-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYi3XyKE/QV7mWzsK3reCDXbCHDdGtLdSpfDP5d7sVGu5WKF39h5HBh6Ug46Kd4d sUGSVVuMZhOrEfveh8cK9Q== /in/edgar/work/20000607/0000893220-00-000749/0000893220-00-000749.txt : 20000919 0000893220-00-000749.hdr.sgml : 20000919 ACCESSION NUMBER: 0000893220-00-000749 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000607 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILMINGTON TRUST CORP CENTRAL INDEX KEY: 0000872821 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 510328154 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-14659 FILM NUMBER: 650428 BUSINESS ADDRESS: STREET 1: RODNEY SQUARE NORTH STREET 2: 1100 NORTH MARKET ST CITY: WILMINGTON STATE: DE ZIP: 19890 BUSINESS PHONE: 3026511000 MAIL ADDRESS: STREET 1: 1100 NORTH MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19890 10-Q/A 1 0001.txt FORM 10-Q/A FOR WILMINGTON TRUST CORPORATION 1 FORM 10-Q/A 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 March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From ____________ to ___________ Commission File Number: 1-14659 WILMINGTON TRUST CORPORATION ---------------------------- (Exact name of registrant as specified in its charter) Delaware 51-0328154 - ------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890 ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (302) 651-1000 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (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 2 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 March 31, 2000 - 32,235,847 shares 2 3 Wilmington Trust Corporation and Subsidiaries Form 10-Q/A Index
Page ------ Part I. Financial Information Item 1 - Financial Statements Consolidated Statements of Condition 4 Consolidated Statements of Income 6 Consolidated Statements of Cash Flows 8 Notes to Consolidated Financial Statements 10 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 21 Part II. Other Information Item 1 - Legal Proceedings 23 Item 2 - Changes in Securities and Use of Proceeds 23 Item 3 - Defaults Upon Senior Securities 23 Item 4 - Submission of Matters to a Vote of Security Holders 23 Item 5 - Other Information 23 Item 6 - Exhibits and Reports on Form 8-K 23 Exhibit 11 Exhibit 27
3 4
CONSOLIDATED STATEMENTS OF CONDITION (unaudited) Wilmington Trust Corporation and Subsidiaries ---------------------------------- March 31, December 31, (in thousands) 2000 1999 - --------------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 228,510 $ 225,145 ---------------------------------- Interest-bearing time deposits in other banks ---- ---- ---------------------------------- Federal funds sold and securities purchased under agreements to resell 46,800 129,760 ---------------------------------- Investment securities available for sale: U.S. Treasury and government agencies 931,127 997,799 Obligations of state and political subdivisions 4,721 4,732 Other securities 658,252 683,736 - --------------------------------------------------------------------------------------------------------------- Total investment securities available for sale 1,594,100 1,686,267 ---------------------------------- Investment securities held to maturity: U.S. Treasury and government agencies 11,588 11,960 Obligations of state and political subdivisions 7,244 7,244 Other securities 9,407 12,028 - --------------------------------------------------------------------------------------------------------------- Total investment securities held to maturity (market values were $28,074 and $31,150, respectively) 28,239 31,232 ---------------------------------- Loans: Commercial, financial and agricultural 1,579,741 1,521,336 Real estate-construction 342,530 303,734 Mortgage-commercial 917,503 919,297 Mortgage-residential 984,723 968,259 Consumer 1,143,916 1,108,945 Unearned income (1,062) (1,492 - --------------------------------------------------------------------------------------------------------------- Total loans net of unearned income 4,967,351 4,820,079 Reserve for loan losses (73,628) (76,925 - --------------------------------------------------------------------------------------------------------------- Net loans 4,893,723 4,743,154 ---------------------------------- Premises and equipment, net 130,371 132,160 Goodwill and other intangible assets, net of accumulated amortization of $21,066 in 2000 and $20,818 in 1999 161,422 163,622 Accrued interest receivable 44,246 43,672 Other assets 90,537 46,932 - --------------------------------------------------------------------------------------------------------------- Total assets $7,217,948 $7,201,944 ==================================
4 5 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 944,066 $ 994,643 Interest-bearing: Savings 406,592 393,750 Interest-bearing demand 1,429,648 1,397,574 Certificates under $100,000 995,103 1,067,729 Certificates $100,000 and over 1,775,736 1,515,788 - ---------------------------------------------------------------------------------------------------------------- Total deposits 5,551,145 5,369,484 ----------------------------------- Short-term borrowings: Federal funds purchased and securities sold under agreements to repurchase 844,171 995,858 U.S. Treasury demand 52,267 95,000 - ---------------------------------------------------------------------------------------------------------------- Total short-term borrowings 896,438 1,090,858 ----------------------------------- Accrued interest payable 50,637 56,012 Other liabilities 45,475 19,359 Long-term debt 168,000 168,000 - ---------------------------------------------------------------------------------------------------------------- Total liabilities 6,711,695 6,703,713 ----------------------------------- Stockholders' equity: Common stock ($1.00 par value) authorized 150,000,000 shares; issued 39,264,173 39,264 39,264 Capital surplus 71,012 70,749 Retained earnings 706,664 689,598 Accumulated other comprehensive income (37,229) (34,796) - ---------------------------------------------------------------------------------------------------------------- Total contributed capital and retained earnings 779,711 764,815 Less: Treasury stock, at cost, 7,028,326 and 6,911,398 shares, respectively (273,458) (266,584) - ---------------------------------------------------------------------------------------------------------------- Total stockholders' equity 506,253 498,231 ----------------------------------- Total liabilities and stockholders' equity $7,217,948 $7,201,944 =================================== See Notes to Consolidated Financial Statements
