in those jurisdictions, Delaware does not impose any tax
on those trusts.
ITEM 2 - PROPERTIES
Wilmington Trust owns and/or leases buildings that are used in the
normal course of business by the Banks and its other subsidiaries. The main
office of Wilmington Trust and WTC is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890. Wilmington Trust and most of its
subsidiaries occupy 265,000 square feet of space at this location, known as the
Wilmington Trust Center. It is owned by Rodney Square Investors, L.P., in which
WTC has a 50% ownership interest through one of its subsidiaries. WTC carries
the mortgage for this facility, which had an outstanding balance of $29,666,371
at December 31, 1999.
A separate, unencumbered, 300,000-square foot operations facility
known as the Wilmington Trust Plaza is owned by a subsidiary of WTC. This
facility is located at 301 West Eleventh Street, Wilmington, Delaware 19801.
As of January 31, 2000, the Banks had 60 branches in the following
locations:
o Twenty-six are in New Castle County, seven are in Kent County,
and fifteen are in Sussex County, Delaware;
o Three are in Chester County, two are in Delaware County, and
one is in each of Montgomery and Philadelphia Counties,
Pennsylvania;
o One is in Wicomico County and two are in Worcester County,
Maryland; and
o One is in each of Martin, Palm Beach, and Indian River
Counties, Florida.
WTFSB also operates trust agency offices in leased facilities in New
York City, New York, Easton, Maryland, Las Vegas, Nevada, and Santa Monica,
California.
23
<PAGE>
All of Wilmington Trust's reporting segments operate at Wilmington
Trust Center. Wilmington Trust's fee and banking reporting segments primarily
operate its branches, and its fee reporting segment operates its trust agency
offices.
ITEM 3 - LEGAL PROCEEDINGS
Wilmington Trust and its subsidiaries are involved in various legal
proceedings in the ordinary course of business. While it is not feasible to
predict the outcome of all pending suits and claims, management does not believe
that the ultimate resolution of any of these matters will have a material
adverse effect on Wilmington Trust's consolidated financial condition.
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 1999.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Information required by this item is contained on page 28 of the
Management's Discussion and Analysis portion of Wilmington Trust's Annual Report
to Shareholders, which is incorporated by reference herein. See also "Item 1 -
Business."
24
<PAGE>
ITEM 6 - SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five years:
(in thousands, except per share information)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Interest income $ 462,176 $ 456,939 $ 430,639 $ 402,850 $ 377,341
Net interest
income 245,913 237,697 230,016 214,221 197,364
Provision for
loan losses 17,500 20,000 21,500 16,000 12,280
Net income 107,297 114,325 106,044 97,278 90,031
Per share data:
Net income-
basic 3.26 3.41 3.15 2.83 2.56
Net income-
diluted 3.21 3.34 3.08 2.79 2.53
Cash dividends
declared 1.65 1.53 1.41 1.29 1.17
Balance sheet
at year-end:
Assets $7,201,944 $6,300,565 $6,122,351 $5,564,409 $5,372,198
Long-term debt 168,000 168,000 43,000 43,000 28,000
- -----------------------------------------------------------------------------
25
<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 17 to 31 of
Wilmington Trust's Annual Report to Shareholders for 1999, which are
incorporated by reference herein.
ITEM 7A - QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
The information required by this item is contained on pages 24 to 25 of
Wilmington Trust's Annual Report to Shareholders for 1999, which is incorporated
by reference herein.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information required by this item is contained on the
respective pages indicated of Wilmington Trust's Annual Report to Shareholders
for 1999. Those pages are incorporated by reference herein.
Annual Report
to Shareholders
Page Number
Consolidated Statements of Condition as
of December 31, 1999 and 1998 34
Consolidated Statements of Income
for the years ended December 31,
1999, 1998, and 1997 35
Consolidated Statements of Changes in Stock-
holders' Equity for the years ended
December 31, 1999, 1998, and 1997 36
Consolidated Statements of Cash Flows
for the years ended December 31,
1999, 1998, and 1997 37
Notes to Consolidated Financial
Statements - December 31,
1999, 1998, and 1997 38-59
Report of Independent Auditors 60
Unaudited Selected Quarterly Financial Data 55
26
<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 Item 401 of Regulation S-K is contained on
pages 4 to 10 of Wilmington Trust's proxy statement for its Annual Shareholders'
Meeting to be held on May 11, 2000 (the "Proxy Statement"), which are
incorporated by reference herein.
Information required by Rule 405 of Regulation S-K is contained on page 20
of the Proxy Statement, which is incorporated by reference herein.
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item is contained on pages 13 to 19 of
the Proxy Statement, which are incorporated by reference herein.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is contained on pages 11 and 12 of
the Proxy Statement, which are incorporated by reference herein.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained on page 20 of the Proxy
Statement, which is incorporated by reference herein.
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
are incorporated by reference in Item 8 above:
27
<PAGE>
Annual Report
to Shareholders
Page Number
Consolidated Statements of Condition as
of December 31, 1999 and 1998 34
Consolidated Statements of Income for
each of the years in the three-year period
ended December 31, 1999 35
Consolidated Statements of Changes in
Stockholders' Equity for each of the years
in the three-year period ended December 31, 1999 36
Consolidated Statements of Cash Flows for
each of the years in the three-year period
ended December 31, 1999 37
Notes to Consolidated Financial Statements 38-59
Report of Independent Auditors 60
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.
The Corporation filed a Form 8-K with the Securities and
Exchange Commission on December 16, 1999 reporting certain developments
under Item 5.
28
<PAGE>
Exhibit Exhibit
Number -------
- ------
3.1 Amended and Restated Certificate of Incorporation
of the Corporation8
3.2 Amended and Restated Bylaws of the Corporation 11
4.1 1991 Employee Stock Purchase Plan1
4.2 1996 Employee Stock Purchase Plan 8
4.3 2000 Employee Stock Purchase Plan11
4.4 1983 Employee Stock Option Plan1
4.5 1988 Long-Term Incentive Stock Option Plan1
4.6 1991 Long-Term Incentive Stock Option Plan1
4.7 1999 Long-Term Incentive Plan10
4.8 Thrift Savings Plan1
4.9 Employee Stock Ownership Plan1
4.10 Senior Executive Incentive Compensation Plan6
4.11 Executive Incentive Plan10
10.1 Purchase and Assumption Agreement dated June 18, 1991 by
and between Wilmington Trust Company and Wilmington
Savings Fund Society2
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 Company3
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, 19924
10.4 Agreement of Reorganization and Merger dated as of March 18, 1993
between Wilmington Trust Corporation and Freedom Valley Bank5
10.5 Rights Agreement dated as of January 19, 1996 between Wilmington Trust
Corporation and Harris Trust and Savings Bank7
10.6 Supplemental Executive Retirement Plan8
10.7 Amended and Restated Supplemental Executive Retirement
Plan11
10.8 Severance Agreement dated as of February 29, 1996
between Wilmington Trust Company and Ted T. Cecala8
10.9 Severance Agreement dated as of February 29, 1996
between Wilmington Trust Company and Robert J. Christian8
10.10 Severance Agreement dated as of February 29, 1996
between Wilmington Trust Company and Howard K. Cohen8
10.11 Severance Agreement dated as of February 29, 1996
between Wilmington Trust Company and William J. Farrell
II8
10.12 Severance Agreement dated as of February 29, 1996
between Wilmington Trust Company and David R. Gibson8
29
<PAGE>
10.13 Severance Agreement dated as of February 29, 1996 between
Wilmington Trust Company and Robert V.A. Harra Jr.8
10.14 Severance Agreement dated as of February 29, 1996 between
Wilmington Trust Company and Hugh D. Leahy Jr.8
10.15 Severance Agreement dated as of February 29, 1996 between
Wilmington Trust Company and Robert A. Matarese8
10.16 Severance Agreement dated as of July 18, 1996 between
Wilmington Trust Company and Rita C. Turner9
10.17 Severance Agreement dated as of June 28, 1999 between
Wilmington Trust Company and Rodney P. Wood11
11 Statement re computation of per share earnings11
13 1999 Annual Report to Shareholders of Wilmington Trust
Corporation11
21 Subsidiaries of Wilmington Trust Corporation11
23 Consent of independent auditor11
27 Financial data schedule11
- -------------
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 Incorporated by reference to the corresponding exhibit to the Annual Report
on Form 10-K of Wilmington Trust Corporation filed on March 28, 1997.
10 Incorporated by reference to Exhibit A to the proxy statement of Wilmington
Trust Corporation dated March 22, 1999 filed on March 31, 1999.
11 Filed herewith.
30
<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
(Date) March 16, 2000
/s/ Robert V. A. Harra, Jr.
----------------------------------
Robert V. A. Harra, Jr.
Director, President,
Chief Operating Officer and Treasurer
(Date) March 16, 2000
/s/ David R. Gibson
----------------------------------
David R. Gibson,
Senior Vice President and
Chief Financial Officer
(Date) March 16, 2000
/s/ Carolyn S. Burger
----------------------------------
Carolyn S. Burger
Director
(Date) March 16, 2000
/s/ Richard R. Collins
----------------------------------
Richard R. Collins
Director
(Date) March 16, 2000
31
<PAGE>
/s/ Charles S. Crompton, Jr.
----------------------------------
Charles S. Crompton, Jr.
Director
(Date) March 16, 2000
/s/ H. Stewart Dunn, Jr.
----------------------------------
H. Stewart Dunn, Jr.
Director
(Date) March 16, 2000
----------------------------------
Edward B. du Pont
Director
(Date) March 16, 2000
----------------------------------
R. Keith Elliott
Director
(Date) March 16, 2000
/s/ Andrew B. Kirkpatrick, Jr.
----------------------------------
Andrew B. Kirkpatrick, Jr.
Director
(Date) March 16, 2000
/s/ Rex L. Mears
----------------------------------
Rex L. Mears
Director
(Date) March 16, 2000
32
<PAGE>
/s/ Hugh E. Miller
----------------------------------
Hugh E. Miller
Director
(Date) March 16, 2000
/s/ Stacey J. Mobley
----------------------------------
Stacey J. Mobley
Director
(Date) March 16, 2000
----------------------------------
Leonard W. Quill
Director
(Date) March 16, 2000
/s/ David P. Roselle
----------------------------------
David P. Roselle
Director
(Date) March 16, 2000
/s/ H. Rodney Sharp, III
----------------------------------
H. Rodney Sharp, III
Director
(Date) March 16, 2000
/s/ Thomas P. Sweeney
----------------------------------
Thomas P. Sweeney
Director
(Date) March 16, 2000
33
<PAGE>
/s/ Mary Jornlin Theisen
----------------------------------
Mary Jornlin Theisen
Director
(Date) March 16, 2000
/s/ Robert W. Tunnell, Jr.
----------------------------------
Robert W. Tunnell, Jr.
Director
(Date) March 16, 2000
34
AMENDED AND RESTATED BYLAWS OF
WILMINGTON TRUST CORPORATION
EXHIBIT 3.2
<PAGE>
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 of the Corporation (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
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
<PAGE>
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
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
2
<PAGE>
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.
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
3
<PAGE>
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.
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 it 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
4
<PAGE>
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
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
5
<PAGE>
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.
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. No more than two directors may also be employees of the
Corporation or any affiliate thereof.
Section 3. QUALIFICATION. Except as provided in these Bylaws or as otherwise
required by law, there shall be no qualifications for election or service as
directors of the Corporation. In addition to any other provisions of these
Bylaws, to be qualified for nomination for election or appointment to the Board
of Directors (i) each person shall own in his or her own right not less than one
hundred shares of Common Stock of the Corporation and (ii) each person must have
not attained the age of sixty-nine years at the time of such election or
appointment, provided however, the Nominating and Corporate Governance Committee
may waive such qualification as to a particular candidate otherwise qualified to
serve as a director upon a good faith determination by such committee that such
a waiver is in the best interests of the Corporation and its stockholders. The
Chairman of the Board of Directors shall not be qualified to continue to serve
as a director upon the termination of his or her service in that office for any
reason.
6
<PAGE>
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.
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.
7
<PAGE>
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.
(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
8
<PAGE>
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 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.
9
<PAGE>
(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.
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.
10
<PAGE>
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) 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.
11
<PAGE>
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.
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.
12
<PAGE>
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
13
<PAGE>
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.
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.
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
14
<PAGE>
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.
I , ________________________________________________________
_______________________, Secretary of WILMINGTON TRUST
CORPORATION, do hereby certify that the foregoing is a true and
correct copy of the By-Laws of WILMINGTON TRUST CORPORATION, as
herefore amended and changed from time to time, copies of
which, certified by the Secretary of the State of Delaware, are
on file in the office of WILMINGTON TRUST CORPORATION.
Date __________________________
Secretary _____________________
15
2000 EMPLOYEE STOCK PURCHASE PLAN
EXHIBIT 4.3
<PAGE>
WILMINGTON TRUST CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of Wilmington Trust Corporation's 2000
Employee Stock Purchase Plan (the "Plan") is to provide all regular employees of
Wilmington Trust Corporation ("WTC") and those of its subsidiaries that may be
designated as participating companies by WTC's Board of Directors from time to
time an opportunity to purchase shares of WTC'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 WTC's success, growth,
and development. WTC intends 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"). Accordingly, the Plan's provisions shall be
construed to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
2. 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 WTC or of any subsidiary of WTC; or
(2) That permits an Employee rights to purchase shares
under all employee stock purchase plans of WTC and
its subsidiaries to accrue at a rate that exceeds
$25,000 of the fair market value of the shares
(determined at the time that option is granted) for
each calendar year in which those stock options are
outstanding at any time.
3. OFFERINGS. WTC 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 that may be purchased thereunder.
<PAGE>
The fixed term of any offering shall include a Purchase Period of specified
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.
4. 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 end on the
termination date of the offering to which that authorization applies, unless
terminated sooner by the Participant in accordance with Paragraph 8 below.
5. 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 that 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 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 8 below.
6. GRANTING OF AN 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 he or she elects to purchase 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 6 (b) below.
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<PAGE>
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, it 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.
7. 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 9 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 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 9 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,
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 9 below.
3
<PAGE>
8. 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 9 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. Except as provided in the following sentence, 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 that begins at least six months after that
withdrawal or cessation of participation.
c. If an Employee retires or otherwise terminates 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 9 below or, at the Employee's
election, used to purchase Common Stock in accordance with Paragraph 7 above.
d. If an Employee dies, that Employee's beneficiary may elect
to withdraw the balance in his or her account, with interest computed in
accordance with Paragraph 9 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 6 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
9 below, to the person or persons entitled thereto in accordance with Paragraph
12 below.
9. 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 that may not be accessed by check.
4
<PAGE>
10. 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 that the company has reacquired and holds in its treasury. The maximum
number of shares that shall be made available for sale hereunder during all
offerings shall be 400,000 shares, subject to adjustment upon changes in WTC's
capitalization as provided in Paragraph 14 below.
b. None of the rights or privileges of a stockholder of WTC
shall exist with respect to shares purchased hereunder until the end of the
Purchase Period with respect to which those shares were acquired.
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 Human Resources 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.
11. ADMINISTRATION. The Plan shall be administered by a committee
(the "Committee") consisting of not less than three members who shall be
appointed by WTC'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 that it deems necessary or desirable to administer the Plan. Any
determination, decision, 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.
12. DESIGNATION OF BENEFICIARY. A Participant may file with
Wilmington Trust Company's Human Resources 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 Human Resources
Division. Upon the death of a Participant and receipt by Wilmington Trust
Company's Human Resources Division of proof of the Participant's death and the
5
<PAGE>
identity and existence of a beneficiary validly designated hereunder, WTC shall
deliver those shares and/or that cash to the executor or administrator of the
Participant's estate. If no such executor or administrator has been appointed to
WTC's knowledge, WTC 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. If no spouse,
dependent or relative is known to WTC, then WTC may, in its discretion and in
such form as the Committee may prescribe, deliver those shares and/or that cash
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.
13. TRANSFERABILITY. No rights with respect to the exercise of any
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.
14. 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 WTC's shares, merger,
consolidation, or other change in WTC'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.
15. 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.
16. GOVERNMENT REGULATIONS. WTC's obligations to sell and deliver
WTC's stock hereunder are subject to the approval of any governmental authority
required in connection with the authorization, issuance, or sale of that stock.
WTC'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; or
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<PAGE>
b. The Participant has represented at the time of purchase, in
form and substance satisfactory to WTC, that he or she intends to purchase those
shares for investment and not for resale or distribution.
17. AMENDMENT OR TERMINATION. Unless terminated sooner by WTC's
Board of Directors, the Plan shall terminate automatically as of May 31, 2004.
WTC'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 that would
adversely affect the rights of any Participant, nor be made without the prior
approval of a majority of the shares of WTC's outstanding stock if such approval
would be required by law, including if that amendment would:
a. Permit the sale of more shares than are authorized under
Paragraph 10 above; or
b. Permit payroll deductions at a rate in excess of 10% of a
Participant's Base Salary.
18. 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 WTC or any
direct or indirect subsidiary thereof. The Plan shall not be deemed to interfere
in any way with the right of WTC or any direct or indirect subsidiary thereof to
terminate, or otherwise modify, an Employee's employment at any time.
19. 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.
20. 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 the Committee specifically approves
including any such item.
b. "Committee" means the committee established pursuant to
Paragraph 11 above to administer the Plan.
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<PAGE>
c. "Date of Offering" shall be the first day of each
Purchase Period.
d. "Employee" shall mean 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 WTC and any subsidiary company designated
as a participating company by WTC's Board of Directors, 15% or more of the
voting stock of which is owned directly or indirectly by WTC.
f. "Participant" means an Employee who has agreed to
participate in an offering and has met the requirements of Paragraph 4 above.
g. "Purchase Period" means each of the periods during which a
Participant may purchase Common Stock pursuant to any particular offering
hereunder.
h. "Section 16 Officers" means officers of WTC 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 WTC
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.
8
AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
EXHIBIT 10.7
<PAGE>
WILMINGTON TRUST CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Article I
Purpose and Effective Date...................................................1
Article II
Definitions
2.01 "Administrator" .......................................................1
2.02 "Average Monthly Compensation" ........................................1
2.03 "Board" ...............................................................1
2.04 "Code" ................................................................1
2.05 "Company" .............................................................1
2.06 "Compensation" ........................................................1
2.07 "Early Retirement" ....................................................2
2.08 "Employee" ............................................................2
2.09 "Normal Retirement" ...................................................2
2.10 "Participant" .........................................................2
2.11 "Pension Plan" ........................................................2
2.12 "Plan" ................................................................2
2.13 "Plan Year" ...........................................................2
2.14 "Postponed Retirement" ................................................2
2.15 "Social Security Taxable Wage Base" ...................................2
2.16 "Trust" ...............................................................2
2.17 "Year of Participation" ...............................................3
Article III
Eligibility for and Forfeiture of Plan Participation
3.01 Commencement of Participation..........................................3
3.02 Termination for Cause..................................................3
3.03 Competition with Company...............................................3
3.04 Board Discretion.......................................................3
3.05 Change in Control......................................................3
Article IV
Types of Retirement and Elections
4.01 Early Retirement.......................................................5
4.02 Normal Retirement......................................................5
4.03 Postponed Retirement...................................................5
4.04 Notice of Early Normal or Postponed Retirement.........................6
4.05 Commencement of Benefits in Pension Plan...............................6
i
<PAGE>
Article V
Form of Benefits
5.01 Form of Retirement Benefits............................................6
5.02 Right to Elect.........................................................6
5.03 No Death or Disability Benefits........................................6
Article VI
Computation and Payment of Retirement Benefits
6.01 Monthly Retirement Benefit.............................................7
6.02 Pension Plan Offset....................................................7
6.03 Supplemental Benefits..................................................7
6.04 Early Retirement Reduction.............................................7
Article VII
Vesting
7.01 Vesting Over 15 Years of Participation.................................7
7.02 Vesting At 55 Years of Age and 10 Years of Participation...............8
Article VIII
Plan Administration
8.01 Appointment of Administrator...........................................8
8.02 Authority of Administrator.............................................8
8.03 Expenses of Administrator..............................................8
8.04 Payment of Benefits....................................................8
8.05 Sufficiency of Assets in Trust.........................................8
8.06 Contributions to Trust/Investment of Trust Assets......................8
8.07 Indemnification........................................................8
Article IX
Contributions
9.01 Company Contributions..................................................8
Article X
Maintenance of Accounts
10.01 Separate Accounts......................................................9
10.02 No Interest in Assets..................................................9
ii
<PAGE>
Article XI
Amendment and Termination of the Plan
11.01 Board Amendment or Termination.........................................9
Article XII
Miscellaneous
12.01 Anti-Alienation........................................................9
12.02 No Right to Continue Employment.......................................10
12.03 Applicable Law........................................................10
12.04 Headings..............................................................10
iii
<PAGE>
WILMINGTON TRUST CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Article I
---------
PURPOSE AND EFFECTIVE DATE
The Wilmington Trust Corporation Supplemental Executive Retirement Plan is
the former Wilmington Trust Company Supplemental Executive Retirement Plan as
amended and adopted by Wilmington Trust Corporation. The purpose of this Plan is
to provide supplemental retirement benefits to certain senior management
officers of the Company selected for Membership by the Company's Board of
Directors. Benefits provided by this Plan are intended to supplement benefits
provided by the Wilmington Trust Pension Plan. This Plan is intended to be an
Excess Benefit Plan as defined in Section 3(36) of the Employee Retirement
Income Security Act of 1974 and is designed for the sole purpose of providing
supplemental retirement benefits to certain selected employees in excess of the
limitations imposed by Section 415 of the Internal Revenue Code of 1986. This
Plan and its attendant Trust were effective January 1, 1989 and the Plan was
amended from time to time. The Company now amends this Plan effective January 1,
2000.
ARTICLE II
Definitions
-----------
The terms used in this Plan shall have the same meaning as ascribed to
them in the Pension Plan unless they are specifically defined differently below.
2.01. "Administrator" - means the group or individual appointed by the
Company pursuant to Section 8.01.
2.02. "Average Monthly Compensation" - means a Participant's Compensation
determined under Section 2.06 below for the final sixty (60) months of the
Participant's employment with the Company divided by sixty (60).
2.03. "Board" - means the Board of Directors of Wilmington Trust
Corporation and any designated committee thereof to which it delegates its
authority and discretion hereunder.
2.04. "Code" - means the Internal Revenue Code of 1986 as amended from
time to time.
2.05. "Company" - means Wilmington Trust Corporation, a Delaware
Corporation, and any wholly-owned subsidiary of Wilmington Trust Corporation.
2.06. "Compensation" - means the salary or wages of, and bonuses and
incentive payments, including but not limited to 100% of all awards under the
Wilmington Trust Company Executive Incentive Compensation Plan, to a Participant
paid by the Company as reported on Form W-2 or any substitute therefore,
1
<PAGE>
increased by any amounts deferred by the Participant under the Wilmington Trust
Thrift Savings Plan and increased by amounts attributable to salary reduction
under the Wilmington Trust Best Plan to the extent such amount is not included
in taxable income, and reduced by (i) any imputed amounts under the Code, and
regulations issued pursuant thereto, and (ii) amounts attributable to moving and
travel expenses, and tuition payments. Income realized by a Participant from the
exercise of any stock options shall not be considered part of a Participant's
compensation for purposes of this Plan.
In the year in which a Participant's employment terminates, any bonuses or
incentive payments paid to the Participant after the Participant's employment
terminates shall be attributed to the Participant's last month of employment.
Vacation time that has been accrued but not taken shall not be taken into
account for either service or compensation purposes.
2.07. "Early Retirement" - means the earliest date on which a Participant
is eligible to receive early retirement benefits under the Pension Plan.
2.08. "Employee" - means any individual employed by the Company in a
senior policy making position.
2.09. "Normal Retirement" - means the date on which a Participant attains
age 62 and completes at least five years of participation in the Plan.
2.10. "Participant" - means those Employees selected by the Board for
participation in this Plan.
2.11. "Pension Plan" - means the Wilmington Trust Pension Plan, as amended
from time to time.
2.12. "Plan" - means the Wilmington Trust Corporation Supplemental
Executive Retirement Plan.
2.13. "Plan Year" - means the period beginning on January 1, and ending on
December 31 of each year.
2.14. "Postponed Retirement" - means the date after a Participant's Normal
Retirement on which the Participant can elect to receive retirement benefits
from the Pension Plan.
2.15. "Social Security Taxable Wage Base" - means the amount of Earnings,
as determined under the Social Security Act each year, subject to the Social
Security OASDI tax for Old Age, Survivors and Disability Income benefits.
2.16. "Trust" - means the depository adopted by the Company to hold the
assets used to pay Plan benefits.
2
<PAGE>
2.18. "Year of Participation" - means, for any Participant, the 12 month
period measured from the date that an employee becomes a Participant in the Plan
and each anniversary thereafter.
ARTICLE III
Eligibility for and Forfeiture of Plan Participation
----------------------------------------------------
3.01. COMMENCEMENT OF PARTICIPATION. An Employee shall become a
Participant in this Plan if selected for participation by the Board, in its sole
and absolute discretion. The Board shall document the selection of an Employee
as a Participant in the Plan by a written resolution of the Board. The name of
each Employee selected by the Board to participate in the Plan shall be set
forth on Schedule I hereto.
3.02. TERMINATION FOR CAUSE. A Participant shall cease to be a Participant
and shall forfeit the right to any benefits under this Plan if the employment of
the Participant with the Company is terminated for Cause. For purposes of this
Agreement, a Participant's employment is terminated for Cause if the Participant
(a) engaged in gross misconduct, dishonesty, or deliberate and premeditated acts
against the interest of the Company, (b) is convicted of a felony whether
related or unrelated to employment by the Company, or (c) repeatedly and
substantially failed to perform the Participant's obligations and duties of
employment after written or oral demands for such performance are given to the
Participant by the Company.
