WILMINGTON TRUST CORP 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010


o		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 incorporation or organization)		(I.R.S. Employer Identification No.)

1100 NORTH MARKET STREET, WILMINGTON, DELAWARE		19890
(Address of principal executive offices)		(Zip Code)

(302) 651-1000
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title of Each Class		Name of Each Exchange on Which Registered
COMMON STOCK, $1.00 PAR VALUE		NEW YORK STOCK EXCHANGE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ

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. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Aggregate market value of the voting and non-voting common equity held by non-affiliates* computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2010, the last business day of the registrant’s most recently completed second fiscal quarter: $1,004,231,788

Number of shares outstanding of each of the registrant’s classes of common stock at February 25, 2011: 91,425,794

*For purposes of this calculation, Wilmington Trust’s subsidiaries and its directors and executive officers are deemed to be affiliates.



Wilmington Trust Corporation 2010 Form 10-K		2

Table of contents


	Page
Part 1
Item 1. Business		3
Item 1A. Risk Factors		9
Item 1B. Unresolved Staff Comments		18
Item 2. Properties		18
Item 3. Legal Proceedings		19
Item 4. Submission of Matters to a Vote of Security Holders		21

Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities		22
Item 6. Selected Financial Data		25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		86
Item 8. Financial Statements and Supplementary Data		91
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		184
Item 9A. Controls and Procedures		184
Item 9B. Other Information		187

Part III
Item 10. Directors, Executive Officers, and Corporate Governance		187
Item 11. Executive Compensation		192
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		211
Item 13. Certain Relationships and Related Party Transactions, and Director Independence		213
Item 14. Principal Accountant Fees and Services		214

Part IV
Item 15. Exhibits and Financial Statement Schedules		215
EX-21
EX-23
EX-31
EX-32
EX-99.1
EX-99.2
EX-99.3
EX-99.4
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT



Wilmington Trust Corporation 2010 Form 10-K		3

PART I

Item 1. Business

PROPOSED MERGER WITH M&T BANK

On November 1, 2010, we announced that we signed a definitive merger agreement with M&T Bank Corporation and MTB One, Inc (M&T). In the merger, holders of Wilmington Trust (WL) common stock will receive 0.051372 shares of M&T common stock for each share of WL common stock they hold. The outstanding Series A Preferred Stock we issued to the U.S. Department of the Treasury under the Capital Purchase Program (CPP) will be exchanged for one-one hundredth (1/100) of a share of M&T preferred stock with substantially the same rights, powers, and preferences, and the warrant issued to the U.S. Department of the Treasury in connection with the issuance of the Series A Preferred Stock will be converted automatically into a warrant to purchase M&T common stock, subject to appropriate adjustments. The merger agreement contains certain customary covenants restricting the conduct of our business, other than in the ordinary course consistent with past practice, until the closing of the merger. The closing of the merger is subject to certain conditions, including approval by our stockholders and regulators. Subject to the satisfaction of these conditions, the merger is expected to close in the 2011 second quarter, and we will become a wholly-owned subsidiary of M&T. The merger agreement also contains certain termination provisions and, under specified circumstances, we would be required to pay M&T a termination fee of $30 million. This description is only a summary and is qualified in its entirety by the text of the merger agreement, which is incorporated herein by reference. A copy of the merger agreement was filed with the SEC as an exhibit to a Form 8-K on November 1, 2010.

DESCRIPTION OF BUSINESS

Wilmington Trust Corporation is a Delaware corporation and financial holding company under the Bank Holding Company Act. In this report, the terms “we,” “us,” “our,” “the company,” or “Wilmington Trust” include subsidiaries, unless the context indicates otherwise.

We provide a full range of banking and other financial services through our banking and other subsidiaries.

We have three core businesses: Regional Banking, Corporate Client Services (CCS), and Wealth Advisory Services (WAS). For reporting purposes, we present four business segments: one for each of our three core businesses, and one for Affiliate Money Managers, which combines results from the two money management firms in which we have ownership interests.

Our principal client base consists of:

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Consumer banking clients in the state of Delaware.

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Commercial banking clients throughout the mid-Atlantic region, which we define as the state of Delaware and the parts of Pennsylvania, New Jersey, and Maryland that are within approximately 150 miles of our Wilmington headquarters.

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High-net-worth clients throughout the United States.

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Retirement plan sponsors throughout the United States.

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Institutional clients in the United States, Europe, and the Caribbean.



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Our principal subsidiary is Wilmington Trust Company (WTC), a Delaware-chartered bank and trust company founded in 1903. We also own one other depository institution: Wilmington Trust FSB (WTFSB), a federally-chartered savings bank. Until November 2008, we owned a third depository institution: Wilmington Trust of Pennsylvania (WTPA), a Pennsylvania-chartered bank and trust company. On November 1, 2008, we merged WTPA into WTFSB.

WTFSB owns Wilmington Trust Retirement and Institutional Services Company (WTRISC), a Delaware-chartered trust company. WTRISC owns Wilmington Trust Fiduciary Services Company (WTFSC), a New Jersey-chartered nondepository bank.

We win business in an increasingly competitive environment. We endeavor to mitigate competitive risk by:

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Focusing on long-term relationships with clients.

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Having extensive knowledge of the clients and markets we serve.

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Providing responsive, personalized, and customized services.

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Attracting and retaining highly qualified staff members.

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Offering competitive pricing.

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Developing and marketing new and innovative products and services.

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Deploying technology that improves efficiency and client service.

For more information about the competitive risks we face, read Item 1A, Risk Factors, in this report.

At December 31, 2010, we had 2,793 full-time-equivalent staff members. We provide a variety of benefit programs for these staff members, which may include pension, incentive compensation, thrift savings, stock purchase, and group life, health, and accident plans.

For more information about our businesses, including segment and geographic information, read Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), Note 2, “Nature of Business,” and Note 24, “Segment Reporting,” in this report.

SUPERVISION AND REGULATION

We and our subsidiaries are subject to extensive regulation under federal and state law. Some of our subsidiaries are not only regulated by federal and state authorities, but also by regulatory authorities in other countries in which we conduct business.

As a bank holding company, a thrift holding company, and a financial holding company under the Bank Holding Company Act, we are subject to supervision, regulation, and inspection by the Delaware Department of Banking (DOB) and the Federal Reserve Board. As a publicly-traded company that issues stock, we are subject to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Our common stock is listed on the New York Stock Exchange (NYSE) under the trading symbol WL, and we are subject to the NYSE’s rules for listed companies.



Wilmington Trust Corporation 2010 Form 10-K		5

WTC is regulated by, and subject to the rules and regulations of, the DOB and the Federal Reserve. WTFSB is regulated by, and subject to the rules and regulations of, the Office of Thrift Supervision (OTS). Primarily with respect to deposit insurance matters, WTC and WTFSB (collectively, the banks) are also subject to the rules and regulations of the Federal Deposit Insurance Corporation (FDIC). WTRISC is regulated by the DOB and the OTS. WTFSC is regulated by the New Jersey Department of Banking and Insurance and the OTS.

Described below are the material elements of selected laws and regulations that apply to us. These descriptions are not intended to be complete. They are qualified in their entirety by reference to the full statutes and regulations described.

Bank Holding Company Act (BHCA). The BHCA requires us to have prior approval from the Federal Reserve before we may acquire control of a bank or before any company may acquire control of us. The BHCA also requires us to have the Federal Reserve’s prior approval before we acquire ownership or control of more than 5% of the outstanding shares of any class of a bank’s or a bank holding company’s voting securities; acquire substantially all of a bank’s assets; or merge or consolidate with a bank holding company. Likewise, any bank holding or other company seeking to obtain control of us would need prior approval from the Federal Reserve.

As a financial holding company, we may engage in activities permitted by the BHCA without obtaining prior Federal Reserve approval. In addition, we may engage in activities not otherwise permitted for bank holding companies, generally without the Federal Reserve’s prior approval. These activities include those that the Federal Reserve Board has determined are beneficial in nature, incidental to financial activities, or complementary to a financial activity. The BHCA does not place territorial restrictions on the activities of nonbank subsidiaries of financial holding companies.

Safety and soundness. The Federal Reserve Board requires us to operate in a safe and sound manner. If the Federal Reserve determines there is a serious risk to the financial safety and soundness of a subsidiary bank, it can require us to terminate the activity presenting the risk or terminate our control of the subsidiary.

Federal regulations establish dollar amount limits and collateral requirements for assets the banks purchase from non-bank affiliates. For these purposes, we and most of the companies we control are considered affiliates of the banks. In addition, the Federal Reserve Act and the Federal Reserve Board impose dollar amount, credit quality, and other limitations on loans the banks make to directors, executive officers, principal stockholders, and their related interests.