5 6 CONSOLIDATED STATEMENTS OF INCOME (unaudited) Wilmington Trust Corporation and Subsidiaries
-------------------------------- For the three months ended March 31, -------------------------------- (in thousands; except per share data) 2000 1999 - ------------------------------------------------------------------------------------------------------------- NET INTEREST INCOME Interest and fees on loans $ 99,722 $ 87,201 Interest and dividends on investment securities: Taxable interest 22,986 17,356 Tax-exempt interest 152 190 Dividends 2,508 2,361 Interest on time deposits in other banks ---- ---- Interest on federal funds sold and securities purchased under agreements to resell 650 280 - ------------------------------------------------------------------------------------------------------------- Total interest income 126,018 107,388 -------------------------------- Interest on deposits 44,563 33,833 Interest on short-term borrowings 15,004 12,980 Interest on long-term debt 2,761 2,756 - ------------------------------------------------------------------------------------------------------------- Total interest expense 62,328 49,569 -------------------------------- Net interest income 63,690 57,819 Provision for loan losses (5,500) (5,000) - ------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 58,190 52,819 -------------------------------- OTHER INCOME Trust and asset management fees 40,330 36,079 Service charges on deposit accounts 6,225 5,426 Card fees 2,235 2,002 Other operating income 1,937 2,072 Securities gains 1,475 20 - ------------------------------------------------------------------------------------------------------------- Total other income 52,202 45,599 -------------------------------- Net interest and other income 110,392 98,418 -------------------------------- OTHER EXPENSE Salaries and employment benefits 41,690 33,792 Net occupancy 3,617 3,087 Furniture and equipment 5,595 4,413 Stationery and supplies 1,633 1,561 Servicing and consulting fees 1,762 1,777
6 7 Advertising and contributions 1,305 1,945 Other operating expense 8,961 8,468 - ----------------------------------------------------------------------------------------------------------- Total other expense 64,563 55,043 ------------------------------ NET INCOME Income before income taxes 45,829 43,375 Applicable income taxes 15,228 14,219 - ----------------------------------------------------------------------------------------------------------- Net income $ 30,601 $ 29,156 ============================== Net income per share: basic $ 0.95 $ 0.88 ============================== diluted $ 0.94 $ 0.87 ============================== Weighted average shares outstanding: basic 32,227 33,075 diluted 32,544 33,703 Cash dividends per share $ 0.42 $ 0.39 See Notes to Consolidated Financial Statements
7 8 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Wilmington Trust Corporation and Subsidiaries
---------------------------------- For the three months ended March 31, (in thousands) 2000 1999 - --------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 30,601 $ 29,156 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 5,500 5,000 Provision for depreciation 4,583 3,985 Amortization of investment securities available for sale discounts and premiums 1,453 609 Accretion of investment securities held to maturity discounts and premiums (3) (28) Deferred income taxes 122 1,951 Securities gains (1,475) (20) (Increase)/decrease in other assets (42,101) 973 Increase/(decrease) in other liabilities 22,422 (1,478) - --------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 21,102 40,148 ---------------------------------- INVESTING ACTIVITIES Proceeds from sales of investment securities available for sale 145,736 276,380 Proceeds from maturities of investment securities available for sale 120,658 113,916 Proceeds from maturities of investment securities held to maturity 2,996 29,050 Purchases of investment securities available for sale (178,007) (548,511) Purchases of investment securities held to maturity ---- ---- Gross proceeds from sales of loans 6,813 37,783 Purchases of loans (2,913) (1,422) Net increase in loans (159,969) (133,935) Net increase in premises and equipment (2,794) (4,845) - --------------------------------------------------------------------------------------------------------------- Net cash used for investing activities (67,480) (231,584) ---------------------------------- FINANCING ACTIVITIES Net decrease in demand, savings and interest-bearing demand deposits (5,661) (82,489) Net increase in certificates of deposit 187,322 9,709 Net (decrease)/increase in federal funds purchased and securities sold under agreements to repurchase (151,687) 241,387 Net (decrease)/increase in U.S. Treasury demand (42,733) 9,962 Cash dividends (13,535) (12,887)
8 9 Proceeds from common stock issued under employment benefit plans 1,659 4,454 Payments for common stock acquired through buybacks (8,582) (26,885) - --------------------------------------------------------------------------------------------------------------- Net cash (used for)/provided by financing activities (33,217) 143,251 ------------------------------- Decrease in cash and cash equivalents (79,595) (48,185) Cash and cash equivalents at beginning of period 354,905 288,079 - --------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 275,310 $ 239,894 =============================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 67,704 $ 46,229 Taxes 1,014 6,407 Loans transferred during the year: To other real estate owned $ 1,024 $ 143 From other real estate owned 1,020 620 See Notes to Consolidated Financial Statements