3.03. COMPETITION WITH COMPANY. Participation in this Plan shall also
cease and all rights to any benefits under this Plan shall be forfeited when a
Participant, after Early, Normal, or Postponed Retirement, becomes an employee,
officer or a director of a competitor of the Company without consent of the
Board. The Board in its sole and absolute discretion shall determine if another
entity or person is a "competitor" for the purposes of this section.
3.04. BOARD DISCRETION. The Board shall have broad, sole and absolute
discretion in making any determination under Sections 3.01, 3.02 and 3.03
hereof.
3.05. CHANGE IN CONTROL.
a. NONFORFEITABILITY UPON CHANGE IN CONTROL. Notwithstanding
anything to the contrary contained in this Article III or any other portion of
this Plan, when a Change in Control (as defined below) occurs, rights to receive
benefits under this Plan for each Employee who is a Participant in the Plan on
the date such change occurs shall become fixed and 100% vested and shall not be
subsequently divested by the Board. All discretion of the Board regarding the
payment of benefits under this Plan shall be eliminated upon such Change in
Control or ownership. This Section 3.05 shall not be considered to create in the
Plan Participants any greater rights in the assets of the Company or the Trust
than the Participants had before the Change in Control occurred.
3
<PAGE>
b. CHANGE IN CONTROL DEFINED. For purposes of this Section 3.05, a
"Change in Control" shall mean the occurrence of any of the following events,
directly or indirectly or in one or more series of transactions:
(1) A consolidation or merger of Wilmington Trust Company
("Bank") or Wilmington Trust Corporation ("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, as the case may be, directly or
indirectly, through one or more subsidiaries or
transactions:
(a) Acquires beneficial ownership of 15% or more
of any class of Bank's or Parent's voting
stock;
(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 Board; 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 of persons to Parent's Board which causes
a majority of Parent's Board to consist of persons
other than (a) persons who were members of Parent's
Board on January 1, 2000 and/or (b) persons who were
nominated for election as members of Parent's Board by
4
<PAGE>
Parent's Board (or a committee thereof) at a time when
the majority of the Parent's Board (or that committee)
consisted of persons who were members of Parent's Board
on January 1, 2000; provided, however, that any person
nominated for election by Parent's Board (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 (or a committee
thereof), shall for this purpose be deemed to have been
nominated by a Board 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 (i) are related to or
occur in connection with the appointment of a receiver or 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 a Member of the Board from participation in the conduct of Bank's or
Parent's business; or (ii) 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 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.
ARTICLE IV
Types of Retirement and Elections
---------------------------------
4.01. EARLY RETIREMENT. A Participant shall be eligible for Early
Retirement if the Participant is eligible for Early Retirement under the Pension
Plan.
4.02. NORMAL RETIREMENT. A Participant shall be eligible for Normal
Retirement when the Participant attains age 62 and completes at least five Years
of Participation in the Plan.
4.03. POSTPONED RETIREMENT. A Participant shall be eligible for Postponed
Retirement if the Participant was eligible for Normal Retirement under the
Pension Plan and, with the approval of the Board, continues in the employ of the
Company.
5
<PAGE>
4.04. NOTICE OF EARLY NORMAL OR POSTPONED RETIREMENT. Sixty days prior to
a Participant's Early or Normal Retirement, the Participant shall make a written
request to the Board which shall specify the intended Early or Normal Retirement
date. To elect Postponed Retirement a Participant shall make a written request
to the Board sixty days prior to Normal Retirement requesting Postponed
Retirement. If the Participant's request for Postponed Retirement is granted by
the Board, a Participant shall, sixty days prior to this Postponed Retirement
date, make a written request to the Board which shall specify the intended
Postponed Retirement date. If the Participant's request for Postponed Retirement
is denied by the Board, the Participant shall retire on the Participant's Normal
Retirement Date. All requests made under this Section shall be irrevocable once
approved by the Board.
4.05. COMMENCEMENT OF BENEFITS IN PENSION PLAN. Notwithstanding anything
in this Plan to the contrary, in no event shall a Participant's benefits under
this Plan commence earlier or later than the date benefits commence under the
Pension Plan.
ARTICLE V
Form of Benefits
----------------
5.01. FORM OF RETIREMENT BENEFITS
a. NORMAL FORM. The normal form of retirement benefits payable under
this Plan shall be monthly payments payable for the Participant's lifetime. Upon
Participant's death, benefits paid under this form shall cease.
b. POST-RETIREMENT SURVIVOR OPTION. The alternative form of
retirement benefit payable under this Plan shall be monthly payments payable for
the Participant's lifetime and, if the Participant predeceases his or her spouse
while receiving retirement benefits from this Plan, the Participant's surviving
spouse shall begin to receive a survivor benefit payable for the life of the
surviving spouse. Survivor benefits will cease upon the death of the surviving
spouse. This survivor benefit shall be a monthly payment equal to 50% of the
monthly payment the Participant was receiving prior to the death of the
Participant. Under this benefit option, the Participant's normal retirement
benefit under this Plan shall be reduced by the applicable conversion factors
specified in Appendix A in order to provide the funding for the survivor
benefit.
5.02. RIGHT TO ELECT. A Participant shall have the right to elect the
Normal Form or the Post Retirement Survivor Option Form of benefit to be
received from this Plan within the 90 day period which precedes the
Participant's retirement date. The election of benefit form, once made, is
irrevocable. The form of benefit selected shall be made on forms provided by the
Administrator and shall be consented to by the Participant's Eligible Spouse as
witnessed by a notary public.
5.03. NO DEATH OR DISABILITY BENEFITS. Except for the survivor benefit
described in this Article V, there shall be no survivor, disability, death or
other benefits provided by this Plan.
6
<PAGE>
ARTICLE VI
Computation and Payment of Retirement Benefits
----------------------------------------------
6.01. MONTHLY RETIREMENT BENEFIT. The Monthly Retirement Benefit payable
to a Participant under this Plan shall be 60% of a Participant's Average Monthly
Compensation multiplied by a fraction the numerator of which is the
Participant's Years of Participation in the Plan (not to exceed 30) and the
denominator of which is 30.
6.02. PENSION PLAN OFFSET. The amount of a Participant's monthly benefit
determined under Section 6.01 above shall be reduced by the monthly benefit the
Participant is receiving from the Pension Plan.
6.03. SUPPLEMENTAL BENEFITS. In addition to the benefits provided under
this Article VI, a Participant shall be entitled to Additional Supplemental
Benefits under this Plan as granted to a Participant by the Board and as set
forth in Appendix A hereto.
6.04. EARLY RETIREMENT REDUCTION. If a Participant receives an Early
Retirement Benefit before age 62 under the Pension Plan, the amounts calculated
under 6.01 above (before any reduction for the monthly benefit payable from the
Pension Plan) shall be reduced in accordance with the reduction factors set
forth in the Pension Plan.
ARTICLE VII
Vesting
-------
7.01. VESTING OVER 15 YEARS OF PARTICIPATION. A Participant shall become
vested in the Monthly Retirement Benefit determined for the Participant under
Section 6.01 based upon the following schedule:
YEARS OF PARTICIPATION IN THE PLAN VESTED %
0-5th Year 0.0 %
6th Year 40.0 %
7th Year 46.7 %
8th Year 53.3 %
9th Year 60.0 %
10th Year 66.7 %
11th Year 73.3 %
12th Year 80.0 %
13th Year 86.7 %
14th Year 93.3 %
15th and later 100.0 %
7
<PAGE>
7.02. VESTING AT 55 YEARS OF AGE AND 10 YEARS OF PARTICIPATION.
Notwithstanding the provisions of Section 7.01, a Participant shall become 100%
vested in the Monthly Retirement Benefit of the Participant upon attaining age
55 and completing 10 Years of Participation in the Plan.
ARTICLE VIII
Plan Administration
-------------------
8.01. APPOINTMENT OF ADMINISTRATOR. The Company will appoint an
Administrator who shall be responsible for ministerial, non-discretionary acts
associated with this Plan, including but not limited to determining the amount
and payment of retirement benefits.
8.02. AUTHORITY OF ADMINISTRATOR. With the consent of the Board, the
Administrator may engage such agents and advisors as it deems necessary to carry
out its administrative responsibilities under the Plan.
8.03. EXPENSES OF ADMINISTRATOR. The expenses of the Plan shall be borne
solely by the Company to the extent such expenses are not paid from the Trust
Fund.
8.04. PAYMENT OF BENEFITS. The Administrator, at the direction of the
Company, shall instruct the Trustee as to the commencement, cessation, amount
and payment of benefits due a Participant from the Trust. The Administrator
shall not be required to assure that the Company makes contributions to the
Trust at a level or in an amount sufficient to pay benefits.
8.05. SUFFICIENCY OF ASSETS IN TRUST. The Company shall have the sole and
exclusive responsibility to assure that there are sufficient assets in the Trust
in order to pay Participant benefits when due. To the extent Trust assets are
insufficient to pay Participant benefits, the Company shall contribute the
necessary amounts from its general assets to the Trustee.
8.06. CONTRIBUTIONS TO TRUST/INVESTMENT OF TRUST ASSETS. The Company shall
have the sole and exclusive responsibility for making contributions to the Trust
to provide benefits and for directing the Trustee as to the investment of the
assets held in the Trust.
8.07. INDEMNIFICATION. The Administrator and the Trustee shall be fully
indemnified and held harmless by the Company for all actions taken pursuant to
this Plan at the direction of the Company.
ARTICLE IX
Contributions
-------------
9.01. COMPANY CONTRIBUTIONS. The Company shall contribute cash or property
to the Trust in such amounts and at such times as, in its sole discretion, it
deems necessary.
8
<PAGE>
ARTICLE X
Maintenance of Accounts
-----------------------
10.01. SEPARATE ACCOUNTS. The Company shall maintain a separate account on
its books for amounts held for the benefit of each Participant in the Trust (the
"Account") which shall be held, administered and accounted for separately for
each Participant. Separate accounting records shall be maintained so that the
amount held in each Participant's Account shall be identifiable at all times.
Each Account shall consist of, and be increased by, contributions made by the
Company which are designated by the Company as the property of such Account and
shall be decreased by distributions made therefrom. The Company shall make
contributions to the Trust and credit such Accounts from time to time in its
sole discretion. In addition, the Company shall allocate and credit the Net
Income of the Trust to the Accounts of Participants on the last day of each
calendar year (the "Allocation Date"), pro rata based on the respective Account
balance of each Participant on such date. If as a result of the foregoing, all
or a portion of any Net Income otherwise allocable to the Account of any
Participant on the Allocation Date cannot be so allocated, such Net Income shall
be allocated and credited to the Accounts of all other Participants pro rata,
based on the respective Account balances of each Participant on such Allocation
Date (determined without regard to the allocation of any Net Income to such
Accounts on such date). For purposes of the foregoing, Net Income shall mean the
net gain or loss of the Trust from investments, as reflected by interest
payments, dividends, realized and unrealized gains and losses on securities,
other investment transactions and expenses paid from the Trust. In determining
the Net Income of the Trust as of any date, assets shall be valued on the basis
of their then fair market value.
10.02. NO INTEREST IN ASSETS. Nothing in Section 10.01 shall be construed
as creating any right, title or interest in or to any assets in the Trust or
assets of the Company.
ARTICLE XI
Amendment and Termination of the Plan
-------------------------------------
11.01. BOARD AMENDMENT OR TERMINATION. The Board reserves the right to
amend or terminate this Plan at any time without the consent of any Participant
except, however, that no such amendment or termination will effect the
irrevocability of the Trust or the Company's obligation to pay benefits to
Participants.
ARTICLE XII
Miscellaneous
-------------
12.01. ANTI-ALIENATION. No right or claim to any portion of the benefits
payable under the Plan shall be assignable or alienable by a Participant nor
shall a Participant's benefit be subject to garnishment, attachment, execution
or levy.
9
<PAGE>
12.02. NO RIGHT TO CONTINUE EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon any Employee the right to continue in the employ of
the Company in any capacity whatsoever.
12.03. APPLICABLE LAW. The provisions of this Plan shall be governed and
construed in accordance with Delaware law.
12.04. HEADINGS. The headings in this document are for convenience of
reference only and shall have no effect upon the meanings of the provisions
hereof.
IN WITNESS WHEREOF, Wilmington Trust Corporation has caused this
amended Plan to be executed this 17th day of February, 2000.
ATTEST: WILMINGTON TRUST CORPORATION
/s/ Thomas P. Collins /s/ Ted T. Cecala
- ------------------------- By: -------------------------------
Secretary
10
[Corporate Seal]
<PAGE>
WILMINGTON TRUST CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
APPENDIX A
ADDITIONAL SUPPLEMENTAL BENEFITS
--------------------------------
1. Pursuant to Section 6.03 of the Wilmington Trust Corporation
Supplemental Executive Retirement Plan, as of December 20, 1990, Bernard J.
Taylor, II, shall be entitled to Additional Supplemental Benefits of $73,596 per
annum payable in monthly installments of $6,133 each.
2. Pursuant to Section 6.03 of the Wilmington Trust Corporation
Supplemental Executive Retirement Plan, as of July 16, 1992, Bernard J. Taylor,
II, shall be entitled to Additional Supplemental Benefits of $73,715 per annum
payable in monthly installments of $6,142.91 each. These Additional Supplemental
Benefits shall be in addition to those granted to Bernard J. Taylor, II, on
December 20, 1990.
<PAGE>
WILMINGTON TRUST CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SCHEDULE I
BOARD DESIGNATED PARTICIPANTS
As Of January 1, 2000
- -------------------------------------------------------------------------------
DATE OF
PARTICIPANT COMMENCEMENT OF PARTICIPATION
- -------------------------------------------------------------------------------
Ted T. Cecala January 10, 1985
- -------------------------------------------------------------------------------
Robert J. Christian February 12, 1996
- -------------------------------------------------------------------------------
Howard K. Cohen May 28, 1992
- -------------------------------------------------------------------------------
William J. Farrell, II August 1, 1993
- -------------------------------------------------------------------------------
David R. Gibson May 28, 1992
- -------------------------------------------------------------------------------
Robert V.A. Harra, Jr. March 1, 1984
- -------------------------------------------------------------------------------
Hugh D. Leahy, Jr. May 28, 1992
- -------------------------------------------------------------------------------
Robert A. Matarese March 29, 1990
- -------------------------------------------------------------------------------
Rita C. Turner July 16, 1996
- -------------------------------------------------------------------------------
Rodney P. Wood June 27, 1999
- -------------------------------------------------------------------------------
SEVERANCE AGREEMENT BETWEEN WILMINGTON TRUST
COMPANY AND RODNEY P. WOOD
EXHIBIT 10.20
<PAGE>
SEVERANCE AGREEMENT
-------------------
THIS AGREEMENT is made as of the 28th day of June, 1999 between WILMINGTON
TRUST COMPANY, a Delaware-chartered bank and trust company (the "Bank"), and
RODNEY P. WOOD ("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 his employment with Bank and devote his best efforts to duties which
may be assigned to him 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 him 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 him 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.
<PAGE>
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 his 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
<PAGE>
(2) By Employee, contemporaneously with or within two years after
a Change in Control, for Good Reason; or
(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)
that 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 his 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 that
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
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
3
<PAGE>
(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 that 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 he 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;
(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;
4
<PAGE>
(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
that 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 the Effective 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 Effective
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 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
<PAGE>
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 his employment a lump sum payment equal to the aggregate of 115%
of the future base salary payments Employee would have received if he had
continued in Bank's employ until 36 months after the termination of his
employment (unless a reduction in compensation preceded Employee's resignation
or retirement for Good Reason, in which case the Bank shall pay him a lump sum
payment equal to the aggregate amount of 115% of the future base salary payments
Employee would have received at his highest base salary in effect during the
twelve-month period before the termination of Employee's employment if he had
continued in the Bank's employ until 36 months after the termination of his
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
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.
ss.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
6
<PAGE>
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 his 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 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.
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
7
<PAGE>
(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 his rights to severance benefits under Paragraph 5 above and he
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 his 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
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.
8
<PAGE>
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.
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
/s/ Gerard A. Chamberlain /s/ Robert V.A. Harra, Jr.
- ---------------------------- ---------------------------------
[Assistant] Secretary President
WITNESS: EMPLOYEE:
/s/ Gerard A. Chamberlain /s/ Rodney P. Wood
- ---------------------------- ---------------------------------
Rodney P. Wood
Name: Rodney P. Wood
--------------------------
Address:
-------------------------
---------------------------------
9
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11
<PAGE>
Earnings per share of $3.26 for 1999 were computed by dividing net income
of $107,296,971 by the weighted average number of shares of common stock
outstanding during 1999 of 32,913,489.
ANNUAL REPORT TO SHAREHOLDERS FOR 1999
Exhibit 13
<PAGE>
----------------------------
WILMINGTON
----------------------------
[PHOTO OF CHILD SITTING IN A TREE.]
----------------------------
WILMINGTON TRUST
CORPORATION
ANNUAL REPORT
1999
----------------------------
1
<PAGE>
[PHOTO OF TREE WITH CHILD SITTING IN A TIRE SWING.]
2
<PAGE>
----------------------------
WE ARE
----------------------------
RELATIONSHIP
MANAGERS
----------------------------
WHOSE BUSINESS
IS BUILDING
WEALTH
----------------------------
1
<PAGE>
WEALTH MANAGEMENT
[PHOTO OF WILMINGTON TRUST CLIENT ELIZABETH PESCE AND RODNEY WOOD,
SENIOR VICE PRESIDENT OF PRIVATE CLIENT ADVISORY SERVICES DEPARTMENT,
AND ROBERT V.A. HARRA, JR., PRESIDENT AND CHIEF OPERATING OFFICER.]
- --------------------------------------------------------------------------------
WE CULTIVATE RELATIONSHIPS
- --------------------------------------------------------------------------------
For nearly a century, clients have chosen to do business with Wilmington
Trust because of the promise of enduring relationships and performance that
helps create, grow, and preserve their wealth. Of all the assets we manage, the
most valuable -- and the ones that remain our greatest competitive distinction
- -- are our relationships with clients.
Dating to 1903, when our company was founded to manage trusts and assets for
the du Pont family, our relationship roots run deep. Some of our current family
relationships extend across five generations and some of our experts have worked
with the same group of families for more than 35 years.
As the demand for our specialized expertise has spread, so have our roots.
Today our relationships reach far beyond Delaware to locales throughout the
United States and in more than 50 other countries. Among our thousands of
clients are some of the world's wealthiest individuals, largest corporations,
most profitable business owners, and most promising entrepreneurs.
We have responsibility for $135 billion in trust, custody, and asset
management relationships. We are the 12th largest personal trust provider in the
U.S.(1) and we manage more than $18 billion in personal trust assets.
In addition to the personal and corporate trust structures in which we
specialize, our capabilities encompass a full array of financial planning, asset
and investment management, estate planning, tax planning, lending, insurance,
banking, and brokerage services. We deliver innovative solutions, precise
execution, and responsive service. Personalized, individual attention and ready
access to decision makers are hallmarks of our approach.
Our clients are as varied as our capabilities, which are organized into three
core businesses: wealth management, specialty corporate trust, and commercial
banking.
2
<PAGE>
Trust client Elizabeth Pesce outlines financial objectives for her family and
business with Rod Wood, Center, Head of Private Client Advisory Services, and
Bob Harra, Wilmington Trust President.
- --------------------------------------------------------------------------------
BY LISTENING
- --------------------------------------------------------------------------------
Our wealth management clients are located throughout the U.S. and abroad. We
have more than 9,700 private client and personal trust accounts, totaling $28.5
billion. More than two-thirds of these accounts have balances in excess of $5
million; our average account size is $3 million.
Our specialty corporate trust clients are global in scope and comprise most
Fortune 500 companies. Through long-standing relationships with these
corporations and their investment bankers, accountants, and legal and tax
advisors, we are the preferred trustee or administrator for a wide variety of
sophisticated financing structures. We service more than 11,000 trusts, holding
companies, and other entities. We also act as trustee and custodian for more
than 1,000 pension and 401(k) employee benefit plans.
Our $7.2 billion commercial banking business is focused on Delaware,
southeastern Pennsylvania, and Maryland's eastern shore and our lending
activities are targeted to privately held businesses. Our $4.8 billion loan
portfolio is well diversified and comprises a mix of commercial credits extended
to clients with whom we develop in-depth relationships. Our lending approach is
consistent through economic cycles, our chargeoffs remain low, and our net
interest margin is stable. We are the dominant commercial bank in Delaware and
we have retail relationships with 41% of the households in the state.
(1) Thomson Financial Publishing, 1998 personal trust rankings
3
<PAGE>
WEALTH PROTECTION
Changing demographics and a surging economy are creating more demand for our
wealth preservation capabilities and posing new opportunities to build and
strengthen relationships with clients.
o Every 10 seconds a baby boomer turns 50, moves into his or her prime savings
and investment years, and begins to focus on retirement and estate planning.
o History's largest transfer of wealth from one generation to the next -- a sum
estimated at $12 trillion -- is underway, as baby boomers' parents pass on
their accumulated assets.
o New wealth is being created at record levels as economic expansion swells the
ranks of the affluent.
o The rapid pace of new business launches is increasing the number of
entrepreneurs, executives, and beneficiaries who need financial planning
assistance.
Clients who need to protect their wealth choose Wilmington Trust for a number
of reasons. High on the list are our range of financial planning capabilities
and our in-depth knowledge of the advantages associated with trusts established
in Delaware.
Even more important to clients, however, than our expertise with these
complex and sophisticated structures is our relationship orientation. We act as
a client's chief financial officer, as circumstances change and as time passes,
bringing to bear all of the services, products, and planning necessary to meet
financial objectives.
Our trust, tax, and legal specialists collaborate with our clients' attorneys
and advisors on estate plans that help achieve wealth transfer objectives. Our
financial planners help clients prepare for retirement, manage tax liabilities,
and fund college educations for their children and grandchildren. We can
recommend the best timing and the best methods for exercising stock options --
and for minimizing the resulting taxes. We also advise on refinancing debt,
structuring payments, and other methods of improving cash flow.
Optimizing wealth is our heritage -- and our legacy. From our Brandywine
Valley roots to today's Silicon Valley fortunes, clients choose Wilmington Trust
because of our abiding relationships and demonstrated ability to help create,
grow, and preserve wealth.
- --------------------------------------------------------------------------------
ADVISING GENERATIONS . . .
- --------------------------------------------------------------------------------
4
<PAGE>
----------------------------
OUR PLANNING
TECHNIQUES HELP
ENSURE THAT OUR
CLIENTS' BENEFICIARIES
ARE WELL CARED FOR.
----------------------------
[PICTURE OF CHILD ON SWING.]
- --------------------------------------------------------------------------------
PRESENT AND FUTURE
- --------------------------------------------------------------------------------
5
<PAGE>
[PICTURE OF ROBERT J. CHRISTIAN, SENIOR VICE PRESIDENT OF ASSET MANGEMENT
DEPARTMENT, AND ERIC CHEUNG, MANAGER OF FIXED-INCOME INVESTMENTS.]
Chief Investment Officer Bob Christian, left, devises strategy with Eric Cheung,
manager of fixed income investments.
- --------------------------------------------------------------------------------
STANDING
- --------------------------------------------------------------------------------
6
<PAGE>
INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
THE TEST OF TIME
- --------------------------------------------------------------------------------
When client relationships span multiple generations and market cycles,
managing investments is a long-term proposition. We employ a disciplined asset
allocation model that is designed to provide highly competitive returns without
undue risk. We build and manage portfolios that can withstand volatility and
deliver optimal performance over extended time horizons -- an approach that
works equally well during both market expansions and downturns.
Using a combination of equity, fixed income, and cash equivalent instruments,
we customize investment selections that deliver maximum growth within risk
tolerance parameters. Our emphasis on the long-term view minimizes the
attractiveness of rapid growth and short-term gains. We typically look for
holdings we can retain for a minimum of five years. On average, our annual
portfolio turnover is in the 20% range.
The combination of our own expertise and our affiliations with two highly
regarded investment management firms enables us to provide a full array of asset
classes and management styles. We manage our large cap core, small cap, and
fixed income portfolios internally. California-based growth manager Roxbury
Capital Management, in whom we hold a 30% preferred interest, oversees our
growth equity process and gives our clients access to socially responsible
investments. Our value equity process is managed by New York-based Cramer
Rosenthal McGlynn, in whom we hold a 34% interest.
During 1999 Wilmington Trust's assets under management grew 12% to $26
billion and our assets under administration rose 11% to $135 billion. Roxbury
Capital Management's assets under management rose from $6 billion at the end of
1998 to $11.2 billion at the end of 1999. At year end 1999, Cramer Rosenthal
McGlynn's assets under management stood at $3.2 billion.
In 1999 our alliances with Roxbury Capital Management and Cramer Rosenthal
McGlynn led to the creation of a comprehensive and competitive family of mutual
funds. We established the Wilmington Funds, a single fund family that comprises
seven equity portfolios, three fixed income portfolios, and four money market
portfolios. At year-end 1999 the family totaled more than $4.6 billion.
7
<PAGE>
- --------------------------------------------------------------------------------
ACCESS . . .
- --------------------------------------------------------------------------------
[PHOTO OF REGINA POPE, MANAGER OF ONLINE PORTFOLIO SERVICES FOR TRUST
CLIENTS, ON COMPUTER SCREEN, AND GOVERNMENT BUILDING IN BACKGROUND.]
Regina Pope manages online portfolio services for trust clients.
8
<PAGE>
TECHNOLOGY
- --------------------------------------------------------------------------------
BUILDS RELATIONSHIPS
- --------------------------------------------------------------------------------
When clients want the convenience of now, we offer a growing array of online
and other technology-based tools. Technology is reshaping how we deliver
services -- and the value of unlimited access is creating new opportunities for
relationships with clients.
At the core is wilmingtontrust.com, the gateway to our online banking and
brokerage offerings, as well as to a spectrum of services that ranges from
commentary on market performance to information on the tax-advantaged structures
available under Delaware law.
Our online banking account access and bill payment service was launched in
January 1999 and online brokerage debuted in October. Users can access all of
their banking and brokerage accounts via a single sign-on.