Capital requirements and dividend limitations. To assess the capital adequacy of bank holding companies and their bank subsidiaries, the Federal Reserve and other federal banking agencies have adopted risk-weighted capital standards. As of December 31, 2010, we were well capitalized, with capital levels that exceeded the minimum thresholds. Subsequent to year-end, the OTS deemed Wilmington Trust FSB to be adequately capitalized and set targets for its future capital ratios. More information about this is in Note 17, “Capital,” in this report.



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Dividends paid by the banks to us, and by us to stockholders, are subject to Federal Reserve, OTS, DOB, and other legal and regulatory restrictions. More information about this is also in Note 17. We were directed by our regulators not to pay dividends on our common or preferred stock without their prior approval. Subsequent to year-end, our regulators approved the payment of our 2011 first quarter preferred stock dividend.

Broker-dealer regulation. Wilmington Brokerage Services Company (WBSC), our broker-dealer subsidiary, is registered as a broker-dealer with and is subject to regulation by the SEC and the securities administrators of the states in which it is registered. In addition, WBSC is a member of the Financial Industry Regulatory Authority (FINRA), and subject to FINRA regulations. WBSC is also a member of the Securities Investor Protection Corporation, which, in the event of a broker-dealer’s liquidation, provides some financial protections for securities holders. Several of our subsidiaries, including WBSC, also are registered as investment advisors with the SEC and in some states.

For more information about these and other regulatory restrictions to which we are subject, read the subsection, “We and our subsidiaries are subject to a variety of legal and regulatory restrictions,” in Item 1A, Risk Factors, in this report.

U.S. Department of the Treasury. We are participating in the U.S. Department of the Treasury’s CPP. For more information about this, read Note 17, “Capital,” in this report.

Deposit insurance. WTC and WTFSB are required to pay premiums for FDIC insurance coverage, which insures deposits in the banks up to applicable limits. We participated in the temporary FDIC Transaction Account Guarantee Program through December 31, 2010. Under this program, which is part of the FDIC’s Temporary Liquidity Guarantee Program, all noninterest-bearing deposit transaction accounts, as well as certain types of transaction accounts with interest rates of 0.5% or less, were guaranteed fully by the FDIC for the entire amount in the account. Under the Dodd-Frank Act, this program became required for all banks from January 1, 2011 through December 31, 2012. This coverage is in addition to the increase in standard FDIC insurance coverage made permanent in 2010.

Bank Secrecy Act, USA PATRIOT Act, and Office of Foreign Assets Control regulations (collectively, the BSA laws). The BSA laws require us to establish policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing activities. If we fail to comply with these laws, significant criminal and civil penalties can be imposed on us, and our charter, license, and/or deposit insurance can be revoked. We have adopted appropriate policies, procedures, and controls to comply with the BSA laws, and we will revise them as needed.

Privacy and information security. Federal and state laws and regulations require us to respect the privacy of our clients and to protect the security and confidentiality of their nonpublic personal information. These laws and regulations limit our disclosure of nonpublic client information to affiliates and nonaffiliated third parties; require us to inform clients of our privacy and information-sharing policies; and require us to notify clients and regulators if an unauthorized disclosure occurs and there is concern the disclosed information may be misused. We have information security programs to safeguard the confidentiality and security of client information, and to ensure its proper disposal.



Wilmington Trust Corporation 2010 Form 10-K		7

Community Reinvestment Act (CRA). The CRA requires banks to help serve the credit needs of the communities they serve. This includes extending credit and providing other services to low- and moderate-income individuals and families. To be rated at least satisfactory under the CRA, we are required to meet or exceed federal definitions of well-managed and well-capitalized financial institutions. If we fail to meet these requirements, we may incur penalties, which could include denials of applications to add branches, relocate, add subsidiaries and affiliates, and merge with or purchase other financial institutions. We also could be required to cease engaging in financial holding company activity or divest ownership of one or both of the banks.

Fair Housing Act. This Act prohibits us from discriminating against or withholding services from individuals in connection with our real estate lending practices based on their race, color, religion, gender, familial status, or national origin.

Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act requires us to assess the design and effectiveness of our internal controls over financial reporting. We evaluate the documentation of our control processes and test our primary controls continually, and we remediate them as needed. Each quarter, we require designated managers in each business unit to certify to the chairman and chief executive officer, and to the chief financial officer, that the internal controls within their respective areas of responsibility are effective.

Residential mortgage usury laws. Since Delaware and Maryland have not overridden federal legislation that preempted state usury laws on residential first mortgage loans, there currently is no limit on interest rates the banks can charge on residential first mortgage loans. In today’s interest rate environment, these usury laws do not materially affect the banks’ lending programs.

Consumer protection laws. Our banking activities are subject to a variety of federal and state consumer protection laws, including:

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The Truth-in-Lending Act, which mandates disclosures for and imposes substantive requirements in connection with certain consumer loans;

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The Truth-in-Savings Act, which mandates deposit-related disclosures;

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The Equal Credit Opportunity Act, which prohibits discrimination;

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The Fair Credit Reporting Act, which regulates the collection, dissemination and use of consumer information, including consumer credit information; and

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The Electronic Funds Transfer Act (as implemented through Regulation E), which mandates disclosures and imposes substantive requirements relating to electronic funds transfers.

Our banking activities are also subject to a number of newly enacted federal protection laws and regulations, including:

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The Credit Card Accountability Responsibility and Disclosure Act of 2009, which mandates disclosures, imposes substantive requirements, and restricts fees charged for consumer credit card accounts;

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Rule changes under the Real Estate Settlement Procedures Act mandating significant changes in disclosure requirements;

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The Mortgage Disclosure Improvement Act, Helping Families Save Their Homes Act, and additional regulatory changes, which impose additional disclosure and substantive requirements in connection with real estate loans;



Wilmington Trust Corporation 2010 Form 10-K		8

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Rule changes under Regulation E relating to overdraft services and fees;

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A number of new rules implementing parts of the Fair and Accurate Credit Transactions Act, which require new notices and consumer dispute procedures;

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Unlawful Internet Gambling Enforcement Act, which requires the implementation of procedures reasonably designed to help combat unlawful internet gambling; and

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The Dodd-Frank Wall Street Reform and Consumer Protection Act, which provides for numerous substantive changes to be implemented over the next several years. For more information about this, read the subsection, “The financial services industry is subject to extensive regulation, which is undergoing major changes,” in Item 1A, “Risk Factors,” and the “Noninterest income” discussion in this report.

Corporate governance. Our Board of Directors has implemented a system of strong corporate governance practices. More information about this is in Item 10, “Directors, Executive Officers, and Corporate Governance,” in this report and in the Investor Relations section of our Internet site at www.wilmingtontrust.com.

For additional requirements to which we are subject, read Item 11, “Executive Compensation,” in this report.

AVAILABLE INFORMATION

Our Internet address is www.wilmingtontrust.com. The content on this site:

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Should be used for informational purposes only.

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Should not be relied on for investment purposes.

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Is not incorporated by reference into this Form 10-K.

Content in the Investor Relations section of this site includes:

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Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy statements, as well as any amendments to these reports, under “SEC filings.” We post these reports as quickly as possible after we file them electronically with or furnish them to the SEC.

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M&T’s registration statement on Form S-4, which includes our proxy statement in connection with the M&T merger, as well as any amendments to that report, under “SEC filings.”

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Our Corporate Governance Guidelines, Code of Conduct and Ethics, and the charters of our Audit, Compensation, Nominating and Corporate Governance, and Risk Management Committees.

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Any amendments to or waivers from the Code of Conduct and Ethics that apply to any of our directors or executive officers.

Wilmington Trust stockholders may request printed copies of these materials free of charge by contacting Investor Relations at 302.651.8069 or IR@wilmingtontrust.com.



Wilmington Trust Corporation 2010 Form 10-K		9

Item 1A. Risk Factors

The normal course of business exposes us to a variety of operational, reputational, legal, and regulatory risks, which we summarize below. All of these risks could affect our financial performance and condition adversely.

We and our subsidiaries are subject to a variety of legal and regulatory restrictions. Failure to comply with these restrictions adequately could subject us to financial, regulatory, or other sanctions, which could have adverse effects on our financial performance and ability to conduct business. These include restrictions imposed by the Bank Holding Company Act, the Federal Deposit Insurance Act, the Federal Reserve Act, the Home Owners’ Loan Act, and a variety of federal and state consumer protection laws. We are subject to regular examination, supervision, and regulation by various federal and state authorities with regard to compliance with these and other laws and regulations. These and other laws, regulations, and policies, including standards or interpretations to which we are subject, could change at any time. In addition, we are required to obtain regulatory approval of the acquisition by M&T. One or more regulators may not approve that acquisition. Alternatively, in connection with obtaining such approvals, our regulators could impose conditions on the completion of the merger or other requirements which could affect our operations materially.

