1
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, 2000
[ ] 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890
-------------------------------------------------------------------------
(Address of principal executive offices)(Zip Code)
(302) 651-1000
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Name of each exchange on which registered:
Section 12(b) of the Act:
Title of each class
Common Stock, $1.00 Par Value New York Stock Exchange
----------------------------- -----------------------
(Title of class)
2
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 January 31, 2001, the aggregate market value of voting and
non-voting stock held by non-affiliates* of the registrant was $ 1,491,882,055.
Indicate the number of shares outstanding of the registrant's class of common
stock, as of the latest practicable date.
Class Outstanding at January 31, 2001
-------------------------- -------------------------------
Common Stock, $1 Par Value 32,419,303
Documents Incorporated Part of Form 10-K in which
by Reference Incorporated
-------------------------- -------------------------------
--------------------------
(1) Portions of Proxy Statement for 2001 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, 2000
*For purposes of this calculation, Wilmington Trust's subsidiaries and its
directors and executive officers are deemed to be "affiliates."
3
TABLE OF CONTENTS
PART I
Item 1 Business...............................................................................1
Item 2 Properties............................................................................24
Item 3 Legal Proceedings.....................................................................24
Item 4 Submission of Matters to a Vote of Security Holders...................................25
PART II
Item 5 Market for Registrant's Common Stock and Related
Stockholder Matters...................................................................25
Item 6 Selected Financial Data...............................................................26
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operation....................................................27
Item 7A Qualitative and Quantitative Disclosure About Market Risk.............................27
Item 8 Financial Statements and Supplementary Data...........................................27
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................................................28
PART III
Item 10 Directors and Executive Officers of the Registrant....................................28
Item 11 Executive Compensation................................................................28
Item 12 Security Ownership of Certain Beneficial Owners and
Management............................................................................28
Item 13 Certain Relationships and Related Transactions........................................28
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K...........................................................................29
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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 45 branch offices at
January 31, 2001. Wilmington Trust also owns two other financial institutions,
Wilmington Trust of Pennsylvania, a Pennsylvania-chartered bank and trust
company with five branches ("WTPA"), and Wilmington Trust FSB, a
Federally-chartered savings bank with one branch in Maryland, three branches and
a sales office in Florida and trust agency offices in New York, California, and
Nevada ("WTFSB"). (WTC, WTPA, and WTFSB sometimes are referred to herein as the
"Banks"). Wilmington Trust also owns Rodney Square Management Corporation, a
registered investment adviser ("RSMC"), and 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',
RSMC's, 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, 2000, Wilmington Trust had total assets of $7.3
billion and total shareholders' equity of $591.9 million. On that date,
32,393,318 shares of Wilmington Trust's common stock were issued and
outstanding, which were held by 9,189 shareholders of record. Wilmington Trust's
total loans outstanding were approximately $5.2 billion on that date.
Personal Trust Activities
-------------------------
Wilmington Trust is one of the nation's largest personal trust
institutions, serving a client base that is national in scope. It offers trust
administration, investment management, private banking, custody, estate and
financial planning, and estate settlement services for its personal trust
clients. A staff of attorneys is available to work with the advisors of those
clients. Wilmington Trust's offices in Delaware, Pennsylvania, Maryland,
Florida, New York, California, Nevada, London, Jersey, and the Cayman Islands
provide convenient access to customers in these key markets.
Corporate Trust Activities
--------------------------
Wilmington Trust is a major provider of trust and administrative
services for customers who benefit from Delaware's and Nevada's favorable tax
and legal environments. These customers include passive investment companies,
business trusts, limited liability companies, and limited partnerships.
Wilmington Trust serves as the owner or indenture trustee for a variety of
corporate,
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municipal and derivative securities, including those secured by mortgage-backed
collateral, residential and commercial mortgage loans, leases, credit card
receivables, franchises, timeshares and many other assets included in innovative
financing structures. Wilmington Trust participates as owner or indenture
trustee for equipment leasing trusts involving aircraft, power generating
facilities, communication lines, satellites, and vessels. It also serves as
collateral or liquidating trustee in corporate debt restructurings,
reorganizations, and mergers. These afford the opportunity to cross-sell
Wilmington Trust's custody and asset management services. In addition,
Wilmington Trust provides trust and custody services for a variety of
tax-qualified employee benefit plans, including defined benefit plans, 401(k)
plans, and executive compensation arrangements.