In addition to our online offerings, we added new features to our touch-tone
telephone banking services in 1999 and introduced enhanced function ATMs to the
Delaware market. These ATMs hold coins as well as currency, enabling customers
to cash checks to the penny. Our "Hi! TECH" ad campaign during the fall of 1999
helped position our online, telephone, and enhanced function ATM services as
friendly, accessible, and convenient, and generated an increase in the usage of
these options.
We also launched our eRoom for corporate trust clients, a service that lets
participants in complex trust agreements collaborate on documents in a private
and password-protected Web-based environment -- eliminating the risks associated
with less secure e-mail transmissions as well as the need for costly and
time-consuming photocopying, faxing, and overnight delivery.
Many of our clients use PC-driven portfolio programs that we develop and
maintain. We are migrating these programs to Web-based applications that will
allow us to offer service improvements from a central location, regardless of a
client's software or release configuration.
In 2000 we will enhance wilmingtontrust.com and introduce a Web site for
wealth management clients. Over the next few years, we plan to reduce the number
of branches we operate in Delaware but increase the number of technology-driven
"touch points" through which customers access our services. The combined effect
of these initiatives reflects how customers are changing the ways in which they
interact with us -- and how we are using technology to our advantage.
9
<PAGE>
THE "DELAWARE ADVANTAGE"
- --------------------------------------------------------------------------------
AT HOME IN DELAWARE
- --------------------------------------------------------------------------------
Delaware's trust and tax law advantages, innovative estate planning vehicles,
and Court of Chancery have earned our home state national and international
renown as the premier jurisdiction in the United States for corporate and
personal trusts.
To a large extent, we share a common genealogy with the body of legislation
and case law that comprise the "Delaware advantage." Our founders' families and
ancestors established relationships that set the stage for what today gives
Delaware -- and Wilmington Trust -- competitive distinction in this complex and
sophisticated arena.
To complement Delaware's singular reputation, we offer a package of
comprehensive capabilities as unique as the state itself. For generations, our
experts have helped individuals, families, and businesses navigate the nuances
of the structures available under Delaware law.
Passing wealth on to successive generations without incurring excessive
transfer taxes is possible through Delaware dynasty trusts, in which personal
property may be held forever. Certain irrevocable trusts are exempt from
Delaware income tax. Delaware does not assess tax on the value of intangible
personal property. Direction trust statutes permit the use of third-party
investment advisors; other statutes provide protection from creditors' claims.
Grantors are assured the highest levels of confidentiality because trust court
accountings are not required in Delaware and court proceedings may be sealed.
For corporations, Delaware's tax and legal climate makes it the situs of
choice for special-purpose entities designed to provide a bankruptcy-remote
vehicle that isolates and protects the assets it holds. Delaware business
trusts, for example, insulate assets from attachment and offer protection from
creditors, pass-through tax
10
<PAGE>
[PHOTO OF CYNTHIA L. CORLISS, CORPORATE TRUST COUNSELOR, AND EMMITT R. HARMON,
MANAGING DIRECTOR, EUROPE, STANDING IN STAIRWAY OF LEGISLATIVE HALL IN DOVER,
DELAWARE.]
Cynthia L. Corliss, corporate trust counsel, and Emmitt R. Harmon, managing
director, Europe, at Legislative Hall in Dover, the Delaware state capital.
treatment, and limited liability for owners and managers. We are trustee for
some 2,000 Delaware business trusts, roughly half the number on record in the
state.
As the preferred trustee for other special purpose vehicles like limited
liability companies, limited partnerships, finance companies, and passive
investment companies, we provide fiduciary, investment, and administrative
services in a manner that establishes a substantive presence in the jurisdiction
of choice.
11
<PAGE>
INTERNATIONAL PRESENCE
[PHOTO OF PALM LEAF.]
- --------------------------------------------------------------------------------
AND WHERE WE'RE NEEDED
- --------------------------------------------------------------------------------
[PHOTO OF CACTUS PLANT.]
Nearly a century has passed since Wilmington Trust's roots in Delaware first
took hold. Today, in a time when technology renders geographic boundaries moot,
our scope spans the globe. Our customers are based throughout the United States
and in more than 50 other countries. We meet their financial planning and wealth
management needs through a combination of personal visits, Web-based technology,
and physical locations in California, Delaware, Florida, Maryland, Nevada, New
York, Pennsylvania, and London.
In Delaware, where we are the dominant banking company, we have begun a
multi-year undertaking that is changing our 48 brick-and-mortar branches into a
network of transaction centers, sales offices, and financial planning centers.
In the five counties surrounding Philadelphia, a market six times the size of
our home state's, we don't rely on branches to serve customers. From our sales
office in Villanova, we target privately held businesses with annual sales of
between $5 million and $200 million. Our lenders and wealth managers call on
them at their places of business and we employ couriers to service their cash
and deposit needs. We are replicating this approach on Maryland's eastern shore.
High-net-worth individuals are our focus in California, New York, and
Florida, where we have had an active presence along the Treasure Coast since
1983 and opened a new office in North Palm Beach in 1999. In California and New
York, where we established offices in 1998, we are located adjacent to our
affiliated money managers: Cramer Rosenthal McGlynn in Manhattan and Roxbury
Capital Management in Santa Monica.
In 1999 we opened an office in London to take advantage of corporate trust
opportunities stemming from the introduction of the euro and resulting single
currency, cross-border asset securitization opportunities.
12
<PAGE>
[PHOTO OF TREE BRANCH.]
LONDON, ENGLAND
[PHOTO OF MAPLE LEAF.]
NEW YORK, NEW YORK
PHILADELPHIA, PENNSYLVANIA
WILMINGTON, DELAWARE
MARYLAND'S EASTERN SHORE
[PHOTO OF PALM TREE.]
PALM BEACH, FLORIDA
13
<PAGE>
CHAIRMAN'S LETTER
- --------------------------------------------------------------------------------
TO OUR STOCKHOLDERS
- --------------------------------------------------------------------------------
YEAR IN BRIEF
- --------------------------------------------------------------------------------
INCREASE
FOR THE YEARS ENDED DECEMBER 31 1999 1998 (DECREASE)
- --------------------------------------------------------------------------------
in thousands except per share amounts
Net interest Income $ 245,913 $ 237,697 3.5%
Provision for loan losses 17,500 20,000 (12.5)
Other income 191,453 183,917 4.1
Net interest and other income 419,866 401,614 4.5
Other expense 258,204 230,066 12.2
Income before income taxes 161,662 171,548 (5.8)
Applicable income taxes 54,365 57,223 (5.0)
Net income 107,297 114,325 (6.1)
Per share
Net income - basic $ 3.26 $ 3.41 (4.4)%
Net income - diluted 3.21 3.34 (3.9)
Dividends paid 1.65 1.53 7.8
Book value at December 31 15.40 16.39 (6.0)
Assets $7,201,944 $6,300,565 14.3%
Loans 4,820,079 4,319,633 11.6
Reserve for loan losses 76,925 71,906 7.0
Investment Securities 1,717,499 1,372,652 25.1
Deposits 5,369,484 4,536,763 18.4
Stockholders' equity 498,231 546,209 (8.8)
* 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.
[PHOTO OF TED T. CECALA, CHAIRMAN AND CHIEF EXECUTIVE OFFICER.]
TED T. CECALA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
In 1999 Wilmington Trust's earnings per share and net income were $3.21 and
$107.3 million, respectively. Nonrecurring items, including a one-time, pre-tax,
non-cash write off of $13.4 million for outsourcing and branch reconfiguration
activities, impacted performance. Absent the one-time charge, earnings per share
would have been $3.47.
These results should not overshadow the tremendous progress we made. We
introduced new delivery channels; we conducted more business in markets outside
Delaware; and we embarked on a series of steps that will change our cost
structure. We began to see a return on the expansion investments we have made
over the past two years and we took action to accelerate our growth in 2000 and
beyond.
Two performance measures in which we still outpace our peers were especially
noteworthy: return on average assets, which was 1.60%, and return on equity,
which was 20.18%. Our return on equity has been 20% or higher every year since
1985, an especially enviable record considering the substantial investments we
have made in recent years to position our company for the future.
14
<PAGE>
- --------------------------------------------------------------------------------
Our return on equity has been 20% or higher every year since 1985, an especially
enviable record considering the substantial investments we have made in recent
years to position our company for future growth.
- --------------------------------------------------------------------------------
We finished the year on target for revenue growth in all areas of our
business. We posted double-digit increases in trust and asset management
revenues, which rose 15.2% to $148.4 million as a result of new business
development and our affiliations with Cramer Rosenthal McGlynn and Roxbury
Capital Management.
[BAR GRAPH OF RETURN ON ASSETS (NET INCOME AS A PERCENTAGE OF AVERAGE ASSETS)
FOR EACH YEAR FROM 1989 TO 1999, WITH THE FOLLOWING PLOT POINTS:
1989 - 1.70%
1990 - 1.72%
1991 - 1.75%
1992 - 1.55% AFTER CHANGE IN ACCOUNTING PRINCIPLE
1992A - 1.90% BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - 1.96%
1994 - 1.88%
1995 - 1.83%
1996 - 1.83%
1997 - 1.87%
1998 - 1.83%
1999 - 1.60% AFTER ONE-TIME CHARGE
1999A - 1.73% BEFORE ONE-TIME CHARGE.]
Fee-based revenues, which are growing at a faster pace than spread-based
income, continued to increase as a percentage of our total revenues. At year-end
1999, fee-based revenues comprised 43.6% of our total revenues, up from 42.7% at
year-end 1998 and 40.6% at year-end 1997.
Loan balances on average increased 9% to $4.5 billion; more than half this
growth came from our expansion into the five counties surrounding Philadelphia.
Net interest income, at $245.9 million, was up 3.5% but below the growth rate of
the overall portfolio, due to pricing pressures that compressed the net interest
margin from 4.26% in 1998 to 4.11 % in 1999.
The quality of our credit portfolio remained strong, as nonperforming assets
declined and charge-offs were stable at 0.07%. The reserve for loan losses at
year-end was 1.60% of loans outstanding, compared with 1.66% at year-end 1998.
Total assets under management reached a new high of $26 billion, 12% higher
than 1998. Assets under administration reached $135.1 billion, an 11% increase.
Total banking assets were $7.2 billion, up 14.3%. Loans outstanding increased
11.6% to $4.8 billion. Deposits rose 18.4% to $5.4 billion. Stockholders' equity
totaled $498.2 million.
Reflecting our continued commitment to shareholder value, we paid a dividend
in 1999 of $1.65 per share, an increase of 7.8% over the dividend paid in 1998.
One other 1999 milestone that warrants attention was the move of our stock
listing from Nasdaq to the New York Stock Exchange.
[BAR GRAPH OF RETURN ON STOCKHOLDERS' EQUITY (NET INCOME AS A PERCENTAGE OF
AVERAGE STOCKHOLDERS' EQUITY) FOR EACH YEAR FROM 1989 TO 1999, WITH THE
FOLLOWING PLOT POINTS:
1989 - 22.08%
1990 - 22.67%
1991 - 21.09%
1992 - 17.44% AFTER CHANGE IN ACCOUNTING PRINCIPLE
1992A - 20.62% BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - 21.12%
1994 - 20.84%
1995 - 20.70%
1996 - 21.38%.
1997 - 22.15%
1998 - 21.70%
1999 - 20.18% AFTER ONE-TIME CHARGE
1999A - 21.80% BEFORE ONE-TIME CHARGE.]
NEW OFFICES, NEW TECHNOLOGY, NEW GROWTH
As our growth plans move beyond Delaware, where we hold a dominant market
position, we have established firm footholds in other geographic locations. The
year past marked our first full year with offices in New York and California,
where we gained momentum. We made solid progress in southeastern Pennsylvania,
as evidenced by our loan growth. In Florida, we opened a new office in North
Palm Beach. We also opened an office in London.
Some of our most exciting achievements during 1999 involved the ways in which
we are using technology. The widespread acceptance of the Internet and the
economic potential of e-commerce led us to devote considerable resources to
Web-based applications. The most prominent of these were the launches of our
online banking and brokerage services.
We added new features to our touch-tone telephone banking system and
15
introduced enhanced function ATMS, machines that carry coin dispensers so
customers may cash checks to the penny.
15A
<PAGE>
- --------------------------------------------------------------------------------
Outsourcing check processing and trust accounting gives us access to world-class
capabilities -- and the ability to purchase services as we need them, rather
than invest to meet anticipated demand and create unused capacity.
- --------------------------------------------------------------------------------
Technological tools are changing the ways customers perform routine banking
transactions -- and changing the way we allocate resources to our traditional
branch network, where we currently process 12,000,000 teller transactions per
year. Over the next two to three years, we envision that at least half of those
transactions will move to online banking, telephone banking, or enhanced
function ATMS.
[BAR GRAPH OF DIVIDENDS PER SHARE PAID FOR EACH YEAR FROM 1989 TO 1999, WITH THE
FOLLOWING PLOT POINTS:
1989 - $0.59
1990 - $0.72
1991 - $0.80
1992 - $0.88
1993 - $0.98
1994 - $1.06
1995 - $1.17
1996 - $1.29
1997 - $1.41
1998 - $1.53
1999 - $1.65.]
At the same time, we will increase the number of physical locations and
"touchpoints" from which clients may access our services. In our branch offices,
we will change the focus of staff members from performing transactions to
advising on a full range of financial services. As we continue to evaluate the
effectiveness of all of our delivery channels, we may close or sell 25% or more
of our traditional branch offices.
STRENGTHENING RELATIONSHIPS AND BUILDING VALUE
In December we announced plans to outsource our check processing and core
accounting processing for personal and institutional trust accounts to external
providers for whom data processing is a core business. As a result, we will gain
access to world-class capabilities -- and the ability to purchase services as we
need them, rather than invest to meet anticipated demand and create unused
capacity. Furthermore, this lets us spread operational risk and focus our
technology resources on areas of strategic importance, initiatives in which we
can achieve the greatest competitive distinction, and efforts that build
relationships with clients.
[BAR GRAPH OF NET INCOME PER SHARE FOR EACH YEAR FROM 1989 TO 1999, WITH THE
FOLLOWING PLOT POINTS:
1989 - $1.59
1990 - $1.81
1991 - $1.92
1992 - $1.70 AFTER CHANGE IN ACCOUNTING PRINCIPLE
1992A - $2.09 BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - $2.24
1994 - $2.37
1995 - $2.56
1996 - $2.83
1997 - $3.15
1998 - $3.41
1999 - $3.26 AFTER ONE-TIME CHARGE
1999A - $3.52 BEFORE ONE-TIME CHARGE.]
Going forward, our business plan -- combined with the superior talent,
professionalism, and dedication of our staff members -- leaves us well
positioned for the coming year and beyond. We will continue to focus our efforts
on strengthening our relationships with clients, growing our core businesses,
maximizing the differentiating factors that distinguish us from our competitors,
and building value for clients and shareholders alike.
On behalf of the entire Wilmington Trust team, I thank you for your continued
confidence in our ability to continue our record of success.
/s/ Ted T. Cecala
Ted T. Cecala
Chairman and Chief Executive Officer
16
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
1999 operating earnings, exclusive of a one-time charge, were $115.9
million, or $3.52 per share, a 1% increase over the $3.41 per share reported for
1998. On a diluted basis, operating earnings were $3.47 per share compared to
the $3.34 reported for 1998. Net income for 1999 was $107.3 million, or $3.26
per share. This was a 6% decrease from the $114.3 million, or $3.41 per share,
reported for 1998. On a diluted basis, per share net income was $3.21, a 4%
decrease from the $3.34 reported for 1998.
1999 earnings were down 6% from the 1998 level due primarily to a $13.4
million pre-tax charge in the fourth quarter. In December, the Corporation
announced its plans to outsource certain back office data processing functions -
check processing and core accounting processing for personal and institutional
trust accounts. The one-time charge included $11.2 million for outsourcing check
processing and core accounting processing for personal and institutional trust
accounts, $800,000 for branch closures, and $1.4 million for automated teller
machines and software reconfiguration charges. The outsourcing of these services
is part of the Corporation's strategy to concentrate resources on areas where
its greatest competitive distinction can be achieved. This move toward a
variable cost structure will enable the Corporation to purchase services as
needed rather than invest to meet anticipated demand and create unused capacity.
Improvement was realized in both of the major components of the
Corporation's income. Net interest income increased 4% to $245.9 million, an
increase of $8.2 million over the $237.7 million reported for 1998. Non-interest
revenues also increased 4%, to $191.5 million, an increase of $7.5 million over
the $183.9 million reported for 1998.
The provision for loan losses for 1999 was $17.5 million, a decrease of
$2.5 million, or 13%, from the $20.0 million provision for 1998.
Operating expenses, absent the one-time charge, were $244.8 million, $14.7
million, or 6%, higher than the $230.1 million for 1998. After the charge,
operating expenses were $258.2 million, an increase of $28.1 million, or 12%,
over the $230.1 million reported for 1998. The provision for income taxes was
$54.4 million, a decrease of $2.9 million, or 5%, from the $57.2 million
reported for 1998. These results produced a return on average stockholders'
equity of 20.18%, down from the 21.70% reported last year, and marked the
fifteenth consecutive year that return on equity has exceeded 20%.1 The return
on average assets for 1999 was 1.60%, down from 1.83% for a year ago.
The Corporation maintained its high level of productivity during 1999. The
net profit margin (measured by net income as a percentage of the sum of net
interest and non-interest income), absent the one-time charge, was 26.5%, down
from the 27.1% reported for 1998. Productivity for 1999, measured by net income
per staff member, was $48,000 before the charge. This was an increase over the
$47,000 reported for 1998. Including the charge, the net profit margin was 24.5%
and the net income per staff member was $44,000.
Statistical disclosures required of bank holding companies by Industry
Guide 3 are included in the Corporation's Annual Report on Form 10-K for 1999.
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.
[BAR GRAPH OF NET INCOME PER STAFF MEMBER FOR EACH YEAR FROM 1989 TO
1999, WITH THE FOLLOWING PLOT POINTS, IN THOUSANDS:
1989 - $28.16
1990 - $31.45
1991 - $32.88
1992 - $29.26 AFTER CHANGE IN ACCOUNTING PRINCIPLE
1992A - $36.00 BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - $36.72
1994 - $36.98
1995 - $38.61
1996 - $40.23
1997 - $43.68
1998 - $46.82
1999 - $44.08 AFTER ONE-TIME CHARGE
1999A - $47.61 BEFORE ONE-TIME CHARGE.]
17
<PAGE>
[BAR GRAPH OF NET PROFIT MARGIN (NET INCOME AS A PERCENTAGE OF
OPERATING REVENUES) FOR EACH YEAR FROM 1989 TO 1999, WITH THE FOLLOWING
PLOT POINTS:
1989 - 28.53%
1990 - 29.34%
1991 - 28.51%
1992 - 23.24% AFTER CHANGE IN ACCOUNTING PRINCIPLE
1992A - 28.59% BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - 28.69%
1994 - 28.64%
1995 - 27.70%
1996 - 27.60%
1997 - 27.36%
1998 - 27.12%.
1999 - 24.53% AFTER ONE-TIME CHARGE
1999A - 26.49% BEFORE ONE-TIME CHARGE.]
1 Based on income before cumulative effect of change in accounting
principle.
17A
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
FIVE-YEAR ANALYSIS OF EARNINGS AND CONSOLIDATED STATEMENTS OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
<CAPTION>
1999
----------------------------------------------
(in thousands, except per share amounts;
rates on tax-equivalent basis) Average balance Income/expense Average rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Time deposits in other banks $ - $ - -%
Federal funds sold and securities
purchased under agreements to resell 31,521 1,566 4.97
- -------------------------------------------------------------------------------
Total short-term investments 31,521 1,566 4.97
----------------------------------------------
U.S. Treasury and government agencies 937,878 55,412 5.85
State and municipal1 14,411 1,086 7.64
Preferred stock1 159,738 11,278 7.05
Asset-backed securities 352,615 22,221 6.23
Other1 129,712 7,439 5.73
- -------------------------------------------------------------------------------
Total investment securities 1,594,354 97,436 6.06
----------------------------------------------
Commercial, financial and agricultural 1,423,794 113,217 7.95
Real estate - construction 268,668 23,775 8.85
Mortgage - commercial 882,038 77,217 8.75
Mortgage - residential 895,138 63,877 7.14
Installment loans to individuals1,2 1,060,785 93,010 8.77
- -------------------------------------------------------------------------------
Total loans1,2 4,530,423 371,096 8.19
----------------------------------------------
Total earning assets 6,156,298 470,098 7.62
Other assets 532,767
- ---------------------------------------------------------------
Total assets $6,689,065
==============================================
Savings $ 411,352 7,364 1.79
Interest-bearing demand 1,377,749 29,670 2.15
Certificates under $100,000 1,137,764 57,031 5.01
Certificates $100,000 and over 983,340 53,429 5.43
- -------------------------------------------------------------------------------
Total interest-bearing deposits 3,910,205 147,494 3.77
----------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1,102,470 55,862 5.07
U.S. Treasury demand 35,643 1,846 5.18
- -------------------------------------------------------------------------------
Total short-term borrowings 1,138,113 57,708 5.07
----------------------------------------------
Long-term debt 168,000 11,061 6.58
- -------------------------------------------------------------------------------
Total interest-bearing liabilities 5,216,318 216,263 4.15
Demand deposits 856,171
Other noninterest funds 83,809
- ---------------------------------------------------------------------------------------------
Total funds used to support earning assets 6,156,298 216,263 3.51
Stockholders' equity 531,592
Equity used to support earning assets (83,809)
Other liabilities 84,984
- ---------------------------------------------------------------
Total liabilities and stockholders' equity $6,689,065
==============================================
Net interest income/yield 253,835 4.11
Tax-equivalent adjustment (7,922)
- ---------------------------------------------------------------------------------------------
Net interest income 245,913
Provision for loan losses (17,500)
- ---------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 228,413
- ---------------------------------------------------------------------------------------------
Other income
Trust and asset management fees 148,413
Service charges on deposit accounts 23,817
Other operating income 17,979
Securities gains/(losses) 1,244
- ---------------------------------------------------------------------------------------------
Total other income 191,453
-----------------------
Net interest and other income 419,866
-----------------------
18
<PAGE>
Other expense
Salaries and employment benefits 147,219
Net occupancy 15,440
Furniture and equipment 21,513
Other operating expense 74,032
- ---------------------------------------------------------------------------------------------
Total other expense 258,204
------------------------
Income before income taxes 161,662
Applicable income taxes 54,365
- ---------------------------------------------------------------------------------------------
Net income $107,297
========================
Net income per share - basic $ 3.26
========================
Net income per share - diluted $ 3.21
========================
</TABLE>
1 Tax-advantaged income has been adjusted to a tax-equivalent basis using a
combined statutory federal and state income tax rate of 38.2% for all years.
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 market valuation adjustments.
18A
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
FIVE-YEAR ANALYSIS OF EARNINGS AND CONSOLIDATED STATEMENTS OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
<CAPTION>
1998
----------------------------------------------
(in thousands, except per share amounts;
rates on tax-equivalent basis) Average balance Income/expense Average rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Time deposits in other banks $ - $ - -%
Federal funds sold and securities
purchased under agreements to resell 31,081 1,665 5.36
- ------------------------------------------------------------------------------
Total short-term investments 31,081 1,665 5.36
----------------------------------------------
U.S. Treasury and government agencies 983,276 60,627 6.22
State and municipal1 16,672 1,278 7.73
Preferred stock1 146,595 10,846 7.56
Asset-backed securities 358,929 23,749 6.66
Other1 104,123 5,874 5.67
- ------------------------------------------------------------------------------
Total investment securities 1,609,595 102,374 6.42
----------------------------------------------
Commercial, financial and agricultural 1,263,385 107,039 8.47
Real estate - construction 180,830 16,953 9.38
Mortgage - commercial 890,375 83,040 9.33
Mortgage - residential 837,218 65,195 7.79
Installment loans to individuals1,2 984,590 89,044 9.04
- ------------------------------------------------------------------------------
Total loans1,2 4,156,398 361,271 8.69
----------------------------------------------
Total earning assets 5,797,074 465,310 8.05
Other assets 455,365
- ---------------------------------------------------------------
Total assets $6,252,439
==============================================
Savings $ 406,060 9,141 2.25
Interest-bearing demand 1,222,866 30,800 2.52
Certificates under $100,000 1,208,244 66,045 5.47
Certificates $100,000 and over 842,368 47,750 5.67
- ------------------------------------------------------------------------------
Total interest-bearing deposits 3,679,538 153,736 4.18
----------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1,027,184 55,583 5.41
U.S. Treasury demand 49,338 2,377 4.82
- ------------------------------------------------------------------------------
Total short-term borrowings 1,076,522 57,960 5.38
----------------------------------------------
Long-term debt 125,877 7,546 5.99
- ------------------------------------------------------------------------------
Total interest-bearing liabilities 4,881,937 219,242 4.49
Demand deposits 747,791
Other noninterest funds 167,346
- ---------------------------------------------------------------------------------------------
Total funds used to support earning assets 5,797,074 219,242 3.79
Stockholders' equity 526,742
Equity used to support earning assets (167,346)
Other liabilities 95,969
- ---------------------------------------------------------------
Total liabilities and stockholders' equity $6,252,439
==============================================
Net interest income/yield 246,068 4.26
Tax-equivalent adjustment (8,371)
- ---------------------------------------------------------------------------------------------
Net interest income 237,697
Provision for loan losses (20,000)
- ---------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 217,697
- ---------------------------------------------------------------------------------------------
Other income
Trust and asset management fees 128,801
Service charges on deposit accounts 21,934
Other operating income 26,496
Securities gains/(losses) 6,686
- ---------------------------------------------------------------------------------------------
Total other income 183,917
----------------------------------------------
Net interest and other income 401,614
----------------------------------------------
18B
<PAGE>
Other expense
Salaries and employment benefits 137,917
Net occupancy 13,236
Furniture and equipment 19,024
Other operating expense 59,889
- ---------------------------------------------------------------------------------------------
Total other expense 230,066
----------------------------------------------
Income before income taxes 171,548
Applicable income taxes 57,223
- ---------------------------------------------------------------------------------------------
Net income $114,325
==============================================
Net income per share - basic $ 3.41
==============================================
Net income per share - diluted $ 3.34
==============================================
</TABLE>
1 Tax-advantaged income has been adjusted to a tax-equivalent basis using a
combined statutory federal and state income tax rate of 38.2% for all years.