9 10 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 and WT Investments, Inc., conform to generally accepted accounting principles 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 of the interim periods are not necessarily indicative of the results that may be expected for the full year. This note is presented and should be read in conjunction with the Notes to the Consolidated Financial Statements included in the Corporation's Annual Report to Shareholders for 1999. Note 2 - Comprehensive Income Total comprehensive income for the Corporation included net income and the after-tax, unrealized gains and/or losses on the Corporation's investment securities available-for-sale portfolio. For the three months ended March 31, 2000 and 1999, total comprehensive income, net of taxes, was $28,168,000 and $26,259,000, respectively. 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 March 31, ------------------------------------ (in thousands; except per share data) 2000 1999 - ----------------------------------------------------------------------------------------------------------------- Numerator Net income $ 30,601 $ 29,156 - ----------------------------------------------------------------------------------------------------------------- Denominator Denominator for basic earnings per share - weighted-average shares 32,227 33,075 - ----------------------------------------------------------------------------------------------------------------- Effect of dilutive securities: Employee stock options 317 628 - ----------------------------------------------------------------------------------------------------------------- Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions 32,544 33,703 - ----------------------------------------------------------------------------------------------------------------- Basic earnings per share $ 0.95 $ 0.88 ================================================================================================================= Diluted earnings per share $ 0.94 $ 0.87 =================================================================================================================
10 11 Note 4 - Segment Reporting Financial data by segment for March 31, 2000 vs March 31, 1999 is as follows:
- --------------------------------------------------------------------------------------------------------------- Banking Fee-based Funds Year-to-Date March 31, 2000 (in thousands) business business management Totals - --------------------------------------------------------------------------------------------------------------- Net interest income $ 54,973 $ 6,673 $ 2,563 $ 64,209 Provision for loan losses (5,467) (33) ---- (5,500) - --------------------------------------------------------------------------------------------------------------- Net interest income after provision 49,506 6,640 2,563 58,709 Trust and asset management fees: Personal trust ---- 17,816 ---- 17,816 Corporate financial services ---- 13,087 ---- 13,087 Asset management ---- 9,463 ---- 9,463 Other operating income 10,064 436 390 10,890 Securities gains 1,470 ---- 5 1,475 - --------------------------------------------------------------------------------------------------------------- Net interest and other income 61,040 47,442 2,958 111,440 Other expense (33,820) (30,801) (421) (65,042) - --------------------------------------------------------------------------------------------------------------- Segment profit from operations 27,220 16,641 2,537 46,398 Segment loss from infrequent events ---- (34) ---- (34) - --------------------------------------------------------------------------------------------------------------- Segment profit before income taxes $ 27,220 $ 16,607 $ 2,537 $ 46,364 =============================================================================================================== Intersegment revenue $ 5,377 $ 1,833 $ 710 $ 7,920 Depreciation and amortization 2,814 1,898 74 4,786 Investment in equity method investees ---- 158,741 ---- 158,741 Segment average assets 4 ,461,114 809,046 3,405,866 8,676,026 Year-to-Date March 31, 1999 (in thousands) - --------------------------------------------------------------------------------------------------------------- Net interest income $ 49,396 $ 5,102 $ 3,846 $ 58,344 Provision for loan losses (4,944) (56) ---- (5,000) - --------------------------------------------------------------------------------------------------------------- Net interest income after provision 44,452 5,046 3,846 53,344 Trust and asset management fees: Personal trust ---- 16,014 ---- 16,014 Corporate financial services ---- 11,185 ---- 11,185 Asset management ---- 9,137 ---- 9,137 Other operating income 9,300 510 182 9,992 Securities gains ---- ---- 20 20 - --------------------------------------------------------------------------------------------------------------- Net interest and other income 53,752 41,892 4,048 99,692 Other expense (29,425) (25,686) (464) (55,575) - --------------------------------------------------------------------------------------------------------------- Segment profit from operations 24,327 16,206 3,584 44,117 Segment loss from infrequent events ---- (190) ---- (190) - --------------------------------------------------------------------------------------------------------------- Segment profit before income taxes $ 24,327 $ 16,016 $ 3,584 $ 43,927 ===============================================================================================================
11 12 Intersegment revenue $ 2,462 $ 1,886 $ 635 $ 4,983 Depreciation and amortization 2,532 1,665 69 4,266 Investment in equity method investees ---- 132,244 ---- 132,244 Segment average assets 4,083,777 662,882 3,052,629 7,799,288
A reconciliation of reportable segment amounts to the Corporation's consolidated balances is as follows:
- ------------------------------------------------------------------------------------ Year-to-Date March 31 (in thousands) 2000 1999 - ------------------------------------------------------------------------------------ Revenue: Total revenues for reportable segments $ 64,209 $ 58,344 Other revenues 52,731 46,348 Elimination of intersegment revenues (1,048) (1,274) - --------------------------------------------------------------------------------- Total consolidated revenues before provision $ 115,892 $ 103,418 ============================ Profit or loss: Total profit or loss for reportable segments $ 46,364 $ 43,927 Elimination of intersegment profits (535) (552) - --------------------------------------------------------------------------------- $ 45,829 $ 43,375 ============================ Assets: Total assets for reportable segments $ 8,676,026 $ 7,799,288 Other assets 196,243 228,173 Elimination of intersegment assets (1,791,755) (1,741,707) Other assets not allocated to segments ---- ---- - --------------------------------------------------------------------------------- Consolidated total average assets $ 7,080,514 $ 6,285,754 ============================
A description of the Corporation's business lines is contained in Note 18 to its Consolidated Financial Statements in the Corporation's 1999 Annual Report to Shareholders. 12 13 Wilmington Trust Corporation and Subsidiaries Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations SUMMARY - ------- Net income for the first quarter of 2000 was $30.6 million, or $.95 per share, a 5% increase over the $29.2 million, or $.88 per share, reported for the first quarter of last year. Diluted net income per share for the first quarter of 2000 was $.94, compared to $.87 for the first quarter of last year. Total revenues for the first quarter of 2000 reached $115.9 million, a 12% increase over the $103.4 million reported for the first quarter of 2000. Net interest income for the first quarter of 2000 reached $63.7 million, a 10% increase over the $57.8 million reported for the first quarter of last year. The quarterly provision for loan losses of $5.5 million was 10% higher than the $5.0 million for the first quarter of 1999. The reserve for loan losses at quarter-end was $73.6 million, $3.3 million, or 4%, below the $76.9 million reported at December 31, 1999. Noninterest income for the first quarter of 2000 was $52.2 million, a 14% increase over the $45.6 million reported for the same quarter of last year. Operating expenses for the first quarter of 2000 were $64.6 million, a 17% increase above the $55.0 million reported for the first quarter of last year. Return on assets for the three months ended March 31, 2000, on an annualized basis, was 1.74%, down from the 1.88% reported for the corresponding period a year ago. Return on stockholders' equity, also on an annualized basis, was 24.57%, as compared with 22.10% for the first three months of 1999. STATEMENT OF CONDITION - ---------------------- Total assets at March 31, 2000 were $7.22 billion, up $16.0 million over the $7.20 billion reported at December 31, 1999. Total earning assets decreased $25.9 million over the same period of time, to $6.64 billion, as decreases in investment securities offset increases in the loan portfolio. Total loans at March 31, 2000 were $4.97 billion, an increase of $147.3 million, or 3%, over the December 31, 1999 level of $4.82 billion. Contributing to this increase were commercial loans of $1.58 billion, which rose $63.4 million, or 4%, over their December 31, 1999 level; commercial construction loans of $342.5 million, which rose $38.8 million, or 13%; residential mortgage loans of $984.7 million, which rose $16.5 million, or 2%; and consumer loans of $1.14 billion, which rose $35.0 million, or 3%. Over half of the loan portfolio growth was from activity in the southeastern Pennsylvania market. The investment portfolio at March 31, 2000 was $1.62 billion, a decrease of $95.2 million, or 6%, from the December 31, 1999 level of $1.72 billion. Contributing to this decrease were U.S. Treasury and government agency securities, which decreased $67.0 million, or 7%, to $942.7 million, preferred stocks, which decreased $16.6 million, or 12%, to $125.9 million, and asset-backed securities, which decreased $13.0 million, or 4%, to $348.9 million. Interest-bearing liabilities at quarter-end were $5.67 billion, $37.8 million, or 1%, above the year-end level of $5.63 billion. Total deposits during the first three months of 2000 increased $181.7 million, while short-term borrowings decreased $194.4 million. A $259.9 million increase in certificates of deposit $100,000 13 14 and over was offset, in part, by a decrease in certificates of deposit under $100,000 and non-interest-bearing demand deposits which decreased $72.6 million and $50.6 million, respectively. The higher overall level of deposits at quarter-end decreased the Corporation's dependence on short-term borrowings, which resulted in lower levels of Federal funds purchased, reverse repurchase agreements and U.S. Treasury demand balances. Shareholders' equity at March 31, 2000 was $506.3 million, $8.0 million, or 2%, over the 1999 year-end level. Earnings of $30.6 million and $2.0 million in new stock issued during that period were offset, in part, by $13.5 million in cash dividends, the repurchase of $8.6 million of treasury stock and a $2.4 million valuation reserve adjustment for the investment portfolio. NET INTEREST INCOME - ------------------- Net interest income for the first quarter of 2000 on a fully tax-equivalent ("FTE") basis was $65.6 million. This was a $5.8 million, or 10%, increase over the $59.8 million reported for the first quarter of 1999. Interest income (FTE) for the first quarter of 2000 increased $18.5 million, or 17%, to $127.9 million from $109.4 million for the first quarter of 1999. Contributing to this improvement was a $774.8 million increase in the average level of earning assets, which added $14.8 million to interest revenues. This was complemented by the higher interest rate environment, which added an additional $3.7 million to interest revenues for the quarter. The average rate earned on the Corporation's earning assets during the first quarter of 2000 increased 10 basis points, from 7.60% to 7.70%. Interest expense for the first quarter of 2000 also increased, rising $12.8 million, or 26%, to $62.3 million. Interest-bearing liabilities, on average, rose $750.7 million over their level of a year ago. This increase in interest-bearing liabilities contributed an additional $10.2 million to interest expense, while the higher rate environment added another $2.6 million to quarterly interest expense. The average rate the Corporation paid for its funds during the first quarter of 2000 was 3.76%, compared to 3.46% for the first quarter of 1999. The Corporation's net interest margin for the first quarter of 2000 was 3.94%, 20 basis points below the 4.14% reported for the first quarter of a year ago. This decline was driven, in part, by the Corporation's use of the national certificate of deposit markets to fund its balance sheet growth. The following two tables present comparative net interest income data and a rate-volume analysis of changes in net interest income for the first quarters of 2000 and 1999, respectively. 14 15 QUARTERLY ANALYSIS OF EARNINGS