Asset Management
----------------
Wilmington Trust provides investment advisory services for individual
and institutional 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 the following
portfolios:
- The Wilmington Prime Money Market Portfolio and the Wilmington
U.S. Government Portfolio, which seek high current income
while preserving capital and liquidity by investing in money
market instruments;
- The Wilmington Tax-Exempt Portfolio, which seeks high current
interest income exempt from Federal income tax;
- The Wilmington Short/Intermediate Bond Portfolio and the
Wilmington Intermediate Bond Portfolio, which seek high total
return, consistent with high current income, by investing
principally in various types of investment-grade, fixed-income
securities;
- The Wilmington Municipal Bond Portfolio, which seeks a high
level of income exempt from Federal income tax, consistent
with the preservation of capital;
- The Wilmington Large Cap Growth Portfolio, which seeks
long-term growth of capital by investing in large-cap U.S.
equity securities;
- The Wilmington Large-Cap Core Portfolio, which seeks to
achieve long-term capital appreciation by investing in
large-cap U.S. equity securities;
- The Wilmington Large-Cap Value Portfolio, which seeks to
achieve long-term capital appreciation by investing in
large-cap U.S. equity securities;
- The Wilmington Small-Cap Core Portfolio, which seeks superior
long-term growth of capital by investing in small-cap U.S.
equity securities; and
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- The Wilmington International Multi-Manager Portfolio, which
seeks superior long-term capital appreciation by investing in
equity securities of issuers located outside the United
States.
WTI holds a 56.5% equity interest in Cramer Rosenthal McGlynn, LLC
("CRM"), an asset management firm with $3.4 billion under management at December
31, 2000 and a value orientation. CRM's capabilities also include special
equity, limited partnerships, and high-yield investments. WTI also holds a 30%
profit interest and an 8.2% equity interest in California-based Roxbury Capital
Management, LLC, an asset management firm with a growth orientation and $11.3
billion under management at December 31, 2000.
Through its personal investment centers, Wilmington Trust offers
investment services throughout the Banks' branches.
As of December 31, 2000, Wilmington Trust in the aggregate had assets
of $94.4 billion under trust, custody, and administration. Of that total,
Wilmington Trust manages approximately $26.8 billion in discretionary assets.
Personal trust assets that Wilmington Trust manages totaled $17.5 billion.
Lending Activities
------------------
The Banks historically have concentrated the lending activities
described below in Delaware, Pennsylvania, Maryland, Florida, and New York. 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 conventional residential first
mortgage loans. A third-party servicer generally services residential mortgage
loans that are not resold. The Banks provide financing for jumbo residential
first mortgage loans through a third-party lender.
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 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:
- Limiting the size of their individual commercial and
multi-family real estate loans;
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- Monitoring the aggregate size of their commercial and
multi-family housing loan portfolios;
- Generally requiring equity in the property securing
the loan equal to a certain percentage of the
appraised value or selling price;
- Requiring in most instances that the financed project
generates cash flow adequate to meet required debt
service payments; and
- 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 24 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. Accordingly, the Banks engage several individuals
experienced in underwriting in connection with their construction lending.
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 newspaper advertising and direct mail. Consumer
loans generally have shorter terms and higher interest rates than residential
first mortgage loans. Through their consumer lending, the Banks attempt to
enhance the spread between their average loan yields and their cost of funds,
and their matching of assets and liabilities expected to mature or reprice in
the same periods.
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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:
- Inspecting each property before issuing a loan
commitment and before each disbursement;
- Requiring an appraisal of the property;
- Requiring recourse to the borrower; and
- Requiring the personal guaranty of the borrower's
principal(s).
The Banks monitor the performance of these loans by inspecting the property
securing each loan.
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 Banks monitor the
performance of these loans and other loans by reviewing each one at least
annually.
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 borrower'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.
The Banks' deposit accounts include demand checking accounts, term
certificates of deposit, money market deposit accounts, NOW accounts, and
regular savings accounts. The Banks also offer retirement plan accounts
(including individual retirement accounts, Keogh accounts, and
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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, 2000, the Banks' investment
securities, including securities purchased under agreements to resell, totaled
$1.5 billion, or 20.6% 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 2000.
Subsidiaries
------------
WTC has 18 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:
- Brandywine Finance Corporation, a finance company;
- Brandywine Insurance Agency, Inc., a licensed
insurance agent and broker for life, casualty, and
property insurance;
- Brandywine Life Insurance Company, Inc., a reinsurer
of credit life insurance written in connection with
closed-end consumer loans WTC makes;
- Delaware Corporate Management, Inc. and Organization
Services, Inc., which provide services for special
purpose entities using Delaware's favorable tax and
legal environment;
- Nevada Corporate Management, Inc., which provides
services for special purpose entities using Nevada's
favorable tax and legal environment;
- WTC Corporate Services, Inc., a sales production
company for corporate trust customers;
- Wilmington Brokerage Services Company, a registered
broker-dealer and a registered investment adviser;
- Wilmington Trust Global Services, Ltd., a sales
production company for corporate trust customers;
- Wilmington Trust (Cayman), Ltd., a trust company; and
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- Wilmington Trust (Channel Islands), Ltd., a trust
company.
Staff Members
----- -------
On December 31, 2000, Wilmington Trust and its subsidiaries had 2,299
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
---- -------
- 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
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.
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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.
- 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.
- 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."