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 market valuation adjustments.
18C
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
FIVE-YEAR ANALYSIS OF EARNINGS AND CONSOLIDATED STATEMENTS OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
<CAPTION>
1997
----------------------------------------------
(in thousands, except per share amounts;
rates on tax-equivalent basis) Average balance Income/expense Average rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Time deposits in other banks $ - $ - -%
Federal funds sold and securities
purchased under agreements to resell 22,369 1,280 5.72
- --------------------------------------------------------------------------------
Total short-term investments 22,369 1,280 5.72
----------------------------------------------
U.S. Treasury and government agencies 868,296 55,579 6.41
State and municipal1 27,918 2,223 7.99
Preferred stock1 131,693 9,906 7.63
Asset-backed securities 272,527 17,581 6.46
Other1 85,865 5,078 5.93
- --------------------------------------------------------------------------------
Total investment securities 1,386,299 90,367 6.53
----------------------------------------------
Commercial, financial and agricultural 1,211,703 105,758 8.73
Real estate - construction 131,745 12,980 9.85
Mortgage - commercial 904,063 85,260 9.43
Mortgage - residential 764,246 58,406 7.64
Installment loans to individuals1,2 909,736 85,953 9.45
- --------------------------------------------------------------------------------
Total loans1,2 3,921,493 348,357 8.88
----------------------------------------------
Total earning assets 5,330,161 440,004 8.26
Other assets 349,826
- ----------------------------------------------------------------
Total assets $5,679,987
==============================================
Savings $ 397,179 9,561 2.41
Interest-bearing demand 1,078,685 27,393 2.54
Certificates under $100,000 1,209,750 68,621 5.67
Certificates $100,000 and over 506,089 28,601 5.65
- --------------------------------------------------------------------------------
Total interest-bearing deposits 3,191,703 134,176 4.20
----------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1,142,106 63,123 5.53
U.S. Treasury demand 46,108 2,450 5.31
- --------------------------------------------------------------------------------
Total short-term borrowings 1,188,214 65,573 5.52
----------------------------------------------
Long-term debt 43,000 874 2.03
- --------------------------------------------------------------------------------
Total interest-bearing liabilities 4,422,917 200,623 4.54
Demand deposits 678,683
Other noninterest funds 228,561
- ----------------------------------------------------------------------------------------------
Total funds used to support earning assets 5,330,161 200,623 3.77
Stockholders' equity 478,814
Equity used to support earning assets (228,561)
Other liabilities 99,573
- ----------------------------------------------------------------
Total liabilities and stockholders' equity $5,679,987
==============================================
Net interest income/yield 239,381 4.49
Tax-equivalent adjustment (9,365)
- ----------------------------------------------------------------------------------------------
Net interest income 230,016
Provision for loan losses (21,500)
- ----------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 208,516
- ----------------------------------------------------------------------------------------------
Other income
Trust and asset management fees 114,501
Service charges on deposit accounts 20,964
Other operating income 22,050
Securities gains/(losses) 27
- ----------------------------------------------------------------------------------------------
Total other income 157,542
----------------------------------------------
Net interest and other income 366,058
----------------------------------------------
19
<PAGE>
Other expense
Salaries and employment benefits 129,816
Net occupancy 11,763
Furniture and equipment 16,361
Other operating expense 49,731
- ----------------------------------------------------------------------------------------------
Total other expense 207,671
----------------------------------------------
Income before income taxes 158,387
Applicable income taxes 52,343
- ----------------------------------------------------------------------------------------------
Net income $106,044
==============================================
Net income per share - basic $ 3.15
==============================================
Net income per share - diluted $ 3.08
==============================================
</TABLE>
1 Tax-advantaged income has been adjusted to a tax-equivalent basis using a
combined statutory federal and state income tax rate of 38.2% for all years.
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 market valuation adjustments.
19A
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
FIVE-YEAR ANALYSIS OF EARNINGS AND CONSOLIDATED STATEMENTS OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
<CAPTION>
1996
----------------------------------------------
(in thousands, except per share amounts;
rates on tax-equivalent basis) Average balance Income/expense Average rate
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Time deposits in other banks $ - $ - -%
Federal funds sold and securities
purchased under agreements to resell 26,459 1,475 5.57
- -----------------------------------------------------------------------------
Total short-term investments 26,459 1,475 5.57
----------------------------------------------
U.S. Treasury and government agencies 818,585 51,511 6.30
State and municipal1 35,473 2,829 8.00
Preferred stock1 133,322 10,058 7.51
Asset-backed securities 259,071 15,163 5.85
Other1 96,556 5,321 5.53
- -----------------------------------------------------------------------------
Total investment securities 1,343,007 84,882 6.33
----------------------------------------------
Commercial, financial and agricultural 1,160,899 103,131 8.88
Real estate - construction 114,827 11,150 9.71
Mortgage - commercial 806,782 77,871 9.65
Mortgage - residential 683,095 53,563 7.84
Installment loans to individuals1,2 836,827 80,941 9.67
- -----------------------------------------------------------------------------
Total loans1,2 3,602,430 326,656 9.07
----------------------------------------------
Total earning assets 4,971,896 413,013 8.31
Other assets 335,467
- -------------------------------------------------------------
Total assets $5,307,363
==============================================
Savings $ 396,650 9,671 2.44
Interest-bearing demand 1,007,652 25,962 2.58
Certificates under $100,000 1,205,328 70,855 5.88
Certificates $100,000 and over 281,314 15,467 5.50
- -----------------------------------------------------------------------------
Total interest-bearing deposits 2,890,944 121,955 4.22
----------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1,161,521 63,429 5.46
U.S. Treasury demand 34,241 1,766 5.16
- -----------------------------------------------------------------------------
Total short-term borrowings 1,195,762 65,195 5.45
----------------------------------------------
Long-term debt 30,910 1,479 4.78
- -----------------------------------------------------------------------------
Total interest-bearing liabilities 4,117,616 188,629 4.58
Demand deposits 633,066
Other noninterest funds 221,214
- -------------------------------------------------------------------------------------------
Total funds used to support earning assets 4,971,896 188,629 3.80
Stockholders' equity 454,917
Equity used to support earning assets (221,214)
Other liabilities 101,764
- -------------------------------------------------------------
Total liabilities and stockholders' equity $5,307,363
==============================================
Net interest income/yield 224,384 4.51
Tax-equivalent adjustment (10,163)
- -------------------------------------------------------------------------------------------
Net interest income 214,221
Provision for loan losses (16,000)
- -------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 198,221
- -------------------------------------------------------------------------------------------
Other income
Trust and asset management fees 98,247
Service charges on deposit accounts 19,038
Other operating income 19,764
Securities gains/(losses) 1,188
- -------------------------------------------------------------------------------------------
Total other income 138,237
----------------------------------------------
Net interest and other income 336,458
----------------------------------------------
19B
<PAGE>
Other expense
Salaries and employment benefits 119,574
Net occupancy 11,111
Furniture and equipment 14,413
Other operating expense 47,241
- -------------------------------------------------------------------------------------------
Total other expense 192,339
----------------------------------------------
Income before income taxes 144,119
Applicable income taxes 46,841
- -------------------------------------------------------------------------------------------
Net income $ 97,278
==============================================
Net income per share - basic $ 2.83
==============================================
Net income per share - diluted $ 2.79
==============================================
</TABLE>
1 Tax-advantaged income has been adjusted to a tax-equivalent basis using a
combined statutory federal and state income tax rate of 38.2% for all years.
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 market valuation adjustments.
19C
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
FIVE-YEAR ANALYSIS OF EARNINGS AND CONSOLIDATED STATEMENTS OF CONDITION
WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
<CAPTION>
1995
----------------------------------------------
(in thousands, except per share amounts;
rates on tax-equivalent basis) Average balance Income/expense Average rate
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Time deposits in other banks $ - $ - -%
Federal funds sold and securities
purchased under agreements to resell 17,522 1,036 5.91
- ------------------------------------------------------------------------------------
Total short-term investments 17,522 1,036 5.91
----------------------------------------------
U.S. Treasury and government agencies 598,501 37,182 6.21
State and municipal1 42,099 3,077 7.31
Preferred stock1 155,632 9,865 6.34
Asset-backed securities 290,779 15,946 5.48
Other1 96,991 5,595 5.76
- ------------------------------------------------------------------------------------
Total investment securities 1,184,002 71,665 6.05
----------------------------------------------
Commercial, financial and agricultural 1,074,860 99,199 9.23
Real estate - construction 103,104 10,739 10.42
Mortgage - commercial 751,937 74,244 9.87
Mortgage - residential 633,852 50,356 7.94
Installment loans to individuals1,2 827,029 81,141 9.81
- ------------------------------------------------------------------------------------
Total loans1,2 3,390,782 315,679 9.31
----------------------------------------------
Total earning assets 4,592,306 388,380 8.46
Other assets 340,560
- --------------------------------------------------------------------
Total assets $4,932,866
==============================================
Savings $ 404,421 10,222 2.53
Interest-bearing demand 981,379 26,253 2.68
Certificates under $100,000 1,036,792 60,021 5.79
Certificates $100,000 and over 161,403 8,808 5.46
- ------------------------------------------------------------------------------------
Total interest-bearing deposits 2,583,995 105,304 4.08
----------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1,203,372 72,178 6.00
U.S. Treasury demand 36,044 2,147 5.96
- ------------------------------------------------------------------------------------
Total short-term borrowings 1,239,416 74,325 6.00
----------------------------------------------
Long-term debt 6,981 348 4.98
- ------------------------------------------------------------------------------------
Total interest-bearing liabilities 3,830,392 179,977 4.70
Demand deposits 580,928
Other noninterest funds 180,986
- --------------------------------------------------------------------------------------------------
Total funds used to support earning assets 4,592,306 179,977 3.92
Stockholders' equity 434,843
Equity used to support earning assets (180,986)
Other liabilities 86,703
- --------------------------------------------------------------------
Total liabilities and stockholders' equity $4,932,866
==============================================
Net interest income/yield 208,403 4.54
Tax-equivalent adjustment (11,039)
- --------------------------------------------------------------------------------------------------
Net interest income 197,364
Provision for loan losses (12,280)
- --------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 185,084
- --------------------------------------------------------------------------------------------------
Other income
Trust and asset management fees 87,982
Service charges on deposit accounts 17,497
Other operating income 19,894
Securities gains/(losses) 2,267
- --------------------------------------------------------------------------------------------------
Total other income 127,640
----------------------------------------------
Net interest and other income 312,724
----------------------------------------------
19D
<PAGE>
Other expense
Salaries and employment benefits 110,670
Net occupancy 10,706
Furniture and equipment 14,067
Other operating expense 45,561
- --------------------------------------------------------------------------------------------------
Total other expense 181,004
----------------------------------------------
Income before income taxes 131,720
Applicable income taxes 41,689
- --------------------------------------------------------------------------------------------------
Net income $ 90,031
==============================================
Net income per share - basic $ 2.56
==============================================
Net income per share - diluted $ 2.53
==============================================
</TABLE>
1 Tax-advantaged income has been adjusted to a tax-equivalent basis using a
combined statutory federal and state income tax rate of 38.2% for all years.
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 market valuation adjustments.
19E
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF CONDITION
- --------------------------------------------------------------------------------
Total assets for 1999 increased, on average, $436.6 million, or 7%, to $6.7
billion, due primarily to increased loan levels.
Average total earning assets for 1999 were $6.16 billion. This was a $359.2
million, or 6%, increase over the $5.80 billion reported for 1998. Growth in
loans outstanding was responsible for this increase. The loan portfolio grew
$374.0 million, or 9%, to $4.53 billion. Contributing to this increase were a
$155.7 million, or 12%, increase in commercial loans, an $87.8 million, or 49%,
increase in real estate construction loans, a $76.2 million, or 8%, increase in
consumer loans, and a $57.9 million, or 7%, increase in residential mortgage
loans, offset in part by an $8.3 million, or 1%, decrease in commercial mortgage
loans. Approximately 59% of this 1999 loan growth was a direct result of the
Corporation's marketing and sales efforts in southeastern Pennsylvania.
The average level of investment securities for 1999 was $1.59 billion, a
decrease of $15.2 million, or 1%, from 1998. Investment securities available for
sale increased, on average, $151.1 million, or 11%, to $1.55 billion. Higher
levels of U.S. Treasury and government agency securities, asset-backed
securities, and corporate bonds contributed to this increase. The available for
sale portfolio had $54.4 million of unrealized losses at December 31, 1999,
compared to $9.3 million in unrealized gains at December 31, 1998. Investment
securities held to maturity decreased, on average, $166.4 million, or 80%, to
$42.5 million as the replacements for maturing securities are being classified
as available for sale.
Total liabilities in 1999 increased $431.8 million, or 8%, on average, with
approximately 77% of this increase due to higher levels of interest-bearing
liabilities. A $230.7 million, or 6%, increase in total interest-bearing
deposits, a $61.6 million, or 6%, increase in short-term borrowings, and a $42.1
million, or 34%, increase in long-term debt contributed to this increase.
Non-interest-bearing demand deposits for 1999 on average reached $856.2 million,
an increase of $108.4 million, or 15%, over the $747.8 million reported for
1998. The growth in interest-bearing deposits was due to increased levels of
interest-bearing demand deposit accounts, up $154.9 million, or 13%, and
certificates of deposit $100,000 and over, which rose $141.0 million, or 17%.
Offsetting these increases, in part, were certificates of deposit less than
$100,000, which decreased $70.5 million, or 6%. Short-term borrowings increased
$61.6 million, or 6%, to $1.14 billion, as the Corporation increased its level
of term Federal funds purchased and originated a $25 million line of credit with
an unaffiliated bank in order to meet the growth in earning assets. If further
funding needs arise, the Corporation anticipates that it would be able to meet
those funding needs in a timely and cost-effective manner. See "Liquidity."
Average total stockholders' equity during 1999 increased $4.9 million, or
1%, to $531.6 million. Additions to equity from earnings for the year were
offset in part by higher dividend payments, ongoing purchases of the
Corporation's stock, and the increase in unrealized losses within the
Corporation's available for sale investment portfolio. See "Capital Resources."
[PIE CHART OF LOAN PORTFOLIOS, WITH THE FOLLOWING PLOT POINTS:
COMMERCIAL
PERMANENT MORTGAGE - 12.9%
REAL ESTATE DEVELOPMENT - 7.5%
REAL ESTATE INTERIM PROJECTS - 3.7%
BUSINESS - 33.6%
CONSUMER
PERSONAL - 16.6%
RESIDENTIAL MORTGAGE-FIXED RATE - 12.3%
RESIDENTIAL MORTGAGE -FLOATING RATE - 7.9%
HOME EQUITY - 2.9%
CREDIT CARDS - 1.5%
LEASES - 1.2%.]
- --------------------------------------------------------------------------------
NET INTEREST INCOME
- --------------------------------------------------------------------------------
The Corporation's net interest income for 1999, on a fully tax-equivalent
(FTE) basis, was $253.8 million, an increase of $7.8 million, or 3%, over the
20
<PAGE>
$246.1 million reported for 1998. This was a result of a $4.8 million increase
in interest revenues and a $3.0 million decrease in interest expense.
Interest income (FTE) for 1999 totaled $470.1 million, an increase of $4.8
million, or 1%, over the $465.3 million reported for 1998. Interest revenues
increased $33.3 million due to a $359.2 million increase in the average level of
earning assets. This increase was offset, in part, by a $28.5 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 1999 was 7.62%, a
43-basis point decrease from the 8.05% earned for 1998. The Corporation's prime
lending rate (the rate at which banks lend to their most creditworthy customers)
decreased during the year. The Corporation's average prime lending rate for 1999
was 8.00%, down from 8.35% for 1998. This decrease in interest income
attributable to the declining rate environment was partially offset by the
Corporation's investment in interest rate floor contracts. The net result of the
$283.3 million of floor contracts during 1999 was an increase of two basis
points in the Corporation's net interest margin. This compares to a three basis
point increase in the net interest margin provided by the $325.0 million of
floor contracts in 1998.
Interest expense for 1999 was $216.3 million, a decrease of $3.0 million,
or 1%, from the $219.2 million reported for 1998. Interest expense increased
$14.1 million due to a $334.4 million increase in interest-bearing liabilities.
Offsetting this increase was a $17.1 million decrease in interest expense due to
the lower interest rate environment. The average interest rate paid on the
Corporation's liabilities for 1999 was 3.51%, a 28-basis point decrease from the
3.79% paid during 1998. The average discount rate (the rate at which the Federal
Reserve Banks lend money to their member banks) was 4.62%, compared with a
corresponding average rate for 1998 of 4.92%. See "Quantitative and Qualitative
Disclosures About Market Risk."
The Corporation's net interest margin for 1999 was 4.11%, 15 basis points
below the 4.26% reported for 1998. Yields on earning assets declined 43 basis
points, in large part driven by a lower rate environment for most of the year.
The decline in the yield from the loan portfolio was greater than might be
expected by viewing changes in market interest rates. The portfolio yield
decline was exacerbated by several key trends. Customers elected to convert
adjustable-rate commercial loans to a fixed-rate basis to take advantage of the
flat yield curve. In addition, market conditions resulted in aggressive pricing
for new loans. The lower interest rate environment also reduced the
Corporation's cost of funds 28 basis points during the year. The Corporation
reduced the rates offered on its retail deposit products, reflecting the
movements in market interest rates. At the same time, the cost of funds
purchased in the national markets also declined. The overall cost of funds,
however, did not decline to the same extent as earning asset yields, resulting
in the narrower margin.
[BAR GRAPH OF NET INTEREST MARGIN FOR EACH YEAR FROM 1989 TO 1999, WITH
THE FOLLOWING PLOT POINTS:
1989 - 4.46%
1990 - 4.23%
1991 - 4.37%
1992 - 4.62%
1993 - 4.76%
1994 - 4.64%
1995 - 4.54%
1996 - 4.51%
1997 - 4.49%
1998 - 4.26%
1999 - 4.11%.]
- --------------------------------------------------------------------------------
NON-INTEREST REVENUES AND OPERATING EXPENSES
- --------------------------------------------------------------------------------
Double-digit growth in the Corporation's fiduciary and wealth management
businesses was the impetus behind the improved non-interest revenues. The
improvement in the Corporation's fee businesses was due in part to our enhanced
ability to assist customers in growing and managing their wealth. This has been
accomplished by broadening our array of available investment products through
affiliations with the asset management firms Roxbury Capital Management, LLC and
21
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
Cramer Rosenthal McGlynn, LLC. Customer service also was improved through our
opening of offices in New York City and Santa Monica, California,
reconfiguration of our services in southeastern Pennsylvania and southern
Delaware, the launching of our web site (www.wilmingtontrust.com), the
introduction of online banking, and the roll-out of advanced function automated
teller machines.
Revenues from non-interest sources for 1999 were $191.5 million, an
increase of $7.5 million, or 4%, over the $183.9 million reported for 1998.
Total trust and asset management fees during 1999 were $148.4 million and
were 34% of operating revenues. This was an increase over the 31% of operating
revenues reported for 1998. Asset management fees rose 36%, personal trust fees
rose 12%, and corporate financial services fees rose 7%.
Personal trust fees in 1999 were $66.8 million, or 15% of operating
revenues. This was a $7.3 million, or 12%, increase over the $59.5 million
reported for 1998. These fees primarily are based on 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 1999, higher fee income was reported from most
components of this business line.
Corporate financial services fees for 1999 were $46.8 million, or 11% of
operating revenues. This was a $3.2 million, or 7%, increase over the $43.7
million reported for 1998. These fees are generated by providing trust, custody,
and specialized administrative services to corporate clients and financial
intermediaries. The Corporation acts as trustee for leased capital equipment,
collateralized securities, bond financings, corporate restructurings, and
bankruptcy liquidations and provides fiduciary services for all types of
employee benefit trusts. Corporate custody services include all aspects of
establishing and administering Delaware investment holding companies. During
1999, revenue from most of these fee sources improved over 1998 levels.
Asset management fees for 1999 were $34.8 million, or 8% of operating
revenues. This was a $9.2 million, or 36%, increase over the $25.6 million
reported for 1998. The Corporation's affiliation with Cramer Rosenthal McGlynn,
LLC and Roxbury Capital Management, LLC contributed approximately two-thirds of
this revenue growth. Assets under management with these two affiliates during
1999 grew 40%, to $14.4 billion.
[BAR GRAPH OF TRUST AND ASSET MANAGEMENT FEES FOR EACH YEAR FROM 1989
TO 1999, WITH THE FOLLOWING PLOT POINTS, IN MILLIONS:
PERSONAL TRUST FEES
1989 - $25.3
1990 - $32.0
1991 - $33.4
1992 - $35.3
1993 - $36.0
1994 - $37.5
1995 - $41.4
1996 - $45.3
1997 - $53.8
1998 - $59.5
1999 - $66.8
CORPORATE TRUST FEES
1989 - $19.3
1990 - $21.9
1991 - $22.8
1992 - $23.7
1993 - $23.9
1994 - $25.8
1995 - $27.1
1996 - $32.8
1997 - $37.8
1998 - $43.7
1999 - $46.8
22
<PAGE>
ASSET MANAGEMENT FEES
1989 - $14.2
1990 - $14.6
1991 - $16.5
1992 - $18.0
1993 - $18.4
1994 - $19.2
1995 - $19.5
1996 - $20.1
1997 - $22.9
1998 - $25.6
1999 - $34.8
TOTAL TRUST AND ASSET MANAGEMENT FEES
1989 - $ 58.8
1990 - $ 68.5
1991 - $ 72.7
1992 - $ 77.0
1993 - $ 78.3
1994 - $ 82.5
1995 - $ 88.0
1996 - $ 98.2
1997 - $114.5
1998 - $128.8
1999 - $148.4.]
The Corporation offers a broad range of institutional portfolio management
services to domestic and foreign entities, including fixed-income investments
and short-term cash management, and manages a variety of mutual funds. In
addition, the Corporation provides brokerage services through Wilmington
Brokerage Services Company, a subsidiary of Wilmington Trust Company.
Service charges on deposit accounts for 1999 were $23.8 million, an
increase of $1.9 million, or 9%, over the $21.9 million reported for 1998. This
increase was due to higher levels of service charge fees on business checking
accounts, which increased $1.2 million, or 28%, to $5.4 million, and returned
item and overdraft fees, which increased $479,000, or 7%, to $7.7 million.
Other operating income for 1999 was $18.0 million, an $8.5 million, or 32%,
decrease from the $26.5 million reported for 1998. Higher levels of loan fees
and merchant and card holder service fees were more than offset by losses on
asset dispositions and a nonrecurring gain in 1998. Fees from card transactions
22A
<PAGE>
rose $1.1 million, or 13%, to $9.3 million due to increased levels of merchant
and interchange transactions. Loan fees rose $332,000, or 7%, to $5.0 million
due to increased levels of commercial loan late charge fees and letter of credit
fees. Losses on the disposition of vehicles coming off lease during 1999 rose
$1.3 million, or 139%, to $2.2 million, as deterioration in the resale markets
coincided with peak inventory levels. During 1998, a nonrecurring gain of $5.5
million was recorded for the sale of Rodney Square Management Corporation's
(RSMC's) mutual fund processing business.
Securities gains of $1.2 million were recognized in 1999, compared to $6.7
million in 1998, as the Corporation sold selective investments during 1998 to
reposition the investment portfolio.
Non-interest (operating) expenses for 1999 were $258.2 million, an increase
of $28.1 million, or 12%, over the $230.1 million reported for 1998. Personnel
expenses for 1999 were $147.2 million, a $9.3 million, or 7%, increase over the
$137.9 million reported for 1998. Salaries and wages increased $6.0 million, or
6%, to $100.0 million due in part to staffing the Corporation's new locations.
Bonuses and incentives earned in 1999 were $12.7 million, an increase of $2.7
million, or 27%, over the $10.0 million earned in 1998. Included in this amount
were $1.2 million of incentives related to the Corporation's year 2000 effort.
Offsetting this increase was a $2.9 million, or 30%, decrease in the
profit-sharing bonus which was based upon the Corporation's return on equity and
growth in net income. Employee benefit expense increased $2.0 million, or 9%, to
$24.9 million, due primarily to higher health insurance costs.
Net occupancy and furniture and equipment expenses during 1999 increased
$4.7 million, or 15%, to $37.0 million. Higher depreciation and maintenance
expense on electronic data processing equipment, the Corporation's new
operations facility, and its new offices were primarily responsible for this
increase.
Other operating expenses in 1999, before the one-time charge, were $244.8
million, a $14.7 million, or 6%, increase over the $230.1 million reported for
1998. The 1998 results included a $5.5 million charge for the settlement of a
class action lawsuit. Absent this charge in 1998, other operating expenses
during 1999 rose $20.2 million, or 9%.
In December 1999, the Corporation announced its plans to outsource certain
back office data processing functions - check processing and core accounting
processing for personal and institutional trust accounts. The one-time charge
included $11.2 million for outsourcing check processing and core accounting
processing for personal and institutional trust accounts, $800,000 for branch
closures, and $1.4 million for automated teller machines and software
reconfiguration charges. Approximately 100 check processing employees were
affected by outsourcing the Corporation's check processing; most were employed
by the new provider in the first quarter of 2000. After the one-time charge,
operating expenses were $258.2 million, a $28.1 million, or 12%, increase over
the $230.1 million reported for 1998. Advertising expense rose $1.9 million, or
25%, to $9.4 million as an increased effort was made in support of the
Corporation's expansion markets and its "Hi!-Tech" campaign promoting
technological and electronic capabilities. Higher levels of telephone, data
communication, and customer development expenses contributed to the remainder of
the increase.