We implemented plans at the request of our regulators that are intended to, among other things, enhance the independence and effectiveness of our loan review, credit policy, and credit analysis functions; address liquidity management and current and future capital requirements; improve our position on nonperforming loans; and improve our credit risk management. We were directed by our regulators not to pay dividends on our common or preferred stock without their prior approval. Subsequent to year-end, our regulators approved the payment of our 2011 first quarter preferred stock dividend. Also, we agreed with our regulators that we will not purchase or redeem our common or preferred stock, that we will not incur any debt, subject to certain exceptions, and that Wilmington Trust Company will not incur any debt with an original maturity of greater than one year, in each case without prior written approval from our regulators. In addition, we may not appoint directors or senior executive officers of Wilmington Trust Corporation, Wilmington Trust Company, or Wilmington Trust FSB, or make severance payments to former directors or staff members, without prior approval of our regulators. WTFSB entered into a supervisory agreement with the OTS on February 17, 2011, pursuant to which, among other things, WTFSB is deemed to be adequately capitalized, must achieve future capital targets, limit its asset growth in any quarter to the net interest credited to its deposit liabilities during the quarter, cannot pay dividends without OTS approval, may not enter into or modify contractual arrangements related to compensation, benefits, or third-party contracts outside the ordinary course of business without prior OTS approval, and must take steps to increase its independence from Wilmington Trust Company.

If we do not comply with these policies, agreements, and directives, we could become subject to supervisory action, possibly including cease-and-desist orders, prompt corrective action directives, and other regulatory enforcement actions. Based on discussions with our regulators, we believe that, without a change-of-control transaction acceptable to them, we likely would face imminent significant additional regulatory actions, which likely would cause our business prospects to worsen dramatically. Any such formal enforcement action could limit our ability to develop new business or operate our existing businesses, or require us to raise additional capital or dispose of certain assets or liabilities within a prescribed time period, or both. Such regulatory action could have a material adverse effect on our business, operating results, and financial condition.



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We are subject to contractual restrictions and business uncertainties while the M&T merger is pending. Our merger agreement with M&T restricts us from operating in any way other than in the ordinary course of business, and prohibits us from taking specified actions until the merger occurs, without M&T’s consent. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the merger. In addition, uncertainty about the effect of the M&T merger on our staff members and clients may affect our business adversely. We may have difficulty retaining staff members while the merger is pending, as certain staff members may experience uncertainty about their future roles, if any, with M&T. In addition, the uncertainty caused by the pending merger could cause our clients and business associates to change their existing business relationships with us. These uncertainties may impair our ability to attract, retain, and motivate key staff members and retain and grow our client base until we complete the merger.

Termination of our merger agreement with M&T could affect our business negatively. If the merger agreement with M&T is terminated, there may be various adverse consequences. For example, our businesses may have been affected adversely by the failure to pursue other beneficial opportunities due to contractual restrictions in the merger agreement, without realizing any of the anticipated benefits of completing the merger. Also, to the extent that the current market price of our common stock reflects a market assumption that the merger with M&T will be completed, the market price of our common stock could decline if the merger agreement is terminated. In addition, termination of our agreement with M&T could increase the possibility of further downgrades by the credit rating agencies or imminent significant additional regulatory actions, which could have a material adverse effect on our business, operating results, and financial condition.

We are subject to credit risk. This risk is associated primarily with our banks. When we make a loan through our banks, we make subjective judgments about a borrower’s ability to repay. No matter how financially sound a client or lending decision may seem, a borrower’s ability to repay can be affected adversely by economic changes and other external factors. If borrowers do not repay their loans, our levels of nonperforming assets, loan losses, and the provision for loan losses could increase.

Adverse economic conditions, especially in the mid-Atlantic region, have increased the degree of repayment risk inherent in our loan portfolio. We do most of our lending in the mid-Atlantic region. Economic conditions in this region have affected the ability of borrowers to repay their loans. Adverse conditions also have reduced the value of assets, such as property or securities that borrowers use as collateral. A reduction in the value of collateral could affect our ability to collect the balance of a loan if the borrower defaults. We do not expect the adverse conditions to improve in the near term. If these conditions persist, they could have a further material adverse effect on our results of operation and financial condition.

Our loan portfolio is concentrated in commercial loans, which constituted 74% of our total loan portfolio at December 31, 2010. Some of our commercial loans carry a higher degree of repayment risk than others. The commercial real estate — construction and commercial mortgage loans we make may carry a higher degree of repayment risk than other types of loans. The commercial real estate business is subject to downturns, overbuilding, and economic conditions. Adverse conditions in the real estate market and in the economy in general, have affected the repayment ability of these borrowers more severely than other types of borrowers.



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Commercial mortgage loans may be riskier than those for one-to-four family residences. Commercial mortgage loans are typically larger than loans for one-to-four family residential properties. In addition, the repayment of commercial mortgage loans typically depends on successful property operation and management or, in the case of owner-occupied properties, successful operation of the underlying business.

Commercial mortgage loans comprised 26% of our total loans as of December 31, 2010. Approximately 55% of these loans were for properties in Delaware. Many of our commercial mortgage loans are to developers, contactors, and construction businesses, to which we have extended other types of credit. During 2010, the financial condition of many of our commercial mortgage borrowers worsened, resulting in increased nonperforming loans, loan loss provisions, charge-offs, and losses. Further deterioration in this portfolio could increase nonperforming loans, which could lead to reduced earnings, a higher loan loss provision, and higher charge-offs, all of which could affect our results of operations and financial condition adversely.

Commercial real estate — construction loans, which we make for residential and commercial properties and for unimproved land, carry a higher degree of repayment risk than other types of loans, especially when the associated projects are not generating income. Repayment of these types of loans often depends on the ultimate success of the project, not on the borrower’s or guarantor’s ability to repay. In addition, consistent with industry practice, we sometimes fund the interest payments on a commercial construction loan by including the interest as part of the loan. This increases the total amount of the loan.

Commercial real estate — construction loans comprised 19% of our loan portfolio as of December 31, 2010. Within this portfolio, we had a geographic concentration in Delaware, where 55% of these loans were located. During 2010, the financial condition of many of our commercial real estate - construction borrowers worsened; updated appraisals indicated significant declines in collateral values, particularly for construction loans in southern Delaware; and there was continued lack of improvement in the Delaware economy. These resulted in increased nonperforming loans, loan loss provisions, charge-offs, and losses. Further deterioration of the commercial real estate - construction portfolio could result in an increase in nonperforming loans, which could lead to reduced earnings, a higher loan loss provision, and higher charge-offs, all of which could have a material adverse effect on our results of operations and financial condition.

Consumer and other retail loans comprised 26% of our total loans at December 31, 2010. Consumer loans may carry a higher degree of repayment risk than residential mortgage loans, particularly when the consumer loan is unsecured. Repayment of a consumer loan typically depends on the borrower’s financial stability, and it is more likely to be affected adversely by job loss, illness, or personal bankruptcy. In addition, federal and state bankruptcy, insolvency, and other laws may limit the amount we can recover when a consumer client defaults. During 2010, the financial condition of many of our consumer and other retail borrowers worsened. Further deterioration in this portfolio could increase nonperforming loans, which could lead to reduced earnings, higher loan loss provisions, and higher charge-offs, all of which could affect our results of operations and financial condition adversely.

We maintain a reserve for loan losses which represents our best estimate of inherent losses in our loan portfolio. We establish the reserve by charging a provision for loan losses against income. We determine the amount of the reserve by making subjective judgments about the likelihood that loans will be repaid. The information we consider includes both quantitative and qualitative



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factors, including loan loss experience, loan concentrations, trends in economic conditions, and trends in collateral composition, valuation, appraisals, and other factors. Establishing the reserve for loan losses involves significant estimates and judgments. Changing conditions, new information, and additional problem loans could require us to increase our reserve for loan losses, which may have an adverse effect on our results of operations and financial condition.

Market interest rates can affect loan profitability and increase repayment risk. The interest rates on almost all of our commercial loans, and on many of our consumer and residential mortgage loans, are adjustable (floating). Floating rate loans generally carry lower initial interest rates than fixed rate loans, which may make them less profitable than fixed rate loans during the initial interest rate period. When the floating rate rises, it may be more difficult for some borrowers to repay their loans, and loan delinquencies may increase, which could result in significant increases in nonperforming loans, charge-offs, and provisions for loan losses, and have a material effect on our financial condition.

For additional discussion about how the recession and our credit risk concentrations have affected our financial results and condition, read the “Credit risk” discussion in this report.

Changes in market interest rates, and the pace at which they occur, can affect net interest income adversely. Market interest rates present more risk to us than inflation. As a financial institution, nearly all of our assets and liabilities are monetary in nature. Their values are more likely to be eroded by changes in market interest rates than by the effects of inflation on currency valuations.

Rate changes, which can affect the yields we earn on loans and investments and the rates we pay on deposits and other borrowings, can affect our net interest margin and net interest income positively or negatively, and ultimately affect our financial performance. We have experienced an extended period of historically low interest rates since 2008, which has affected our net interest income. For additional information about this, read the “Net interest income and margin” discussion in this report.