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Industry Guide 3 Tables
The following table presents a rate/volume analysis of net interest income:
--------------------------------------------------------------------------------
2000/1999 1999/1998
Increase Increase
(Decrease) (Decrease)
due to due to
change in change in
--------------------------------------------------------------------------------
1 2 1 2
(in thousands) Volume Rate Total Volume Rate Total
-----------------------------------------------------------------------------------------------------------------------------------
Interest income:
Time deposits in other banks $ -- $ -- $ -- $ -- $ -- $ --
Federal funds sold and securities
purchased under agreements to resell (99) 343 244 24 (123) (99)
-----------------------------------------------------------------------------------------------------------------------------------
Total short-term investments (99) 343 244 24 (123) (99)
--------------------------------------------------------------------------------
U.S. Treasury and government agencies 110 1,292 1,402 (1,713) (3,502) (5,215)
State and municipal * (7) (51) (58) (180) (12) (192)
Preferred stock * (2,678) 1,300 (1,378) 1,243 (811) 432
Asset-backed securities (1,315) (135) (1,450) 1 (1,529) (1,528)
Other * 3,739 2,213 5,952 1,484 81 1,565
-----------------------------------------------------------------------------------------------------------------------------------
Total investment securities (151) 4,619 4,468 835 (5,773) (4,938)
--------------------------------------------------------------------------------
Commercial, financial, and agricultural * 12,424 12,141 24,565 13,587 (7,409) 6,178
Real estate-construction 8,196 2,902 11,098 8,239 (1,417) 6,822
Mortgage - commercial * 5,325 325 5,650 (778) (5,045) (5,823)
Mortgage - residential 5,858 432 6,290 4,512 (5,830) (1,318)
Installment loans to individuals 11,476 3,876 15,352 6,888 (2,922) 3,966
-----------------------------------------------------------------------------------------------------------------------------------
Total loans 43,279 19,676 62,955 32,448 (22,623) 9,825
-----------------------------------------------------------------------------------------------------------------------------------
Total interest income $ 43,029 $ 24,638 $ 67,667 $ 33,307 $(28,519) $ 4,788
================================================================================
Interest expense:
Savings $ (564) $ (976) $ (1,540) $ 119 $ (1,896) $ (1,777)
Interest-bearing demand (1,080) 678 (402) 3,903 (5,033) (1,130)
Certificates under $100,000 (7,841) (525) (8,366) (3,855) (5,159) (9,014)
Certificates $100,000 and over 38,523 16,491 55,014 7,993 (2,314) 5,679
-----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 29,038 15,668 44,706 8,160 (14,402) (6,242)
--------------------------------------------------------------------------------
Federal funds purchased and securities
sold under agreements to repurchase 1 13,561 13,562 4,073 (3,794) 279
U.S. Treasury demand 405 379 784 (660) 129 (531)
-----------------------------------------------------------------------------------------------------------------------------------
Total short-term borrowings 406 13,940 14,346 3,413 (3,665) (252)
--------------------------------------------------------------------------------
Long-term debt -- -- -- 2,523 992 3,515
-----------------------------------------------------------------------------------------------------------------------------------
Total interest expense $ 29,444 $ 29,608 $ 59,052 $ 14,096 $(17,075) $ (2,979)
=================================================================================
Changes in net interest income $ 8,615 $ 7,767
======= ========
-----------------------------
* 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.
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.
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The maturity distribution of Wilmington Trust's investment securities held to
maturity follows:
----------------------------------------------------------
Market Amortized Weighted
December 31, 2000 (in thousands) Value Cost Average Yield
-----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury and government agencies:
After 1 but within 5 years $ 9,984 $10,000 6.03%
After 10 years 997 1,003 6.32
----------------------------------------------------------------------------------------------------------------------------------
Total 10,981 11,003 6.06
----------------------------------------------------------------------------------------------------------------------------------
State and municipals:
Within 1 year 1,328 1,324 5.82
After 1 but within 5 years 586 585 6.70
After 5 but within 10 years 2,837 2,690 6.02
After 10 years 2,162 2,041 6.10
----------------------------------------------------------------------------------------------------------------------------------
Total 6,913 6,640 6.06
----------------------------------------------------------------------------------------------------------------------------------
Asset-backed securities:
After 1 but within 5 years 131 130 8.43
After 5 but within 10 years 2,059 2,065 5.71
After 10 years -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Total 2,190 2,195 5.87
----------------------------------------------------------------------------------------------------------------------------------
Other:
After 10 years 900 900 3.53
----------------------------------------------------------------------------------------------------------------------------------
Total 900 900 3.53
Total investment securities held to maturity $20,984 $20,738 5.93%
===================================================================================================================================
----------------------------
* There were no other securities held to maturity as of December 31, 1999 and
1998.
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.