[BAR GRAPH OF EFFICIENCY RATIO [TOTAL OTHER EXPENSES AS A PERCENTAGE OF
OPERATING REVENUES ON A TAX-EQUIVALENT BASIS] FOR EACH YEAR FROM 1989 TO 1999,
WITH THE FOLLOWING PLOT POINTS:
1989 - 53.60%
1990 - 53.21%
1991 - 52.71%
1992 - 53.47%
1993 - 53.97%
1994 - 55.86%
1995 - 53.86%
1996 - 53.04%
1997 - 52.32%
1998 - 53.51%
1999 - 57.99% BEFORE ONE-TIME CHARGE.]
1999A - 54.98% AFTER ONE-TIME CHARGE.]
23
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
The provision for income taxes for 1999 was $54.4 million, a $2.9 million,
or 5%, decrease from the $57.2 million reported for 1998. Federal income tax
expense decreased $3.8 million, or 7%, to $49.0 million, while state income tax
expense increased $970,000, or 22%, to $5.3 million. The Corporation's effective
tax rate for the year was 33.6%, compared with 33.4% in 1998.
- --------------------------------------------------------------------------------
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
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 Corporation employs simulation models to measure the effect of
variations in interest rates on net interest income. 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.
Net interest income is projected using multiple interest rate scenarios.
The results are compared to net interest income projected using stable interest
rates. The Corporation's model employs interest rate scenarios in which interest
rates gradually move up or down 250 basis points. The simulation model projects,
as of December 31, 1999, that a gradual 250-basis point increase in market
interest rates would decrease net interest income by 5.5% over a one-year
period. This figure compares to a projected decrease at December 31, 1998 of
1.6%. If interest rates were to gradually decrease 250 basis points, the
simulation model projects, as of December 31, 1999, that net interest income
would increase 2.9% over a one-year period. This figure compares to a projected
decrease at December 31, 1998 of 2.4%. The Corporation's policy limits the
permitted reduction in projected net interest income to 10% over a one-year
period given a change in interest rates.
The preceding paragraph contains certain forward-looking statements
regarding the anticipated effects on the Corporation's net interest income
resulting from hypothetical changes in market interest rates. The assumptions
the Corporation uses regarding the effects of changes in interest rates on the
adjustment of retail deposit rates and the balances of residential mortgages,
asset-backed securities, and collateralized mortgage obligations (CMOs) play a
significant role in the results the simulation model projects. The adjustment
paths are not assumed to be symmetrical.
24
<PAGE>
[BAR GRAPH OF OPERATING REVENUES [NET INTEREST INCOME BEFORE PROVISION FOR LOAN
LOSSES PLUS NONINTEREST INCOME] FOR EACH YEAR FROM 1989 TO 1999, WITH THE
FOLLOWING PLOT POINTS, IN MILLIONS:
NET INTEREST INCOME BEFORE PROVISIONS FOR LOAN LOSSES
1989 - $128.03
1990 - $137.57
1991 - $152.89
1992 - $165.21
1993 - $174.85
1994 - $184.33
1995 - $197.36
1996 - $214.22
1997 - $230.22
1998 - $237.70
1999 - $245.91
NONINTEREST INCOME
1989 - $ 86.43
1990 - $ 95.97
1991 - $102.31
1992 - $110.27
1993 - $113.67
1994 - $113.08
1995 - $127.64
1996 - $138.24
1997 - $157.54
1998 - $183.92
1999 - $191.45
TOTAL OPERATING REVENUES
1989 - $214.46
1990 - $233.54
1991 - $255.20
1992 - $275.48
1993 - $288.52
1994 - $297.41
1995 - $325.00
1996 - $352.46
1997 - $387.56
1998 - $421.62
1999 - $437.36.]
The Corporation's model employs assumptions that reflect the historical
adjustment paths of its retail deposit rates to changes in the level of market
interest rates. In addition, some of the Corporation's retail deposit rates
reach historic lows within the 250-basis point decline scenario. The
Corporation's model freezes the rates for these deposit products when they equal
their historic lows. These model assumptions (asymmetrical adjustments and rate
floors based on historic lows) limit the extent to which deposit rates are
expected to adjust in a declining rate scenario and contribute to the projected
simulation results.
Changes in the balances of residential mortgages, CMOs, and asset-backed
securities are driven by contractual obligations and prepayments. While
contractual obligations are not typically influenced by changes in interest
rates, prepayment activity (including refinancing) can shift dramatically with
changes in interest rates. The Corporation's prepayment assumptions are based on
industry estimates for loans with similar coupons and remaining maturities. A
24A
<PAGE>
250-basis point decline in interest rates can lead to a significant increase in
prepayments when available reinvestment opportunities of similar risk carry
lower returns. Conversely, should interest rates rise 250 basis points, the same
balances are not likely to prepay at the same rate, but instead are likely to
lengthen in effective maturity as debtors elect not to prepay and to retain
these now below-market credit terms for as long as possible. Holders of
mortgages, asset-backed securities, and CMOs are left with returns below those
prevailing in the current environment. This prepayment-driven effect also
contributes to the projected simulation results.
During 1999, the Corporation sold certain fixed-rate residential mortgage
loans into the secondary market. The primary goal of this program is to reduce
the risk that the average duration of these fixed-rate residential mortgage
loans would extend well beyond the duration that was anticipated at origination,
as frequently occurs during periods of rising interest rates. Total mortgage
loans sold during 1999 were $76 million.
Management reviews the Corporation's rate sensitivity regularly, and may
employ 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
interest rate swaps and interest rate floors.
At December 31, 1999, the Corporation was committed to interest rate floors
with a total notional amount of $225 million, down from the $325 million at
year-end 1998. The floors have remaining maturities of between 1 and 30 months,
with a weighted average maturity of 11.5 months. The net interest differential,
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.
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 1999, the proportion of funding provided by demand deposits
and interest-bearing demand deposits increased from the prior year. These
increases offset a decline in the proportion of funding provided by certificates
of deposit and allowed the Corporation to reduce its reliance on short-term
25
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
borrowings (principally 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. 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 1999 were $12.5 million, an increase of $582,000, or 5%,
over the $11.9 million reported for 1998. The Corporation's provision for loan
losses for 1999 was $17.5 million. This was $2.5 million, or 13%, lower than the
$20.0 million provision for 1998. The reserve for loan losses at December 31,
1999 was $76.9 million, a 7% increase over the $71.9 million at December 31,
1998. The reserve at year-end, as a percentage of loans outstanding, was 1.60%,
a decrease from the 1.66% reported at year-end 1998. Loans past due 90 days or
more, non-accrual loans, and restructured loans at December 31, 1999 totaled
$45.7 million. This represented a decrease of $3.5 million, or 7%, from the
$49.2 million reported at year-end 1998. Loans past due 90 days or more at
December 31, 1999 totaled $16.5 million, a $2.0 million, or 11%, decrease from
the $18.6 million reported at year-end 1998. Non-accrual loans at year-end 1999
were $29.2 million, a $1.4 million, or 5%, decrease from the $30.6 million
reported at year-end 1998. No loans were classified as restructured at either
year-end.
Other real estate owned (OREO) at December 31, 1999 was $576,000, a
$956,000, or 62%, decrease from the $1.5 million reported at year-end 1998. Net
activity within the OREO portfolio during 1999 included the addition of $1.8
million of properties securing non-performing loans. Loans and real estate
totaling $2.8 million were removed from the portfolio through chargeoffs and
sales. Chargeoffs within the portfolio during 1999 were $727,000. The balance
was liquidated through sales, which resulted in net gains of $886,000. Expenses
incurred to carry this portfolio during 1999 were $156,000. This compared with
chargeoffs of $792,000, net gains on dispositions of $195,000, and portfolio
expenses of $260,000 during 1998.
[BAR GRAPH OF RESERVE FOR LOAN LOSSES AND NONACCRUING LOANS FOR EACH YEAR FROM
1989 TO 1999, WITH THE FOLLOWING PLOT POINTS, IN MILLIONS:
RESERVE FOR LOAN LOSSES
1989 - $38.595
1990 - $42.405
1991 - $44.996
1992 - $46.962
1993 - $51.363
1994 - $48.669
1995 - $49.867
1996 - $54.361
1997 - $63.805
1998 - $71.906
1999 - $76.925
NONACCURING LOANS
1989 - $12.248
1990 - $13.932
1991 - $53.962
1992 - $29.674
1993 - $21.983
1994 - $28.851
1995 - $33.576
1996 - $40.735
1997 - $28.669
1998 - $30.598
1999 - $29.184.]
26
<PAGE>
The overall level of non-performing loans during 1999 decreased $2.4
million, or 7%. 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 non-performing 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, 1999, an analysis of
loans 90 days or more past due, which totaled $16.5 million, indicated that
approximately 65% of those loans were in the Corporation's commercial loan
portfolio, 24% in the residential mortgage loan portfolio, and 11% in the
consumer loan portfolio. This compares with corresponding levels of 70%, 18%,
and 12%, respectively, at December 31, 1998. The Corporation's analysis of these
26A
<PAGE>
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, 1999, approximately $48.8 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.
This compares with the $37.9 million in loans at year-end 1998 about which the
Corporation had serious doubt. In light of the current levels of past due,
non-accrual, and potential problem loans, management believes that the
Corporation's reserve for loan losses is adequate based upon currently available
information. At December 31, 1999, approximately $13.5 million, or 18%, of the
reserve for loan losses was unallocated. This compares to the $11.9 million, or
17%, of the reserve that was classified as unallocated at year-end 1998. 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.
- --------------------------------------------------------------------------------
CAPITAL RESOURCES
- --------------------------------------------------------------------------------
Management continues to review the Corporation's capital position, and
makes adjustments as needed to assure that the Corporation's capital base is
sufficient to satisfy existing and impending regulatory requirements, as well as
meet appropriate standards of safety and provide for future growth.
The Corporation's capital decreased in 1999 due primarily to increased
activity in the acquisition of treasury stock and higher unrealized losses in
the Corporation's investment portfolio. The Corporation's 1999 capital
generation rate, prior to the one-time charge, was 11.26%, down from the 12.54%
reported for 1998. After the one-time charge, the capital generation rate was
9.69%. The acquisition of 1.38 million shares of the Corporation's stock during
1999 reduced its capital by $74.9 million. The Corporation's investment
portfolio, classified as available for sale, contained $54.4 million in
temporary unrealized losses at year-end 1999, compared with $9.3 million in
unrealized gains at year-end 1998. This valuation shift had a $40.7 million
after-tax impact on the Corporation's capital during 1999.
[BAR GRAPH OF EQUITY TO ASSET RATIO FOR EACH YEAR FROM 1989 TO 1999, WITH THE
FOLLOWING PLOT POINTS:
1989 - 7.71%
1990 - 7.58%
1991 - 8.30%
1992 - 8.88%
1993 - 9.28%
1994 - 9.04%
1995 - 8.82%
1996 - 8.57%
1997 - 8.43%
1998 - 8.42%
1999 - 7.95%.]
The Federal Reserve Board's risk-based capital guidelines establish the
minimum levels of capital a bank holding company must have. 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, 1999, the
Corporation's total risk-based capital ratio was 10.67%, down from the 12.48%
27
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
reported at the corresponding date a year ago. The Corporation's Tier 1
risk-based capital ratio at that date was 7.03%, down from the 8.55% reported at
year-end 1998, and its Tier 1 leverage capital ratio was 5.65%, down from the
6.61% reported a year ago. Each of these ratios exceeded the minimum levels
required for adequately-capitalized institutions of 8%, 4%, and 4%,
respectively, and exceeded the levels required for well-capitalized institutions
of 10%, 6%, and 5%, respectively.
On April 15, 1999, the Corporation's Board of Directors increased the
quarterly dividend to $.42 per share. This marked the eighteenth consecutive
year of increased cash dividends. Dividends paid for 1999 totaled $1.65 per
share, an 8% increase over the $1.53 per share paid in 1998. The Corporation's
dividend payout ratio for 1999 was 50.6%, higher than the 44.9% payout for 1998.
Absent the pre-tax charge of $13.4 million, basic net income per share would
have been $3.52 and the dividend payout ratio would have been 46.9%.
In April 1996, the Corporation's Board of Directors authorized the buyback
of 4,000,000 shares of the Corporation's commoncommon stock. At December 31,
1998, 2,098,316 shares had been bought under the program at a cost of $95.9
million. During 1999, an additional 1,381,077 shares were purchased at a cost of
$74.9 million, bringing the total number of shares repurchased under the current
program to 3,479,393.
[BAR GRAPH OF NET INCOME FOR EACH YEAR FROM 1989 TO 1999, WITH THE FOLLOWING
PLOT POINTS, IN MILLIONS:
1989 - $61.19
1990 - $68.53
1991 - $72.76
1992 - $64.01 AFTER CHANGE IN ACCOUNTING PRINCIPLE
1992A - $78.76 BEFORE CHANGE IN ACCOUNTING PRINCIPLE
1993 - $82.76
1994 - $85.17
1995 - $90.03
1996 - $97.28
1997 - $106.04
1998 - $114.33
1999 - $107.30 AFTER ONE-TIME CHARGE
1999A - $115.88 BEFORE ONE-TIME CHARGE.]
The Corporation's common stock is traded on the New York Stock Exchange
(NYSE) under the symbol "WL." The listing was moved from Nasdaq to the NYSE in
January 1999, a key step in building both customer and investor awareness. The
table below summarizes the price ranges of the Corporation's common stock and
its quarterly dividends.
Common Stock Price Range and Dividend Rate by Quarter
1999 1998
---------------------------- ----------------------------
High Low Dividend High Low Dividend
------ ------ -------- ------ ------ --------
First Quarter $63.50 $55.88 $0.39 $67.13 $57.00 $0.36
Second Quarter $62.63 $56.19 $0.42 $68.50 $56.00 $0.39
Third Quarter $58.38 $46.75 $0.42 $63.25 $46.38 $0.39
Fourth Quarter $56.50 $44.75 $0.42 $62.00 $46.38 $0.39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 1998/1997
- --------------------------------------------------------------------------------
Net income for 1998 was $114.3 million, or $3.41 per share. This was an 8%
increase over the $106.0 million, or $3.15 per share, reported for 1997. On a
diluted basis, per share earnings were $3.34, an 8% increase over the $3.08
reported for 1997.
Earning assets in 1998 increased, on average, $470.0 million, or 9%, to
$5.80 billion. Approximately 48% of this increase was due to growth in the
average level of loans outstanding. The loan portfolio rose $234.9 million, or
28
<PAGE>
6%, to an average level of $4.16 billion. Contributing to this increase was a
$46.5 million, or 4%, increase in commercial loans, a $73.0 million, or 10%,
increase in residential mortgage loans, a $49.1 million, or 37%, increase in
real estate construction loans, and a $74.9 million, or 8%, increase in consumer
loans. These increases were offset in part by a $13.7 million, or 2%, decrease
in commercial mortgage loans. Approximately 63% of this 1998 loan growth was a
direct result of the Corporation's marketing and sales efforts in its expansion
market in southeastern Pennsylvania.
The average level of the investment securities for 1998 increased $223.3
million, or 16%, to $1.61 billion. Contributing to this increase were higher
levels of U.S. Treasury and government agency securities, which increased $115.0
million, or 13%, to $983.3 million. Asset-backed securities increased $86.4
million, or 32%, to $358.9 million.
Interest-bearing liabilities in 1998 increased, on average, $459.0 million,
or 10%, to $4.88 billion. Contributing to this increase were higher levels of
interest-bearing deposits and long-term debt offset, in part, by lower levels of
short-term borrowings. Interest-bearing deposits rose $487.8 million, or 15%, to
$3.68 billion as the Corporation expanded its efforts into the national
certificate of deposit markets. Certificates of deposit $100,000 and over rose
$336.3 million, or 66%. Also contributing to the increase were interest-bearing
demand accounts, which increased $144.2 million, or 13%. Long-term debt rose
$82.9 million, or 193%, to $125.9 million as the Corporation issued $125.0
million in subordinated notes in the second quarter of 1998. The addition of the
subordinated notes to the $43 million of funds previously borrowed from the
Federal Home Loan Bank of Pittsburgh increased the year-end level of long-term
debt to $168.0 million.
Stockholders' equity during 1998 increased, on average, $47.9 million, or
10%, to $526.7 million. Additions to equity from earnings for the year were
offset in part by higher dividend payments and the Corporation's ongoing stock
repurchases.
Net interest income (FTE) in 1998 increased $6.7 million, or 3%, to $246.1
million from the $239.4 million in 1997. A $25.3 million increase in interest
revenues was offset, in part, by an $18.6 million increase in interest expense.
The increase in the average level of earning assets was responsible for $34.8
million of this increase. This was offset, in part, by a $9.5 million decrease
in interest revenues attributable to the lower interest rate environment. The
average rate earned on the Corporation's assets for 1998 was 8.05%, a
21-basis-point decrease from the 8.26% earned for 1997. This decrease in
interest income was partially offset by the Corporation's investment in interest
rate swap and interest rate floor contracts. The $153.0 million in swaps
increased interest income during 1998 $174,000, while the $318 million of swaps
outstanding during 1997 increased interest income $621,000. The $325 million in
floors contributed $1.2 million to interest income during 1998, compared with an
average level of $289 million during 1997, which contributed $825,000 to
interest income that year. However, this was offset by $620,000 and $550,000 of
amortized acquisition costs in 1998 and 1997, respectively. During 1995, $200
million of those contracts were sold, resulting in a $4.3 million gain which is
being deferred and accreted into income over the remaining lives of the
contracts sold. The gain accreted during 1998 was $938,000, down from the $1.2
29
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
million for 1997. The swaps and floors increased the Corporation's net interest
margin three basis points in 1998, compared with a four basis point increase in
1997.
Interest expense for 1998 increased $18.6 million, or 9%, to $219.2 million
from $200.6 million for 1997. The higher cost was attributable to the increase
in the average level of interest-bearing liabilities, which caused interest
expense to increase $18.3 million, and the higher interest rate environment,
which increased interest expense $329,000. The average rate of interest paid on
the Corporation's liabilities during 1998 was 3.79%, a two-basis-point increase
over the 3.77% paid during 1997. The Corporation's net interest margin for 1998
was 4.26%, down 23 basis points from the 4.49% reported for 1997.
The provision for loan losses for 1998 was $20.0 million. This was $1.5
million lower than the $21.5 million provision for 1997. The reserve for loan
losses at December 31, 1998 was $71.9 million, or 1.66% of loans outstanding.
This compares with corresponding levels of $63.8 million and 1.60% of loans
outstanding reported at year-end 1997. Loans past due 90 days or more,
non-accrual loans, and restructured loans at December 31, 1998 totaled $49.2
million. This was a $5.0 million, or 11%, increase over the corresponding level
of $44.2 million reported at December 31, 1997. Non-accrual loans at year-end
1998 were $30.6 million, a $1.9 million, or 7%, increase over the $28.7 million
reported at year-end 1997. No loans were classified as restructured at either
year-end. The OREO portfolio at December 31, 1998 totaled $1.5 million, a
decrease of $2.2 million, or 59%, from the $3.7 million reported at year-end
1997. Approximately $2.7 million of properties securing non-performing loans
were added to this portfolio during 1998, while $4.9 million were removed
through chargeoffs and sales. Chargeoffs in this portfolio during 1998 were
$792,000. The remainder was liquidated through sales, which resulted in net
gains of $195,000. Expenses of $260,000 were incurred to carry this portfolio
during 1998. These amounts compare with chargeoffs of $500,000, net gains on
dispositions of $116,000, and portfolio expenses of $1.0 million during 1997.
Revenues from non-interest sources in 1998 increased $26.4 million, or 17%,
to $183.9 million, over the $157.5 million reported for 1997. Trust and asset
management fees increased $14.3 million, or 12%, to $128.8 million. All three
components of this revenue source contributed to this increase. Personal trust
fees were $59.5 million, or 14% of operating revenues. This was a $5.7 million,
or 11%, increase over the $53.8 million reported for 1997. Corporate financial
services fees for 1998 were $43.7 million, or 10% of operating revenues. This
was a $5.8 million, or 15%, increase over the $37.8 million reported for 1997.
Asset management fees in 1998 were $25.6 million, or 6% of operating revenues.
This was a $2.7 million, or 12%, increase over the $22.9 million reported for
1997. Service charges on deposit accounts in 1998 were $21.9 million, an
increase of $970,000, or 5%, over the $21.0 million reported for 1997, due
primarily to returned item and overdraft fees, automated teller machine fees,
30
<PAGE>
checkbook fees, and checking account balance fees. Other operating income
increased $4.4 million, or 20%, to $26.5 million, as a gain of $5.5 million was
recorded for the sale of RSMC's mutual fund processing business. Offsetting this
gain in part was a $1.8 million decrease in precious metals revenues associated
with the precious metals business the Corporation sold during the year. Also
offsetting this gain was a $5.5 million provision in connection with the
settlement of litigation. Other items contributing to the increase in other
operating income were higher levels of card fees, loan origination fees, and
gains recorded on the sale of OREO. Securities gains of $6.7 million were
recognized in 1998, as the Corporation sold selective investments to reposition
its investment portfolio.
Operating expenses for 1998 increased $22.4 million, or 11%, to $230.1
million. Personnel expenses increased $8.1 million, or 6%, to $137.9 million due
to higher levels of salaries, bonuses, incentives, payroll taxes, and thrift
plan costs. These were partially offset by lower health care insurance costs.
Net occupancy and furniture and equipment expenses during 1998 increased $4.1
million, or 15%, due, in part, to higher depreciation and maintenance expense on
computer equipment and the Corporation's new operations facility. Other
operating expense in 1998 increased $9.7 million, or 22%, due primarily to the
$5.5 million settlement of the class action lawsuit which had been pending for
more than six years. Absent this charge, other operating expense increased $4.2
million, or 9%. Service and consulting fees for 1998 were $11.0 million, a $5.0
million, or 82%, increase over the $6.0 million reported for 1997. The
Corporation's outsourcing of its residential mortgage loan servicing to a
third-party provider during 1997 contributed to this increase. Expenses incurred
to remediate the Corporation's Year 2000 issue were also recorded as servicing
and consulting fees.
The provision for income taxes for 1998 increased $4.9 million, or 9%, to
$57.2 million. Higher pre-tax income was primarily responsible for this
increase. The Corporation's effective tax rate for 1998 was 33.4%, compared with
33.0% for 1997.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
YEAR 2000 ISSUE
The Corporation transitioned into the year 2000 successfully, without
experiencing significant problems. We will continue to monitor our systems
during other date-critical periods, including the end of the year 2000, to
ensure smooth processing. We believe we are prepared for handling other
date-critical periods, based on our renovation, testing, contingency planning,
and contacts with third parties. We do not anticipate any material impact due to
date processing.
The Corporation estimates that it spent $23.9 million through December 31,
1999 in outside and internal costs toward required modifications, upgrades, and
replacements of its internal systems and testing. We presently anticipate
incurring approximately $410,000 in 2000 for resources supporting the monitoring
of critical date periods.