2000 First Quarter 1999 First Quarter ---------------------------------------- ---------------------------------------- (in thousands; rates on Average Income/ Average Average Income/ Average tax-equivalent basis) balance expense rate balance expense rate - --------------------------------------------------------------------------------------------------------------------------------- Earning assets Time deposits in other banks $ -- $ -- --% $ -- $ -- --% Federal funds sold and securities purchased under agreements to resell 47,489 650 5.41 24,444 280 4.53 - -------------------------------------------------------------------------- ----------------------------------- Total short-term investments 47,489 650 5.41 24,444 280 4.53 ------------------------------------------------------------------------------------- U.S. Treasury and government agencies 956,978 14,711 5.93 834,945 11,959 5.77 State and municipal 11,965 229 7.76 15,244 285 7.61 Preferred stock 133,518 2,783 7.79 168,739 2,813 6.78 Asset-backed securities 353,671 5,680 6.20 290,646 4,603 6.35 Other 194,636 3,179 6.56 92,521 1,199 5.21 - -------------------------------------------------------------------------- ----------------------------------- Total investment securities 1,650,768 26,582 6.23 1,402,095 20,859 6.00 ------------------------------------------------------------------------------------- Commercial, financial and agricultural 1,513,683 31,062 8.14 1,383,405 26,483 7.68 Real estate-construction 327,134 7,528 9.10 229,912 4,929 8.63 Mortgage-commercial 917,751 19,695 8.49 872,813 19,167 8.81 Mortgage-residential 976,489 17,301 7.09 854,064 15,916 7.39 Consumer 1,123,085 25,063 8.94 1,014,878 21,734 8.67 - -------------------------------------------------------------------------- ---------------------------------- Total loans 4,858,142 100,649 8.24 4,355,072 88,229 8.13 ------------------------------------------------------------------------------------- Total earning assets $6,556,399 127,881 7.70 $ 5,781,611 109,368 7.60 ===================================================================================== Funds supporting earning assets Savings $ 397,069 1,552 1.57 $ 408,230 1,968 1.96 Interest-bearing demand 1,364,286 6,962 2.05 1,349,693 7,661 2.30 Certificates under $100,000 1,044,662 12,561 4.84 1,175,661 14,944 5.16 Certificates $100,000 and over 1,587,167 23,488 5.85 700,084 9,260 5.29 - -------------------------------------------------------------------------- ---------------------------------- Total interest-bearing deposits 4,393,184 44,563 4.04 3,633,668 33,833 3.76 ------------------------------------------------------------------------------------- Federal funds purchased and securities sold under agreements to repurchase 1,004,990 14,401 5.71 1,030,789 12,510 4.85 U.S. Treasury demand 45,469 603 5.25 28,513 470 6.59 - -------------------------------------------------------------------------- ---------------------------------- Total short-term borrowings 1,050,459 15,004 5.69 1,059,302 12,980 4.91 ------------------------------------------------------------------------------------- Long-term debt 168,000 2,761 6.57 168,000 2,756 6.65 - -------------------------------------------------------------------------- ---------------------------------- Total interest-bearing
15 16
liabilities 5,611,643 62,328 4.43 4,860,970 49,569 4.11 ------------------------------------------------------------------------------------- Other noninterest funds 944,756 -- -- 920,641 -- -- - ---------------------------------------------------------------------------- ------------------------------------- Total funds used to support earning assets $6,556,399 62,328 3.76 $ 5,781,611 49,569 3.46 ===================================================================================== Net interest income/yield 65,553 3.94 59,799 4.14 Tax-equivalent adjustment (1,863) (1,980) ---------- ----------- Net interest income $ 63,690 $ 57,819 ========== ===========
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. 16 17 RATE-VOLUME ANALYSIS OF NET INTEREST INCOME
------------------------------------ For the three months ended March 31, ------------------------------------ 2000/1999 Increase(Decrease) due to change in ------------------------------------ (1) (2) (in thousands) Volume Rate Total - --------------------------------------------------------------------------------------------------------------------------- Interest income Time deposits in other banks $ -- $ -- $ -- Federal funds sold and securities purchased under agreements to resell 264 106 370 - --------------------------------------------------------------------------------------------------------------------------- Total short-term investments 264 106 370 -------------------------------------------- U.S. Treasury and government agencies 2,350 402 2,752 State and municipal * (61) 5 (56) Preferred stock * (394) 364 (30) Asset-backed securities 1,217 (140) 1,077 Other * 1,327 653 1,980 - --------------------------------------------------------------------------------------------------------------------------- Total investment securities 4,439 1,284 5,723 -------------------------------------------- Commercial, financial and agricultural * 2,488 2,091 4,579 Real estate-construction 2,086 513 2,599 Mortgage-commercial * 984 (456) 528 Mortgage-residential 2,249 (864) 1,385 Consumer 2,333 996 3,329 - --------------------------------------------------------------------------------------------------------------------------- Total loans 10,140 2,280 12,420 - --------------------------------------------------------------------------------------------------------------------------- Total interest income $ 14,843 $ 3,670 $ 18,513 ============================================ Interest expense: Savings $ (54) $ (362) $ (416) Interest-bearing demand 83 (782) (699) Certificates under $100,000 (1,681) (702) (2,383) Certificates $100,000 and over 11,862 2,366 14,228