Securities in our investment portfolio are subject to credit risk, market risk, and illiquidity. The fair value of instruments in our investment securities portfolio may fall below the amount at which we purchased them, and we may be required to record these valuation declines as impairment losses. These conditions could result from factors beyond our control, including credit rating agency downgrades, issuer defaults, lack of market demand or trading activity, and instability in the credit markets. In addition, issuers of these securities may prepay or revoke instruments prior to their scheduled maturity. These conditions could affect our cash flows and earnings negatively.

Any change in current accounting principles or interpretations of those principles could affect our assessment of the fair value of our securities and our determination of whether they are other-than-temporarily impaired. Such a determination would require us to record a non-cash charge in an amount equal to the decrease in the value of the securities.

Volatility in financial markets can affect our noninterest income adversely. Some of our WAS and CCS fees, and all of our affiliate money manager fees, are based on financial market valuations of assets we or our affiliate money managers manage or hold



Wilmington Trust Corporation 2010 Form 10-K		13

in custody for clients. Changes in these valuations can affect noninterest income positively or negatively, and ultimately affect our financial results. Significant changes in the volume of activity in the capital markets, and in the number of assignments we are awarded, could also affect our financial results.

Circumstances in the mid-Atlantic region, throughout the United States, and around the world could reduce demand for our services and adversely affect our ability to conduct business. These circumstances include inflation, recession, unemployment, changes in market interest rates, money supply, tax policies, the competitive environment, economic uncertainty, military actions, and other factors beyond our control.

Changes in business and economic conditions in general, or specifically in the principal markets in which we do business, could affect our financial results adversely. Our results also could be affected adversely by a weakening of, or sustained weakness in, business or economic conditions that may affect our clients and counterparties directly or indirectly. These conditions could lead to:

•

A decrease in the demand for loans and other products and services we offer.

•

A decrease in client savings, in general, and in demand for the savings and investment products we offer, in particular.

•

An increase in the number of clients and counterparties who become delinquent, file for protection under bankruptcy laws, or default on their loans and other obligations to us. An increase in the number of delinquencies, bankruptcies, or defaults could result in a higher level of nonperforming assets, net charge-offs, and provisions for loan losses.

Our Regional Banking business is particularly vulnerable to adverse changes in economic conditions in the mid-Atlantic region, where this business is concentrated.

Competition can cause us to increase the rates we pay to attract deposits, reduce the interest rates we can charge on loans, and reduce the fees we charge for services. Competition can also affect our ability to retain existing clients or attract new clients. We compete for loans, deposits, assets to manage or hold in custody, and opportunities to provide trustee, administrative, and other services.

We compete for loans primarily with savings banks, savings and loan associations, commercial banks, mortgage banking companies, insurance companies, and other institutional lenders in the mid-Atlantic region. For deposits, we compete primarily with savings banks, savings and loan associations, and commercial banks operating in the mid-Atlantic region. We also compete for deposits with dealers in government securities, deposit brokers, and credit card, direct, and internet-based financial institutions.

We compete for other types of business with regional and money center banks, trust companies, investment advisors, mutual fund companies, family office service providers, insurance companies, accounting firms, law firms, and other service providers.

Some of our competitors are larger, have greater financial resources, have higher lending limits, and provide services that we do not, such as investment banking. In some cases, mergers, acquisitions, and other types of consolidation within the financial services



Wilmington Trust Corporation 2010 Form 10-K		14

industry have heightened competition by reducing the number of competitors. In other cases, consolidation that created very large institutions has reduced the number of independent, conflict-free competitors and improved our competitive position.

Our business could be affected adversely if we fail to develop and market new and innovative products and services, or fail to adopt or deploy new technologies. Our ability to compete for business depends in part on our ability to develop ways to differentiate our products and services and to improve efficiency. Competitive pressures plus rapid technological change in our industry require us to invest in new products and services, and to bring them to market in a timely fashion and at a competitive price, on an ongoing basis.

Developing and introducing new products can be risky. We may not achieve timeframe, price, or profitability targets. Changes in the regulatory environment, competition, and market demand could affect our ability to launch new products successfully. There could be unanticipated effects on our system of internal controls. These factors could affect our financial performance adversely.

Changes in accounting rules may affect our reported earnings and operating income adversely. Generally accepted accounting principles (GAAP) and accompanying accounting pronouncements, implementation guidelines, and interpretations for many aspects of our business are highly complex and may involve subjective judgments. Changes in these rules or their interpretations could affect our earnings significantly.

Changes in the value of goodwill or intangible assets on our balance sheet could affect earnings adversely. If we determine that any of our goodwill or intangible assets are impaired under GAAP, we may be required to record an expense that could reduce earnings and stockholders’ equity.

We review our goodwill and intangible assets for impairment when events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. We are required to test for impairment at least annually. During 2010, we recorded a $24.5 million impairment write-down on the goodwill related to our affiliate money manager Roxbury Capital Management (RCM) and on our Regional Banking segment. In 2008, we recorded an impairment write-down for $66.9 million on our investment in RCM.

Reductions in the value of our deferred tax assets could affect earnings adversely. A deferred tax asset (DTA) is created by the tax effect of the differences between an asset’s book value and its tax basis. We assess our DTAs periodically to determine the likelihood of our ability to realize their benefits. These assessments consider the performance of the associated business and its ability to generate future taxable income. If the information available to us at the time of assessment indicates that it is more likely than not that we will not realize the DTA benefit, we are required to establish a valuation allowance for it and record a corresponding charge against earnings. Such charges could have a material adverse effect on our results of operations or financial position. During 2010, we established a $292.2 million valuation allowance against our DTAs.



Wilmington Trust Corporation 2010 Form 10-K		15

We run the risk of having insufficient liquidity, or funding. A lack of funding, or access to it, could impede our ability to make loans, fund other asset growth, accommodate deposit withdrawals and other liability maturities, meet contractual obligations, and fund new business transactions at a reasonable cost, in a timely manner, and without adverse consequences.

Core deposits (deposits from clients) are our primary source of funding. Our core deposits come primarily from Delaware, where our consumer banking activities are concentrated. Because we make commercial loans throughout the mid-Atlantic region, we rely on other funding sources to augment core deposits.

A significant decrease in our core deposits, an inability to obtain alternative funding to our core deposits, or a substantial, unexpected, or prolonged change in the level or cost of funding could have an adverse effect on our business and financial condition.

Our access to funding, and our ability to serve some clients, could be affected adversely by unfavorable rating actions taken by credit rating agencies. Wilmington Trust Corporation and Wilmington Trust Company are rated by Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. Unfavorable rating actions by these agencies could increase our cost of funds, reduce or limit our access to certain types of funding, place us in violation of certain covenants in client and other contracts in which we are a party, or adversely affect our ability to conduct business. On February 16, 2011, Standard & Poor’s lowered its credit ratings on Wilmington Trust Corporation and Wilmington Trust Company, citing our continued credit quality problems, our fourth quarter net loss, and further erosion of our capital. Because we expect that our credit ratings will be consistent with M&T’s upon consummation of the merger, we believe that these lower credit ratings will not have a material effect on our business, operating results, or financial condition. This or further credit rating downgrades could have a material effect on our business, operating results, or financial condition if our merger agreement with M&T is terminated.

Disruption in the capital and credit markets has created illiquidity and uncertainty. The capital and credit markets have experienced severe volatility and disruption since the second half of 2007. In some cases, these conditions have produced downward pressures on security prices and credit availability for issuers regardless of the underlying financial strength of the issuers. A continuation or worsening of these conditions could have a materially adverse effect on our business, financial condition, and results of operations.

The failure of other financial institutions could affect us adversely. We have exposure to many different industries and counterparties, and routinely execute transactions with other financial services providers, including brokers and dealers, commercial banks, investment banks, insurers, mutual and hedge funds, and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by our counterparty or client. In addition, our credit risk may be exacerbated when collateral we hold cannot be relied upon or is liquidated at prices not sufficient to recover the full amount of our exposure.

Defaults by, or even questions or rumors about, one or more financial services institutions, or the financial services industry in general, could create market-wide liquidity problems and could lead to losses or defaults by other institutions or us. Any such losses could materially and adversely affect our results of operations.



Wilmington Trust Corporation 2010 Form 10-K		16

The financial services industry is subject to extensive regulation, which is undergoing major change. As a financial services institution, we are subject to financial services laws, regulations, administrative actions, and policies in each jurisdiction in which we operate.