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The maturity distribution of Wilmington Trust's investment securities available
for sale follows:
Market Amortized Weighted
December 31, 2000 Value Cost Average Yield
-----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury and government agencies:
Within 1 year $ 103,424 $ 103,028 6.14 %
After 1 but within 5 years 365,643 363,948 5.65
After 5 but within 10 years 226,318 226,856 6.28
After 10 years 183,547 184,435 6.02
----------------------------------------------------------------------------------------------------------------------------------
Total 878,932 878,267 5.96
----------------------------------------------------------------------------------------------------------------------------------
State and municipals:
Within 1 year 67 65 7.80
After 5 but within 10 years 80 80 7.25
After 10 years 11,629 11,298 4.98
----------------------------------------------------------------------------------------------------------------------------------
Total 11,776 11,443 5.01
----------------------------------------------------------------------------------------------------------------------------------
Preferred stock:
Within 1 year 17,660 17,650 9.27
After 1 but within 5 years 26,844 28,614 7.56
After 5 but within 10 years 55,959 60,463 8.26
-----------------------------------------------------------------------------------------------------------------------------------
Total 100,463 106,727 8.25
-----------------------------------------------------------------------------------------------------------------------------------
Asset-backed securities:
Within 1 year -- -- --
After 1 but within 5 years -- -- --
After 5 but within 10 years 6,012 5,988 6.40
After 10 years 287,137 287,357 6.20
-----------------------------------------------------------------------------------------------------------------------------------
Total 293,149 293,345 6.21
-----------------------------------------------------------------------------------------------------------------------------------
Other:
Within 1 year 40,966 40,728 5.16
After 1 but within 5 years 29,996 29,677 6.94
After 5 but within 10 years 505 500 7.50
After 10 years 84,278 86,298 7.52
----------------------------------------------------------------------------------------------------------------------------------
Total 155,745 157,203 7.17
----------------------------------------------------------------------------------------------------------------------------------
Total investment securities available for sale $1,440,065 $1,446,985 6.30 %
====================================================================================================================================
-----------------------
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.
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The following is a summary of period-end loan balances by loan category:
December 31 (in thousands) 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
Commercial, financial, and
agricultural 1,622,654 $ 1,521,336 $ 1,370,566 $ 1,207,930 $ 1,237,061
Real estate-construction 372,702 303,734 211,733 145,097 123,111
Mortgage-commercial 990,433 919,297 869,442 884,146 862,974
Mortgage-residential 925,938 968,259 857,626 813,116 678,800
Installment loans to
individuals 1,277,291 1,108,945 1,015,056 954,486 881,994
----------------------------------------------------------------------------------------------------------------------------------
Total loans, gross 5,189,018 4,821,571 4,324,423 4,004,775 3,783,940
Less: unearned income (609) (1,492) (4,790) (10,840) (12,456)
-----------------------------------------------------------------------------------------------------------------------------------
Total loans $ 5,188,409 $ 4,820,079 $ 4,319,633 $ 3,993,935 $ 3,771,484
====================================================================================================================================
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16
The following table sets forth the allocation of Wilmington Trust's
reserve for loan losses for the past five years:
---------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------- ------------------------ ------------------------------
% of loans % of loans % of loans
in each in each in each
category of category of category of
December 31 (in thousands) Amount net loans Amount net loans Amount net loans
-----------------------------------------------------------------------------------------------------------------------------------
Commercial, financial, and agricultural $34,712 31% $27,463 32% $27,083 32%
Real estate-construction 3,941 7 3,327 6 2,407 5
Mortgage-commercial 15,291 19 15,901 19 13,574 20
Mortgage-residential 974 18 1,202 20 1,141 20
Installment loans to individuals 16,731 25 15,559 23 15,797 23
Unallocated 5,090 -- 13,473 -- 11,904 --
-----------------------------------------------------------------------------------------------------------------------------------
Total $76,739 100% $76,925 100% $71,906 100%
===================================================================================================================================
---------------------------------------------------------------------------------------------
1997 1996
---------------------------- -------------------------------------------------------------
% of loans % of loans
in each in each
category of category of
December 31 (in thousands) Amount net loans Amount net loans
-----------------------------------------------------------------------------------------------------------------------------------
Commercial, financial, and agricultural $27,023 30% $22,770 33%
Real estate-construction 1,977 4 2,000 3
Mortgage-commercial 12,645 22 15,126 23
Mortgage-residential 710 20 700 18
Installment loans to individuals 12,440 24 12,283 23
Unallocated 9,010 -- 1,482 --
-----------------------------------------------------------------------------------------------------------------------------------
Total $63,805 100% $54,361 100%
===================================================================================================================================
-13-
17
An analysis of loan maturities and interest rate sensitivity of Wilmington
Trust's commercial and real estate construction loan portfolios follows:
---------------------------------------------------------------------------------------------
Less than One through Over Total
December 31, 2000 (in thousands) one year five years five years gross loans
-----------------------------------------------------------------------------------------------------------------------------------
Commercial, financial, and agricultural $ 967,920 $ 414,950 $ 239,784 $1,622,654
Real estate-construction 205,156 97,045 70,501 372,702
-----------------------------------------------------------------------------------------------------------------------------------
Total $1,173,076 $ 511,995 $ 310,285 $1,995,356
====================================================================================================================================
Loans with predetermined rate $ 151,609 $ 223,890 $ 196,833 $ 572,332
Loans with variable rate 1,021,467 288,105 113,452 1,423,024
-----------------------------------------------------------------------------------------------------------------------------------
Total $1,173,076 $ 511,995 $ 310,285 $1,995,356
====================================================================================================================================
The following table presents a comparative analysis of the risk elements
contained in Wilmington Trust's loan portfolio at year-end(1):
---------------------------------------------------------------------------------------------
December 31 (in thousands) 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
Nonaccruing $37,522 $29,184 $30,598 $28,669 $40,735
Restructuring 2,639 55 -- 28 --
Past due 90 days or more 13,500 16,520 18,558 15,523 20,440
-----------------------------------------------------------------------------------------------------------------------------------
Total $53,661 $45,759 $49,156 $44,220 $61,175
====================================================================================================================================
Percent of total loans at year-end 1.03 % 0.95 % 1.14 % 1.11 % 1.62 %
====================================================================================================================================
Other real estate owned $ 717 $ 576 $ 1,532 $ 3,738 $ 5,131
====================================================================================================================================
---------------------------------
(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, 2000, which is incorporated by reference
herein.