31
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(in thousands) 1999 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED AVERAGE STATEMENTS OF CONDITION
Assets:
Cash and due from banks $ 198,002 $ 188,183 $ 190,243 $ 187,473 $ 194,224 $ 202,777
Short-term investments 31,521 31,081 22,369 26,459 17,522 26,425
Investment securities 1,594,354 1,609,595 1,386,299 1,343,007 1,184,002 1,060,015
Loans 4,530,423 4,156,398 3,921,493 3,602,430 3,390,782 3,114,384
Reserve for loan losses (73,295) (66,178) (56,747) (50,768) (47,895) (50,258)
- -------------------------------------------------------------------------------------------------------------------------------
Net loans 4,457,128 4,090,220 3,864,746 3,551,662 3,342,887 3,064,126
Other 408,060 333,360 216,330 198,762 194,231 168,702
- -------------------------------------------------------------------------------------------------------------------------------
Total $6,689,065 $6,252,439 $5,679,987 $5,307,363 $4,932,866 $4,522,045
===============================================================================================================================
Liabilities and stockholders' equity:
Demand deposits (noninterest-bearing) $ 856,171 $ 747,791 $ 678,683 $ 633,066 $ 580,928 $ 559,574
Deposits (interest-bearing) 3,910,205 3,679,538 3,191,703 2,890,944 2,583,995 2,704,736
Short-term borrowings 1,138,113 1,076,522 1,188,214 1,195,762 1,239,416 775,302
Other 84,984 95,969 99,573 101,764 86,703 73,786
Long-term debt 168,000 125,877 43,000 30,910 6,981 -
- -------------------------------------------------------------------------------------------------------------------------------
Total 6,157,473 5,725,697 5,201,173 4,852,446 4,498,023 4,113,398
Stockholders' equity 531,592 526,742 478,814 454,917 434,843 408,647
- -------------------------------------------------------------------------------------------------------------------------------
Total $6,689,065 $6,252,439 $5,679,987 $5,307,363 $4,932,866 $4,522,045
===============================================================================================================================
CONSOLIDATED STATEMENTS OF INCOME
Net interest income $ 245,913 $ 237,697 $ 230,016 $ 214,221 $ 197,364 $ 184,330
- -------------------------------------------------------------------------------------------------------------------------------
Trust and asset management fees 148,413 128,801 114,501 98,247 87,982 82,542
Other noninterest revenues 41,796 48,430 43,014 38,802 37,391 32,696
Securities gains/(losses) 1,244 6,686 27 1,188 2,267 (2,157)
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 191,453 183,917 157,542 138,237 127,640 113,081
Operating revenues 437,366 421,614 387,558 352,458 325,004 297,411
Provision for loan losses (17,500) (20,000) (21,500) (16,000) (12,280) (4,550)
Salaries and employment benefits 147,219 137,917 129,816 119,574 110,670 101,813
Other operating expenses 110,985 92,149 77,855 72,765 70,334 70,214
- -------------------------------------------------------------------------------------------------------------------------------
Total other expense 258,204 230,066 207,671 192,339 181,004 172,027
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect
of change in accounting principle 161,662 171,548 158,387 144,119 131,720 120,834
Applicable income taxes 54,365 57,223 52,343 46,841 41,689 35,665
- -------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 107,297 114,325 106,044 97,278 90,031 85,169
Cumulative effect of change in accounting principle
(net of income tax benefit of $8,296)* - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 107,297 $ 114,325 $ 106,044 $ 97,278 $ 90,031 $ 85,169
===============================================================================================================================
Per share data:
Income before cumulative effect of change
in accounting principle
Basic* $ 3.26 $ 3.41 $ 3.15 $ 2.83 $ 2.56 $ 2.37
Diluted* $ 3.21 $ 3.34 $ 3.08 $ 2.79 $ 2.53 $ 2.35
- -------------------------------------------------------------------------------------------------------------------------------
Percentage change from prior year
Basic (4)% 8% 11% 11% 8% 6%
===============================================================================================================================
SELECTED FINANCIAL RATIOS AND STATISTICS
Net income as a percentage of:
Average stockholders' equity3 20.18% 21.70% 22.15% 21.38% 20.70% 20.84%
Average total assets3 1.60 1.83 1.87 1.83 1.83 1.88
- -------------------------------------------------------------------------------------------------------------------------------
Loan quality:
Percentage of average total loans:
Net charge-offs 0.28% 0.29% 0.31% 0.32% 0.33% 0.23%
Nonaccruing loans 0.64 0.74 0.73 1.13 0.99 0.93
Percentage of total loans:
Reserve for loan losses** 1.60 1.66 1.60 1.44 1.42 1.48
- -------------------------------------------------------------------------------------------------------------------------------
Selected per share data:
Dividends paid $ 1.65 $ 1.53 $ 1.41 $ 1.29 $ 1.17 $ 1.06
Book value** 15.40 16.39 15.02 13.71 13.09 11.80
Stock price** 48.25 61.63 62.38 39.50 30.88 22.75
- -------------------------------------------------------------------------------------------------------------------------------
32
<PAGE>
Staff members (full-time equivalents)** 2,434 2,442 2,428 2,418 2,332 2,303
Stockholders** 9,617 9,868 10,164 10,241 9,000 9,097
- -------------------------------------------------------------------------------------------------------------------------------
Net income per staff member3 $ 44,083 $ 46,816 $ 43,675 $ 40,231 $ 38,607 $ 36,982
Efficiency ratio1 57.99% 53.51% 52.32% 53.04% 53.86% 55.86%
Capital generation rate2,3 9.69% 12.54% 12.59% 11.51% 11.68% 11.88%
Risk-based capital ratio** 10.67% 12.47% 12.38% 12.01% 12.06% 12.51%
Price/earnings multiple** 14.80 18.07 19.80 13.96 12.06 9.60
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Effective January 1, 1992, SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," was adopted. Basic and diluted
earnings per share after the cumulative effect of change in accounting principle
was $1.70 and $1.68, respectively. ** 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.
32A
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Compound Growth Rates
(in thousands) 1993 1992 1991 1990 1989 1989 to 1999 1994 to 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED AVERAGE STATEMENTS OF CONDITION
Assets:
Cash and due from banks $ 194,808 $ 180,747 $ 167,438 $ 183,859 $ 181,126 0.89% (0.48)%
Short-term investments 21,248 72,787 73,258 79,830 102,531 (11.11) 3.59
Investment securities 946,052 803,936 901,273 874,955 698,246 8.61 8.51
Loans 2,949,909 2,979,576 2,932,963 2,768,890 2,531,576 5.99 7.78
Reserve for loan losses (48,619) (45,615) (43,724) (41,045) (36,959) 7.09 7.84
- ------------------------------------------------------------------------------------------------------------------------------------
Net loans 2,901,290 2,933,961 2,889,239 2,727,845 2,494,617 5.98 7.78
Other 158,414 144,364 126,486 124,370 117,951 13.21 19.32
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,221,812 $4,135,795 $4,157,694 $3,990,859 $3,594,471 6.41 8.14
====================================================================================================================================
Liabilities and stockholders' equity:
Demand deposits (noninterest-bearing) $ 500,396 $ 443,205 $ 393,260 $ 399,668 $ 421,994 7.33 8.88
Deposits (interest-bearing) 2,718,885 2,778,768 2,858,595 2,593,897 2,319,031 5.36 7.65
Short-term borrowings 545,012 479,577 499,083 629,995 514,418 8.26 7.98
Other 65,737 67,101 61,705 64,971 61,830 3.23 2.87
Long-term debt - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total 3,830,030 3,768,651 3,812,643 3,688,531 3,317,273 6.38 8.40
Stockholders' equity 391,782 367,144 345,051 302,328 277,198 6.73 5.40
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 4,221,812 $4,135,795 $4,157,694 $3,990,859 $3,594,471 6.41 8.14
====================================================================================================================================
CONSOLIDATED STATEMENTS OF INCOME
Net interest income $ 174,847 $ 165,214 $ 152,891 $ 137,569 $ 128,033 6.74 5.93
- ------------------------------------------------------------------------------------------------------------------------------------
Trust and asset management fees 78,313 77,002 72,605 68,527 58,714 9.72 12.45
Other noninterest revenues 35,08 31,006 29,132 26,644 24,812 5.35 5.03
Securities gains/(losses) 268 2,259 574 802 2,904 (8.13) -
- ------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 113,667 110,267 102,311 95,973 86,430 8.28 11.11
Operating revenues 288,514 275,481 255,202 233,542 214,463 7.39 8.02
Provision for loan losses (9,500) (13,000) (15,702) (12,487) (13,644) 2.52 30.92
Salaries and employment benefits 95,849 90,419 85,204 80,214 76,462 6.77 7.65
Other operating expenses 65,937 63,362 58,380 54,639 49,539 8.40 9.59
- ------------------------------------------------------------------------------------------------------------------------------------
Total other expense 161,786 153,781 143,584 134,853 126,001 7.44 8.46
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect
of change in accounting principle 117,228 108,700 95,916 86,202 74,818 8.01 5.99
Applicable income taxes 34,467 29,938 23,155 17,673 13,624 14.84 8.80
- ------------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of change in accounting principle 82,761 78,762 72,761 68,529 61,194 5.78 4.73
Cumulative effect of change in accounting principle
(net of income tax benefit of $8,296)* - (14,749) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 82,761 $ 64,013 $ 72,761 $ 68,529 $ 61,194 5.78 4.73
- ------------------------------------------------------------------------------------------------------------------------------------
Per share data:
Income before cumulative effect of change
in accounting principle
Basic* $ 2.24 $ 2.09 $ 1.92 $ 1.81 $ 1.59 7.44 6.58
Diluted* $ 2.21 $ 2.06 $ 1.89 $ 1.79 $ 1.57 7.41 6.44
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage change from prior year
Basic 7% 9% 6% 14% 10%
====================================================================================================================================
SELECTED FINANCIAL RATIOS AND STATISTICS
Net income as a percentage of:
Average stockholders' equity3 21.12% 20.62% 21.09% 22.67% 22.08%
Average total assets3 1.96 1.90 1.75 1.72 1.70
- ------------------------------------------------------------------------------------------------------------------------------------
Loan quality:
Percentage of average total loans:
Net charge-offs 0.28% 0.37% 0.45% 0.31% 0.37%
Nonaccruing loans 0.75 1.00 1.84 0.50 0.48
Percentage of total loans:
Reserve for loan losses** 1.69 1.56 1.48 1.46 1.42
- ------------------------------------------------------------------------------------------------------------------------------------
Selected per share data:
Dividends paid $ 0.975 $ 0.88 $ 0.80 $ 0.72 $ 0.59
Book value** 10.87 10.12 9.79 8.58 7.61
Stock price** 26.25 26.50 29.00 20.00 18.88
- ------------------------------------------------------------------------------------------------------------------------------------
33
<PAGE>
Staff members (full-time equivalents)** 2,254 2,188 2,213 2,179 2,173
Stockholders** 8,880 8,261 7,477 7,444 7,332
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per staff member3 $ 36,717 $ 35,997 $ 32,879 $ 31,450 $ 28,161
Efficiency ratio1 53.97% 53.47% 52.71% 53.21% 53.60%
Capital generation rate2,3 12.35% 12.18% 13.43% 14.53% 15.07%
Risk-based capital ratio** 12.36% 12.36% 12.13% 11.52% 11.19%
Price/earnings multiple** 11.72 15.59 15.10 11.05 11.87
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Effective January 1, 1992, SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," was adopted. Basic and diluted
earnings per share after the cumulative effect of change in accounting principle
was $1.70 and $1.68, respectively. ** 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.
33A
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CONDITION WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- -----------------------------------------------------------------------------------------------------
<CAPTION>
December 31 (in thousands, except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 225,145 $ 204,579
Interest-bearing time deposits in other banks - -
Federal funds sold and securities purchased under agreements to resell 129,760 83,500
Investment securities available for sale 1,686,267 1,298,741
Investment securities held to maturity (market value of $31,150 in 1999 and $74,480 in 1998) 31,232 73,911
Loans:
Commercial, financial and agricultural 1,521,336 1,370,566
Real estate - construction 303,734 211,733
Mortgage - commercial 919,297 869,442
Mortgage - residential 968,259 857,626
Installment loans to individuals 1,108,945 1,015,056
Unearned income (1,492) (4,790)
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans net of unearned income 4,820,079 4,319,633
Reserve for loan losses (76,925) (71,906)
- ----------------------------------------------------------------------------------------------------------------------------------
Net loans 4,743,154 4,247,727
Premises and equipment, net 132,160 145,492
Goodwill and other intangible assets, net of accumulated amortization of
$20,818 in 1999 and $12,395 in 1998 163,622 141,460
Other assets 90,604 105,155
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $7,201,944 $6,300,565
==================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 994,643 $ 912,066
Interest-bearing:
Savings 393,750 404,015
Interest-bearing demand 1,397,574 1,425,953
Certificates under $100,000 1,067,729 1,182,183
Certificates $100,000 and over 1,515,788 612,546
- ----------------------------------------------------------------------------------------------------------------------------------
Total deposits 5,369,484 4,536,763
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase 995,858 932,346
U.S. Treasury demand 95,000 18,944
- ----------------------------------------------------------------------------------------------------------------------------------
Total short-term borrowings 1,090,858 951,290
Other liabilities 75,371 98,303
Long-term debt 168,000 168,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,703,713 5,754,356
Stockholders' equity:
Common stock: $1.00 par value, authorized 150,000,000 shares; issued 39,264,173 shares 39,264 39,264
Capital surplus 70,749 67,047
Retained earnings 689,598 636,662
Accumulated other comprehensive income (34,796) 5,928
- ----------------------------------------------------------------------------------------------------------------------------------
Total contributed capital and retained earnings 764,815 748,901
Less: Treasury stock; 6,911,398 shares in 1999 and 5,935,072 shares in 1998, at cost (266,584) (202,692)
- ----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 498,231 546,209
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $7,201,944 $6,300,565
==================================================================================================================================
See notes to consolidated financial statements.
</TABLE>
34
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the year ended December 31 (in thousands, except per share amounts) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $367,063 $356,668 $342,831
Interest and dividends on investment securities:
Taxable interest 83,233 88,717 76,838
Tax-exempt interest 722 851 1,430
Dividends 9,592 9,038 8,260
Interest on time deposits in other banks - - -
Interest on federal funds sold and securities purchased under agreements to resell 1,566 1,665 1,280
- -----------------------------------------------------------------------------------------------------------------------
Total interest income 462,176 456,939 430,639
-----------------------------------
Interest on deposits 147,494 153,736 134,176
Interest on short-term borrowings 57,708 57,960 65,573
Interest on long-term debt 11,061 7,546 874
- -----------------------------------------------------------------------------------------------------------------------
Total interest expense 216,263 219,242 200,623
-----------------------------------
Net interest income 245,913 237,697 230,016
Provision for loan losses (17,500) (20,000) (21,500)
- -----------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 228,413 217,697 208,516
-----------------------------------
OTHER INCOME
Trust and asset management fees:
Personal trust 66,804 59,494 53,772
Corporate financial services 46,813 43,661 37,824
Asset management 34,796 25,646 22,905
- -----------------------------------------------------------------------------------------------------------------------
Total trust and asset management fees 148,413 128,801 114,501
-----------------------------------
Service charges on deposit accounts 23,817 21,934 20,964
Card fees 9,343 8,273 7,694
Other operating income 8,636 18,223 14,356
Securities gains 1,244 6,686 27
- -----------------------------------------------------------------------------------------------------------------------
Total other income 191,453 183,917 157,542
-----------------------------------
Net interest and other income 419,866 401,614 366,058
-----------------------------------
OTHER EXPENSE
Salaries and employment benefits 147,219 137,917 129,816
Net occupancy 15,440 13,236 11,763
Furniture and equipment 21,513 19,024 16,361
Advertising and contributions 9,388 7,492 7,884
Servicing and consulting fees 7,290 7,954 2,473
Abandonment of fixed assets and other related charges 13,401 - -
Other operating expense 43,953 44,443 39,374
- -----------------------------------------------------------------------------------------------------------------------
Total other expense 258,204 230,066 207,671
-----------------------------------
NET INCOME
Income before income taxes 161,662 171,548 158,387
Applicable income taxes 54,365 57,223 52,343
- -----------------------------------------------------------------------------------------------------------------------
Net income $107,297 $114,325 $106,044
===================================
Net income per share:
basic $ 3.26 $ 3.41 $ 3.15
===================================
diluted $ 3.21 $ 3.34 $ 3.08
===================================
Weighted average shares outstanding:
basic 32,913 33,487 33,697
diluted 33,383 34,275 34,466
See notes to consolidated financial statements.
</TABLE>
35
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accumulated
other
Common Capital Retained comprehensive Treasury
(in thousands, except per share amounts) stock surplus earnings income stock Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997
Balance, January 1 $ 39,107 $59,463 $515,072 $ 1,004 $(149,929) $464,717
Comprehensive income:
Net income - - 106,044 - - 106,044
Other comprehensive income, net of tax
Unrealized gain on securities,
net of income taxes of $3,655 - - - 6,500 - 6,500
----------
Comprehensive income 112,544
----------
Cash dividends paid - $1.41 per share - - (47,546) - - (47,546)
Common stock issued under
employment benefit plans 85 3,048 - - 6,070 9,203
Acquisition of treasury stock - - - - (35,911) (35,911)
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31 39,192 62,511 573,570 7,504 (179,770) 503,007
- --------------------------------------------------------------------------------------------------------------------
1998
Comprehensive income:
Net income - - 114,325 - - 114,325
Other comprehensive income, net of tax
Unrealized loss on securities,
net of income taxes of $886 - - - (1,576) - (1,576)
----------
Comprehensive income 112,749
----------
Cash dividends paid - $1.53 per share - - (51,233) - - (51,233)
Common stock issued under
employment benefit plans 72 4,536 - - 8,421 13,029
Acquisition of treasury stock - - - - (31,43) (31,343)
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31 39,264 67,047 636,662 5,928 (202,692) 546,209
- --------------------------------------------------------------------------------------------------------------------
1999
Comprehensive income:
Net income - - 107,297 - - 107,297
Other comprehensive income, net of tax
Unrealized loss on securities,
net of income taxes of $22,908 - - - (40,724) - (40,724)
----------
Comprehensive income - 66,573
----------
Cash dividends paid - $1.65 per share - - (54,361) - - (54,361)
Common stock issued under
employment benefit plans - 3,702 - - 10,999 14,701
Acquisition of treasury stock - - - - (74,891) (74,891)
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31 $ 39,264 $70,749 $689,598 $(34,796) $(266,584) $498,231
====================================================================================================================
See notes to consolidated financial statements.
</TABLE>
36
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS WILMINGTON TRUST CORPORATION AND SUBSIDIARIES 1999 ANNUAL REPORT
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the year ended December 31 (in thousands) 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 107,297 $ 114,325 $ 106,044
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 17,500 20,000 21,500
Provision for depreciation 16,467 14,021 10,507
Amortization/(accretion) of investment securities
available for sale discounts and premiums 3,643 (1,439) 2,634
(Accretion)/amortization of investment securities held to
maturity discounts and premiums (56) (270) (203)
Deferred income taxes (8,080) (1,817) (571)
Securities gains (1,244) (6,686) (27)
Decrease in other assets 20,047 2,865 3,035
Increase/(decrease) in other liabilities 11,468 2,974 (8,939)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 167,042 143,973 133,980
- -------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sales of investment securities available for sale 981,744 1,041,818 965,559
Proceeds from maturities of investment securities available for sale 273,839 578,183 278,723
Proceeds from maturities of investment securities held to maturity 43,755 259,398 134,839
Purchases of investment securities available for sale (1,709,160) (1,596,708) (1,754,629)
Purchases of investment securities held to maturity (1,000) -- --
Investments in affiliates (27,658) (131,190) --
Gross proceeds from sales of loans 76,251 122,351 60,719
Purchases of loans (12,341) (1,095) (67,543)
Net increase in loans (576,837) (458,853) (227,683)
Net increase in premises and equipment (3,135) (24,384) (51,249)
- -------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (954,542) (210,480) (661,264)
- -------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in demand, savings and interest-bearing demand deposits 43,933 420,986 24,953
Net increase/(decrease) in certificates of deposit 788,788 (53,253) 230,379
Net increase/(decrease) in federal funds purchased and
securities sold under agreements to repurchase 63,512 (313,941) 263,270
Net increase/(decrease) in U.S. Treasury demand 76,056 (42,346) 7,764
Proceeds from issuance of long-term debt -- 125,000 --
Cash dividends (54,361) (51,233) (47,546)
Proceeds from common stock issued under employment benefit plans 11,289 11,324 8,344
Payments for common stock acquired through buybacks 74,891) (31,343) (35,911)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 854,326 65,194 451,253
- -------------------------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents 66,826 (1,313) (76,031)
Cash and cash equivalents at beginning of year 288,079 289,392 365,423
- -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 354,905 $ 288,079 $ 289,392
=========================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 204,804 $ 220,460 $ 219,624
Taxes 63,869 52,630 47,376
Loans transferred during the year:
To other real estate owned $ 1,805 $ 2,706 $ 5,665
From other real estate owned 2,761 4,912 7,058
See notes to consolidated financial statements.
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
BUSINESS
Wilmington Trust Corporation (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 (WTC), a
Delaware-chartered bank and trust company engaged in commercial and trust
banking activities since 1903. WTC is the largest full-service bank in Delaware,
with 48 branch offices and nine principal operating subsidiaries through which
it engages in various lines of business.
The Corporation also owns two other financial institutions, Wilmington
Trust of Pennsylvania (WTPA), a Pennsylvania-chartered bank and trust company
acquired in 1993, and Wilmington Trust FSB (WTFSB), a federally-chartered
savings bank organized in 1994, and an investment holding company, WT
Investments, Inc. (WTI).
Through its subsidiaries, the Corporation engages in residential,
commercial, and construction lending, deposit-taking, insurance, investment
advisory, fiduciary, wealth management, and broker-dealer services.
The Corporation presently conducts activities through its subsidiaries in
Delaware, Pennsylvania, Maryland, Florida, Nevada, New York, California, and
London. The Corporation and its subsidiaries are subject to competition from
other financial institutions. They are also subject to the regulations of
certain federal and state regulatory agencies and undergo periodic examination
by those authorities.
On January 2, 1998, WTI consummated a transaction with Cramer Rosenthal
McGlynn, LLC, an investment advisory firm specializing in equity investments in
small- to middle-capitalization stocks, with offices in New York City and White
Plains, New York. As a result of this transaction, WTI acquired a 24% equity
interest in the firm, with the ability to acquire additional ownership in the
future. WTI increased its equity interest in the firm to 34% in 1999. The
investment is accounted for under the equity method of accounting and is
recorded in the "goodwill and other intangible assets" and the "other assets"
lines of the Corporation's Consolidated Statements of Condition.
On July 31, 1998, WTI consummated a transaction with Roxbury Capital
Management, LLC, an asset management firm headquartered in Santa Monica,
California, performing investment management services relating to
large-capitalization stocks for institutional and individual clients. As a
result of this transaction, WTI has a preferred profits interest equal to 30% of
revenues in the firm, with the ability to acquire additional ownership in the
future. The investment is accounted for under the equity method of accounting
and is recorded in the "goodwill and other intangible assets" and the "other
assets" lines of the Corporation's Consolidated Statements of Condition. The
excess of the carrying value over the underlying equity resulting from these
transactions was $147 million and $125 million at December 31, 1999 and 1998,
respectively, and is being amortized over 25 years.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and include, after elimination of material intercompany balances and
transactions, the accounts of the Corporation, WTC, WTPA, WTFSB, WTI, and WTC's
subsidiaries. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
38
<PAGE>
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 these estimates. Estimates
that are particularly susceptible to change in the near term relate to the
determination of the reserve for loan losses. Certain prior year amounts have
been reclassified to conform to current year presentation.
ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." Adoption of this accounting
pronouncement was required for all fiscal quarters of fiscal years beginning
after June 15, 1999. The statement will require the Corporation to recognize all
derivatives on its balance sheet at their fair value. Derivatives which are not
hedges must be adjusted to fair value through income. If a derivative is a
hedge, depending on the nature of the hedge, changes in the fair value of the
derivative either will be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be recognized in
earnings immediately. In June 1999, the FASB's SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133," extended the pronouncement's effective date. The
Corporation plans to adopt the provisions of this statement, as amended,
beginning January 1, 2001, which is the statement's new effective date. The
impact of adoption on the Corporation's financial position, results of
operations, and cash flows is not presently determinable and will depend on the
financial position and the nature and purpose of the derivative instruments in
use at that time.
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. Marketable equity securities and debt securities that are not
classified as held to maturity 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.
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
39
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 of 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, "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.
It is the policy of the Corporation to maintain a reserve for loan losses
(reserve) which is sufficient to absorb estimated losses based on subjective
judgments regarding the collectibility of loans within the reported portfolio.
The adequacy of the reserve for loan losses is evaluated on a quarterly basis by
personnel independent of the various lending functions. In evaluating the
adequacy of the reserve, specific consideration is given to current micro- and
macro-economic factors, historical net loss experience, current delinquency
trends, and movement within the internally reported loan quality
classifications. The methodology employed to determine the necessary level of
reserve to maintain has been applied on a basis consistent with prior periods.
Reserve allocations for the commercial portfolios are maintained at various
levels. Impairment reserve allocations typically are established for
nonperforming commercial credits as identified for evaluation in accordance with
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," and are based
on the present value of anticipated cash flows discounted at 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. For
collateral-dependent loans, management obtains appraisals for all significant
properties. Specific reserve allocations are typically established for large
potential problem or problem credits not considered to be impaired. Specific
reserve allocations represent subjective estimates of loss potential and
consider potential collateral shortfalls not yet recognized as losses for
financial reporting purposes. All commercial credits and unfunded letters of
credit not subject to impairments or specific reserve allocations are allocated
a general allowance based on their internal risk-rating classification. An
eight-point risk-rating classification system is maintained. The definitions and
allowance allocation percentages for all adverse classifications are consistent
with current regulatory guidelines.
Reserve allocations for the retail portfolios are determined statistically.
Specific allocations are established for identified problem credits which
typically represent loans nearing the policy guidelines for chargeoff
recognition. General allocations are established for the remaining retail
portfolios by applying a ratio to the outstanding balances which considers the
net loss experience recognized over a historical period for the respective
40
<PAGE>
product. Adjustments are made as information becomes known that adversely
affects the perceived quality of an individual retail portfolio. No material
adjustments were made to the calculated retail reserves during the two-year
period ended December 31, 1999.
A portion of the reserve is not specifically allocated to the commercial or
retail portfolios. This unallocated portion represented approximately 18% and
17% of the total reserve for loan losses at December 31, 1999 and 1998,
respectively.
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.
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.
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants (AICPA) issued Statement of Position
(SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use." SOP 98-1, which has been adopted prospectively as of January
1, 1999, requires the capitalization of certain costs incurred in connection
with developing or obtaining internal use software. Prior to adoption of SOP
98-1, the Corporation expensed the majority of internal costs incurred for the
development of internal use software as incurred. The effect of adopting SOP
98-1 was an increase in net income for the year ended December 31, 1999 of
$401,866, or $.01 per share, net of tax.
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 on an accrual basis, except for certain amounts
that are collected and recorded on a cash basis. Recording income on a cash
basis does not have a material effect on net income.
PER SHARE DATA
Basic net income per share is based on the weighted average number of
shares outstanding during each year. Diluted net income per share is similar to
basic net income per share, but includes the dilutive effect of shares issuable
under stock option plans.
COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income," establishes rules for the
reporting and display of comprehensive income and its components. The statement
requires, among other things, unrealized gains or losses on the Corporation's
available-for-sale securities to be included in comprehensive income.
41
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 it 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.
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 the Corporation. The net interest differential, the amortization of the
initial fees associated with the purchase of the floors, and the amortization of
any gains realized on the sale of the floors, are reported in "Interest and fees
on loans" in the Consolidated Statements of Income and are recognized over the
lives of the contracts.
The Corporation does not hold or issue derivative financial instruments for
trading purposes.
OTHER REAL ESTATE OWNED
Other real estate owned (OREO), 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 for which the Corporation has taken possession of the collateral.
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
$9,800,474 and $24,142,723 during the years ended December 31, 1999 and December
31, 1998, respectively.