The enactment of the Dodd-Frank Act could affect our financial results adversely. In July 2010, Congress enacted and the President signed the Dodd-Frank Act, which will impose comprehensive regulation of financial institutions. This law, among other things:

•

Establishes higher capital standards for banks and bank holding companies;

•

Enhances regulation of financial markets, including derivatives and securitization markets;

•

Prohibits banks from engaging in certain trading activities;

•

Creates a Consumer Financial Protection Bureau authorized to promulgate and enforce consumer protection regulations of financial products, which would affect both banks and non-bank finance companies;

•

Creates a Financial Services Oversight Council to identify emerging systemic risks and improve interagency cooperation;

•

Eliminates the Office of Thrift Supervision and transfers oversight of federally chartered thrift institutions to the Office of the Comptroller of the Currency; and

•

Permanently increases the previously implemented temporary increase of FDIC deposit insurance to $250,000.

While it has been signed into law, numerous provisions of the Act will be implemented through rulemaking by various regulatory agencies. We are unable to predict what the final form of these rules will be when implemented, but believe that certain aspects of the new legislation, including the increase in deposit insurance premiums and the cost of complying with disclosure and reporting requirements and examinations by the new Consumer Financial Protection Bureau, could affect our business, financial condition, and results of operations significantly.

Because of stresses on the Deposit Insurance Fund, the FDIC has recently imposed, and could impose in the future, additional assessments on the banking industry. The financial crisis that began in 2008 caused the Deposit Insurance Fund, administered by the FDIC, to fall below required minimum levels. Although the FDIC has replenished part of the fund through higher premiums, special assessments, and prepaid premiums, we anticipate that the FDIC likely will maintain relatively high deposit insurance premiums for the foreseeable future. The FDIC imposed a special deposit insurance assessment on the banking industry in 2009, and there can be no assurance that it will not do so again. It also has required banking organizations to pre-pay deposit insurance premiums in order to replenish the liquid assets of the Deposit Insurance Fund, and it may impose similar requirements in the future. High insurance premiums and special assessments will affect our profitability adversely.

We and our subsidiaries are subject to various legal proceedings that arise from time to time in the ordinary course of business. Some of these proceedings may seek relief or damages in amounts that may be substantial. Typically these proceedings are complex, and many years may pass before they are resolved.

In addition, several legal proceedings have commenced since the announcement of our merger agreement with M&T. For more information about this, read Item 3, “Legal Proceedings,” in this report.



Wilmington Trust Corporation 2010 Form 10-K		17

Negative public opinion could damage our reputation. Negative public opinion can result from the actual or perceived manner in which we conduct business, manage actual or potential conflicts of interest and ethical issues, and protect confidential client information. It can have an adverse effect on our ability to attract and retain clients, expose us to litigation and regulatory actions, and ultimately affect our financial performance adversely.

Our ability to pay dividends on our stock depends on the financial results of our wholly owned subsidiaries, our regulators, and other factors. As a bank holding company, we conduct almost all of our business through WTC, WTFSB, and our other subsidiaries. Payments to us by these subsidiaries are the primary sources of the capital we use to pay dividends. The ability of our subsidiaries to make these payments to us is limited by their need to maintain sufficient capital and by other general regulatory restrictions on the dividends they pay us. We agreed with our regulators that Wilmington Trust Company will not pay dividends to us without prior written approval from its regulators, if such dividends would reduce its regulatory capital ratios below the minimum levels required for it to remain well capitalized under the applicable regulatory capital standards, or below the minimum levels required under its internal capital plan, whichever are higher. We also agreed with the OTS that WTFSB will not pay dividends to us without OTS approval.

We were directed by our regulators not to pay dividends on our common or preferred stock without their prior approval. Subsequent to year-end, our regulators approved the payment of our 2011 first quarter preferred stock dividend. For more information about these and other regulatory restrictions on common and preferred stock dividend payments, read Item 5 and Note 17, “Capital,” in this report.

Our certificate of incorporation may discourage unsolicited acquisition proposals. Our certificate of incorporation, our bylaws, and Delaware law include certain anti-takeover provisions. These protections could discourage potential acquisition proposals, or delay or prevent a change in control of our company. Under these provisions, we have a classified Board of Directors; we require stockholders to inform us in advance and meet certain other conditions if they nominate directors; and we have the ability to issue the balance of our 1 million shares of preferred stock and the balance of our 150 million authorized shares of common stock in the event of an unsolicited acquisition proposal. Under the CPP, as long as any of the CPP preferred shares are outstanding, we may not issue any securities senior to those shares without the consent of the holders of at least two-thirds of those shares.

Other risks could affect our earnings and damage our reputation. These include human error, systems failures, breach of fiduciary duty, fraud, and inadequate controls and procedures.

Additional information. For more information about the risks to which we are exposed, read:

•

The sections on credit risk and capital resources in the MD&A in this report.

•

Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” in this report.



Wilmington Trust Corporation 2010 Form 10-K		18

Item 1B. Unresolved Staff Comments

We currently have an open comment letter in which the Securities and Exchange Commission’s staff has inquired about certain matters regarding our Form 10-K for 2009 and our Forms 10-Q filed during 2010 relating to credit review, substandard and nonperforming loans, impaired loans, collateral values, goodwill, and our deferred tax asset valuation allowance. We have responded to the SEC comments and although we have not formally resolved this matter with the SEC, we believe that our responses addressed their comments in all material respects and we have incorporated the applicable responses to the SEC comments into our filings.

Item 2. Properties

Our largest properties are in downtown Wilmington, Delaware: the Wilmington Trust Center (1100 North Market Street) and the Wilmington Trust Plaza (301 West Eleventh Street). Our headquarters are in the Wilmington Trust Center, which is owned by Rodney Square Investors, L.P., one of our subsidiaries. At the end of 2010, the outstanding mortgage on this building was $31.5 million. There is no mortgage on the Wilmington Trust Plaza, an operations facility owned by one of our subsidiaries.

At December 31, 2010, our branch office (as defined by banking regulators) and other office locations were as follows:

•

Arizona: One office in Phoenix.

•

California: One office each in Los Angeles and Costa Mesa.

•

Connecticut: One office each in Guilford and Stamford.

•

Delaware: 48 branch offices throughout the state (24 in New Castle County, including one each at the Wilmington Trust Center and Wilmington Trust Plaza; 8 in Kent County; and 16 in Sussex County), plus 1 retirement services administrative office in Wilmington.

•

Florida: One branch office in North Palm Beach and one office each in Palm Beach, Stuart, and Vero Beach.

•

Georgia: One office in Atlanta.

•

Maryland: One branch office in Baltimore and one office in Bel Air.

•

Massachusetts: One office in Boston.

•

Michigan: One office in Birmingham.

•

Minnesota: One office in Minneapolis.

•

Nevada: One office in Las Vegas.

•

New Jersey: One office each in Jersey City, Mt. Laurel, and Princeton.

•

New York: Two offices in New York City.

•

Pennsylvania: One branch office each in Bethlehem, Doylestown, Philadelphia, Villanova, and West Chester.

•

South Carolina: One office in Charleston.

•

Vermont: One office in Burlington.

•

Europe: One office each in the Channel Islands (Jersey), England (London), Ireland (Dublin), Germany (Frankfurt), Luxembourg, and The Netherlands (Amsterdam).

•

Caribbean: One office in Grand Cayman, Cayman Islands.



Wilmington Trust Corporation 2010 Form 10-K		19

We own 29 of these offices. We lease space for the others. We believe these offices are suitable and adequate for our needs, and that we could accommodate further growth by utilizing existing capacity or by acquiring or renting additional space. More information about our lease obligations is in the discussion of contractual obligations, which is in the MD&A and in Note 14, “Commitments and contingencies,” in this report.

Our Regional Banking and CCS businesses operate principally at the Wilmington Trust Center and Wilmington Trust Plaza. CCS also leases a substantial portion of a facility across the street from the Wilmington Trust Center. The WAS business operates principally at the Wilmington Trust Center.

Regional Banking operates our branch offices, except for the one in Florida, which WAS operates. Regional Banking and WAS operate our offices in Maryland, New Jersey, and Pennsylvania. WAS operates our offices in California, Connecticut, Florida, Georgia, and Massachusetts. WAS and CCS operate our offices in New York. CCS operates our offices in Arizona, Michigan, Minnesota, Nevada, South Carolina, Vermont, Europe, and the Caribbean.

Our fourth reporting segment — Affiliate Money Managers — comprises our investments in Cramer Rosenthal McGlynn (CRM) and Roxbury Capital Management (RCM). CRM leases office space in New York, New York. RCM leases office space in Minneapolis, Minnesota, and Santa Monica, California.

Item 3. Legal Proceedings

We and our subsidiaries are subject to various legal proceedings that arise from time to time in the ordinary course of business. Some of these proceedings may seek relief or damages in amounts that may be substantial. Because these proceedings are complex, many years may pass before they are resolved, and it is not feasible to predict their outcomes. Some of these proceedings involve claims that we believe may be covered by insurance, and we have advised our insurance carriers accordingly.