* Restructured as nonaccrual, but not included in nonaccrual amount of
$37,522.
-14-
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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):
-------------------------------------------------------------------------------
For the year ended December 31 (in thousands) 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
Reserve for loan losses at beginning of period $76,925 $71,906 $63,805 $54,361 $49,867
-----------------------------------------------------------------------------------------------------------------------------------
Loans charged off:
Commercial, financial, and agricultural 15,360 3,737 2,189 6,105 3,811
Real estate-construction 50 129 -- 184 94
Mortgage - commercial 827 335 148 187 2,475
Mortgage - residential 286 493 166 236 285
Installment loans to individuals 9,860 11,806 13,427 9,475 7,990
-----------------------------------------------------------------------------------------------------------------------------------
Total loans charged off 26,383 16,500 15,930 16,187 14,655
-------------------------------------------------------------------------------
Recoveries on amounts previously charged off:
Commercial, financial, and agricultural 1,268 791 961 891 1,160
Real estate-construction 20 23 3 1 4
Mortgage-commercial 238 56 35 948 17
Mortgage-residential 8 123 3 1 1
Installment loans to individuals 2,763 3,026 3,029 2,290 1,967
-----------------------------------------------------------------------------------------------------------------------------------
Total recoveries 4,297 4,019 4,031 4,131 3,149
-------------------------------------------------------------------------------
Net loans charged off 22,086 12,481 11,899 12,056 11,506
-----------------------------------------------------------------------------------------------------------------------------------
Current year's provision for loan losses 21,900 17,500 20,000 21,500 16,000
-----------------------------------------------------------------------------------------------------------------------------------
Reserve for loan losses at end of period $76,739 $76,925 $71,906 $63,805 $54,361
====================================================================================================================================
Ratio of net loans charged off to average loans 0.44 % 0.28 % 0.29 % 0.31 % 0.32 %
(1) The factors the Corporation considers in determining the amount of
additions to its allowance for loan losses are discussed on page 27 of
its Annual Report to Shareholders for the fiscal year ended December
31, 2000, which is incorporated by reference herein.
-15-
19
The following table presents a summary of Wilmington Trust's deposits based on
average daily balances over the last three years:
-----------------------------------------------------------------------------------
2000 1999 1998
--------------------- ------------------- ---------------------
Average Average Average Average Average Average
For the year ended December 31 (in thousands) amount rate Amount rate amount rate
-----------------------------------------------------------------------------------
Noninterest-bearing demand $ 889,686 --% $ 856,171 --% $ 747,791 --%
Interest-bearing deposits:
Savings 379,837 1.53 411,352 1.79 406,060 2.25
Interest-bearing demand 1,327,498 2.20 1,377,749 2.15 1,222,866 2.52
Certificates under $100,000 981,248 4.96 1,137,764 5.01 1,208,244 5.47
Certificates $100,000 and over 1,692,782 6.41 983,340 5.43 842,368 5.67
-----------------------------------------------------------------------------------------------------------------------------------
Total $5,271,051 $4,766,376 $4,427,329
====================================================================================================================================
The maturity of Wilmington Trust's time deposits of $100,000 or more is as
follows:
-----------------------------------------------------------------------------------
Certificates All other interest-
December 31, 2000 (in thousands) of deposit bearing deposits
-----------------------------------------------------------------------------------------------------------------------------------
Three months or less $ 931,330 $ 505,159
Over three through six months 654,110 --
Over six through twelve months 44,461 --
Over twelve months 9,578 --
-----------------------------------------------------------------------------------------------------------------------------------
Total $1,639,479 $ 505,159
====================================================================================================================================
-16-
20
Securities sold
Federal funds under agreements U.S. Treasury Line of
purchased to repurchase demand notes credit
-----------------------------------------------------------------------------------------------------------------------------------
2000
Balance at December 31 $ 865,645 $ 233,800 $ 30,757 $ 17,000
Weighted average interest rate at balance sheet date 6.3 % 5.5 % 5.4 % 7.1 %
Maximum amount outstanding at any month-end $1,026,600 $ 242,686 $ 94,625 $ 25,000
approximate average amount outstanding during the period $ 875,976 $ 207,669 $ 43,453 $ 18,852
Weighted average interest rate for average amounts
outstanding during the period 6.5 % 5.4 % 6.1 % 7.0 %
-----------------------------------------------------------------------------------------------------------------------------------
1999
Balance at December 31 $ 701,720 $ 269,138 $ 95,000 $ 25,000
Weighted average interest rate at balance sheet date 5.8 % 4.3 % 4.2 % 6.5 %
Maximum amount outstanding at any month-end $1,040,095 $ 269,138 $ 95,000 $ 25,000
approximate average amount outstanding during the period $ 911,937 $ 183,396 $ 35,643 $ 7,137
Weighted average interest rate for average amounts
outstanding during the period 5.2 % 4.2 % 5.2 % 6.6 %
-----------------------------------------------------------------------------------------------------------------------------------
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 % -- %
-----------------------------------------------------------------------------------------------------------------------------------
-----------------
Federal funds purchased and securities sold under agreements to repurchase
generally mature within 90 days. U.S. Treasury demand notes mature overnight.