42
<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
------------------- unrealized unrealized ----------------------
Balance, December 31, 1998 (in 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 $ 791,456 $ - $ 8,210 $ (3,001) $ 796,665 $ -
Obligations of state and political subdivisions 6,930 - 261 (5) 7,186 -
Other securities:
Preferred stock - 178,455 2,353 - - 180,808
Asset-backed securities 227,683 - 1,123 (103) 228,703 -
Other debt securities 10,500 - 80 (62) 10,518 -
Other marketable equity securities - 74,455 406 - - 74,861
- ---------------------------------------------------------------------------------------------------------------------
Total $1,036,569 $252,910 $12,433 $ (3,171) $1,043,072 $255,669
=====================================================================================================================
Investment securities held to maturity:
U.S. Treasury and government agencies $ 29,098 $ - $ 96 $ - $ 29,194 $ -
Obligations of state and political subdivisions 8,098 - 390 - 8,488 -
Other securities:
Asset-backed securities 36,715 - 131 (48) 36,798 -
- ---------------------------------------------------------------------------------------------------------------------
Total $ 73,911 $ - $ 617 $ (48) $ 74,480 $ -
=====================================================================================================================
Balance, December 31, 1999 (in thousands)
- ---------------------------------------------------------------------------------------------------------------------
Investment securities available for sale:
U.S. Treasury and government agencies $1,030,825 $ - $ 339 $ (33,365) $ 997,799 $ -
Obligations of state and political subdivisions 4,565 - 167 - 4,732 -
Other securities:
Preferred stock - 51,554 - (9,077) - 142,477
Asset-backed securities 362,786 - 89 (12,053) 350,822 -
Other debt securities 100,533 - 484 (863) 100,154 -
Other marketable equity securities - 90,373 154 (244) - 90,283
- ---------------------------------------------------------------------------------------------------------------------
Total $1,498,709 $241,927 $ 1,233 $ (55,602) $1,453,507 $232,760
=====================================================================================================================
Investment securities held to maturity:
U.S. Treasury and government agencies $ 11,960 $ - $ - $ (213) $ 11,747 $ -
Obligations of state and political subdivisions 7,244 - 161 - 7,405 -
Other securities:
Asset-backed securities 11,028 - 13 (43) 10,998 -
Other debt securities 1,000 - - - 1,000 -
- ---------------------------------------------------------------------------------------------------------------------
Total $ 31,232 $ - $ 174 $ (256) $ 31,150 $ -
=====================================================================================================================
</TABLE>
43
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
The amortized cost and estimated market value of debt securities at
December 31, 1999 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 $ 139,843 $ 139,618 $ 400 $ 402
Due after one year through five years 397,778 389,397 11,581 11,401
Due after five years through ten years 277,264 262,841 10,695 10,704
Due after ten years 683,824 661,651 8,556 8,643
- ------------------------------------------------------------------------------------------------------
$1,498,709 $1,453,507 $31,232 $31,150
======================================================================================================
</TABLE>
Proceeds from the sales of investment securities available for sale during
1999, 1998, and 1997 were $981,744,446, $1,041,818,319, and $965,559,484,
respectively. Gross gains of $1,252,594, $6,669,263, and $24,070 in 1999, 1998,
and 1997, respectively, were realized on those sales, with offsetting losses of
$8,192 and $15,072 in 1999 and 1998, respectively. There were no offsetting
losses in 1997. Securities with an aggregate book value of $1,185,979,064 at
December 31, 1999 were pledged to secure deposits and other commitments.
The Corporation's preferred stock portfolio consists of auction-rate,
cumulative, and noncumulative 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, 1999, the Corporation's asset-backed securities portfolio
consisted primarily of collateralized mortgage obligations. The portfolio has an
approximate average life of 3.11 years. The portfolio's aggregate average
yield-to-maturity was 6.24%.
At December 31, 1999, the Corporation did not hold state and municipal
securities for any one state in excess of 10% of stockholders' equity.
- --------------------------------------------------------------------------------
NOTE 4: CONCENTRATIONS OF LOANS
- --------------------------------------------------------------------------------
The Corporation's lending activity primarily is focused within Delaware,
Pennsylvania, Maryland, and Florida. The Corporation makes no foreign loans. At
December 31, 1999, approximately 6% of the Corporation's total loan portfolio
consisted of real estate construction loans, while approximately 32% represented
commercial loans, 19% represented commercial mortgage loans, which were secured
by income-producing properties, and approximately 20% and 23%, respectively,
represented residential mortgage loans and installment loans to individuals.
Each of these ratios was virtually unchanged from the corresponding ratio
reported at December 31, 1998.
In addition to these loans outstanding, at December 31, 1999 and 1998,
unfunded commitments to lend in the real estate sector were approximately
$569,333,000 and $492,882,000, 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.
44
<PAGE>
- --------------------------------------------------------------------------------
NOTE 5: RESERVE FOR LOAN LOSSES
- --------------------------------------------------------------------------------
The following is an analysis of the reserve for loan losses:
(in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Balance, January 1 $ 71,906 $ 63,805 $ 54,361
- --------------------------------------------------------------------------------
Chargeoffs (16,500) (15,930) (16,187)
Recoveries 4,019 4,031 4,131
- --------------------------------------------------------------------------------
Net chargeoffs (12,481) (11,899) (12,056)
- --------------------------------------------------------------------------------
Provision charged to operations 17,500 20,000 21,500
- --------------------------------------------------------------------------------
Balance, December 31 $ 76,925 $ 71,906 $ 63,805
================================================================================
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) 1999 1998 1997
- --------------------------------------------------------------------------------
Average recorded investment
in impaired loans $52,403 $33,053 $39,946
- --------------------------------------------------------------------------------
Recorded investment in
impaired loans at year-end
subject to a reserve for
loan losses (1999 reserve -
$7,222; 1998 reserve -
$7,184; 1997 reserve
- $8,042) $26,157 $38,486 $31,731
Recorded investment in impaired
loans at year-end requiring
no reserve for loan losses 8,043 96 524
- --------------------------------------------------------------------------------
Recorded investment in
impaired loans at year-end $34,200 $38,582 $32,255
================================================================================
Recorded investment in
impaired loans at year-end
classified as nonaccruing $27,135 $27,835 $27,007
- --------------------------------------------------------------------------------
Interest income recognized $ 3,245 $ 3,078 $ 2,649
Interest income recognized
using the cash basis method
of income recognition 2,555 2,302 2,162
- --------------------------------------------------------------------------------
The following is an analysis of interest on nonaccruing loans:
(in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Nonaccruing loans at
December 31 $29,184 $30,598 $28,669
- --------------------------------------------------------------------------------
Interest income which would
have been recognized under
original terms $ 3,584 $ 3,219 $ 2,766
Interest accrued or received 2,644 2,408 2,207
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 6: PREMISES AND EQUIPMENT
- --------------------------------------------------------------------------------
A summary of premises and equipment at December 31 is as follows:
(in thousands) 1999 1998
- -------------------------------------------------------------------------------
Land $ 10,903 $ 11,488
Buildings and improvements 106,804 110,035
Furniture and equipment 121,340 124,701
- --------------------------------------------------------------------------------
239,047 246,224
Accumulated depreciation (106,887) (100,732)
- --------------------------------------------------------------------------------
Premises and equipment, net $132,160 $ 145,492
================================================================================
45
<PAGE>
During the fourth quarter of 1999, the Corporation announced plans to
outsource its check processing and core accounting processing for personal and
institutional trust accounts. The Corporation determined that the processing
functions identified could be performed more cost effectively by an external
provider. In conjunction with the Corporation's commitment to outsource these
functions, assets including imaging equipment and capitalized software with a
carrying value of $11,181,342 were abandoned in full.
In addition, the Corporation closed several retail branch locations.
Accordingly, the Corporation evaluated the ongoing value of furniture and
fixtures associated with the various locations. Based on the evaluation
performed, the Corporation determined that the related assets, including
property, with a carrying value of $886,062 were impaired. A charge of $758,330
was recognized to reduce the related assets to their fair value based on
available market prices.
In conjunction with the identified outsourcing plans and branch closures,
additional expenses amounting to $1,461,419 were recognized in the fourth
quarter. These expenses represent charges associated with automated teller
machines and software reconfiguration.
45A
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 7: SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
Short-term borrowings include federal funds purchased, securities sold
under agreements to repurchase, other borrowings, and U.S. Treasury demand
notes.
Federal funds purchased and securities sold under agreements to repurchase
generally mature within 60 days from the transaction date. Securities sold under
agreements to repurchase are delivered to either broker-dealers or custodian
accounts for customers. The securities underlying the agreements are U.S.
Treasury bills, notes, and bonds which are held at the Federal Reserve as
collateral for the repurchase agreements. Other borrowed funds, which consist of
term federal funds purchased and a line of credit, and Treasury tax and loan
deposits are generally repaid within seven to 180 days from the transaction
date.
At December 31, 1999, $25,000,000 was outstanding under a $25,000,000 line
of credit agreement between the Corporation and an unaffiliated bank. The credit
agreement provides for interest to be paid on outstanding balances at the London
Interbank Offered Rate (LIBOR) plus 2% and requires the Corporation to maintain
certain financial ratios pertaining to loan quality, limitations on debt, and
risk-based capital ratios. The Corporation was in compliance with all required
covenants set forth by the agreement at December 31, 1999. In addition, the
Corporation has a $25,000,000 uncommitted line of credit agreement with an
unaffiliated bank. There are no commitment fees associated with this agreement
and the interest to be paid on outstanding balances will be based on prevailing
commercial paper rates. No amounts were outstanding under this agreement at
December 31, 1999. No line of credit agreements were available to the
Corporation at December 31, 1998.
A summary of securities sold under agreements to repurchase at December 31
is as follows:
(in thousands) 1999 1998
- --------------------------------------------------------------------------------
Maximum amount outstanding at
any month-end $269,138 $264,146
Daily average amount outstanding
during the period 183,396 206,040
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 8: LONG-TERM DEBT
- --------------------------------------------------------------------------------
WTC has obtained advances from the Federal Home Loan Bank of Pittsburgh to
finance its operations facility, the Wilmington Trust Plaza. 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
- --------------------------------------------------------------------------------
On May 4, 1998, the Corporation issued $125,000,000 in unsecured
subordinated notes due May 1, 2008. Semiannual interest payments are due on May
1 and November 1 in each year at a fixed interest rate of 6.625%, with the
principal due on May 1, 2008. The notes are not redeemable prior to maturity and
will not be subject to any sinking fund.
Under a shelf registration statement filed on March 31, 1998 with the
Securities and Exchange Commission, the Corporation has registered but not
issued debt securities, which may be either senior or subordinated, of
$100,000,000 at December 31, 1999. The interest rate will be set at the time of
issue.
46
<PAGE>
- --------------------------------------------------------------------------------
NOTE 9: CONTINGENT LIABILITIES
- --------------------------------------------------------------------------------
The Corporation and its subsidiaries, in the ordinary course of business,
are involved in various legal proceedings. While it is not feasible to predict
the outcome of all pending suits and claims, management does not believe the
ultimate resolution of any of these matters will have a material adverse effect
on the Corporation's consolidated financial condition.
- --------------------------------------------------------------------------------
NOTE 10: FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
The following discloses the fair value of financial instruments held by the
Corporation as of December 31, 1999 and 1998, 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 do not
require that certain financial instruments and all nonfinancial instruments be
included in 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 to 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.
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.
47
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
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>
1999 1998
--------------------- ---------------------
Carrying Fair Carrying Fair
(in thousands) value value value value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 225,145 $ 225,145 $ 204,579 $ 204,579
Short-term investments 129,760 129,760 83,500 83,500
Investment securities (see note 3) 1,717,499 1,717,417 1,372,652 1,373,221
Loans, net of reserves 4,743,154 4,656,606 4,247,727 4,302,115
Accrued interest receivable 43,672 43,672 38,266 38,266
Financial liabilities:
Deposits 5,369,484 5,268,414 4,536,763 4,529,414
Short-term borrowings 1,090,858 1,090,858 951,290 951,290
Accrued interest payable 56,012 56,012 44,553 44,553
Long-term debt 168,000 166,554 168,000 166,626
- --------------------------------------------------------------------------------------------------
Contractual Fair Contractual Fair
(in thousands) amount value amount value
- --------------------------------------------------------------------------------------------------
Off-balance-sheet financial instruments:
Unfunded commitments to extend credit $2,132,588 $ (5,331) $1,749,479 $ (4,374)
Standby and commercial letters of credit 100,996 (1,515) 70,050 (1,051)
Interest rate swap contracts - - 25,000 (9)
Interest rate floor contracts 225,000 220 325,000 5,450
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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) 1999 1998
- --------------------------------------------------------------------------------
Commitments to extend credit
(contractual amount) $2,132,588 $1,749,479
Letters of credit (contractual amount) 100,996 70,050
Interest rate swaps (notional value) - 25,000
Interest rate floors (notional value) 225,000 325,000
- --------------------------------------------------------------------------------
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 (e.g., securities,
receivables, inventory, equipment, and residential and commercial properties) is
obtained depending on management's credit assessment of the customer.
48
<PAGE>
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. There were no swaps in effect at December 31,
1999. At December 31, 1998, swaps with a total notional principal of $25 million
were in effect. The weighted average variable interest rate that the Corporation
paid was 5.40% on December 31, 1998, while the weighted average fixed interest
rate that the Corporation received was 5.17% on that date.
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 may fail to perform. At December 31, 1999, floors with a total
notional principal of $225 million were in effect. This compares with $325
million at December 31, 1998. The weighted average strike rate was 6% on
December 31, 1999 and 1998. The floors have a weighted average original and
remaining term to maturity of approximately 4.8 years and 1 year, 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
result in 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, 1999 and
1998, 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.
49
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
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
For capital prompt corrective
adequacy purposes action provisions
Actual ------------------ ------------------
-------------- Amount Ratio Amount Ratio
(in thousands) Amount Ratio > > > >
- - - -
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1999:
Total capital (to risk-weighted assets):
Wilmington Trust Corporation $559,154 10.67%
Wilmington Trust Company 500,298 10.12 $395,657 8.00% $494,572 10.00%
Tier 1 capital (to risk-weighted assets):
Wilmington Trust Corporation 368,521 7.03
Wilmington Trust Company 438,359 8.86 197,829 4.00 296,743 6.00
Tier 1 capital (to average assets):
Wilmington Trust Corporation 368,521 5.65
Wilmington Trust Company 438,359 6.68 262,663 4.00 328,329 5.00
As of December 31, 1998:
Total capital (to risk-weighted assets):
Wilmington Trust Corporation $589,103 12.48%
Wilmington Trust Company 521,853 11.34 $368,016 8.00% $460,019 10.00%
Tier 1 capital (to risk-weighted assets):
Wilmington Trust Corporation 403,804 8.55
Wilmington Trust Company 463,115 10.07 184,008 4.00 276,012 6.00
Tier 1 capital (to average assets):
Wilmington Trust Corporation 403,804 6.61
Wilmington Trust Company 463,115 7.99 231,968 4.00 289,960 5.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The primary source of funds for payment of dividends by the Corporation
historically has been dividends received from WTC. The ability to pay dividends
is limited by Delaware law, which permits a corporation to pay dividends only
out of its capital surplus.
In April 1996, the Corporation, after obtaining approval of its Board of
Directors, announced a plan to buy back 4,000,000 shares of its stock. During
the years ended December 31, 1999, 1998, and 1997, 1,381,077 shares, 546,220
shares, and 737,729 shares, respectively, were acquired under this program at a
total cost of $142,144,393.
- --------------------------------------------------------------------------------
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, 1999 and 1998, loans to executive officers and directors of the
Corporation and its principal affiliates, including loans to their associates,
totaled $60,447,041 and $52,819,798, respectively. During 1999, loan additions
were $15,980,262, loan repayments were $9,056,446, and other changes were
$703,427.
- --------------------------------------------------------------------------------
NOTE 14: EMPLOYMENT BENEFIT PLANS
- --------------------------------------------------------------------------------
STOCK-BASED COMPENSATION PLANS
At December 31, 1999, 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
50
<PAGE>
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:
1999 1998 1997
- --------------------------------------------------------------------------------
Net income:
As reported $107,297 $114,325 $106,044
Pro forma 103,645 111,530 102,650
Basic earnings per share:
As reported $ 3.26 $ 3.41 $ 3.15
Pro forma 3.15 3.33 3.05
Diluted earnings per share:
As reported $ 3.21 $ 3.34 $ 3.08
Pro forma 3.10 3.25 2.98
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------------------------------------------------
Weighted Weighted Weighted
Option average Options average Options average
outstanding exercise price outstanding exercise price outstanding exercise price
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1 1,616,842 $35.67 1,716,086 $30.04 1,543,312 $25.89
Options granted 397,926 57.38 260,577 62.23 419,086 42.32
Options exercised (348,776) 24.36 (322,121) 26.09 (234,912) 24.75
Options forfeited (38,300) 53.47 (37,700) 44.86 (11,400) 28.38
- ------------------------------------------------------------------------------------------------------------------------
Balance, December 31 1,627,692 42.99 1,616,842 35.67 1,716,086 30.04
========================================================================================================================
Options exercisable, December 31 1,202,501 1,363,465 1,297,000
========================================================================================================================
Weighted average fair value of
option granted during the year $10.90 $10.56 $ 7.65
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
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:
1999 1998 1997
- --------------------------------------------------------------------------------
Dividend yields 3.57% 2.77% 2.29%
Expected volatility 21.36-22.05 19.77-21.18 17.79-18.03
Risk-free interest rate 6.41-6.50 4.54-4.57 5.36-5.38
Expected option life (years) 3-5 3-5 3-5
- --------------------------------------------------------------------------------
A summary of the stock options outstanding at December 31, 1999 is as
follows:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
----------------------------------------- ---------------------------
Weighted
average
remaining Weighted Weighted
Options contractual average Options average
Range of exercise prices outstanding life (years) exercise price exercisable exercise price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$19.50-31.50 547,647 3.1 $26.88 547,647 $26.88
31.75-57.44 551,350 7.0 42.95 452,042 39.94
57.56-66.50 528,695 6.2 59.70 202,812 62.58
- ---------------------------------------------------------------------------------------------------
$19.50-66.50 1,627,692 5.5 $42.99 1,202,501 $37.81
===================================================================================================
</TABLE>
51
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
Shares reserved
for future Subscriptions Price
subscriptions outstanding per share
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance,
January 1, 1997 413,678 86,322
- --------------------------------------------------------------------------
Subscriptions entered into on June 1, 1997 (76,796) 76,796 $ 38.14
Forfeitures 3,631 (3,631) 28.05-38.14
Shares issued - (84,386) 28.05
- -----------------------------------------------------------------------------------------
Balance,
December 31, 1997 340,513 75,101
- --------------------------------------------------------------------------
Subscriptions entered into on June 1, 1998 (56,356) 56,356 51.53
Forfeitures 4,980 (4,980) 38.14-51.53
Shares issued - (72,325) 38.14
- -----------------------------------------------------------------------------------------
Balance,
December 31, 1998 289,137 54,152
- -----------------------------------------------------------------------------------------
Subscriptions entered into on June 1, 1999 (59,959) 59,959 49.78
Forfeitures 3,865 (3,865) 49.78-51.53
Shares issued - (52,829) 49.99
- -----------------------------------------------------------------------------------------
Balance,
December 31, 1999 233,043 57,417
==========================================================================
</TABLE>
PENSION PLAN
The Wilmington Trust Pension Plan is a noncontributory, 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 the Wilmington
Equity and Fixed-Income Funds (formerly the Rodney Square Strategic Equity and
Fixed-Income Funds), managed by WTC and its affiliates. Participation in the
plan was $134,381,635 and $107,976,832 at December 31, 1999 and 1998,
respectively.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In 1989, the Corporation adopted a Supplemental Executive Retirement Plan
(SERP). The plan, covering selected officers, is a nonqualified defined benefit
plan. Assumptions used in determining the net periodic pension costs are similar
to those used in determining the cost of the Corporation's pension plan. The
Corporation has invested in corporate-owned life insurance contracts to meet its
future obligations under this plan. The projected benefit obligation and the
accumulated benefit obligation exceeded the assets by $7,070,365 and $5,180,243,
respectively, at December 31, 1999, and $7,041,116 and $5,129,116, respectively,
at December 31, 1998.
52
<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.
52A
<PAGE>
Information with respect to the pension, SERP, and post-employment benefit
plans is as follows:
<TABLE>
<CAPTION>
Pension/SERP benefits Post-employment benefits
----------------------- ------------------------
(in thousands) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Net benefit obligation at beginning of year $106,256 $ 88,639 $ 30,162 $ 26,657
Service cost 4,029 3,052 586 559
Interest cost 7,240 6,796 2,017 1,906
Plan participants' contributions - - 89 69
Actuarial (gain)/loss (11,887) 12,023 (849) 2,993
Gross benefits paid (5,204) (4,254) (2,196) (2,022)
- ----------------------------------------------------------------------------------------------------------
Net benefit obligation at end of year $100,434 $106,256 $ 29,809 $ 30,162
==========================================================================================================
Change in plan assets:
Fair value of plan assets at beginning of year $101,222 $103,880 $ - $ -
Actual return on plan assets 9,267 1,208 - -
Employer contribution 430 388 2,107 1,953
Plan participants' contributions - - 89 69
Gross benefits paid (5,204) (4,254) (2,196) (2,022)
- ----------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $105,715 $101,222 $ - $ -
==========================================================================================================
Funded status at end of year $ 5,281 $(5,034) $(29,809) $(30,162)
Unrecognized net actuarial (gain)/loss (16,789) (4,555) 2,131 2,980
Unrecognized net transition obligation/(asset) (3,719) (4,470) - -
Unrecognized prior service cost 6,645 7,469 - -
- ----------------------------------------------------------------------------------------------------------
Net amount recognized at end of year $(8,582) $ (6,590) $(27,678) $(27,182)
==========================================================================================================
Amounts recognized in the
Consolidated Statements of Condition consist of:
Accrued benefit cost $(8,582) $ (6,590) $(27,678) $(27,182)
Accrued benefit liability (1,395) (1,917) - -
Intangible asset 797 916 - -
- ----------------------------------------------------------------------------------------------------------
Other 598 1,001 - -
Net amount recognized at end of year $(8,582) $(6,590) $(27,678) $(27,182)
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Pension/SERP benefits Post-employment benefits
-------------------------------- -------------------------------
(in thousands, except percentages) 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Weighted-average assumptions used were
as follows:
Discount rate 7.50% 6.75% 7.50% 7.50% 6.75% 7.50%
Expected return on plan assets 9.50 9.50 9.50
Rate of compensation increase 4.50 4.50 4.50
Components of net periodic benefit cost:
Service cost $ 4,029 $ 3,052 $ 2,424 $ 586 $ 559 $ 524
Interest cost 7,240 6,796 6,299 2,017 1,906 1,928
Expected return on plan assets (9,093) (8,440) (7,557) - - -
Amortization of transition obligation/(asset) (751) (581) (581) - - -
Amortization of prior service cost 824 663 635 - - -
Recognized actuarial (gain)/loss 192 (93) (69) - - -
- -------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $2,441 $ 1,397 $ 1,151 $2,603 $2,465 $2,452
===================================================================================================================
</TABLE>
For measurement purposes, the assumed health care cost trend rate for 2000
is 4.25%. This rate is assumed to decrease to 4.0% for 2001 and remain at that
level thereafter.
A one percentage point change in the assumed health care trend rate would
have the following effect:
1% 1%
(in thousands) increase decrease
- --------------------------------------------------------------------------------
Effect on total service and interest cost components
of net periodic post-employment health care benefit cost $ 104 $ (115)
Effect on accumulated post-retirement benefit obligation
for health care benefits 1,127 (1,229)
53
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 $2,436,249,
$2,351,725, and $2,193,149 in 1999, 1998, and 1997, 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) 1999 1998 1997
- --------------------------------------------------------------------------------
Income before taxes $161,662 $171,548 $158,387
================================================================================
Income tax at statutory
rate of 35% $ 56,582 $ 60,042 $ 55,435
Tax effect of tax-exempt and
dividend income (5,152) (5,442) (6,052)
State taxes, net of federal
tax benefit 3,462 2,831 2,662
Other (527) (208) 298
- --------------------------------------------------------------------------------
Total income taxes $ 54,365 $ 57,223 $ 52,343
================================================================================
Taxes currently payable:
Federal $ 57,119 $ 54,684 $ 48,819
State 5,326 4,356 4,095
Deferred taxes (benefit):
Federal (8,080) (1,817) (571)
- --------------------------------------------------------------------------------
Total income taxes $ 54,365 $ 57,223 $ 52,343
================================================================================
Taxes from securities gains $ 436 $ 2,340 $ 9
- --------------------------------------------------------------------------------
The significant components of the deferred tax liabilities and assets at
December 31 are as follows:
(in thousands) 1999 1998
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Tax depreciation $ 3,581 $ 4,549
Prepaid VEBA costs 7,420 6,475
Automobile and equipment leases 8,605 12,753
System development costs 1,976 2,088
Market valuation on investment securities - 3,335
Partnerships 1,912 772
Other 3,100 3,738
- --------------------------------------------------------------------------------
Total deferred tax liabilities 26,594 33,710
- --------------------------------------------------------------------------------
Deferred tax assets:
Loan loss provision 26,944 25,188
OPEB obligation 9,687 9,511
Unearned fees 6,868 5,606
Pension and SERP 2,927 2,205
Market valuation on investment securities 19,564 -
Other 1,665 1,280
- --------------------------------------------------------------------------------
Total deferred tax assets 67,655 43,790
Net deferred tax assets $41,061 $10,080
================================================================================
No valuation allowance was recognized for the deferred tax assets at
December 31, 1999 and 1998.
