FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Transition Period From to
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Commission File Number: 1-14659
WILMINGTON TRUST CORPORATION
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(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
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(Address of principal executive offices) (Zip Code)
(302) 651-1000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares of issuer's common stock ($1.00 par value) outstanding
at June 30, 2002 - 65,674,519 shares
Wilmington Trust Corporation and Subsidiaries
Form 10-Q
Index
Page
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Part I. Financial Information
Item 1 - Financial Statements (unaudited)
Consolidated Statements of Condition 1
Consolidated Statements of Income 3
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 16
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 29
Part II. Other Information
Item 1 - Legal Proceedings 31
Item 2 - Changes in Securities and Use of Proceeds 31
Item 3 - Defaults Upon Senior Securities 31
Item 4 - Submission of Matters to a Vote of Security Holders 31
Item 5 - Other Information 32
Item 6 - Exhibits and Reports on Form 8-K 32
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
Wilmington Trust Corporation and Subsidiaries
-----------------------------------
June 30, December 31,
(in thousands) 2002 2001
------------------------------------------------------------------------------------------------------------------
Cash and due from banks $184,706 $210,104
----------------------------
Federal funds sold and securities purchased
under agreements to resell 302,630 104,999
----------------------------
Investment securities available for sale:
U.S. Treasury and government agencies 739,867 759,382
Obligations of state and political subdivisions 12,978 12,970
Other securities 511,602 492,496
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Total investment securities available for sale 1,264,447 1,264,848
----------------------------
Investment securities held to maturity:
U.S. Treasury and government agencies 10,299 10,593
Obligations of state and political subdivisions 4,486 4,921
Other securities 913 938
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Total investment securities held to maturity (market values
of $16,257 and $17,086, respectively) 15,698 16,452
-----------------------------------
Loans:
Commercial, financial and agricultural 2,018,553 1,861,727
Real estate-construction 464,377 400,534
Mortgage-commercial 995,260 1,009,442
Mortgage-residential 783,239 865,305
Consumer 1,481,772 1,351,825
Unearned income (571) (874)
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Total loans net of unearned income 5,742,630 5,487,959
Reserve for loan losses (86,619) (80,784)
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Net loans 5,656,011 5,407,175
----------------------------
Premises and equipment, net 137,478 140,224
Goodwill, net of accumulated amortization
of $29,391 in 2002 and 2001 232,570 212,851
Other intangible assets, net of accumulated amortization
of $6,534 in 2002 and $5,698 in 2001 11,411 6,819
Accrued interest receivable 38,431 40,558
Other assets 109,600 114,432
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Total assets $7,952,982 $7,518,462
=============================
1
----------------------------
June 30, December 31,
(in thousands) 2002 2001
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 897,010 $1,258,322
Interest-bearing:
Savings 362,729 356,182
Interest-bearing demand 1,865,857 1,410,280
Certificates under $100,000 882,419 900,059
Certificates $100,000 and over 2,047,514 1,665,942
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Total deposits 6,055,529 5,590,785
----------------------------
Short-term borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 809,777 828,261
U.S. Treasury demand 64,520 94,871
Line of credit 26,600 33,500
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Total short-term borrowings 900,897 956,632
----------------------------
Accrued interest payable 33,760 34,540
Other liabilities 77,630 93,475
Long-term debt 160,500 160,500
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Total liabilities 7,228,316 6,835,932
----------------------------
Minority interest 142 --
----------------------------
Stockholders' equity:
Common stock ($1.00 par value) authorized
150,000,000 shares; issued 78,528,346* 78,528 39,264
Capital surplus 47,986 78,190
Retained earnings 850,852 817,017
Accumulated other comprehensive income 13,380 10,078
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Total contributed capital and retained earnings 990,746 944,549
Less: Treasury stock, at cost, 12,853,827* and
13,127,912* shares, respectively (266,222) (262,019)
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Total stockholders' equity 724,524 682,530
----------------------------
Total liabilities and stockholders' equity $7,952,982 $7,518,462
============================
*Revised to reflect the two-for-one stock split in the form of a 100% stock
dividend paid on June 17, 2002.
See Notes to Consolidated Financial Statements
2
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Wilmington Trust Corporation and Subsidiaries
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For the three months ended For the six months ended
June 30, June 30,
--------------------------------------------------------------
(in thousands; except per share data) 2002 2001 2002 2001
------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME
Interest and fees on loans $ 84,372 $ 100,874 $ 165,120 $ 206,812
Interest and dividends on investment securities:
Taxable interest 13,334 17,852 27,054 37,204
Tax-exempt interest 246 1,124 493 1,353
Dividends 1,476 1,745 2,917 3,745
Interest on federal funds sold and securities
purchased under agreements to resell 108 239 220 485
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Total interest income 99,536 121,834 195,804 249,599
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Interest on deposits 21,858 40,381 44,405 87,813
Interest on short-term borrowings 4,460 13,684 10,362 29,060
Interest on long-term debt 2,648 2,763 5,289 5,519
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Total interest expense 28,966 56,828 60,056 122,392
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Net interest income 70,570 65,006 135,748 127,207
Provision for loan losses (6,062) (4,700) (11,357) (9,950)
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Net interest income after provision
for loan losses 64,508 60,306 124,391 117,257
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OTHER INCOME
Advisory fees 51,241 43,156 103,896 86,045
Service charges on deposit accounts 7,397 6,867 14,282 13,029
Loan fees and late charges 1,632 1,768 3,497 3,318
Card fees 2,728 2,602 5,148 4,947
Securities gains -- 71 -- 782
Other operating income 1,341 412 2,187 3,432
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Total other income 64,339 54,876 129,010 111,553
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Net interest and other income 128,847 115,182 253,401 228,810
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OTHER EXPENSE
Salaries and employment benefits 44,567 40,349 91,541 83,242
Net occupancy 4,776 4,322 9,415 8,085
Furniture and equipment 6,772 5,729 13,360 11,458
Stationery and supplies 1,386 1,268 2,790 2,686
Advertising and contributions 2,977 2,847 4,633 4,328
3
Servicing and consulting fees 2,899 2,377 5,523 4,466
Travel, entertainment and training 2,089 1,569 3,548 2,950
Originating and processing fees 2,013 1,745 3,558 3,331
Other operating expense 8,375 7,928 16,766 15,652
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Total other expense 75,854 68,134 151,134 136,198
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NET INCOME
Income before income taxes, minority
interest and cumulative effect of change
in accounting principle 52,993 47,048 102,267 92,612
Income tax expense 18,613 16,066 35,732 31,563
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Net income before minority interest and
cumulative effect of change in
accounting principle 34,380 30,982 66,535 61,049
Minority interest (143) -- (202) --
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Net income before cumulative effect of
change in accounting principle 34,237 30,982 66,333 61,049
Cumulative effect of change in accounting
principle (net of income taxes of $584) -- -- -- 1,130
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Net income $ 34,237 $ 30,982 $ 66,333 $ 62,179
===========================================================
Net income per share - basic:
Before cumulative effect of change in
accounting principle $ 0.52 $ 0.48* $ 1.01 $ 0.94*
Cumulative effect of change in
accounting principle -- -- -- 0.02*
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Net income per share - basic $ 0.52 $ 0.48* $ 1.01 $ 0.96*
===========================================================
Net income per share - diluted:
Before cumulative effect of change in
accounting principle 0.52 0.47* $ 1.00 $ 0.92*
Cumulative effect of change in
accounting principle -- -- -- 0.02*
------------------------------------------------------------------------------------------------------------------
Net income per share - diluted $ 0.52 $ 0.47* $ 1.00 $ 0.94*
===========================================================
Weighted average shares outstanding:
basic 65,635 65,063* 65,627 64,979*
diluted 66,381 65,908* 66,445 65,830*
*Revised to reflect the two-for-one stock split in the form of a 100% stock
dividend paid on June 17, 2002.