On November 5, 2010, two purported stockholders of Wilmington Trust Corporation filed lawsuits in the Delaware Court of Chancery, captioned Medich v. Wilmington Trust Corporation, et al., C.A. No. 5958 (Del. Ch.) and Yi v. Wilmington Trust Corporation, et al., C.A. No. 5959 (Del. Ch.). On November 9, 2010, a third purported stockholder of Wilmington Trust Corporation filed a lawsuit in the Delaware Court of Chancery captioned Burie v. Foley, et al., C.A. No. 5970 (Del. Ch.). On December 8, 2010, these complaints were consolidated under the caption In re Wilmington Trust Corporation Shareholders Litigation, C.A. No. 5958-VCL (Del. Ch.). On December 10, 2010, plaintiffs filed an amended and consolidated complaint (Consolidated Complaint). On December 20, 2010, the defendants moved to dismiss the Consolidated Complaint.

The Consolidated Complaint names as defendants us, each of the current members of our Board of Directors (Director Defendants), M&T, and MTB One, Inc (Merger Sub). It is brought on behalf of a putative class of our common stockholders and seeks a declaration that it is properly maintainable as a class action. The Consolidated Complaint alleges that the director defendants breached their fiduciary duties by failing to maximize stockholder value in connection with the merger, and also alleges that M&T



Wilmington Trust Corporation 2010 Form 10-K		20

and Merger Sub aided and abetted those breaches of fiduciary duty. It further alleges that the Director Defendants improperly favored M&T and discouraged alternative bids by agreeing to the merger agreement’s no-solicitation provision, termination fee provision, and notification clause. In addition, the Consolidated Complaint claims that the consideration to be received by our common stockholders is inadequate and unfair. Finally, the Consolidated Complaint claims that the Form S-4 filed by the defendants in connection with the merger omits material information. It alleges deficiencies in the descriptions of negotiations with interested parties, failure to disclose the identity of one financial advisor and the fees payable to all financial advisors, and failure to adequately explain the financial advisors’ valuation analyses. The Consolidated Complaint claims that, without this information, our stockholders cannot meaningfully determine whether or not to approve the merger.

The Consolidated Complaint seeks declaratory and injunctive relief to prevent the consummation of the merger, a constructive trust over any benefits improperly received by the defendants, and costs, including plaintiffs’ attorneys’ and experts’ fees.

We and M&T believe that the claims asserted are without merit and intend to defend vigorously against this lawsuit.

Securities litigation

Between November 18, 2010, and December 10, 2010, four purported purchasers of our common stock filed lawsuits in the United States District Court for the District of Delaware captioned Pipefitters Local 537 Annuity Fund v. Wilmington Trust Corporation, et al., C.A. No. 10-990-LPS (D. Del.), Rooney v. Wilmington Trust Corporation, et al., C.A. No. 10-995-LPS (D. Del.), Elzagha v. Wilmington Trust Corporation, et al., C.A. No. 10-1020-LPS (D. Del.), and Lynch v. Wilmington Trust Corporation, et al., C.A. No. 10-1086 (D. Del.), which we refer to as the Lynch Lawsuit. One or more of the lawsuits asserted claims against us, certain of our current and former executive officers and directors, J.P. Morgan, and Keefe, Bruyette & Woods. All four lawsuits allege violations of Sections 10(b) and 20(a) of the 1934 Securities Exchange Act and Rule 10b-5 thereunder. One of the lawsuits also alleges violations of Section 11 of the 1933 Securities Act. All of the lawsuits allege that the defendants knowingly made materially false and misleading statements and omissions in press releases and securities filings regarding our loan loss provisions, reserves, and loan charge-offs. The complaints allege that these actions artificially inflated the price of our common stock, and that the stock price fell as a result of certain disclosures that allegedly revealed the purported misrepresentations. One of the lawsuits alleges that the defendants made false and materially misleading statements in the materials used in our February 23, 2010, offering of common stock. All of the lawsuits seek compensatory damages, interest, and costs, including attorneys’ and experts’ fees. On February 7, 2011, the plaintiff in the Lynch Lawsuit filed a Notice of Voluntary Dismissal voluntarily dismissing all claims against the defendants asserted in the Lynch Lawsuit.

On January 18, 2011, four groups of purported purchasers of our common stock filed motions in the United States District Court for the District of Delaware seeking to consolidate these four lawsuits and be appointed lead plaintiffs. As of the filing date of this report, the Court had not yet ruled on these motions.

We believe the claims asserted in these lawsuits are without merit and intend to defend vigorously against them.



Wilmington Trust Corporation 2010 Form 10-K		21

ERISA litigation

On December 20, 2010, participants in the Wilmington Trust Thrift Savings Plan (the Plan) filed a lawsuit in the United States District Court for the District of Delaware captioned Outten, et al., v. Wilmington Trust Corporation, et al., C.A. No. 10-1114-SD (D. Del.) (Outten Lawsuit). On January 31, 2011, another participant in the Plan filed a lawsuit in the United States District Court for the District of Delaware captioned Gray v. Wilmington Trust Corporation, et al., C.A. No. 11-cv-00101-SD (D. Del.) (Gray Lawsuit). Both lawsuits name as defendants Wilmington Trust, Wilmington Trust Company, the Wilmington Trust Corporation Employee Benefits Committee (the Committee), and certain executive officers and employees who are alleged to have served on the Committee at some time from January 1, 2008, to the present for the Outten Lawsuit, and from December 31, 2006 to December 31, 2010 for the Gray Lawsuit (the Class Periods). The Gray Lawsuit also names as a defendant a former director and executive officer of Wilmington Trust.

These lawsuits are brought on behalf of a purported class of all participants and beneficiaries of the Plan whose Plan accounts were invested in our stock during the Class Periods. The complaints allege that the defendants violated the Employee Retirement Income Security Act (ERISA) by failing to act solely in the interest of the Plan’s participants and beneficiaries, and by failing to exercise the required skill and care in administering the Plan and its assets during the Class Periods. The complaints claim that the defendants allowed investment of the Plan’s assets in our common stock throughout the Class Periods, despite the fact that the defendants knew, or should have known, that such investment was not a suitable investment for the Plan. The complaints further allege that the defendants failed to provide them with necessary information regarding Wilmington Trust’s financial condition, and that the defendants placed their own pecuniary interests above the interests of the Plan’s participants. The defendants also are alleged to have failed to share information regarding Wilmington Trust with the fiduciaries of the Plan and failed to monitor the fiduciaries.

These lawsuits seek declaratory and injunctive relief, damages in the form of Plan losses, and an award of attorneys’ fees.

We believe the claims asserted are without merit and intend to defend vigorously against these lawsuits.

As of March 1, 2011, other than the matters discussed above, we believed there were no other outstanding legal matters that, upon their ultimate resolution, would have a materially adverse effect on our consolidated financial condition.

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to security holders for a vote during the fourth quarter of 2010.



Wilmington Trust Corporation 2010 Form 10-K		22

PART II

Item 5. Market for the Registrant’s Common Equity, related Stockholder Matters, and Issuer Purchases of Equity Securities

Our common stock is listed and traded principally on the New York Stock Exchange under the symbol WL.

Statistical information


As of and for the year ended December 31	2010		2009		2008

Stockholders of record (approximate)		7,379		7,278		7,534
Diluted shares outstanding (average)		87,367,435		68,965,938		67,453,648
Basic shares outstanding (period end)		91,430,365		69,396,986		69,113,448
Market capitalization (period end)	$0.40 billion		$0.86 billion		$1.54 billion

As of February 25, 2011, we had approximately 7,279 stockholders of record of our common stock and one shareholder of record of our Series A preferred stock.

We have agreed not to repurchase our stock without prior written approval from our regulators. In addition, until December 12, 2011, or until the U.S. Treasury no longer holds any of the Series A preferred stock we issued to it under the CPP, whichever is earlier, we are not permitted to repurchase any of our common stock, subject to certain exceptions, without the prior approval of our regulators. Our merger agreement with M&T also restricts our ability to repurchase any of our stock without M&T’s consent.

COMMON STOCK PRICE PERFORMANCE AND DIVIDENDS

The graph below compares the cumulative total stockholder return (including price appreciation and dividend reinvestments) on our common stock with all companies in the Standard & Poor’s 500 Index (S&P 500) and companies in the Keefe, Bruyette & Woods (KBW) Regional Banking Index (ticker symbol: KRXTR) over the past five years, assuming an initial investment of $100 at the close of business on December 31, 2005. The KBW Regional Banking Index includes most major regional banks, weighted by market capitalization. We regard it as a proxy for the stock price performance of large banks throughout the United States.

total return on Wilmington trust common stock

As of December 31



Wilmington Trust Corporation 2010 Form 10-K		23

cumulative total stockholder return


As of December 31	2005		2006		2007		2008		2009		2010

WL	$	100.0	$	109.9	$	95.2	$	63.9	$	36.5	$	12.9
S&P 500 Index	$	100.0	$	115.8	$	122.1	$	76.9	$	97.3	$	112.0
KBW Regional Bank Index	$	100.0	$	108.6	$	84.7	$	69.0	$	53.7	$	64.7

common stock price performance¹ and per-share dividends paid


	2010						2009						2008
					Dividend						Dividend						Dividend
Period	High		Low		paid		High		Low		paid		High		Low		paid

First quarter	$	17.03	$	11.71	$	0.01	$	22.53	$	6.76	$	0.1725	$	35.50	$	27.78	$	0.335
Second quarter	$	20.23	$	10.72	$	0.01	$	18.66	$	9.03	$	0.1725	$	35.17	$	26.26	$	0.345
Third quarter	$	12.78	$	8.35	$	0.01	$	15.82	$	9.75	$	0.0100	$	46.75	$	20.50	$	0.345
Fourth quarter	$	9.64	$	3.88	$	—	$	15.90	$	11.45	$	0.0100	$	31.07	$	19.49	$	0.345
Full year	$	20.23	$	3.88	$	0.03	$	22.53	$	6.76	$	0.3650	$	46.75	$	19.49	$	1.370


¹		Intraday trading prices.