-17-
21
The following table presents the percentage of Wilmington Trust's funding
sources by deposit type:
--------------------------------------
(based on daily average balances) 2000 1999 1998
--------------------------------------------------------------------------------
Savings 5.92% 6.97% 7.38%
Interest-bearing demand 20.69 23.33 22.22
Certificates of deposit 41.67 35.92 37.26
Short-term borrowings 17.86 19.28 19.56
Demand deposits 13.86 14.50 13.58
--------------------------------------------------------------------------------
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:
--------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------
Return on assets 1.68% 1.60% 1.83
Return on stockholders' equity 22.76 20.18 21.70
Dividend payout 47.33 50.61 44.87
Equity to asset 7.37 7.95 8.42
================================================================================
-18-
22
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:
- Any action that causes a bank or other company to become a
bank holding company;
- Any action that causes a bank to become a subsidiary of a bank
holding company;
- 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;
- 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
- 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.
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:
-19-
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- Making, acquiring, and servicing loans and other extensions of
credit;
- Performing functions a trust company can perform;
- Acting as an investment or financial advisor;
- 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;
- Performing appraisals of real estate and tangible and
intangible personal property;
- Acting as an intermediary for the financing of commercial and
industrial income-producing real estate;
- Providing certain securities brokerage services;
- Underwriting and dealing in government obligations and money
market instruments; and
- Providing tax planning and preparation services.
In addition, under the BHCA, a bank holding company that meets
certain qualifications can elect to become a financial holding company. A
financial holding company can engage in additional activities not otherwise
permitted for a bank holding company, generally without obtaining the FRB's
prior approval. These include engaging in, acquiring, or controlling voting
securities or assets of a company engaged in securities underwriting and
distribution, merchant banking, certain insurance activities, and other
activities FRB determines (1) to be financial in nature or incidental to that
financial activity or (2) are complementary to a financial activity and do not
pose a substantial risk to the company's or the financial system's safety and
soundness.
To qualify to become a financial holding company, a bank holding
company's depository institutions must all be "well-managed" and
"well-capitalized," and have at least a "satisfactory" rating under the
Community Reinvestment Act.
In December 2000, Wilmington Trust became a financial holding
company. Its status as a financial holding company should permit greater
flexibility in the future growth of its fee business.
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.
Under the Interstate Banking Act, states may permit de novo
branching or acquisitions of existing branches by out-of-state banks within
their borders. 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.
-20-
24
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, 2000, 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.
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
-21-
25
extent of the corrective action depends primarily on the institution's capital
level. Options available include:
- Requiring recapitalization of or a capital restoration plan
from the institution;
- Restricting transactions between the institution and its
affiliates;
- Restricting interest rates, asset growth, activities, and
investments in the institution's subsidiaries; and
- 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.
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:
- 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);
- The Truth-in-Savings Act (which principally mandates certain
disclosures in connection with deposit-taking activities);
-22-
26
- The Equal Credit Opportunity Act (which prohibits
discrimination in all aspects of credit-granting);
- 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);
- 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);
- The Electronic Funds Transfer Act (which requires certain
disclosures in connection with electronic funds transactions);
and
- 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 such loans governed by the laws of those states. In addition, the
usury limitations of the Banks' respective home states apply to all other loans
the 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 Wilmington Trust's and WTC's operating results. A substantial
percentage of large pharmaceutical and chemical companies and other Fortune 500
companies are headquartered in Delaware. Delaware's Court of Chancery is 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 and WTC'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.
-23-
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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 $29,255,048
at December 31, 2000.
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 December 31, 2000, the Banks had 54 branches in the following
locations:
- Twenty-three are in New Castle County, seven in Kent County,
and 15 are in Sussex County, Delaware;
- One is in each of Bucks, Chester, Delaware, Montgomery, and
Philadelphia Counties, Pennsylvania;
- One is in Wicomico County, Maryland; and
- One is in each of Martin, Palm Beach, and Indian River
Counties, Florida.