See Notes to Consolidated Financial Statements
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Wilmington Trust Corporation and Subsidiaries
-----------------------------------
For the six months ended
June 30,
(in thousands) 2002 2001
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OPERATING ACTIVITIES
Net income $ 66,333 $ 62,179
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 11,357 9,950
Provision for depreciation 10,905 8,864
Minority interest in net income 142 --
Compensation expense - nonemployee stock options 60 --
Amortization of investment securities available for sale
discounts and premiums 8,406 3,633
Amortization of investment securities held to maturity
discounts and premiums 5 3
Deferred income taxes 12 10
Gross proceeds from sales of loans 70,571 40,578
Gains on sales of loans (983) (355)
Securities gains -- (782)
Decrease in other assets 798 13,629
Increase/(decrease) in other liabilities (17,356) (14,143)
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Net cash provided by operating activities 150,250 123,566
----------------------------
INVESTING ACTIVITIES
Proceeds from sales of investment securities available for sale 685 15,233
Proceeds from maturities of investment securities available for sale 384,409 196,149
Proceeds from maturities of investment securities held to maturity 849 2,854
Purchases of investment securities available for sale (387,935) (25,563)
Purchases of investment securities held to maturity (100) --
Investments in affiliates (3,058) (5,837)
Cash paid for purchase of subsidiary (6,356) --
Purchases of loans (2,989) (6,902)
Net (increase)/decrease in loans (326,792) (113,887)
Net increase in premises and equipment (8,159) (15,320)
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Net cash (used for)/provided by investing activities (349,446) 46,727
----------------------------
FINANCING ACTIVITIES
Net increase/(decrease) in demand, savings and interest-bearing
demand deposits 100,812 (25,543)
Net increase/(decrease) in certificates of deposit 363,932 (168,049)
Net (decrease)/increase in federal funds purchased and securities sold
under agreements to repurchase (18,484) 193,365
5
Net (decrease)/increase in U.S. Treasury demand (30,351) 40,325
Net decrease in line of credit (6,900) --
Cash dividends (32,498) (30,189)
Proceeds from common stock issued under employment benefit
plans, net of income taxes 9,100 8,853
Payments for common stock acquired through buybacks (14,207) (1,590)
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Net cash used for financing activities 371,404 17,172
----------------------------
Effect of foreign currency translation on cash 25 --
----------------------------
Decrease in cash and cash equivalents 172,233 187,465
Cash and cash equivalents at beginning of period 315,103 273,994
------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 487,336 $ 461,459
============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 60,836 $ 112,999
Taxes 35,480 35,552
Loans transferred during the period:
To other real estate owned 178 $ 70
From other real estate owned 286 296
Common stock issued for purchase of subsidiary $ 8,836 $ --
See Notes to Consolidated Financial Statements
6
Notes to Unaudited Consolidated Financial Statements
Note 1 - Accounting and Reporting Policies
The accounting and reporting policies of Wilmington Trust Corporation
(the "Corporation"), a holding company that owns all of the issued and
outstanding shares of capital stock of Wilmington Trust Company, Wilmington
Trust of Pennsylvania, Wilmington Trust FSB, WT Investments, Inc. ("WTI"),
Rodney Square Management Corporation and Wilmington Trust (UK) Limited, conform
to accounting principles generally accepted in the United States of America and
practices in the banking industry for interim financial information. The
information for the interim periods is unaudited and includes all adjustments
that are of a normal recurring nature and that management believes to be
necessary for fair presentation. Results for the interim periods are not
necessarily indicative of the results that may be expected for the full year.
The consolidated financial statements presented herein should be read in
conjunction with the notes to the consolidated financial statements included in
the Corporation's Annual Report to Shareholders for 2001.
Note 2 - Comprehensive Income
The following table depicts other comprehensive income as required by SFAS No.
130:
------------------------------
For the six months ended
June 30,
------------------------------
(in thousands) 2002 2001
-------------------------------------------------------------------------------------------------------------
Net income $ 66,333 $ 62,179
Other comprehensive income, net of income taxes:
Net unrealized holding gains/(losses) on securities 3,305 12,838
Reclassification adjustment for securities gains included in net income -- (500)
Net unrealized holding gains arising during the period on derivatives
used for cash flow hedge -- 902
Reclassification adjustment for derivative gains included in net income (88) --
Foreign currency translation adjustments 85 --
-------------------------
Total comprehensive income $ 69,635 $ 75,419
=========================
7
Note 3 - Earnings Per Share
The following table sets forth the computation of basic and diluted net earnings
per share:
--------------------------------------------------------------
For the three months ended For the six months ended
June 30, June 30,
--------------------------------------------------------------
(in thousands; except per share data) 2002 2001 2002 2001
------------------------------------------------------------------------------------------------------------------
Numerator:
Net income before cumulative effect of
change in accounting principle $ 34,237 $ 30,982 $ 66,333 $ 61,049
Cumulative effect of change in accounting
principle (net of income taxes of $584) -- -- -- 1,130
------------------------------------------------------------------------------------------------------------------
Net income $ 34,237 $ 30,982 $ 66,333 $ 62,179
------------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per
share - weighted-average shares 65,635 65,063 65,627 64,979
------------------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
Employee stock options 746 845 818 851
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Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions 66,381 65,908 66,445 65,830
------------------------------------------------------------------------------------------------------------------
Basic earnings per share
Before cumulative effect of change in
accounting principle $ 0.52 $ 0.48* $ 1.01 $ 0.94*
Cumulative effect of change in
accounting principle -- -- -- 0.02*
------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.52 $ 0.48* $ 1.01 $ 0.96*
==================================================================================================================
Diluted earnings per share
Before cumulative effect of change in $ 0.52 $ 0.47* $ 1.00 $ 0.92*
accounting principle
Cumulative effect of change in
accounting principle -- -- -- 0.02*
------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.52 $ 0.47* $ 1.00 $ 0.94*
==================================================================================================================
Cash dividends per share $ .255 $ .240* $ .495 $ .465*
* Revised to reflect the two-for-one stock split in the form of a 100% stock
dividend paid on June 17, 2002.
8
Note 4 - Segment Reporting
For the purposes of reporting our results, we divide our business activities
into two segments. Our banking and advisory fee-based segments comprise the
services we provide to customers. The banking and advisory fee-based segments
are managed separately but have overlapping markets, customers and systems. The
Corporation's strategy to develop full relationships across a broad product
array allows these two segments to market separate products and services to a
common base of customers.
The banking segment includes lending, deposit-taking and branch banking in our
primary banking 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 and
consumer loans. Deposit products include demand checking, certificates of
deposit, negotiable order of withdrawal accounts and various savings and money
market accounts.
The advisory fee-based segment includes private client advisory services, asset
management, mutual fund, corporate trust and corporate retirement plan services
to individuals and corporations in the United States and more than 50 other
countries and the results of Balentine & Company. Private client advisory
service activities include investment management, trust services, private
banking, estate settlement, financial planning 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 and corporate management services.
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
without including nonrecurring gains and losses. The Corporation generally
records 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.
Financial data by segment for June 30, 2002 vs June 30, 2001 is as follows:
--------------------------------------------------------------------------------------------------
Banking Fee-Based
Quarter ended June 30, 2002 (in thousands) Business Business Totals
--------------------------------------------------------------------------------------------------
Net interest income $ 62,333 $ 8,237 $ 70,570
Provision for loan losses (5,966) (96) (6,062)
--------------------------------------------------------------------------------------------------
Net interest income after provision 56,367 8,141 64,508
Total advisory fees:
Private client advisory services 2,066 28,910 30,976
Corporate financial services 787 15,225 16,012
Affiliate managers -- 4,412 4,412
Amortization of other intangibles -- (159) (159)
Other operating income 12,248 850 13,098
Securities gains -- -- --
--------------------------------------------------------------------------------------------------
Net interest and other income 71,468 57,379 128,847
Other expense (38,382) (37,472) (75,854)
--------------------------------------------------------------------------------------------------
Segment profit from operations 33,086 19,907 52,993
Segment gain from infrequent events -- -- --
--------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 33,086 $ 19,907 $ 52,993
==================================================================================================
9
Intersegment revenue $ -- $ -- $ --
Depreciation and amortization 3,382 2,432 5,814
Investment in equity method investees -- 222,443 222,443
Segment average assets 5,830,530 1,547,459 7,377,989
Quarter ended June 30, 2001 (in thousands)
--------------------------------------------------------------------------------------------------
Net interest income $ 57,332 $ 7,674 $ 65,006
Provision for loan losses (4,964) 264 (4,700)
--------------------------------------------------------------------------------------------------
Net interest income after provision 52,368 7,938 60,306
Total advisory fees:
Private client advisory services 2,350 23,761 26,111
Corporate financial services 286 14,078 14,364
Affiliate managers -- 4,743 4,743
Amortization of other intangibles and goodwill -- (2,062) (2,062)
Other operating income 11,303 346 11,649
Securities gains 58 13 71
--------------------------------------------------------------------------------------------------
Net interest and other income 66,365 48,817 115,182
Other expense (36,419) (31,715) (68,134)