At the direction of our regulators, we did not declare a dividend on our common stock for the third or fourth quarters of 2010. These dividends would have been paid in the 2010 fourth quarter and the 2011 first quarter, respectively. Prior to this, we reduced our quarterly dividend on our common stock to $0.01 per share on July 22, 2009. Our ability to pay dividends on our common stock is limited by our participation in the CPP, other regulatory restrictions, our merger agreement with M&T, and our own prudent capital management policies. Our policy is not to pay dividends that would reduce our regulatory capital ratios below the level required for us to qualify as a well-capitalized financial institution. For more information about these regulatory capital ratios, read the capital resources section in this report.

Wilmington Trust Company may not pay any dividends to us that would cause its regulatory capital ratios to fall below the minimum levels required for it to remain a well-capitalized institution, under the applicable regulatory capital standards, or the minimum levels required under its internal capital plan, whichever are higher, without prior written approval from its regulators. We also agreed with the OTS that WTFSB will not pay dividends to us without OTS approval. For more information about our dividends and restrictions on our ability to pay them, read the capital resources discussion, Item 1-A, “Risk factors,” and Note 17, “Capital,” in this report.

per-share price and book value


	2010				2009				2008
At quarter end	Closing price		Book value ¹		Closing price		Book value ¹		Closing price		Book value

First	$	16.57	$	13.49	$	9.69	$	14.64	$	31.10	$	16.99
Second	$	11.09	$	12.20	$	13.66	$	14.26	$	26.44	$	15.84
Third	$	8.98	$	8.13	$	14.20	$	14.29	$	28.83	$	15.60
Fourth	$	4.34	$	5.76	$	12.34	$	14.17	$	22.24	$	14.65


¹		Does not include preferred stock and noncontrolling interest.



Wilmington Trust Corporation 2010 Form 10-K		24

securities authorized for issuance under equity compensation plans

(a)

(b)

(c)

Number of securities to

Weighted average

Number of securities remaining

be issued upon exercise

exercise price of

available for future issuance under

of outstanding options,

outstanding options,

equity compensation plans (excluding

Plan category

warrants, and rights

securities reflected in column a)

Equity compensation plans approved by security holders

7,196,109

30.33

1,774,983

Equity compensation plans not approved by security holders

—

Total

7,196,109

30.33

1,774,983

SHARE REPURCHASES

Our current share repurchase plan, which our Board of Directors authorized in April 2002, permits us to buy back up to 8 million shares of Wilmington Trust common stock. Our share repurchase activity reflects how we choose to deploy capital, and our decisions are not driven solely by share price.

We did not repurchase any of our shares under this program during 2010, 2009, or 2008. We have agreed not to repurchase our stock without prior written approval from our regulators, and any such repurchase would be subject to the restrictions contained in our merger agreement with M&T. In addition, until December 12, 2011, or until the U.S. Treasury no longer holds any of the Series A preferred stock we issued under the CPP, whichever is earlier, we are not permitted to repurchase any of our common stock, subject to certain exceptions, without prior approval of our regulators.

share repurchase plan activity


As of and for the year ended December 31	2010		2009		2008

Number of shares repurchased		—		—		—
Average price per share repurchased	$	—	$	—	$	—
Total cost of shares repurchased (in millions)	$	—	$	—	$	—
Total shares purchased under current plan		3,043,796		3,043,796		3,043,796
Shares available for repurchase		4,956,204		4,956,204		4,956,204

Share repurchase amounts in the table below may not match share repurchase amounts in the table above, because the amounts in the table below include shares we receive when recipients of stock-based compensation tender shares to exercise their options or to cover payroll taxes on restricted stock vesting. We consider these types of share acquisitions to be outside the parameters of our authorized share repurchase plan, because these shares are not trading on the open market when we acquire them.

share repurchase activity during the fourth quarter of 2010


					Total number of shares		Maximum number of shares
	Total number of		Average price		purchased as part of publicly		that may yet be purchased
Period	shares repurchased		paid per share		announced plans or programs		under the plans or programs ¹

October		—		—		—		15,178,705
November		—		—		—		15,175,055
December		—		—		—		15,300,225
Total		—		—		—		15,300,225


¹		In April 2002, our Board of Directors authorized the repurchase of up to 8 million shares of our common stock.



Wilmington Trust Corporation 2010 Form 10-K		25

Item 6. Selected Financial Data


As of and for the year ended December 31

(dollars in millions, except per-share amounts)	2010 ^3,4			2009 ⁴			2008 ^3,4			2007			2006 ³

INCOME STATEMENT
Interest income	$	366.6		$	437.2		$	611.4		$	722.2		$	674.8
Net interest income		277.1			318.2			357.7			368.9			363.1
Provision for loan losses		699.7			205.0			115.5			28.2			21.3
Noninterest income		396.7			362.7			294.0			386.3			346.1
Noninterest expense		641.7			515.6			561.3			444.4			471.6
Net (loss)/income attributable to Wilmington Trust Corporation		(720.1	)		(4.4	)		(23.6	)		182.0			143.8
Dividends and accretion on preferred stock		18.2			18.3			0.9			—			—

Net (loss)/income available to common stockholders	$	(738.3	)	$	(22.7	)	$	(24.5	)	$	182.0		$	143.8

SELECTED PER-SHARE DATA
Total basic common shares issued and outstanding (in millions)		87.4			69.0			67.5			67.9			68.4
Total diluted common shares issued and outstanding (in millions)		87.4			69.0			67.5			68.9			69.7
Basic (loss)/income per common share	$	(8.45	)	$	(0.33	)	$	(0.36	)	$	2.68		$	2.10
Diluted (loss)/income per common share		(8.45	)		(0.33	)		(0.36	)		2.64			2.06
Cash dividends paid per common share		0.03			0.365			1.370			1.320			1.245
Book value^{1, 2}		5.76			14.17			14.65			16.70			15.47
Stock price²		4.34			12.34			22.24			35.20			42.17
Price/earnings multiple		N/M			N/M			N/M			13.13			20.08

BALANCE SHEET²
Total assets	$	10,932.6		$	11,097.1		$	12,318.9		$	11,485.7		$	11,157.0
Long-term debt		595.0			442.9			468.8			267.8			388.5

SELECTED BALANCES, ON AVERAGE
Investment securities	$	747.0		$	855.8		$	1,561.2		$	1,863.5		$	1,884.0
Loans		8,419.6			9,243.5			9,200.0			8,212.0			7,699.8
Reserve for loan losses		(350.4	)		(175.5	)		(108.1	)		(95.5	)		(91.8	)
Earning assets		9,893.6			10,358.9			10,910.1			10,126.3			9,645.7
Total assets		10,765.5			11,349.2			11,881.2			10,997.4			10,495.1
Core deposits		6,992.9			6,490.3			5,333.6			5,045.5			4,936.7
Stockholders’ equity		1,372.7			1,331.6			1,103.3			1,091.2			1,059.4

SELECTED FINANCIAL RATIOS
(Loss)/return on average common stockholders’ equity¹		(68.67	)%		(0.44	)%		(2.17	)%		16.68	%		13.58	%
(Loss)/return on average assets		(6.69	)		(0.04	)		(0.20	)		1.65			1.37
Average common equity to asset ratio		9.74			8.89			9.13			9.92			10.09
Net interest margin		2.81			3.08			3.28			3.67			3.79
Nonperforming asset ratio (including OREO⁵ and loans held for sale)		15.02			5.76			2.19			0.95			0.44
Loan loss reserve ratio²		5.86			2.80			1.63			1.19			1.16
Net charge-off ratio		6.06			1.21			0.57			0.26			0.24

CAPTIAL RATIOS
Risk-based capital ratio		12.29	%		14.31	%		13.97	%		11.21	%		12.10	%
Tier 1 risk-based capital ratio		7.51			9.86			9.24			7.73			8.25
Tier 1 leverage capital ratio		6.02			10.10			8.77			7.18			7.39
Tangible common equity to asset ratio		1.53			5.42			5.12			6.76			6.76

SELECTED STATISTICS
Assets under management⁶	$	43,640.7		$	42,136.2		$	36,504.3		$	35,934.7		$	31,222.9
Staff members (full-time-equivalent)²		2,793			2,898			2,946			2,672			2,574


¹		Does not include preferred stock and noncontrolling interest.