17 18
- --------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 10,210 520 10,730 -------------------------------------------- Federal funds purchased and securities sold under agreements to repurchase (313) 2,204 1,891 U.S. Treasury demand 282 (149) 133 - --------------------------------------------------------------------------------------------------------------------------- Total short-term borrowings (31) 2,055 2,024 -------------------------------------------- Long-term debt -- 5 5 - --------------------------------------------------------------------------------------------------------------------------- Total interest expense $ 10,179 $ 2,580 $ 12,759 ============================================ Changes in net interest income $ 5,754 ==========
* 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. 18 19 NON-INTEREST REVENUES AND OPERATING EXPENSES - -------------------------------------------- Non-interest revenues for the first quarter of 2000 were $52.2 million, an increase of $6.6 million, or 14%, over those for the first quarter of a year ago, due primarily to higher trust and asset management fees. Trust and asset management fees for the first quarter of 2000 increased 4.3 million, or 12%, to $40.3 million. Private client advisory services fees for the quarter rose $2.0 million, or 12%, to $17.8 million. Corporate financial services fees increased $2.0 million, or 18%, to $13.1 million. Asset management fees for the quarter rose $326,000, or 4%, to $9.5 million. Service charges on deposit accounts for the first quarter were $6.2 million, 15% above those of a year ago. Increased transaction fees associated with checking accounts and automated teller machine usage contributed to this increase. Card fees and other operating income for the first quarter were $4.2 million. This was an increase of $98,000, or 2%, over the $4.1 million reported for the first quarter of 1999. Increased loan origination and late charge fees, up $98,000, were responsible for this increase. Operating expenses for the first quarter of 2000 increased $9.5 million, or 17%, to $64.6 million. Total personnel expenses for the quarter increased $7.9 million, or 23%, to $41.7 million. Contributing to this increase were higher compensation costs and expansion activity in California, New York and Pennsylvania. Salaries and wages increased 23.4%, reflecting higher incentive compensation and an additional $1.9 million in salary expense associated with the Corporation's shift in 1999 from 24 to 26 pay periods per year. Net occupancy expense rose $530,000, or 17%, due to higher costs associated with the leasing of offices in expansion markets as well as higher levels of depreciation on leasehold improvements. Furniture and equipment expense for the quarter rose $1.2 million, or 27%, as higher data processing maintenance costs and depreciation expense reflected the Corporation's continued investment in new technology. Income tax expense for the first three months of 2000 increased $1.0 million, or 7%, to $15.2 million. Approximately $983,000, or 97%, of this increase was Federal income tax. The Corporation's effective tax rate for the first quarter of 2000 was 33.23%, compared to 32.78% for the first three months of 1999. LIQUIDITY - --------- A financial institution's liquidity represents its ability to meet, in a timely manner, cash flow requirements that may arise. Liquidity of the asset side of the balance sheet is provided by the maturity and marketability of loans, money market assets and investments. Liquidity of the liability side of the balance sheet is usually provided through a stable base of core deposits. The Corporation's quarter-end liquidity ratio, calculated in accordance with regulatory requirements of the FDIC, was 24.66%. Management believes that maturities of the Corporation's investment securities, other readily marketable assets and external sources of funds offer more than adequate liquidity to meet any cash flow requirements that may arise. Sources of funds have historically consisted of deposits, amortization and prepayments of outstanding loans, maturities of investment securities, borrowings and interest income. Management monitors the Corporation's existing and projected liquidity requirements on an ongoing basis, and implements appropriate strategies when deemed necessary. 19 20 ASSET QUALITY AND LOAN LOSS PROVISION - ------------------------------------- The Corporation's provision for loan losses for the first quarter of 2000 was $5.5 million, $500,000, or 10%, above the amount provided for the first quarter of 1999. The reserve for loan losses at March 31, 2000 was $73.6 million, a decrease of $3.3 million, or 4%, from the $76.9 million reported at December 31, 1999. The reserve as a percentage of total period-end loans outstanding was 1.48%, down from the year-end level of 1.60%. Net chargeoffs for the first three months of 2000 were $8.8 million, an increase of $5.0 million, or 174%, over those for the corresponding period of 1999. These included a chargeoff of $5.0 million taken in connection with $15.9 million in credits to a borrower placed in nonaccrual status in the first quarter described below. The following table presents the risk elements in the Corporation's loan portfolio:
Risk Elements (in thousands) March 31, 2000 December 31, 1999 March 31, 1999 - ------------------------------------------------------------------------------------------------------------------ Nonaccruing $41,703 $29,184 $33,485 Past due 90 days or more 20,138 16,520 40,076 - ------------------------------------------------------------------------------------------------------------------ Total $61,841 $45,704 $73,561 ========================================================= Percent of total loans at period-end 1.24% .95% 1.67% Other real estate owned $537 $576 $1,055
Nonaccruing loans at March 31, 2000 were $41.7 million, an increase of $12.5 million, or 43%, over the $29.2 million reported at December 31, 1999. This includes $15.9 million of credits to a borrower about which the Corporation had serious doubt at December 31, 1999 that were placed in nonaccrual status in March of 2000. Other real estate owned, which is reported as a component of other assets in the Consolidated Statements of Condition, consists of assets that have been acquired through foreclosure. These assets are recorded on the books of the Corporation at the lower of their cost or the estimated fair value less cost to sell, adjusted periodically based upon current appraisals. Other real estate owned at March 31, 2000 was $537,000, a decrease of $40,000, or 7%, from the December 31, 1999 level of $576,000. Nonperforming assets (other real estate owned plus nonaccrual loans) at March 31, 2000 totaled $42.2 million, or .85% of period-end loans outstanding. This was an increase of $12.5 million, or 42%, over the $29.8 million, or .62% of period-end loans outstanding, reported at December 31, 1999. As a result of the Corporation's ongoing monitoring of its loan portfolio, at March 31, 2000, approximately $51.2 million of its loans were identified that are either currently performing in accordance with their terms or are less than 90 days past due but for which, in management's opinion, serious doubt exists as to the borrowers' ability to continue to repay their loans in full on a timely basis. The reserve for loan losses at quarter-end was 1.77 times the level of nonaccrual loans. Management believes the reserve is adequate, based upon currently available information. The Corporation's determination of the adequacy of its reserve is based upon an evaluation of its classified loans and other assets, past loss experience, current economic and real estate market conditions and any regulatory recommendations. 20 21 CAPITAL RESOURCES - ----------------- A strong capital position provides a margin of safety for both depositors and stockholders, enables a financial institution to take advantage of profitable opportunities and provides for future growth. The Corporation's total risk-based capital ratio at the end of the first quarter of 2000 was 10.67%, and its core (Tier 1) leveraged capital ratio was 5.52%. The corresponding ratios at year-end 1999 were 10.67% and 5.65%, respectively. Both of these ratios are above the current regulatory minimums of 8.00% and 4.00%, respectively. Management monitors the Corporation's capital position and will make adjustments as needed to insure that the capital base will satisfy existing and impending regulatory requirements, as well as meet appropriate standards of safety and provide for future growth. OTHER INFORMATION - ----------------- Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." Adoption of this accounting pronouncement is required for all fiscal quarters of all fiscal years beginning after June 15, 1999. In June 1999, the FASB's SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," extended the pronouncement's effective date. The Corporation plans to adopt the provisions of this statement, as amended, beginning January 1, 2001, which is the new effective date. The statement will require the Corporation to recognize all derivatives on its balance sheet at their fair value. Derivatives which are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be recognized in earnings immediately. The impact of adoption of SFAS No. 133 on the Corporation's financial position, results of operations and cash flows is not presently determinable and will depend on the financial position and the nature and purpose of the derivative instruments in use at that time. Item 3. Quantitative and Qualitative Disclosures About Market Risk Net interest income is an important determinant of the Corporation's financial performance. Through interest rate sensitivity management, the Corporation seeks to maximize the growth of net interest income on a consistent basis by minimizing the effects of fluctuations associated with changing market interest rates. The Corporation employs simulation models to measure the effect of variations in interest rates on net interest income. The composition of assets, liabilities and off-balance-sheet instruments and their respective repricing and maturity characteristics are evaluated in assessing the Corporation's exposure to changes in interest rates. Net interest income is projected using multiple interest rate scenarios. The results are compared to net interest income projected using stable interest rates. The Corporation's model employs interest rate scenarios in which interest rates gradually move up or down 250 basis points. The simulation model 21 22 projects, as of March 31, 2000, that a gradual 250-basis point increase in market interest rates would reduce net interest income by 6.9% over a one-year period. This figure compares to a projected decrease at December 31, 1999 of 5.5%. If interest rates were to gradually decrease 250 basis points, the simulation model projects, as of March 31, 2000, that net interest income would increase 3.0% over a one-year period. This figure compares to a projected decrease at December 31, 1999 of 2.9%. The Corporation's policy limits the permitted reduction in projected net interest income to 10% over a one-year period, given a change in interest rates. The preceding paragraph contains certain forward-looking statements regarding the anticipated effects on the Corporation's net interest income resulting from hypothetical changes in market interest rates. The assumptions that the Corporation uses regarding the