--------------------------------------------------------------------------------------------------
Segment profit from operations 29,946 17,102 47,048
Segment gain from infrequent events -- -- --
--------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 29,946 $ 17,102 $ 47,048
==================================================================================================
Intersegment revenue $ -- $ -- $ --
Depreciation and amortization 3,096 3,823 6,919
Investment in equity method investees -- 188,160 188,160
Segment average assets 5,797,675 1,392,984 7,190,659
--------------------------------------------------------------------------------------------------
Banking Fee-Based
Year-to-Date June 30, 2002 (in thousands) Business Business Totals
--------------------------------------------------------------------------------------------------
Net interest income $ 118,542 $ 17,206 $ 135,748
Provision for loan losses (11,112) (245) (11,357)
--------------------------------------------------------------------------------------------------
Net interest income after provision 107,430 16,961 124,391
Total advisory fees:
Private client advisory services 3,543 57,841 61,384
Corporate financial services 1,570 28,901 30,471
Affiliate managers -- 12,282 12,282
Amortization of other intangibles -- (241) (241)
Other operating income 23,649 1,465 25,114
Securities gains -- -- --
--------------------------------------------------------------------------------------------------
10
Net interest and other income 136,192 117,209 253,401
Other expense (76,041) (75,093) (151,134)
--------------------------------------------------------------------------------------------------
Segment profit from operations 60,151 42,116 102,267
Segment gain from infrequent events -- -- --
--------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 60,151 $ 42,116 $ 102,267
==================================================================================================
Intersegment revenue $ -- $ -- $ --
Depreciation and amortization 6,861 5,410 12,271
Investment in equity method investees -- 222,443 222,443
Segment average assets 5,830,530 1,547,459 7,377,989
Year-to-Date June 30, 2001 (in thousands)
--------------------------------------------------------------------------------------------------
Net interest income $ 111,659 $ 15,548 $ 127,207
Provision for loan losses (9,847) (103) (9,950)
--------------------------------------------------------------------------------------------------
Net interest income after provision 101,812 15,445 117,257
Total advisory fees:
Private client advisory services 3,272 49,282 52,554
Corporate financial services 952 25,683 26,635
Affiliate managers -- 10,919 10,919
Amortization of other intangibles and goodwill -- (4,063) (4,063)
Other operating income 22,528 2,198 24,726
Securities gains 626 156 782
--------------------------------------------------------------------------------------------------
Net interest and other income 129,190 99,620 228,810
Other expense (72,383) (63,815) (136,198)
--------------------------------------------------------------------------------------------------
Segment profit from operations 56,807 35,805 92,612
Segment gain from infrequent events -- -- --
--------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 56,807 $ 35,805 $ 92,612
==================================================================================================
Intersegment revenue $ -- $ -- $ --
Depreciation and amortization 6,204 7,599 13,803
Investment in equity method investees -- 188,160 188,160
Segment average assets 5,797,675 1,392,984 7,190,659
Note 5 - Accounting Pronouncements
Asset Retirement Obligations
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. It applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development and/or normal operation of a long-lived asset, except
for certain obligations of lessees. The Statement requires that the fair value
of a liability for an asset
11
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
This Statement amends FASB Statement No. 19, Financial Accounting and Reporting
by Oil and Gas Producing Companies, and it applies to all entities. It is
effective for financial statements issued for fiscal years beginning after June
15, 2002. Earlier application is encouraged. The Corporation does not expect the
adoption of this Statement to have an impact on its earnings, financial
condition or equity.
Impairment or Disposal of Long-Lived Assets
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This Statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. However, the Statement retains the
fundamental provisions of Statement 121 for (a) recognition and measurement of
the impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale.
This Statement supersedes the accounting and reporting provisions of APB Opinion
No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
However, this Statement retains the requirement of Opinion 30 to report
discontinued operations separately from continuing operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
by abandonment or in distribution to owners) or is classified as held for sale.
This Statement also amends ARB No. 51, Consolidated Financial Statements, to
eliminate the exception to consolidation for a temporarily controlled
subsidiary.
The provisions of this Statement are effective for financial statements issued
for fiscal years beginning after December 15, 2001 and interim periods within
those fiscal years, with earlier application encouraged. The provisions of this
Statement generally are to be applied prospectively. The adoption of this
Statement did not have an impact on the Corporation's earnings, financial
condition or equity.
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
13, and Technical Corrections
In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
This Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that Statement, FASB Statement No.
64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements, along
with rescinding FASB Statement No. 44, Accounting for Intangible Assets of Motor
Carriers and amending FASB Statement No. 13, Accounting for Leases. This
Statement (1) eliminates an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions, (2) eliminates the extraordinary item treatment of reporting gains
and losses from extinguishments of debt and (3) makes certain other technical
corrections.
The provisions of this Statement related to the rescission of Statement 4 apply
in fiscal years beginning after May 15, 2002. The provisions of this Statement
related to Statement 13 are effective for transactions occurring after May 15,
2002. All other provisions of this Statement are effective for financial
statements issued on or after May 15, 2002. Early application of this Statement
is encouraged. The Corporation does not expect the adoption of this Statement to
have an impact on its earnings, financial condition or equity.
12
Costs Associated with Exit or Disposal Activities
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities." This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)."
The provisions of this Statement are effective for exit or disposal activities
that are initiated after December 31, 2002, with early application encouraged.
The Corporation does not expect the adoption of this Statement to have an impact
on its earnings, financial condition or equity.
Note 6 - Derivative and Hedging Activities
The Corporation previously entered into interest rate swap and interest rate
floor contracts in managing interest rate risk 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-rate interest amounts computed on contractual notional
principal amounts.
Floors are contracts that 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.
Changes in the fair value of the floors attributed to the change in "time value"
are excluded in assessing the hedge's effectiveness and are recorded to "Other
Operating Income" in the Consolidated Statements of Income. Changes in the fair
value that are determined to be ineffective are also recorded to "Other
Operating Income" in the Consolidated Statements of Income. The effective
portion of the change in fair value is recorded in "Other Comprehensive Income"
in the Consolidated Statements of Condition. For the first quarter of 2002,
approximately $72,000 of gains in "Accumulated Other Comprehensive Income" were
reclassified to earnings. During the 12 months ending March 31, 2003,
approximately $307,000 of gains in "Accumulated Other Comprehensive Income" are
expected to be reclassified to earnings.
The Corporation does not hold or issue derivative financial instruments for
trading purposes.
Note 7 - Goodwill and Other Intangible Assets
A summary of goodwill and other intangible assets at June 30, 2002 is as
follows:
-------------------------------------------------------------
As of June 30, 2002
-------------------------------------------------------------
Gross carrying Accumulated Net carrying
(in thousands) amount amortization amount
------------------------------------------------------------------------------------------------------------
Goodwill (nonamortizing) $ 261,961 $ 29,391 $ 232,570
===================================================
Other intangibles
Amortizing:
Purchased mortgage servicing rights $ 5,213 $ 2,810 $ 2,403
Customer lists 7,904 2,038 5,866
13
Acquisition costs 1,635 1,301 334
Other intangibles 479 385 94
Nonamortizing
Other intangible assets 2,714 -- 2,714
--------------------------------------------------
Total other intangibles $ 17,945 $ 6,534 $ 11,411
==================================================
Amortization expense of other intangible assets for the six months ended June
30, 2002 is as follows:
--------------------------------------------------
For the six months ended
(in thousands) June 30, 2002
-------------------------------------------------------------------------------------------------------------
Amortization expense $ 836
The estimated amortization expense of other intangible assets for each of the
five succeeding fiscal years is as follows:
Estimated annual amortization expense (in thousands)
------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2003 $ 1,395
For the year ended December 31, 2004 1,138
For the year ended December 31, 2005 734
For the year ended December 31, 2006 442
For the year ended December 31, 2007 431
14
The changes in the carrying amount of goodwill for the six months ended June 30,
2002, are as follows:
Banking Fee-Based
(in thousands) Business Business Total
------------------------------------------------------------------------------------------------------------
Balance as of January 1, 2002 $ 3,752 $ 209,099 $ 212,851
Goodwill acquired -- 20,295 20,295
Impairment loss -- (576) (576)
--------------------------------------------------
Balance as of June 30, 2002 $ 3,752 $ 228,818 $ 232,570
==================================================
The goodwill acquired above includes $7.3 million recorded on the acquisition of
Balentine Holdings, Inc., $2.0 million recorded on the Corporation's investment
in Camden Partners Holdings, LLC and $9.7 million recorded on the acquisition of
SPV Management Limited.
During the first quarter of 2002, a goodwill impairment loss of $575,582 was
recognized due to under- performance of an equity investment. This loss is
recorded in the "Other operating expense" line of the Corporation's Consolidated
Statements of Income and is not considered to be a transitional impairment as of
January 1, 2002, the date of the Corporation's adoption of SFAS No. 142,
"Goodwill and Other Intangible Assets."