WTC also operates a sales office in leased facilities in London,
England, and, through its subsidiaries, trust offices in the Cayman Islands and
the Channel Islands. WTFSB operates trust agency offices in leased facilities in
New York City, New York, Las Vegas, Nevada, and Santa Monica, California, and a
sales office in Boca Raton, Florida.
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.
-24-
28
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 2000.
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."
-25-
29
ITEM 6 - SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five years:
(in thousands, except per share information)
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
Interest income $ 530,454 $ 462,176 $ 456,939 $ 430,639 $ 402,850
Net interest income 255,139 245,913 237,697 230,016 214,221
Provision for loan
losses 21,900 17,500 20,000 21,500 16,000
Net income 120,939 107,297 114,325 106,044 97,278
Per share data:
Net income-basic 3.74 3.26 3.41 3.15 2.83
Net income-diluted 3.70 3.21 3.34 3.08 2.79
Cash dividends
declared 1.77 1.65 1.53 1.41 1.29
Balance sheet at
year-end:
Assets $7,321,616 $7,201,944 $6,300,565 $6,122,351 $5,564,409
Long-term debt 168,000 168,000 168,000 43,000 43,000
--------- -------- -------- ------- -------
-26-
30
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 2000, 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 and 25 of
Wilmington Trust's Annual Report to Shareholders for 2000, 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 2000. Those pages are incorporated by reference herein.
Annual Report
to Shareholders
Page Number
Consolidated Statements of Condition as
of December 31, 2000 and 1999 34
Consolidated Statements of Income
for the years ended December 31,
2000, 1999, and 1998 35
Consolidated Statements of Changes in Stock-
holders' Equity for the years ended
December 31, 2000, 1999, and 1998 36
Consolidated Statements of Cash Flows
for the years ended December 31,
2000, 1999, and 1998 37
Notes to Consolidated Financial
Statements - December 31,
2000, 1999, and 1998 38-59
Report of Independent Auditors 60
Unaudited Selected Quarterly Financial Data 55
-27-
31
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
In February 2001, at Ernst & Young's initiative, it and Wilmington Trust
mutually agreed that Ernst & Young would not continue as the company's
independent accountants after completion of Wilmington Trust's annual audit for
2000.
The reports Ernst & Young on the financial statements of Wilmington Trust
for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audits of Wilmington Trust's financial statements
for each of the two years ended December 31, 2000, there were no disagreements
with Ernst & Young on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved Ernst & Young's satisfaction, would have caused Ernst & Young to make a
reference to the matter in their report.
On March 21, 2001, Wilmington Trust engaged KPMG LLP to act as its auditors
for the fiscal year ended December 31, 2001. Wilmington Trust's Board of
Directors approved KPMG's engagement previously following the recommendation of
its Audit Committee. Wilmington Trust did not consult KPMG regarding the
application of accounting principles to a specified transaction, whether
contemplated or proposed, the type of audit opinion that might be rendered on
Wilmington Trust's financial statements or any matter that was the subject of a
disagreement or a reportable event as contemplated by Item 304 of Regulation
S-K.
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 9 of Wilmington Trust's proxy statement for its Annual Shareholders'
Meeting to be held on May 17, 2001 (the "Proxy Statement"), which are
incorporated by reference herein.
Information required by Rule 405 of Regulation S-K is contained on page 21
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 pages 20 and 21 of
the Proxy Statement, which are incorporated by reference herein.
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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:
Annual Report
to Shareholders
Page Number
Consolidated Statements of Condition as
of December 31, 2000 and 1999 34
Consolidated Statements of Income for
each of the years in the three-year period
ended December 31, 2000 35
Consolidated Statements of Changes in
Stockholders' Equity for each of the years
in the three-year period ended December 31, 2000 36
Consolidated Statements of Cash Flows for
each of the years in the three-year period
ended December 31, 2000 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.