effects of changes in interest rates on the adjustment of retail deposit rates and the balances of residential mortgages, asset-backed securities and collateralized mortgage obligations (CMOs) play a significant role in the results the simulation model projects. The adjustment paths are not assumed to be symmetrical. The Corporation's model employs assumptions that reflect the historical adjustment paths of the Corporation's retail deposit rates to changes in the level of market interest rates. In addition, some of the Corporation's retail deposit rates reach historic lows within the 250-basis point decline scenario. The Corporation's model freezes the rates for these deposit products when they equal their historic lows. These model assumptions (asymmetrical adjustments and rate floors based on new historic lows) limit the extent to which deposit rates are expected to adjust in a declining rate scenario and contribute to the projected simulation results. Changes in the balances of residential mortgages, CMOs and asset-backed securities are driven by contractual obligations and prepayments. While contractual obligations are not typically influenced by changes in interest rates, prepayment activity (including refinancing) can shift dramatically with changes in interest rates. The Corporation's prepayment assumptions are based on industry estimates for loans with similar coupons and remaining maturities. A 250-basis point decline in interest rates can lead to a significant increase in prepayments when available reinvestment opportunities of similar risk carry lower returns. Conversely, should interest rates rise 250 basis points, the same balances are not likely to prepay at the same rate, but instead are likely to lengthen in effective maturity as debtors elect not to prepay and to retain these now below-market credit terms for as long as possible. Holders of mortgages, asset-backed securities and CMOs are left with returns below those prevailing in the current environment. This prepayment-driven effect also contributes to the projected simulation results. During the first quarter of 2000, the Corporation sold certain fixed-rate residential mortgage loans into the secondary market. The primary goal of this program is to reduce the risk that the average duration of these fixed-rate residential mortgage loans would extend well beyond the duration that was anticipated at origination, as frequently occurs during periods of rising interest rates. Mortgage loans sold during the first quarter of 2000 totaled $24.2 million. Management reviews the Corporation's rate sensitivity regularly, and may employ a variety of strategies as needed to adjust that sensitivity. These include changing the relative proportions of fixed-rate and floating-rate assets and liabilities, as well as utilizing off-balance-sheet measures such as interest rate swaps and interest rate floors. At March 31, 2000, the Corporation was not committed to any interest rate swaps. At March 31, 2000, the Corporation was committed to interest rate floors with a total notional amount of $125 million, down from the $225 million at year-end 1999. The floors have remaining maturities of between 4 and 27 months, with a weighted average maturity of 16.8 months. The net interest differential, the amortization of the initial fees associated with the purchase of the floors and any gains recorded on sale are reported under the caption "Interest and fees on loans" and are recognized over the lives of the respective instruments. See "Net Interest Income." 22 23 Part II. Other Information Item 1 - Legal Proceedings Not Applicable Item 2 - Change In Securities and Use of Proceeds On January 19, 2000, the Corporation issued to a total of 31 individuals not full-time employees of the Corporation non-statutory stock options to acquire a total of 30,000 shares of its stock at an exercise price of $52.0625 per share. These options are first exercisable three years after grant and terminate ten years after grant, and were issued under the Corporation's 1999 Long-Term Incentive Plan in reliance on the exemption provided by Section 4(2) under the Securities Act of 1933. The proceeds from the exercise of these options will be used for general corporate purposes. The shares underlying the options are anticipated to be registered on Form S-3 to be filed with the Securities and Exchange Commission. Item 3 - Defaults Upon Senior Securities Not Applicable Item 4 - Submission of Matters to a Vote of Security Holders Not Applicable Item 5 - Other Information Not Applicable Item 6 - Exhibits and Reports on Form 8-K The exhibits listed below are being filed as part of this report. These exhibits will be made available to any shareholder upon receipt of a written request therefor, together with payment of $.20 per page for duplicating costs.
Exhibit Number Exhibit - --------------- ------- 11 Statement re computation of per share earnings 27 Financial data schedule
23 24 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. Date: June 1, 2000 /s/ David R. Gibson --------------------------------------------- Name: David R. Gibson Title: Senior Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer) 24
EX-11 2 0002.txt STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 Exhibit 11 Statement Re Computation of Per Share Earnings - ---------------------------------------------- The calculation of the Corporation's earnings per share for the first quarter of 2000 is reflected in footnote 3 to its Consolidated Financial Statements on page 10 above. EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CORPORATION'S FORM 10-Q/A FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000872821 WILMINGTON TRUST CORPORATION 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 228,510 0 46,800 0 1,594,100 28,239 28,074 4,967,351 73,628 7,217,948 5,551,145 896,438 96,112 168,000 0 0 39,264 466,989 7,217,948 99,722 25,646 650 126,018 44,563 62,328 63,690 5,500 1,475 64,563 45,829 30,601 0 0 30,601 0.95 0.94 3.94 41,703 20,138 145 51,202 76,925 9,649 852 73,628 64,497 0 9,131
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