Other intangible assets acquired in the first six months of 2002 are as follows:
Weighted average
Amount Residual amortization
(in thousands) Assigned Value period in years
-------------------------------------------------------------------------------------------------------------
Purchased mortgage servicing rights $ 644 -- 8
Customer lists 3,108 -- 20
Acquisition costs -- -- --
Other intangibles 1,650 -- --
-----------------------------
Total $ 5,402 --
=============================
The Following table sets forth the computation of basic and diluted earnings
per share adjusted for the adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets":
------------------------------------------------------------
For the three months ended For the six months ended
June 30, June 30,
------------------------------------------------------------
(in thousands, except per share amounts) 2002 2001 2002 2001
-------------------------------------------------------------------------------------------------------------
Reported net income $ 34,237 $ 30,982 $ 66,333 $ 62,179
Add back: Goodwill amortization -- 2,156 -- 4,250
Tax effect -- (736) -- (1,448)
------------------------------------------------------------
Adjusted net income $ 34,237 $ 32,402 $ 66,333 $ 64,981
============================================================
Basic earnings per share
Reported net income $ 0.52 $ 0.48 $ 1.01 $ 0.96
Goodwill amortization -- 0.04 -- 0.04
-----------------------------------------------------------
Adjusted basic earnings per share $ 0.52 $ 0.52 $ 1.01 $ 1.00
===========================================================
Diluted earnings per share
Reported net income $ 0.52 $ 0.47 $ 1.00 $ 0.94
Goodwill amortization -- 0.04 -- 0.04
-----------------------------------------------------------
Adjusted diluted earnings per share $ 0.52 $ 0.51 $ 1.00 $ 0.98
===========================================================
15
Wilmington Trust Corporation and Subsidiaries
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
SUMMARY
The Corporation's stock was split on a two-for-one basis in the form of a 100%
stock dividend paid on June 17, 2002. All share and per share amounts have been
adjusted to reflect that split.
Net income for the second quarter of 2002 was $34.2 million, or $0.52 per share
on a diluted basis, and for the first six months of 2002 was $66.3 million, or
$1.00 per share on a diluted basis. This was an 11% increase over the $31.0
million, or $0.47 per share, and a 7% increase over the $62.2 million, or $0.94
per share, reported for the second quarter and first six months of 2001,
respectively. The 2001 results included a $1.1 million after-tax adjustment, or
$0.02 per share, for the cumulative effect of a change in accounting principle
related to the adoption of Financial Accounting Standards Board Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities."
These results reflect the Corporation's continued growth in each of its core
businesses and are especially noteworthy in the face of the substantial
volatility that continues to plague the financial markets.
Second quarter results reflect the consolidation of the operating results for
SPV Management Limited, which was acquired on April 23, 2002, and the
elimination of $1.9 million of goodwill amortization expense.
Combined assets under management at quarter-end reached $31.7 billion, with
approximately two-thirds of those assets managed by the Corporation and the
remainder managed by the its affiliate asset managers.
Improvement was realized in the major components of the Corporation's revenue as
net interest income for the second quarter improved $5.6 million, or 9%, to
$70.6 million, while noninterest revenues rose $9.5 million, or 17%, to $64.3
million. For the first half of 2002, net interest income was up $8.5 million, or
7%, while noninterest revenues were up $17.5 million, or 16%.
The quarterly provision for loan losses was $6.1 million, up 29% over the $4.7
million for the second quarter of 2001. The provision for the first half of 2002
was $11.4 million, up 14% over $10.0 million for the same period last year.
Operating expenses increased $7.7 million, or 11%, to $75.9 million and included
the consolidation of the results of Balentine Holdings and SPV Management with
the Corporation.
These results produced an annualized return on average stockholders' equity of
19.06% and a return on average assets of 1.80%. These ratios compare with 20.37%
and 1.74%, respectively, for the first six months of 2001.
STATEMENT OF CONDITION
Total banking assets at June 30, 2002 were $7.95 billion, up $434.5 million, or
6%, from year-end 2001 due to higher balances in loans and short-term
investments. Loan balances increased $254.7 million, or 5%, while short-term
investments increased $197.6 million, or 188%.
16
Short-term investments at June 30, 2002 were $302.6 million. This was an
increase of $197.6 million, or 188%, over the December 2001 balance of $105.0
million. Federal funds sold reached $252.6 million, an increase of $187.6
million, or 289%, over their 2001 year-end level.
The investment portfolio at June 30, 2002 was $1.28 billion, virtually unchanged
from its year-end 2001 level.
The loan portfolio increased $254.7 million, or 5%, to $5.74 billion during the
first six months of 2002 as the relative health of the Delaware Valley economy
has produced higher-than-expected growth in the regional banking business.
Commercial, financial and agricultural loans increased $156.8 million, or 8%,
reaching $2.0 billion. Approximately 80% of this growth was in the Corporation's
Delaware market. Consumer loans increased $130.0 million, or 10%, to $1.48
billion due to increased demand for collateralized lending, automobile
financings and home equity loans. Approximately 49% of this growth originated in
the Corporation's Pennsylvania market and 32% in its Delaware market. Real
estate construction loans increased $63.8 million, or 16%, to $464.4 million as
low interest rates continue to spark housing demand. Mortgage loans declined
$96.2 million as residential mortgage loans decreased $82.1 million, or 9%, and
commercial mortgage loans declined $14.2 million, or 1%, due to paydowns and
sales of residential mortgage loans into the secondary markets.
The reserve for loan losses at June 30, 2002 was $86.6 million, or 1.51% of
period-end loans outstanding. This compares with $80.8 million, or 1.47% of
period-end loans outstanding at year-end 2001. The second quarter loan loss
provision of $6.1 million reflected the growth in the loan portfolio and an
increase in nonaccruing loans.
The adoption of Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets," has modified the balance sheet presentation of
these items from prior periods. Prior periods have been adjusted to conform to
the presentation requirements of the new pronouncement. At June 30, 2002,
goodwill was $232.6 million, an increase of $19.7 million, or 9%, over the
reclassified $212.9 million reported for December 31, 2001. This increase was
associated with the Corporation's investments in Camden Partners Holdings, LLC,
a Baltimore-based private equity firm, Balentine Holdings, Inc., an
Atlanta-based investment counseling firm, and SPV Management Limited, a
London-based specialty financial services firm. Other intangibles, previously
reported as a component of other assets, were $11.4 million at June 30, 2002, an
increase of $4.6 million, or 68%, over the $6.8 million at December 31, 2001.
This increase over year-end was attributable to costs associated with the
aforementioned investments. Other intangibles include items such as acquired
customer lists, acquisition costs, purchased mortgage servicing rights and other
items, which will continue to be amortized under the new accounting
pronouncement.
Accrued interest receivable at June 30, 2002 was $38.4 million, down $2.1
million, or 5%, from $40.6 million at year-end 2001. This decrease was primarily
rate-driven and due to lower interest income recorded but not yet received on
Federal funds sold that are included in the Corporation's short-term
investments.
Total deposits at June 30, 2002 were $6.05 billion, $464.7 million, or 8%, over
the 2001 year-end level. Core deposits, excluding certificates $100,000 and
over, rose $83.2 million, or 2%, to $4.0 billion. A decline in noninterest
bearing demand account balances of $361.3 million, or 29%, to $897.0 million was
offset by an increase in interest-bearing demand account balances of $455.6
million, or 32%, to $1.87 billion. Certificates of deposit $100,000 and over
increased $381.6 million, or 23%, to $2.05 billion.
Short-term borrowings at June 30, 2002 were $900.9 million, a decrease of $55.7
million, or 6%, from $956.6 million at December 31, 2001. Federal funds
purchased and securities sold under agreements to repurchase at quarter-end were
$809.8 million, an $18.5 million, or 2%, decrease from the $828.3 million at
year-end 2001. U.S. Treasury demand balances declined $30.4 million, or 32%,
from the year-end level of $94.9 million. Outstanding lines of credit were
reduced $6.9 million, or 21%, to $26.6 million.
Stockholders' equity at June 30, 2002 was $724.5 million, a $42.0 million, or
6%, increase over the $682.6 million at year-end 2001. Earnings of $66.3
million, coupled with $19.1 million of stock issued and a $3.3 million, net of
tax, improvement in the market value of securities held for sale were partially
offset by cash dividends of $32.5 million and treasury stock acquisitions of
$14.2 million.
17
NET INTEREST INCOME
Net interest income is the difference between interest income received on
earning assets, such as loans and investment securities, and interest expense
paid on liabilities, such as deposits and short-term borrowings. Movements in
interest rates and the relative levels of earning assets and interest-bearing
liabilities held by the Corporation affect its net interest margin and the
resulting net interest income. The net interest margin is determined by dividing
fully tax-equivalent ("FTE") net interest income by average total earning
assets.
The Corporation's net interest income for the second quarter of 2002, on an FTE
basis, was $70.6 million, an increase of $5.6 million, or 9%, over that for the
second quarter of 2001. For the first six months of 2002, net interest income
was $8.5 million, or 7%, ahead of that for the corresponding period of last
year. The Corporation's net interest margin for the first half of 2002 was
4.06%, an increase of 12 basis points over the 3.94% reported for the first half
of 2001. The Federal Reserve Board lowered short-term interest rates 11 times
during 2001, reducing the discount rate to 1.25%, 475 basis points below the
6.00% at which it began the year. For the first half of 2002, the discount rate
averaged 1.25%, 322 basis points below the 4.47% averaged for the first half of
2001. These rate reductions have caused both interest revenue and interest
expense to decline.