54
<PAGE>
- --------------------------------------------------------------------------------
NOTE 16: EARNINGS PER SHARE
- --------------------------------------------------------------------------------
The following table sets forth the computation of basic and diluted net
earnings per share:
(in thousands, except per share amounts) 1999 1998 1997
- --------------------------------------------------------------------------------
Numerator:
Net income $107,297 $114,325 $106,044
- --------------------------------------------------------------------------------
Denominator:
Denominator for basic
earnings per share -
weighted-average shares 32,913 33,487 33,697
- --------------------------------------------------------------------------------
Effect of dilutive securities:
Employee stock options 470 788 769
- --------------------------------------------------------------------------------
Denominator for diluted
earnings per share -
adjusted weighted
average shares and
assumed conversions 33,383 34,275 34,466
- --------------------------------------------------------------------------------
Basic earnings per share $ 3.26 $ 3.41 $ 3.15
================================================================================
Diluted earnings per share $ 3.21 $ 3.34 $ 3.08
================================================================================
54A
<PAGE>
- --------------------------------------------------------------------------------
NOTE 17: 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>
1999 1998
----------------------------------------------------------------------------------
(in thousands, except per share amounts) Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $123,493 $118,564 $112,731 $107,388 $110,686 $115,611 $117,123 $113,519
Interest expense 60,197 55,487 51,010 49,569 51,538 56,693 56,906 54,105
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income 63,296 63,077 61,721 57,819 59,148 58,918 60,217 59,414
Provision for loan losses (4,000) (4,000) (4,500) (5,000) (5,000) (5,000) (5,000) (5,000)
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 59,296 59,077 57,221 52,819 54,148 53,918 55,217 54,414
Other income 49,516 49,031 46,083 45,579 46,078 42,569 42,999 45,585
Securities gains/(losses) 399 821 4 20 1,939 4,745 33 (31)
- ---------------------------------------------------------------------------------------------------------------------------
Net interest and other income 109,211 108,929 103,308 98,418 102,165 101,232 98,249 99,968
Other expense 81,936(1) 62,961 58,264 55,043 57,397 57,209 55,990 59,470
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 27,275 45,968 45,044 43,375 44,768 44,023 42,259 40,498
Applicable income taxes 9,806(1) 15,242 15,098 14,219 15,275 14,792 13,970 13,186
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 17,469 $ 30,726 $ 29,946 $ 29,156 $ 29,493 $ 29,231 $ 28,289 $ 27,312
===========================================================================================================================
Net income per share - basic $ 0.54 $ 0.94 $ 0.90 $ 0.88 $ 0.88 $ 0.87 $ 0.84 $ 0.82
===========================================================================================================================
Net income per share - dilute $ 0.53 $ 0.92 $ 0.89 $ 0.87 $ 0.87 $ 0.86 $ 0.82 $ 0.79
===========================================================================================================================
</TABLE>
(1) Includes a one-time write-off resulting in a net loss of $13,401,091 from
the abandonment of fixed assets and other related charges with a tax effect of
$4,822,090.
- --------------------------------------------------------------------------------
NOTE 18: SEGMENT REPORTING
- --------------------------------------------------------------------------------
For the purposes of reporting our results, we divide our business
activities into three segments: Banking, Fee-based, and Funds Management. Two
segments - Banking and Fee-based - comprise the services we provide to
customers. The other segment, Funds Management, comprises activities that are
not directly customer-related and that are undertaken primarily for the
Corporation's general purposes, including management of the investment
portfolio, funding, and interest rate risk management.
The Banking and Fee-based segments are managed separately but have
overlapping markets, customers, and systems. Because of the Corporation's
strategy to develop full relationships across a broad product array, these two
segments market separate products and services to a common base of customers.
The scope of the Banking segment includes lending, deposit taking, and
branch banking in our primary markets of Delaware, Pennsylvania, and Maryland,
along with institutional deposit-taking on a national basis. Lending activities
include commercial loans, commercial and residential mortgages, and construction
55
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
and consumer loans. Deposit products include demand checking, certificates of
deposit, negotiable order of withdrawal accounts, and various savings and money
market accounts.
The scope of the Fee-based segment includes personal trust, asset
management, mutual fund, corporate trust, and employee benefit plan services to
individuals and corporations in the United States and some 50 other countries.
Personal trust activities include trust services, private banking, estate
settlement, and tax preparation. Asset management activities include a broad
range of portfolio management services, including fixed-income, short-term cash
management, and contributions resulting from affiliations with Cramer Rosenthal
McGlynn, LLC and Roxbury Capital Management, LLC. Corporate trust activities
include custody services, trusteeships for capital leases, collateralized
securities, corporate restructurings, and bankruptcies. Results for 1998 include
expenses for opening new offices in New York and California.
The scope of the Funds Management sector encompasses revenues and expenses
not allocated to the two customer-related business segments and includes
intercompany eliminations not directly related to a segment, the Corporation's
investment portfolio activities, and nonrecurring income and expenses, which
include gains and losses on the sale of investment securities.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Corporation evaluates
performance based on profit or loss from operations before income taxes and not
including nonrecurring gains and losses. The Corporation generally accounts for
intersegment sales and transfers as if the sales or transfers were to third
parties (i.e., at current market prices). Profit or loss from infrequent events
such as the sale of a business are reported separately for each segment.
56
<PAGE>
Financial data by segment for the years 1999 through 1997 are as follows:
<TABLE>
<CAPTION>
Banking Fee-based Funds
YEAR ENDED DECEMBER 31, 1999 (in thousands) business business management Totals
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income $ 212,527 $ 23,809 $ 11,658 $ 247,994
Provision for loan losses (17,406) (94) - (17,500)
- -----------------------------------------------------------------------------------------------------------
Net interest income after provision 195,121 23,715 11,658 230,494
Trust and asset management fees:
Personal trust - 67,193 - 67,193
Corporate financial services - 47,006 - 47,006
Asset management - 34,796 - 34,796
Other operating income 40,283 2,330 928 43,541
Securities gains/(losses) 400 - 844 1,244
- -----------------------------------------------------------------------------------------------------------
Net interest and other income 235,804 175,040 13,430 424,274
Other expense (134,121)1 (123,338)1 (2,239) (259,698)
- -----------------------------------------------------------------------------------------------------------
Segment profit from operations 101,683 51,702 11,191 164,576
Segment loss from infrequent events - (726) - (726)
- -----------------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 101,683 $ 50,976 $ 11,191 $ 163,850
===========================================================================================================
Intersegment revenue $ 13,047 $ 7,383 $ 2,300 $ 22,730
Depreciation and amortization 10,492 6,821 278 17,591
Investment in equity method investees - 157,910 - 157,910
Segment average assets 4,236,601 725,803 3,305,609 8,268,013
YEAR ENDED DECEMBER 31, 1998 (in thousands)
- -----------------------------------------------------------------------------------------------------------
Net interest income $ 205,543 $ 22,919 $ 11,162 $ 239,624
Provision for loan losses (19,769) (231) - (20,000)
- -----------------------------------------------------------------------------------------------------------
Net interest income after provision 185,774 22,688 11,162 219,624
Trust and asset management fees:
Personal trust - 59,676 - 59,676
Corporate financial services - 45,120 - 45,120
Asset management - 24,674 - 24,674
Other operating income 37,591 2,646 3,141 43,378
Securities gains/(losses) 1 - 6,685 6,686
- -----------------------------------------------------------------------------------------------------------
Net interest and other income 223,366 154,804 20,988 399,158
Other expense (122,603) (96,311) (3,487) (222,401)
- -----------------------------------------------------------------------------------------------------------
Segment profit from operations 100,763 58,493 17,501 176,757
Segment loss from infrequent events - (1,988) - (1,988)
- -----------------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 100,763 $ 56,505 $ 17,501 $ 174,769
===========================================================================================================
Intersegment revenue $ 7,046 $ 4,712 $ 1,530 $ 13,288
Depreciation and amortization 8,819 6,077 234 15,130
Investment in equity method investees - 132,826 - 132,826
Segment average assets 3,868,716 577,413 2,964,571 7,410,700
YEAR ENDED DECEMBER 31, 1997 (in thousands)
- -----------------------------------------------------------------------------------------------------------
Net interest income $ 192,565 $ 23,476 $ 15,876 $ 231,917
Provision for loan losses (21,410) (90) - (21,500)
- -----------------------------------------------------------------------------------------------------------
Net interest income after provision 171,155 23,386 15,876 210,417
Trust and asset management fees:
Personal trust - 53,770 - 53,770
Corporate financial services - 40,958 - 40,958
Asset management - 16,472 - 16,472
Other operating income 37,186 1,518 2,789 41,493
Securities gains/(losses) (4) - 31 27
- -----------------------------------------------------------------------------------------------------------
Net interest and other income 208,337 136,104 18,696 363,137
Other expense (114,159) (84,607) (2,467) (201,233)
- -----------------------------------------------------------------------------------------------------------
Segment profit from operations 94,178 51,497 16,229 161,904
Segment loss from infrequent events - (281) - (281)
- -----------------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 94,178 $ 51,216 $ 16,229 $ 161,623
===========================================================================================================
Intersegment revenue $ 4,651 $ 4,162 $ 1,029 $ 9,842
Depreciation and amortization 7,083 4,924 43 12,050
Segment average assets 3,724,242 435,373 2,364,622 6,524,237
</TABLE>
1 Includes allocated portions of the one-time write-off of $13,401,091 from the
abandonment of fixed assets and other charges.
57
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WILMINGTON TRUST CORPORATION AND
SUBSIDIARIES 1999 ANNUAL REPORT
- --------------------------------------------------------------------------------
A reconciliation of reportable segment amounts to the consolidated balances
is as follows:
Year ended December 31
(in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Revenue:
Total revenues for
reportable segments $ 247,898 $ 239,824 $ 232,164
Other revenues 193,780 186,822 161,788
Elimination of
intersegment
revenues (4,312) (5,032) (6,394)
- --------------------------------------------------------------------------------
Total consolidated
revenues before
provision $ 437,366 $ 421,614 $ 387,558
- --------------------------------------------------------------------------------
Profit or loss:
Total profit or loss for
reportable segments $ 163,850 $ 174,769 $ 161,623
Elimination of
intersegment profits (2,188) (3,221) (3,236)
$ 161,662 $ 171,548 $ 158,387
================================================================================
Assets, on average:
Total assets for
reportable segments $ 8,268,013 $ 7,410,700 $ 6,524,237
Other assets 223,201 207,885 168,536
Elimination of
intersegment assets (1,802,149) (1,373,184) (1,021,855)
Other assets not
allocated to segments - 7,038 9,069
- --------------------------------------------------------------------------------
Consolidated total
average assets $ 6,689,065 $ 6,252,439 $ 5,679,987
================================================================================
- --------------------------------------------------------------------------------
NOTE 19: 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) 1999 1998
- --------------------------------------------------------------------------------
Assets
Cash and due from banks $ 3,784 $ 23
Investment in subsidiaries 539,362 567,063
Investment securities available for sale 134 24,063
Advance to subsidiary 84,000 79,682
Dividend receivable from subsidiary 20,000 -
Income taxes receivable 4,973 414
Other assets 2,342 1,980
- --------------------------------------------------------------------------------
Total assets $654,595 $673,225
================================================================================
Liabilities and stockholders' equity
Liabilities $ 6,364 $ 2,016
Other borrowings 25,000 -
Long-term debt 125,000 125,000
Stockholders' equity 498,231 546,209
- --------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $654,595 $673,225
================================================================================
58
<PAGE>
STATEMENTS OF INCOME
For the year ended December 31
(in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Income
Dividend from subsidiary $123,350 $ 93,765 $ 86,989
Management fees from
subsidiary - 19 113
Interest on advance
to subsidiary 5,594 2,047 -
Interest 194 1,554 275
- --------------------------------------------------------------------------------
Total income 129,138 97,385 87,377
- --------------------------------------------------------------------------------
Expense
Interest on other borrowings 468 - -
Interest on long-term debt 8,281 5,452 -
Salaries and employment
benefits - 84 197
Net occupancy - 1 6
Stationery and supplies - - 1
Other operating expense 1,065 1,114 1,055
- --------------------------------------------------------------------------------
Total expense 9,814 6,651 1,259
- --------------------------------------------------------------------------------
Income before income tax
benefit and equity in
undistributed income
of subsidiaries 119,324 90,734 86,118
Applicable income
tax benefit (1,287) (1,039) (278)
Dividends in excess of
subsidiary income (13,314) - -
Equity in undistributed
income of subsidiaries - 22,552 19,648
- --------------------------------------------------------------------------------
Net income $107,297 $114,325 $106,044
================================================================================
58A
<PAGE>
- --------------------------------------------------------------------------------
WILMINGTON TRUST CORPORATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the year ended December 31 (in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $107,297 $114,325 $106,044
Adjustments to reconcile net income to net cash provided
by operating activities:
Dividends in excess of subsidiary income 13,314 - -
Equity in undistributed income of subsidiaries - (22,552) (19,648)
Accretion of investment securities available for sale discounts (8) (644) -
(Increase)/decrease in other assets (24,921) (2,055) 700
Increase in other liabilities 4,348 1,420 140
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 100,030 90,494 87,236
- -----------------------------------------------------------------------------------------------------------
Investing activities
Proceeds from sales of investment securities available for sale 58,509 253,812 16,868
Purchases of investment securities available for sale (34,571) (259,980) (27,841)
Capital contribution to subsidiaries (26,338) (5,000) (2,000)
Advance to subsidiary (10,318) (79,682) -
Repayment of advance to subsidiary 6,000 - -
Purchase of indirect subsidiary - (55,100) -
- -----------------------------------------------------------------------------------------------------------
Net cash used for investing activities (6,718) (145,950) (12,973)
- -----------------------------------------------------------------------------------------------------------
Financing activities
Cash dividends (54,361) (51,233) (47,546)
Proceeds from issuance of long-term debt - 125,000 -
Proceeds from line of credit 25,000 - -
Proceeds from common stock issued under employment benefit plans 14,701 13,029 9,203
Payments for common stock acquired through buybacks (74,891) (31,343) (35,911)
- -----------------------------------------------------------------------------------------------------------
Net cash (used for)/provided by financing activities (89,551) 55,453 (74,254)
- -----------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents 3,761 (3) 9
Cash and cash equivalents at beginning of year 23 26 17
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 3,784 $ 23 $ 26
===========================================================================================================
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
WILMINGTON TRUST CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
- --------------------------------------------------------------------------------
The management of Wilmington Trust Corporation (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 accounting principles generally accepted in the United States 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 to audit the
financial statements in accordance with auditing standards generally accepted in
the United States 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/ David R. Gibson
Ted T. Cecala David R. Gibson
Chairman and Chief Executive Senior Vice President and
Officer Chief Financial Officer
/s/ Robert V. A. Harra Jr.
Robert V. A. Harra Jr.
President, Chief Operating
Officer and Treasurer
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To The Board of Directors and Shareholders Wilmington Trust Corporation
We have audited the accompanying consolidated statements of condition of
Wilmington Trust Corporation and subsidiaries (Corporation) as of December 31,
1999 and 1998, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1999. 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 auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 24, 2000
60
<PAGE>
- --------------------------------------------------------------------------------
WILMINGTON TRUST CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
CAROLYN S. BURGER
Principal, CB Associates, Inc.; Director,
PJM Interconnection, L.L.C.
TED T. CECALA
Chairman and Chief Executive Officer;
Member, Board of Managers,
Cramer Rosenthal McGlynn, LLC and
Roxbury Capital Management, LLC
RICHARD R. COLLINS
Retired President and Chief Operating Officer,
American Life Insurance Company
CHARLES S. CROMPTON JR.
Attorney, Counsel, Law Firm of Potter,
Anderson and Corroon
H. STEWART DUNN JR.
Attorney, Partner, Law Firm of Ivins,
Phillips and Barker
EDWARD B. DU PONT
Private Investor; Director,
E. I. du Pont de Nemours and Company
R. KEITH ELLIOTT
Director, Chairman, Hercules Incorporated;
Director, PECO Energy and Computer Task Group
ROBERT C. FORNEY1
Retired Executive Vice President and Director,
E. I. du Pont de Nemours and Company
ROBERT V. A. HARRA JR.
President, Chief Operating Officer, and Treasurer
ANDREW B. KIRKPATRICK JR.
Attorney, Counsel, Law Firm of
Morris, Nichols, Arsht and Tunnell
REX L. MEARS
President, Ray L. Mears and Sons, Inc.
WALTER D. MERTZ2
Retired Senior Vice President
HUGH E. MILLER
Retired Vice Chairman, ICI Americas Incorporated;
Chairman and Director, MGI PHARMA, Inc.
STACEY J. MOBLEY
Senior Vice President, General Counsel, and
Chief Administrative Officer,
E. I. du Pont de Nemours and Company
G. BURTON PEARSON JR.2,3
Retired Senior Vice President
LEONARD W. QUILL
Retired Chairman of the Board
DAVID P. ROSELLE
President, University of Delaware
H. RODNEY SHARP III
Retired Manager,
E. I. du Pont de Nemours and Company; Director,
E. I. du Pont de Nemours and Company
THOMAS P. SWEENEY
Attorney, Member, Law Firm of
Richards, Layton and Finger, P.A.
MARY JORNLIN THEISEN
Former New Castle County Executive
61
<PAGE>
ROBERT W. TUNNELL JR.
Managing Partner, Tunnell Companies, L.P.
1 Retired from the Board on May 20, 1999
2 Associate Director
3 Deceased December 7, 1999
61A
<PAGE>
- --------------------------------------------------------------------------------
WILMINGTON TRUST CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OFFICERS
- --------------------------------------------------------------------------------
TED T. CECALA
Chairman and
Chief Executive Officer
ROBERT V. A. HARRA JR.
President, Chief Operating Officer,
and Treasurer
DAVID R. GIBSON
Senior Vice President
and Chief Financial Officer
WILLIAM J. FARRELL II
Senior Vice President
THOMAS P. COLLINS
Vice President, Legal, and Secretary
RONALD K. PENDLETON
Auditor
- --------------------------------------------------------------------------------
STANDING COMMITTEES
- --------------------------------------------------------------------------------
EXECUTIVE COMMITTEE
Ted T. Cecala, CHAIRMAN
Carolyn S. Burger, Charles S. Crompton Jr.,
Robert V. A. Harra Jr., Hugh E. Miller,
Thomas P. Sweeney
AUDIT COMMITTEE
David P. Roselle, CHAIRMAN
Richard R. Collins, R. Keith Elliott,
Mary Jornlin Theisen, Robert W. Tunnell Jr.
COMPENSATION COMMITTEE
Hugh E. Miller, CHAIRMAN
Richard R. Collins, Charles S. Crompton Jr.,
Stacey J. Mobley, David P. Roselle
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Rex L. Mears, CHAIRMAN
Carolyn S. Burger, H. Stewart Dunn Jr.,
R. Keith Elliott, Thomas P. Sweeney
- --------------------------------------------------------------------------------
OPERATING SUBSIDIARIES
- --------------------------------------------------------------------------------
WILMINGTON TRUST COMPANY
Brandywine Finance Corporation
Brandywine Insurance Agency, Inc.
Brandywine Life Insurance Company, Inc.
Delaware Corporate Management, Inc.
Organization Services, Inc.
Rodney Square Management Corporation
WTC Corporate Services, Inc.
Wilmington Brokerage Services Company
Wilmington Trust Global Services, Ltd.
WILMINGTON TRUST OF PENNSYLVANIA
WILMINGTON TRUST FSB
WT INVESTMENTS, INC.
62
<PAGE>
- --------------------------------------------------------------------------------
WILMINGTON TRUST COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRINCIPAL OFFICERS
- --------------------------------------------------------------------------------
TED T. CECALA
Chairman and
Chief Executive Officer
ROBERT V. A. HARRA JR.
President, Chief Operating Officer,
and Treasurer
ROBERT J. CHRISTIAN
Senior Vice President and Chief Investment Officer,
Asset Management
HOWARD K. COHEN
Senior Vice President,
Corporate Financial Services
WILLIAM J. FARRELL II
Senior Vice President, Information Technology,
Trust Operations, and Systems Development
DAVID R. GIBSON
Senior Vice President, Finance and Administration,
and Chief Financial Officer
HUGH D. LEAHY JR.
Senior Vice President,
Personal Banking
ROBERT A. MATARESE
Senior Vice President,
Commercial Banking
RITA C. TURNER
Senior Vice President,
Marketing
RODNEY P. WOOD
Senior Vice President,
Private Client
Advisory Services
THOMAS P. COLLINS
Vice President, Legal,
and Secretary
RONALD K. PENDLETON
Auditor
- --------------------------------------------------------------------------------
MILESTONES
- --------------------------------------------------------------------------------
Long-time director Robert C. Forney retired from the Wilmington Trust
Corporation Board of Directors in May 1999. During his 24 years of service, Mr.
Forney provided invaluable counsel and contributed in a number of capacities. He
served on the Executive Committee and chaired the Compensation Committee. We
thank him for his commitment, dedication, and insight.
Sadly, we noted the passing on December 7 of one of our associate
directors, The Hon. George Burton Pearson Jr. A former Vice Chancellor in
Delaware's Court of Chancery, Judge Pearson joined our trust department in 1949.
In 1966, he was named chairman of the Trust Committee, on which he actively
participated until his death. We will long remember his vivacity,
inquisitiveness, and keen sense of humor.
63
<PAGE>
STOCKHOLDER INFORMATION
Corporate Headquarters
Wilmington Trust Center
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
(302) 651-1000
(800) 441-7120
www.wilmingtontrust.com
COMMON STOCK
Wilmington Trust Corporation common stock is traded under the symbol WL on the
New York Stock Exchange.
DIVIDENDS
Dividends usually are declared in the first month on each quarter to
stockholders of record as of a designated date in each of 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
Please note that as a reuslt of its merger with Wells Fargo, Norwest Shareowner
Services intends to change its name to Wells Fargo Shareowner Services in
mid-2000.
DIVIDEND REINVESTMENT AND VOLUNTARY STOCK PURCHASE PLAN
The Corporation offers a plan under which participating stockholders can
purchase aditional shares of the Corporation's 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. The Corporation 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 the Corporation's stockholders will be held at the
Wilmington Trust Plaza, 301 West 11th Street, Wilmington, Delaware, at 10:00
a.m. on Thursday, May 11, 2000.
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 Ellen J. Roberts, Vice
President, Media and Investor Relations, (302) 651-8069.
* This annual report was printed on recycled paper.
Design by Addison www.addison.com
Major photography by William Vasquez
Printing by Cedar Tree Press
64
<PAGE>
[PHOTO OF TREE.]
<PAGE>
BACK COVER
[WILMINGTON TRUST LOGO] WILMINGTON TRUST
WILMINGTON TRUST CORPORATION
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON, DE 19890-0001
(302) 651-1000
(800) 441-7120
www.wilmingtontrust.com
CALIFORNIA
Santa Monica
DELAWARE
48 offices throughout the state
FLORIDA
North Palm Beach,
Stuart, Vero Beach
MARYLAND
Easton and Salisbury
NEVADA
Las Vegas
NEW YORK
Midtown Manhattan
PENNSYLVANIA
Villanova, Haverford, Lionville, Media, Philadelphia, West Chester
ENGLAND
London
SUBSIDIARIES OF WILMINGTON TRUST CORPORATION
EXHIBIT 21
<PAGE>
Wilmington Trust Corporation has four direct subsidiaries, Wilmington
Trust Company, a Delaware-chartered bank and trust company, Wilmington Trust of
Pennsylvania, a Pennsylvania-chartered bank and trust company, Wilmington Trust
FSB, a Federally-chartered savings bank headquartered in Maryland, and WT
Investments, Inc., a Delaware holding company. Wilmington Trust Company has the
following active direct 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-VIII, Ltd. Delaware
6. Delaware Corporate Management, Inc. Delaware
7. 100 West Tenth Street Corporation Delaware
8. Rodney Square Management Corporation Delaware
9. Siobain VI, Ltd. Delaware
10. WTC Corporate Services, Inc. Delaware
11. Wilmington Brokerage Services Company Delaware
12. Wilmington Trust Global Services, Ltd. Delaware
Delaware Corporate Management, Inc. has two wholly-owned subsidiaries,
Special Services Delaware, Inc., and Organizational Services, Inc., both
incorporated in Delaware, and one wholly-owned subsidiary, Nevada Corporate
Management, Inc., incorporated in Nevada.
Organization Services, Inc. has two wholly-owned subsidiaries,
Organizational Services Overseas, Inc. and Custody Services Limited, both
incorporated in Delaware.
CONSENT OF INDEPENDENT AUDITORS
EXHIBIT 23
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form 10-K
of Wilmington Trust Corporation of our report dated January 24, 2000, included
in the 1999 Annual Report to Shareholders of Wilmington Trust Corporation.
Philadelphia, Pennsylvania
March 29, 2000
/s/ Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CORPORATION'S FORM
10-K FOR THE PERIOD
ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000872821
<NAME> WILMINGTON TRUST CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 225,145
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 129,760
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,686,267
<INVESTMENTS-CARRYING> 31,232
<INVESTMENTS-MARKET> 31,150
<LOANS> 4,820,079
<ALLOWANCE> 76,925
<TOTAL-ASSETS> 7,201,944
<DEPOSITS> 5,369,484
<SHORT-TERM> 1,090,858
<LIABILITIES-OTHER> 75,371
<LONG-TERM> 168,000
0
0
<COMMON> 39,264
<OTHER-SE> 458,967
<TOTAL-LIABILITIES-AND-EQUITY> 7,201,944
<INTEREST-LOAN> 367,063
<INTEREST-INVEST> 93,547
<INTEREST-OTHER> 1,566
<INTEREST-TOTAL> 462,176
<INTEREST-DEPOSIT> 147,494
<INTEREST-EXPENSE> 216,263
<INTEREST-INCOME-NET> 245,913
<LOAN-LOSSES> 17,500
<SECURITIES-GAINS> 1,244
<EXPENSE-OTHER> 258,204
<INCOME-PRETAX> 161,662
<INCOME-PRE-EXTRAORDINARY> 107,297
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,297
<EPS-BASIC> 3.26
<EPS-DILUTED> 3.21
<YIELD-ACTUAL> 4.11
<LOANS-NON> 29,184
<LOANS-PAST> 16,520
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 48,830
<ALLOWANCE-OPEN> 71,906
<CHARGE-OFFS> 16,500
<RECOVERIES> 4,019
<ALLOWANCE-CLOSE> 76,925
<ALLOWANCE-DOMESTIC> 63,453
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 13,472
</TABLE>