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Exhibit
Number Exhibit
------ -------
3.1 Amended and Restated Certificate of Incorporation of the
Corporation(8)
3.2 Amended and Restated Bylaws of the Corporation (11)
4.1 1991 Employee Stock Purchase Plan(1)
4.2 1996 Employee Stock Purchase Plan (8)
4.3 2000 Employee Stock Purchase Plan (11)
4.4 1983 Employee Stock Option Plan (1)
4.5 1988 Long-Term Incentive Stock Option Plan (1)
4.6 1991 Long-Term Incentive Stock Option Plan (1)
4.7 1996 Long-Term Incentive Plan (8)
4.8 1999 Long-Term Incentive Plan (10)
4.9 2001 Non-Employee Directors' Stock Option Plan (12)
4.10 Thrift Savings Plan (1)
4.11 Amended and Restated Thrift Savings Plan (12)
4.12 First Amendment to the Wilmington Trust Thrift Savings Plan (12)
4.13 Employee Stock Ownership Plan (1)
4.14 Senior Executive Incentive Compensation Plan (6)
4.15 Executive Incentive Plan (10)
10.1 Purchase and Assumption Agreement dated June 18, 1991 by and between
Wilmington Trust Company and Wilmington Savings Fund Society (2)
10.2 Agreement of Reorganization and Merger dated as of April 8, 1991 by
and among Wilmington Trust Company, Wilmington Trust Corporation and
The Sussex Trust Company (3)
10.3 Deposit Insurance and Transfer and Asset Purchase Agreement among
the Federal Deposit Insurance Corporation in its capacity as
receiver for The Bank of the Brandywine Valley, the Federal Deposit
Insurance Corporation, and Wilmington Trust Company dated as of
February 21, 1992 (4)
10.4 Agreement of Reorganization and Merger dated as of March 18, 1993
between Wilmington Trust Corporation and Freedom Valley Bank (5)
10.5 Rights Agreement dated as of January 19, 1996 between Wilmington
Trust Corporation and Harris Trust and Savings Bank (7)
10.6 Supplemental Executive Retirement Plan (8)
10.7 Amended and Restated Supplemental Executive Retirement Plan (11)
10.8 Severance Agreement dated as of February 29, 1996 between Wilmington
Trust Company and Ted T. Cecala (8)
10.9 Severance Agreement dated as of February 29, 1996 between Wilmington
Trust Company and Robert J. Christian (8)
10.10 Severance Agreement dated as of February 29, 1996 between Wilmington
Trust Company and Howard K. Cohen (8)
10.11 Severance Agreement dated as of February 29, 1996 between Wilmington
Trust Company and William J. Farrell II (8)
10.12 Severance Agreement dated as of February 29, 1996 between Wilmington
Trust Company and David R. Gibson (8)
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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. Matarese (8)
10.16 Severance Agreement dated as of July 18, 1996 between Wilmington
Trust Company and Rita C. Turner (9)
10.17 Severance Agreement dated as of June 28, 1999 between Wilmington
Trust Company and Rodney P. Wood (11)
10.18 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Ted T. Cecala (12)
10.19 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Robert J. Christian (12)
10.20 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Howard K. Cohen (12)
10.21 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and William J. Farrell, II (12)
10.22 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and David R. Gibson (12)
10.23 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Robert V.A. Harra, Jr. (12)
10.24 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Hugh D. Leahy, Jr. (12)
10.25 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Robert A. Matarese (12)
10.26 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Rita C. Turner (12)
10.27 Amendment No. 1 to Severance Agreement dated as of December 19, 2000
between Wilmington Trust Company and Rodney P. Wood (12)
11 Statement re computation of per share earnings (12)
13 2000 Annual Report to Shareholders of Wilmington Trust Corporation
(12)
21 Subsidiaries of Wilmington Trust Corporation (12)
23 Consent of independent auditor (12)
(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.
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(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) Incorporated by reference to the corresponding exhibit to the Annual
Report on Form 10-K of Wilmington Trust Corporation filed on March 30,
2000.
(12) Filed herewith.
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Act of 1934, this Form has been signed by the following persons in the
capacities and as of the dates indicated.
/s/ Ted T. Cecala
----------------------------
Ted T. Cecala
Director, Chairman of the Board,
and Chief Executive Officer
(Date) March 21, 2001
/s/ Robert V.A. Harra, Jr.
----------------------------
Robert V. A. Harra, Jr.
Director, President,
Chief Operating Officer, and Treasurer
(Date) March 21, 2001
/s/ David R. Gibson
----------------------------
David R. Gibson
Senior Vice President and
Chief Financial Officer
(Date) March 21, 2001
/s/ Gerald F. Sopp
----------------------------
Gerald F. Sopp
Controller
(Date) March 21, 2001
/s/ Carolyn S. Burger
----------------------------
Carolyn S. Burger
Director
(Date) March 21, 2001
/s/ Richard R. Collins
----------------------------
Richard R. Collins
Director
(Date) March 21, 2001
/s/ Charles S. Crompton, Jr.
----------------------------
Charles S. Crompton, Jr.
Director
(Date) March 21, 2001
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/s/ H. Stewart Dunn, Jr.
----------------------------
H. Stewart Dunn, Jr.
Director
(Date) March 21, 2001
/s/ Edward B. duPont
----------------------------
Edward B. du Pont
Director
(Date) March 21, 2001
/s/ R. Keith Elliott
----------------------------
R. Keith Elliott
Director
(Date) March 21, 2001
/s/ Rex L. Mears
----------------------------
Rex L. Mears
Director
(Date) March 21, 2001
/s/ Hugh E. Miller
----------------------------
Hugh E. Miller
Director
(Date) March 21, 2001
/s/ Stacey J. Mobley
----------------------------
Stacey J. Mobley
Director
(Date) March 21, 2001
----------------------------
Leonard W. Quill
Director
(Date) March 21, 2001
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/s/ David P. Roselle
----------------------------
David P. Roselle
Director
(Date) March 21, 2001
----------------------------
H. Rodney Sharp, III
Director
(Date) March 21, 2001
/s/ Thomas P. Sweeney
----------------------------
Thomas P. Sweeney
Director
(Date) March 21, 2001
/s/ Robert W. Tunnell, Jr.
----------------------------
Robert W. Tunnell, Jr.
Director
(Date) March 21, 2001
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