Interest revenue (FTE) for the first half of 2002 totaled $198.4 million, a
decrease of $54.8 million, or 22%, from the $253.3 million reported for the
first half of 2001. Interest revenue declined $65.0 million as the average rate
earned on the Corporation's assets fell 182 basis points to 5.82%, while
interest revenues increased $10.2 million due to a $219.9 million increase in
the average level of earning assets to $6.82 billion. The Corporation's average
prime lending rate (the rate at which banks lend to their most creditworthy
customers) was 4.75%, 324 basis points below the 7.99% for the first half of
2001.
Interest expense for the first half of 2002 was $60.1 million, a decrease of
$62.3 million, or 51%, from the $122.4 million for the first half of 2001.
Interest expense declined $62.4 million as the average rate the Corporation paid
on its interest-bearing liabilities fell 233 basis points to 2.06%. The
aforementioned reductions in the discount rate by the Federal Reserve Board were
responsible for this decrease. The following tables present comparative net
interest income data for the second quarters of 2002 and 2001 and the first six
months of 2002 and 2001 and a rate-volume analysis of changes in net interest
income for the first quarters of 2002 and 2001, respectively.
18
QUARTERLY ANALYSIS OF EARNINGS
2002 Second Quarter 2001 Second Quarter
--------------------------------- ----------------------------------
(in thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
------------------------------------------------------------------------------------------------------------------
Earning assets
Federal funds sold and
securities purchased under
agreements to resell $ 17,355 $ 108 2.46% $ 20,415 $ 239 4.63%
U.S. Treasury and government
agencies 744,866 8,543 4.67 791,912 11,562 5.92
State and municipal 17,439 378 8.97 17,165 1,740 17.44
Preferred stock 80,418 1,774 8.33 85,142 1,838 8.12
Asset-backed securities 238,551 3,473 6.00 286,470 4,320 6.10
Other 169,197 1,553 3.59 155,912 2,437 6.22
---------------------------------------------------------------- --------------------------
Total investment securities 1,250,471 15,721 5.08 1,336,601 21,897 6.28
-----------------------------------------------------------------------------
Commercial, financial and
agricultural 1,941,050 26,762 5.45 1,620,775 30,839 7.54
Real estate-construction 452,585 5,947 5.19 405,622 7,881 7.70
Mortgage-commercial 1,007,538 16,313 6.40 1,002,435 20,843 8.23
Mortgage-residential 800,288 13,816 6.90 916,722 16,526 7.21
Consumer 1,435,291 22,175 6.18 1,255,738 25,617 8.16
---------------------------------------------------------------- --------------------------
Total loans 5,636,752 85,013 5.99 5,201,292 101,706 7.78
-----------------------------------------------------------------------------
Total earning assets $6,904,578 100,842 5.82 $6,558,308 123,842 7.46
=============================================================================
Funds supporting earning assets
Savings $364,757 229 0.25 $351,221 623 0.71
Interest-bearing demand 1,818,007 2,602 0.57 1,281,853 4,817 1.51
Certificates under $100,000 884,724 7,723 3.50 909,701 11,500 5.07
Certificates $100,000 and over 1,944,431 11,304 2.30 1,716,611 23,441 5.40
---------------------------------------------------------------- --------------------------
Total interest-bearing
deposits 5,011,919 21,858 1.74 4,259,386 40,381 3.77
-----------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase 794,634 4,400 2.19 1,053,382 13,290 4.99
U.S. Treasury demand 15,853 60 1.50 38,442 394 4.05
---------------------------------------------------------------- --------------------------
Total short-term borrowings 810,487 4,460 2.18 1,091,824 13,684 4.96
-----------------------------------------------------------------------------
Long-term debt 160,500 2,648 6.60 168,000 2,763 6.58
---------------------------------------------------------------- --------------------------
Total interest-bearing
liabilities 5,982,906 28,966 1.93 5,519,210 56,828 4.09
-----------------------------------------------------------------------------
19
Other noninterest funds 921,672 -- -- 1,039,098 -- --
---------------------------------------------------------------- --------------------------
Total funds used to
support earning
assets $6,904,578 28,966 1.67 $6,558,308 56,828 3.44
=============================================================================
Net interest income/yield 71,876 4.15 67,014 4.02
Tax-equivalent adjustment (1,306) (2,008)
-------------- --------------
Net interest income $ 70,570 $ 65,006
============== ==============
Average rates are calculated using average balances based on historical cost and
do not reflect the market valuation adjustment required by Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective January 1, 1994.
20
YEAR-TO-DATE ANALYSIS OF EARNINGS
Year-to-Date 2002 Year-to-Date 2001
------------------------------------- ----------------------------------
(in thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense Rate
------------------------------------------------------------------------------------------------------------------
Earning assets
Federal funds sold and
securities purchased under
agreements to resell $ 16,229 $ 220 2.70% $ 18,755 $ 485 5.14%
U.S. Treasury and government
agencies 747,056 17,434 4.76 828,532 24,254 5.90
State and municipal 17,477 756 8.96 18,698 2,078 12.16
Preferred stock 80,406 3,523 8.34 90,288 3,965 8.18
Asset-backed securities 246,801 7,230 6.02 289,701 8,818 6.12
Other 156,302 2,843 3.56 156,196 5,117 6.50
---------------------------------------------------------------- -------------------------
Total investment 1,248,042 31,786 5.15 1,383,415 44,232 6.26
securities
-----------------------------------------------------------------------------
Commercial, financial and
agricultural 1,876,687 49,697 5.26 1,616,651 63,780 7.86
Real estate-construction 436,897 11,274 5.13 401,067 16,640 8.27
Mortgage-commercial 1,014,030 32,937 6.46 997,438 42,100 8.40
Mortgage-residential 820,939 28,726 6.99 919,203 32,995 7.18
Consumer 1,402,538 43,781 6.28 1,258,908 53,028 8.46
---------------------------------------------------------------- -------------------------
Total loans 5,551,091 166,415 5.98 5,193,267 208,543 8.02
-----------------------------------------------------------------------------
Total earning assets $6,815,362 198,421 5.82 $6,595,437 253,260 7.64
=============================================================================
Funds supporting earning assets
Savings $ 356,758 445 0.25 $ 350,792 1,859 1.07
Interest-bearing demand 1,679,351 5,095 0.61 1,293,570 11,402 1.78
Certificates under $100,000 890,677 16,067 3.64 914,582 23,254 5.13
Certificates $100,000 and over 1,848,371 22,798 2.45 1,776,931 51,298 5.74
---------------------------------------------------------------- -------------------------
Total interest-bearing
deposits 4,775,157 44,405 1.86 4,335,875 87,813 4.05
-----------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase 856,058 10,094 2.35 1,023,842 28,167 5.47
U.S. Treasury demand 36,286 268 1.47 37,371 893 4.75
---------------------------------------------------------------- -------------------------
Total short-term 892,344 10,362 2.31 1,061,213 29,060 5.45
borrowings
-----------------------------------------------------------------------------
Long-term debt 160,500 5,289 6.59 168,000 5,519 6.57
---------------------------------------------------------------- -------------------------
Total interest-bearing
liabilities 5,828,001 60,056 2.06 5,565,088 122,392 4.39
-----------------------------------------------------------------------------
Other noninterest funds 987,361 -- -- 1,030,349 -- --
21
------------------------------------------------------------------------------------------------------------------
Total funds used to
support earning
assets $6,815,362 60,056 1.76 $6,595,437 122,392 3.70
=============================================================================
Net interest income/yield 138,365 4.06 130,868 3.94
Tax-equivalent adjustment (2,617) (3,661)
-------------- --------------
Net interest income $ 135,748 $ 127,207
============== ==============
Average rates are calculated using average balances based on historical cost and
do not reflect the market valuation adjustment required by Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective January 1, 1994.
22
RATE-VOLUME ANALYSIS OF NET INTEREST INCOME
-------------------------------------------- -----------------------------------------
For the three months ended June 30, For the six months ended June 30,
-------------------------------------------- -----------------------------------------
2002/2001 2002/2001
Increase (Decrease) Increase (Decrease)
due to change in due to change in
-------------------------------------------- -----------------------------------------
(1) (2) (1) (2)
(in thousands) Volume Rate Total Volume Rate Total
-------------------------------------------------------------------------------------------------------------------------------
Interest income:
Federal funds sold and
securities purchased under
agreements to resell $ (36) $ (95) $ (131) $ (65) $ (200) $ (265)
---------------------------------------------------------------------------------
U.S. Treasury and
government agencies (740) (2,279) (3,019) (2,624) (4,196) (6,820)
State and municipal * 6 (1,368) (1,362) (84) (1,238) (1,322)
Preferred stock * (112) 48 (64) (514) 72 (442)
Asset-backed securities (791) (56) (847) (1,467) (121) (1,588)
Other * 250 (1,134) (884) 80 (2,354) (2,274)
------------------------------------------------------------------------------------------------------------------------------
Total investment
securities (1,387) (4,789) (6,176) (4,609) (7,837) (12,446)
---------------------------------------------------------------------------------
Commercial, financial and
agricultural * 6,021 (10,098) (4,077) 10,135 (24,218) (14,083)
Real estate-construction 902 (2,836) (1,934) 1,469 (6,835) (5,366)
Mortgage-commercial * 105 (4,635) (4,530) 691 (9,854) (9,163)
Mortgage-residential (2,093) (617) (2,710) (3,499) (770) (4,269)
Consumer 3,653 (7,095) (3,442) 6,026 (15,273) (9,247)
------------------------------------------------------------------------------------------------------------------------------
Total loans 8,588 (25,281) (16,693) 14,822 (56,950) (42,128)
------------------------------------------------------------------------------------------------------------------------------
Total interest income $ 7,165 $(30,165) $ (23,000) $ 10,148 $ (64,987) $ (54,839)
==================================================================================
Interest expense:
Savings $ 24 $ (418) $ (394) $ 32 $ (1,446) $ (1,414)
Interest-bearing demand 2,018 (4,233) (2,215) 3,405 (9,712) (6,307)
Certificates under $100,000 (316) (3,461) (3,777) (608) (6,579) (7,187)
Certificates $100,000 and over 3,110 (15,247) (12,137) 2,062 (30,562) (28,500)
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
deposits 4,836 (23,359) (18,523) 4,891 (48,299) (43,408)
23
------------------------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase (3,228) (5,662) (8,890) (4,589) (13,484) (18,073)
U.S. Treasury demand (231) (103) (334) (26) (599) (625)
-------------------------------------------------------------------------------------------------------------------------------
Total short-term
borrowings (3,459) (5,765) (9,224) (4,615) (14,083) (18,698)
------------------------------------------------------------------------------------------
Long-term debt (123) 8 (115) (244) 14 (230)
-------------------------------------------------------------------------------------------------------------------------------
Total interest expense $ 1,254 $ (29,116) $ (27,862) $ 32 $(62,368) $ (62,336)
==========================================================================================
Changes in net interest income $ 4,862 $ 7,497
========= =========
* Variances are calculated on a fully tax-equivalent basis, which
includes the effects of any disallowed interest expense.
(1)
Changes attributable to volume are defined as change in average
balance multiplied by the prior year's rate.
(2)
Changes attributable to rate are defined as a change in rate
multiplied by the average balance in the applicable period of the
prior year. A change in rate/volume (change in rate multiplied by
change in volume) has been allocated to the change in rate.
24
NONINTEREST REVENUES AND OPERATING EXPENSES
Advisory fees for the second quarter of 2002 were $51.2 million, an increase of
$8.1 million, or 19%, over the $43.2 million reported for the second quarter of
last year. For the first half of 2002, advisory fees were $103.9 million, an
increase of $17.9 million, or 21%. Advances in private client advisory services
offset lower revenues from affiliate money managers. Revenues from private
client advisory services were impacted by markets that remained well below their
year-ago levels. Approximately 70% of private client advisory fees are tied to
securities valuations, and fees are calculated monthly, using market values on
the last day of the previous month. Based on those averages for the second
quarters of 2002 and 2001, the Dow Jones Industrial Average declined 3.9%; the
S&P 500 fell 10.2%; and the Nasdaq Composite Index dropped 15.1%. For the first
six months of 2002, those indices were down 5.3%, 12.2%, and 20.0%,
respectively, from the corresponding indices at December 31, 2001. The
percentage of operating revenues derived from these fee-based businesses
continued to increase, accounting for 47.8% of operating revenues for the second
quarter of 2002 compared with 46.7% for the second quarter of 2001.
-------------------------------------------------------------------------------------------------------------
% of % of
Operating Operating
(in thousands) Six Months 2002 Revenues Six Months 2001 Revenues
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Net interest income $135,748 51% $127,207 53%
-------------------------------------------------------------------------------------------------------------
Fee income:
-------------------------------------------------------------------------------------------------------------
Advisory fees 104,137 39% 90,108 37%
-------------------------------------------------------------------------------------------------------------
Service charges 14,282 5% 13,029 5%
-------------------------------------------------------------------------------------------------------------
Other operating income 10,832 5% 11,697 5%
-------------------------------------------------------------------------------------------------------------
Total fee income 129,251 49% 114,834 47%
-------------------------------------------------------------------------------------------------------------
Total operating revenues $264,999 100% $242,041 100%
-------------------------------------------------------------------------------------------------------------
Affiliate manager other
intangibles and goodwill
amortization (241) (4,063)
-------------------------------------------------------------------------------------------------------------
Securities gains / (losses) 0 782
-------------------------------------------------------------------------------------------------------------
Net interest and other income
before loan loss provision $264,758 $238,760
-------------------------------------------------------------------------------------------------------------
Private client advisory fees for the second quarter were $31.0 million, an
increase of $4.9 million, or 19%, over the $26.1 million for the second quarter
of last year as new business continued to grow. For the first six months of
2002, private client advisory fees were $61.4 million, an increase of $8.8
million, or 17%, over the $52.6 million for the first half of last year. The
consolidation of Balentine has added $6.2 million to 2002 revenues. New business
development sales for the second quarter totaled $4.3 million, which was 19%
higher than for the second quarter of last year and 30% higher than the first
quarter of this year. Joint sales activity with Balentine accounted for much of
the increase, as more clients selected the asset allocation and style
diversification that derive from Balentine's open architecture investment
process.
Corporate financial services revenues for the second quarter of 2002 were $16.0
million, an increase of $1.6 million, or 12%, over the $14.4 million for the
second quarter of last year. For the first half of 2002, these fees were $30.5
million, $3.8 million, or 14%, higher than the $26.6 million recorded for the
first half of last year. Income from the acquisition of London-based SPV
Management, which added four European jurisdictions in which Wilmington Trust is
permitted to conduct business, was included for the first time in the second
quarter and accounted for $1.0 million of the fee increase. Year-to-date
revenues from the corporate trust business were $14.6 million, which includes
capital markets and large equipment leasing trusts. This was an increase of $2.3
million, or 18%, over the $12.4 million for the first half of last year.
Contributing to the growth in this business was increased demand for
trust-preferred securities services; referrals from corporate plan sponsors,
recordkeepers and other alliance partners;
25
and increased sales of proprietary Web-based auction agent services. The
majority of corporate financial services revenue is generated on a
fee-for-service basis. The remainder, approximately 24%, is tied to asset
valuations.
Revenues from our affiliate asset managers were $4.4 million, a $330,000, or 7%,
decline from the $4.7 million for the second quarter of 2001, and a $3.5
million, or 44%, decline from the $7.9 million reported for the first quarter of
this year. These fees for the first half of 2002 were $12.3 million, an increase
of $1.4 million, or 13%, over the $10.9 million reported for the first half of
2001. Several factors contributed to the decrease in the second quarter. Income
from value-style manager Cramer Rosenthal McGlynn declined 68% from that for the
first quarter, due largely to a reduction in incentive fees related to hedge
fund activity. Likewise, market valuations and volatility led to a 24% decrease
in revenue from growth-style manager Roxbury Capital Management from its
revenue for the second quarter of 2001. Market conditions continue to hamper the
Corporation's ability to grow its assets under management.
----------------------------------------------------------------------------------------------------------
Assets under management (in billions)
----------------------------------------------------------------------------------------------------------
June 30, 2002 March 31, 2002 June 30, 2001
----------------------------------------------------------------------------------------------------------
Wilmington Trust $22.0 $24.2 $25.7
----------------------------------------------------------------------------------------------------------
Roxbury Capital Management $5.0 $6.9 $9.6
----------------------------------------------------------------------------------------------------------
Cramer Rosenthal McGlynn $4.7 $5.1 4.0
----------------------------------------------------------------------------------------------------------
Totals $31.7 $36.2 $39.3
----------------------------------------------------------------------------------------------------------
At June 30, 2002, the composition of Wilmington Trust's assets under management
was: equities, 59%; fixed income, 23%; cash and equivalent instruments, 10%;
mutual funds, 5%; and miscellaneous assets, 3%.
Second quarter and year-to-date 2002 net advisory fees reflect a $1.9 million
and $3.8 million reduction in goodwill amortization expense from the
corresponding periods of 2001, in accordance with the provisions of Statement of
Financial Accounting Standard No. 142, which were adopted at the beginning of
2002.
Other operating income for the second quarter was $1.3 million, an increase of
$929,000 over the $412,000 reported for the second quarter of 2001. For the
first half of 2002, other operating income was $2.2 million, down $1.2 million,
or 36%, from that for the first half of 2001. Second quarter 2002 results
included a one-time gain from the sale of the 401(k) recordkeeping business of
$553,000 along with higher gains on sales of residential mortgage loans and
automobile lease residual values. Six-month results from 2001 included a $1.8
million gain on the sale of a parking lot offset, in part, by losses on
automobile lease residual values.
Operating expenses for the quarter were $75.9 million, an increase of $7.7
million, or 11%, over the $68.1 million for the second quarter of last year. For
the first half of 2002, operating expenses were $151.1 million, $14.9 million,
or 11%, higher than the $136.2 million reported for the first half of 2001. The
2002 year-to-date expenses include approximately $6.4 million relating to the
consolidation of Balentine and SPV Management.
Personnel expenses for the quarter were $44.6 million, an increase of $4.2
million, or 10%, over the $40.3 million for the second quarter of 2001. For the
year-to-date, personnel expenses were $91.5 million, $8.3 million, or 10%,
higher than those for the first half of 2001. Approximately $3.6 million, or
43%, of this increase was attributable to the newly-consolidated entities.
All categories of operating expense reflected modest increases for both the
quarter-over-quarter and year-over-year. Each of these classifications of
expense reflected increases associated with the aforementioned consolidation of
Balentine and SPV Management. Absent this $6.4 million increase, operating
expenses were 6% higher than their year-ago levels and reflected the opening of
new offices in Atlanta, Palm Beach, Baltimore and California.
The provision for income taxes for the second quarter of 2002 was $18.6 million,
a $2.5 million, or 16%, increase over the provision for the second quarter of
last year. Year-to-date, the provision for income taxes was $35.7 million, $4.2
million, or 13%, higher than for the first half of 2001. Federal income tax
expense was $32.7 million, an increase of $2.8 million, or 10%, over the $29.8
million for the first half of 2002. State income tax expense was
26
$3.0 million, an increase of $642,000, or 27%. The Corporation's effective tax
rate for the first half of 2002 was 34.9%, compared with 34.0% for the first
half of 2001. Contributing to this increase were higher levels of pretax income,
declining levels of tax-exempt income and increased profits in states with less
favorable rate structures than Delaware.
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.
The maturity and marketability of loans and investments provide liquidity, along
with time deposits at other banks, federal funds sold and securities purchased
under agreements to resell. Liquidity also results from the Corporation's
internally generated capital, core deposits, large certificates of deposit,
federal funds purchased, securities sold under agreements to repurchase and
other credit facilities. In the second quarter of 2002, the proportion of
funding provided by core deposits - demand deposits, interest-bearing demand
deposits and certificates of deposit - was stable when compared to last year.
Since average total assets were stable year-to-year, funding sources also were
stable, with the relative proportions of core deposits and short-term borrowings
(principally federal funds purchased and securities sold under agreements to
repurchase) virtually unchanged. The Corporation is a guarantor of 63% - its
ownership interest - of three obligations of its affiliate, Cramer Rosenthal
McGlynn. The guaranty is for two lines of credit totaling $8 million, at LIBOR
plus 2%, which expire December 8, 2002. The third credit facility is a $2
million amortizing term loan, at LIBOR plus 2%, the balance of which was
$166,000 at June 30, 2002. Management continuously monitors the Corporation's
existing and projected liquidity requirements. 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.
ASSET QUALITY AND LOAN LOSS PROVISION
The Corporation's provision for loan losses for the second quarter was $6.1
million. This was $1.4 million higher than the amount provided for the second
quarter of 2001, and was attributable to loan growth and a provision against 25%
of the Corporation's $13 million exposure to a commercial client in the
educational services industry. The reserve for loan losses at June 30, 2002 was
$86.6 million, an increase of $5.8 million, or 7%, over the $80.8 million at
December 31, 2001. The reserve at quarter-end as a percentage of loans
outstanding was 1.51%, an increase of four basis points over the 1.47% reported
at year-end 2001. Net chargeoffs for the quarter were $1.2 million, a decrease
of $2.0 million, or 61%, from the $3.2 million reported for the second quarter
of 2001. Loans past due 90 days or more, nonaccrual loans and restructured loans
at June 30, 2002 totaled $52.6 million. This represented an increase of $1.0
million, or 2%, over the $51.5 million reported at year-end 2001. Loans past due
90 days or more at quarter-end totaled $5.5 million, down $8.1 million, or 60%,
from year-end 2001. Nonaccrual loans at quarter-end were $47.1 million, $9.1
million, or 24%, above the $38.0 million of nonaccrual loans at year-end 2001.
At June 30, 2002, no loans were classified as restructured, compared with
$375,000 of loans at year-end 2001. Other real estate owned (OREO) at
quarter-end was $352,000, down $46,000, or 12%, from the $398,000 at year-end
2001. The overall level of nonperforming loans at the end of the second quarter
of 2002 increased $9.1 million, or 23%, to $47.5 million, from their year-end
level of $38.4 million.
The following table presents risk elements in the Corporation's loan portfolio:
--------------------------------------------------------------------------------------------------
(in thousands) June 30,2002 December 31, 2001 June 30, 2001
--------------------------------------------------------------------------------------------------
Nonaccruing loans $47,124 $38,016 $36,188
--------------------------------------------------------------------------------------------------
Past due 90 days or more 5,461 13,524 8,766
--------------------------------------------------------------------------------------------------
Total $52,585 $51,540 $44,954
--------------------------------------------------------------------------------------------------
Percent of loans at period-end .92% .94% .85%
-------------------------------------------------------------------------------------------------
Other real estate owned $352 $398 $491
---------------------------------------------------------------------------------------------------
27
Continued slow economic conditions or any further deterioration in markets the
Corporation serves may further impair the ability of some borrowers to repay
their loans in full on a timely basis. In that event, management would expect
increased levels of nonperforming assets, credit losses and provisions for loan
losses. To minimize the likelihood and impact of such conditions, management
continually monitors the entire loan portfolio to identify potential problem
loans and avoid disproportionately high concentrations of loans to individual
borrowers and industries. An integral part of this process is a regular analysis
of all past due loans. At June 30, 2002, loans past due 90 days or more totaled
$5.5 million, approximately 44% of which were in the Corporation's commercial
loan portfolio, 35% of which were in the residential mortgage loan portfolio and
21% of which were in the consumer loan portfolio. The corresponding ratios at
December 31, 2001 were 68%, 23% and 9%, respectively. As a result of the
Corporation's ongoing monitoring of its loan portfolios, at June 30, 2002,
management identified approximately $45.1 million of loans about which serious
doubt exists as to the borrowers' ability to continue to repay their loans on a
timely basis. These loans are either currently performing in accordance with
their terms or are less than 90 days past due. This compares with the $60.6
million of loans at year-end 2001 about which the Corporation had serious doubt.
In light of the current levels of past due, non-accrual and problem loans,
management believes that the Corporation's reserve for loan losses is a
reasonable estimate of the known and inherent losses in the loan portfolios. The
Corporation's loan loss reserve methodology is sound and has provided an
appropriate level of reserve adequacy over an extended period of time. The
Corporation's reserve is reflective of estimated credit losses for specifically
identified and estimated probable losses inherent in the remainder of the
portfolio based on loan type and risk rating classification. The methodology
includes an analysis of the business climate and the estimated effect on credit
losses, which is the basis for an unallocated portion of the reserve assessment.
The business climate includes shifts in current market conditions, loan growth
in the Corporation's expansion markets, the average loan size and complexity
within the portfolio, trends in delinquent payment performance, the direction of
risk rating migration within the portfolio, the level of serious doubt loans,
the impact of litigation and trends in bankruptcy filings. The unallocated and
allocated portions of the reserve are reassessed quarterly during the regular
application of the reserve methodology. At June 30, 2002, approximately $6.3
million, or 7%, of the reserve for loan losses was unallocated. This amount was
unchanged from the amount of the reserve that was unallocated at year-end 2001.
Loan growth has been addressed through the allocation of reserves to the new
loans within the parameters of the reserve methodology. While the serious doubt
level has risen, delinquency trends have declined from year-end. The percentage
of loans carrying a pass rating remained high, at 95%.
CAPITAL RESOURCES
Management continues to review the Corporation's capital position and make
adjustments as needed to assure that the Corporation's capital base is
sufficient to satisfy existing and impending regulatory requirements, as well as
to meet appropriate standards of safety and provide for future growth. The
Corporation's capital increased in the first half of 2002 due primarily to
increased earnings and the issuance of shares in the acquisition of Balentine
Holdings. The Corporation's annualized capital generation rate for the first
half of this year was 10.0%, a decrease from the 10.75% reported for 2001.
Earnings for the first six months of 2002 of $66.3 million, net of $32.5 million
in cash dividends, added $33.8 million to the Corporation's capital. An
additional $19.1 million was provided by the issuance of shares under employment
benefit plans and the acquisition of Balentine. The rise in the market value of
the Corporation's available-for-sale investment portfolio increased equity by
$3.3 million, while the acquisition of treasury stock reduced equity by $14.2
million.
The Federal Reserve Board's risk-based capital guidelines establish the minimum
levels of capital for a bank holding company. The guidelines are intended to
reflect the varying degrees of risk associated with different balance sheet and
off-balance-sheet items. The Corporation has calculated its capital position
under the risk-based capital guidelines. At June 30, 2002, the Corporation's
total risk-based capital ratio was 10.94%, compared with 11.16% reported at
year-end 2001. The Corporation's Tier 1 risk-based capital ratio at that date
was 7.67%, compared with 7.78% reported at year-end 2001, and its Tier 1
leverage capital ratio was 6.53%, compared with 6.49% reported at year-end 2001.
Each of these ratios exceeded
28
the minimum levels required for adequately capitalized institutions of 8%, 4%
and 4%, respectively, as well as the levels required for well-capitalized
institutions of 10%, 6% and 5%, respectively.
In April 2002, the Corporation's Board of Directors declared a two-for-one stock
split in the form of a 100% stock dividend, which was paid on June 17, 2002 to
stockholders of record on June 3, 2002. In addition, the Board of Directors
increased the quarterly dividend to $0.255 per share on a post-split basis. This
marked the twenty-first consecutive year of increased cash dividends.
In April 2002, the Corporation's Board of Directors also authorized a new
8,000,000-share (post split) buyback program that will commence at the
completion of its current program, which has 103,290 shares remaining. At June
30, 2002, 7,896,710 shares had been bought under the current program at a cost
of $197.4 million.
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 holding company's performance.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of goods and services. The impact of inflation on a bank
holding company's financial performance, therefore, is indeterminable.
OTHER INFORMATION
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Net interest income is an important determinant of the Corporation's financial
performance. Through management of its interest rate sensitivity exposure, 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, as well as certain external factors such as the level of market
interest rates, 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 generally employs interest rate scenarios in
which interest rates gradually move up or down 250 basis points over one year.
As of June 30, 2002, the declining rate scenario gradually moves down 175 basis
points until the federal funds rate equals zero. This change ensures that
negative rates are not created within the simulation model. The rising rate
scenario remains unchanged and gradually increases 250 basis points. The
simulation model projects, as of June 30, 2002, that a gradual 250 basis point
increase in market interest rates would increase net interest income by 6.51%
over a one-year period. This compares to an increase of 2.57% as measured at
December 31, 2001. If interest rates were to decrease gradually 175 basis
points, the simulation model projects, as of June 30, 2002, that net interest
income would decrease 7.76% over a one-year period. This compares to a decrease
of 5.18% that the simulation projected would occur on a gradual 175-basis-point
decline in market interest rates as measured at December 31, 2001. The
Corporation's objective is to keep any interest rate imbalance from reducing net
interest income by 10% or more within a one-year period, as projected by the
simulation model. If it is determined that a course of action is necessary based
on the simulation model, strategies will be developed and presented to the
Corporation's Board of Directors.
29
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 that the
Corporation uses regarding the effects of changes in interest rates on the
adjustment of retail deposit rates and the prepayment of residential mortgages,
asset-backed securities and collateralized mortgage obligations play a
significant role in the results the simulation model projects. Rate and
prepayment assumptions used in the Bank's simulation model differ for both
assets and liabilities in rising as compared to declining interest rate
environments. Nevertheless, these assumptions are inherently uncertain and, as a
result, the simulation model cannot predict precisely the impact of changes in
interest rates on net interest income. Management reviews the Corporation's
exposure to interest rate risk regularly, and may employ a variety of strategies
as needed to adjust its sensitivity. This includes changing the relative
proportions of fixed-rate and floating-rate assets and liabilities, changing the
number and maturity of funding sources and asset securitizations and utilizing
derivative contracts such as interest rate swaps and interest rate floors.
30
Part II. Other Information
Item 1 - Legal Proceedings
Not Applicable
Item 2 - Change In Securities and Use of Proceeds
Not Applicable
Item 3 - Defaults Upon Senior Securities
Not Applicable
Item 4 - Submission of Matters to a Vote of Security Holders
At the Corporation's Annual Shareholders' Meeting held on April
18, 2002 (the "Annual Meeting"), the nominees for directors of
the Corporation proposed were elected. The votes cast for those
nominees were as follows:
For Withheld
------------ --------
Carolyn S. Burger 26,759,035 447,818
Robert V. A. Harra, Jr. 27,089,967 116,886
Rex L. Mears 26,942,936 263,917
Robert W. Tunnell, Jr. 27,058,287 148,566
The following individuals also continue to serve as directors
of the Corporation:
Betsy S. Atkins
Ted T. Cecala
Richard R. Collins
Charles S. Crompton, Jr.
Edward B. du Pont
R. Keith Elliott
Deborah I. Fine
Hugh E. Miller
Stacey J. Mobley
David P. Roselle
H. Rodney Sharp III
Thomas P. Sweeney
In addition, at the Annual Meeting, the Corporation's
shareholders approved the Corporation's 2002 Long-Term
Incentive Plan. That plan, designed primarily to assist the
Corporation in attracting and retaining highly competent
officers, other key employees and directors, is for a term of
three years and authorizes the issuance of up to 2,000,000
shares of the Corporation's common stock. The vote in favor of
that plan was as follows:
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
20,208,078 2,262,800 254,220 4,481,755
31
Item 5 - Other Information
Not Applicable
Item 6 - Exhibits and Reports on Form 8-K
Exhibit Exhibit
Number -------
------
3.1 Amended and Restated Certificate of Incorporation of the Corporation(1)
3.2 Amended and Restated Bylaws of the Corporation(2)
10.44 Amended and Restated Limited Liability Company Agreement of Cramer
Rosenthal McGlynn, LLC dated as of January 1, 2001(3)
10.45 Amendment to the Amended and Restated Limited Liability Company
Agreement of Cramer Rosenthal McGlynn, LLC dated March 15, 2002(3)
10.46 Amendment to the Amended and Restated Limited Liability Company
Agreement of Cramer Rosenthal McGlynn, LLC dated June 28, 2002 (3)
10.47 Amended and Restated Limited Liability Company Agreement of Roxbury
Capital Management, LLC dated as of July 31, 1998 (3)
10.48 First Amendment to the Amended and Restated Limited Liability Company
Agreement of Roxbury Capital Management, LLC(3)
10.49 Second Amendment to the Amended and Restated Limited Liability Company
Agreement of Roxbury Capital Management, LLC dated as of March 10,
2001(3)
10.50 Third Amendment to the Amended and Restated Limited Liability Company
Agreement of Roxbury Capital Management, LLC (3)
10.51 Merger Agreement among Balentine Holdings, Inc., Robert M. Balentine,
B. Clayton Rolader, Jeffrey P. Adams, Robert E. Reiser, Jr., Gary B.
Martin, Wesley A. French, Michael E. Wolf, The 1999 Balentine Family
Trust, The Robert M. Balentine Insurance Trust, WTC Merger Subsidiary,
Inc., WT Investments, Inc. and Wilmington Trust Corporation dated as of
October 23, 2001(3)
10.52 Amended and Restated Limited Liability Company Agreement of Balentine
Delaware Holding Company, LLC dated as of January 2, 2002(3)
10.53 Agreement for the Sale and Purchase of SPV Management Limited dated
January 1, 2002 by and among Anthony Francis Raikes and Piers Minoprio
and Wilmington Trust (UK) Limited and Wilmington Trust Corporation(3)
------------------------------
(1) Incorporated by reference to the corresponding exhibit to the Annual
Report on Form 10-K of Wilmington Trust Corporation filed March 30,
1996.
(2) Incorporated by reference to the corresponding exhibit to the Annual
Report on Form 10-K of Wilmington Trust Corporation filed on March 30,
2000.
(3) Filed herewith.
The Corporation filed a report on Form 8-K on April 25, 2002 reporting
certain developments under Item 5.
32
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ Ted T. Cecala
Date: August 13, 2002 ---------------------------------
Name: Ted T. Cecala
Title: Chairman and Chief Executive Officer
(Authorized Officer )
/s/ David R. Gibson
---------------------------------
Name: David R. Gibson
Title: Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
The undersigned certify that, to their knowledge, the Form 10-Q of Wilmington
Trust Corporation (the "Corporation") for the second quarter of 2002 fully
complies with the requirements of section 13(a) of the Securities Exchange Act
of 1934 and that the information contained in that report fairly presents, in
all material respects, the financial condition and results of operation of the
Corporation.
/s/ Ted. T. Cecala
----------------------------------------------
Ted. T. Cecala
Chairman and Chief Executive Officer
/s/ David R. Gibson
----------------------------------------------
David R. Gibson
Executive Vice President and
Chief Financial Officer
33