²		At year-end.

³		2010, 2008, and 2006 results included non-cash goodwill impairment write-downs of $24.5 million, $66.9 million, and $72.3 million, respectively.

⁴		2010, 2009, and 2008 results included securities write-downs of $37.9 million, $77.5 million, and $130.7 million, respectively.

⁵		Other real estate owned.

⁶		At Wilmington Trust. Excludes Cramer Rosenthal McGlynn and Roxbury Capital Management.



Wilmington Trust Corporation 2010 Form 10-K		26

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Wilmington Trust Corporation, a financial holding company headquartered in Delaware, is a relationship management company that helps individual and institutional clients increase and preserve their wealth. Our company was founded by members of the du Pont family in 1903. Since then, we have been in the business of building long-term relationships with clients.

We offer diversified financial services through three businesses:

•

Regional Banking Services. This business serves commercial clients throughout the mid-Atlantic region and consumer clients in the state of Delaware.

•

Wealth Advisory Services (WAS). This business serves high-net-worth clients throughout the United States and in 32 other countries.

•

Corporate Client Services (CCS). This business serves institutional clients in 90 countries.

Collectively, our three businesses generate a diversified mix of revenue.

In the pages that follow, we summarize our 2010 performance and discuss each of our businesses in more detail. Throughout this report, we use “net (loss)/income” to mean “net (loss)/income attributable to Wilmington Trust Corporation.” Our comments in this report reflect our best estimates of the trends we know about, anticipate, and believe are relevant to future operations. In the future, however, actual results may differ from our estimates.

EXECUTIVE SUMMARY

We reported a $720.1 million net loss for 2010. After dividends and accretion on preferred stock, the net loss available to common stockholders was $738.3 million, or $8.45 per share.

The primary causes of this loss were:

•

A $699.7 million provision for loan losses. In comparison, the 2009 provision was $205.0 million. The 2010 increase reflected the pressures of the protracted recessionary environment in Delaware, which continued to intensify commercial loan repayment problems, particularly in the commercial construction loan portfolio, the financial conditions of many of our borrowers weakened, and appraisals revealed significant declines in collateral valuations. As a result, we downgraded the risk ratings of more loans, transferred more loans to nonaccruing status, charged off more loans, and increased the reserve for loan losses. If these economic conditions continue in the future, we could have additional increases in nonaccruing loans, risk rating downgrades, charge-offs, and our reserve for loan losses.



Wilmington Trust Corporation 2010 Form 10-K		27

•

A significant increase in income tax expense, following the establishment of a $292.2 million valuation allowance against our net deferred tax asset during 2010. We recorded this valuation allowance because we no longer believe it is more likely than not that tax benefits recorded previously will be realizable in the future.

•

Approximately $74.8 million of costs related to credit problems. This included write-downs and losses on other real estate owned, the reserve for unfunded lending commitments, and legal and other expenses associated with loan recoveries, workouts, and dispositions.

•

A $24.5 million goodwill impairment write-down on our affiliate money manager Roxbury Capital Management (RCM) and our Regional Banking segment.

These items overshadowed the strong performance of our CCS business, which contributed $199.2 million of noninterest income. Total noninterest income accounted for 61% of total revenue (net interest income before the provision for loan losses, plus noninterest income, excluding securities gains and losses and OTTI securities charges).

Because of the 2010 net loss, our capital and regulatory capital ratios declined from December 31, 2009, even though we raised additional capital in a common stock issuance during the 2010 first quarter. Our regulatory capital ratios at December 31, 2010, although lower than at year-end 2009, continued to exceed the minimums required by regulators for banks and bank holding companies to be considered well-capitalized. Subsequent to year-end, the OTS deemed Wilmington Trust FSB to be adequately capitalized and set targets for its future capital ratios. At the direction of our regulators, our Board of Directors did not declare a dividend on our common stock for the 2010 third and fourth quarters.

We improved our credit risk management practices in 2010, and we added $189.3 million to the reserve for loans losses, which brought it to $440.8 million. Nonperforming asset levels continued to trend higher, however, to $1.1 billion at year-end 2010, compared to $518.7 million at year-end 2009.

Since there is no significant economic or real estate recovery on the horizon in Delaware, there is little assurance our loan portfolio will strengthen significantly in the near term or that our capital position will not erode further. Current conditions increase the possibility of further downgrades by the credit rating agencies or adverse regulatory actions, either or both of which could compromise our businesses, including CCS and WAS. These two fee-based businesses continue to perform well, are established leaders in their markets, and have positive long-term prospects. We believe it is important to do all we can to protect and nourish those businesses as well as address the issues in our banking franchise.

For these reasons, management and the Board of Directors carefully studied the company’s strategic options during 2010. In the process, we reviewed a wide range of alternatives. Based on discussions we had with our regulators, we believed that, without a change-of-control transaction acceptable to them, we likely would face imminent significant regulatory actions, which likely would result in a dramatic worsening of our business prospects.



Wilmington Trust Corporation 2010 Form 10-K		28

Ultimately, the Board determined that the best option for our stockholders, as well as our clients and staff members, was a merger with M&T Bank Corporation. On November 1, 2010, we announced that we signed a definitive merger agreement with M&T. If the merger is completed, we will become a wholly-owned subsidiary of M&T. Completion of the merger is subject to certain conditions, including, approval by our stockholders and regulators.

M&T intends to hold our WAS and CCS businesses as distinct divisions within its corporate structure, and to continue to operate them under the Wilmington Trust brand, with expanded access to M&T’s clients and markets. M&T expects to combine our commercial bank with its own banking footprint under the M&T name.

Additional details about each of our businesses and our 2010 performance are discussed in greater detail in the following sections of this report. For more information about the merger, read Note 1, “Adverse financial condition and the proposed merger with M&T Bank Corporation,” in the consolidated financial statements in this report.

CHANGES IN FINANCIAL CONDITION

At December 31, 2010, our assets totaled $10.93 billion, which was a $164.5 million decrease from year-end 2009. This decline was the result of:

•

A $1.44 billion, or 16%, decrease in loan balances. Decreases occurred throughout the portfolio, due to charge-offs, loan pay downs, and weak demand for new loans. In addition, $52.5 million of loans were reclassified as loans held for sale at year-end 2010. This brought total loan balances at period-end to $7.53 billion.

•

A $189.3 million increase in the reserve for loan losses, which brought the reserve to $440.8 million, or 5.9% of total loans outstanding.

•

A $271.8 million decline in investment securities balances, primarily due to calls, maturities, and sales of securities as well as other-than-temporary impairment charges.

Partially offsetting these declines was a $1.93 billion increase in interest-bearing deposits in other banks, which reflected an increase in our liquidity. This increased liquidity resulted from decreases in loan and investment balances and increases in national brokered certificates of deposit and long-term debt. In accordance with our contingency funding plan, we enhanced liquidity during 2010 because of the potential negative impact from our loan credit quality problems and our net losses.

At December 31, 2010, liabilities totaled $10.08 billion, a $290.9 million increase from year-end 2009. This change was the result of:

•

A change in the funding mix between national brokered CDs and short-term borrowings. National brokered CD balances increased 44% to $1,832.0 million, while short-term borrowings decreased 80% to $123.2 million. On a combined basis, however, the increase in national brokered CDs and short-term borrowings was 4%, or $80.8 million. We typically adjust the mix of these two funding sources according to our maturity and pricing preferences.

•

A $152.1 million increase in long-term debt, primarily due to advances from the Federal Home Loan Bank taken during 2010. For more information about these advances, read Note 13, “Borrowings,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		29

Stockholders’ equity declined $455.4 million from December 31, 2009, mainly because of the net loss that we experienced during 2010, but was partially offset by the 21.7 million share common stock issuance completed on March 1, 2010. This issuance netted proceeds of $274 million, which qualified as both tangible common equity and regulatory Tier 1 capital. We used the proceeds for general corporate purposes. Since the offering, we have contributed $400 million of capital to our wholly-owned bank subsidiaries.

At December 31, 2010, all of our regulatory capital ratios continued to exceed the minimums required by regulators for banks and bank holding companies to be considered well-capitalized. However, banking regulators make qualitative judgments about the components of our capital, risk weightings, and other factors. Their views of our financial condition and circumstances could cause them to adjust their well-capitalized minimum standards. Subsequent to year-end, the OTS deemed Wilmington Trust FSB to be adequately capitalized and set targets for its future capital ratios. For additional information about this, read Note 26, “Subsequent events,” in the consolidated financial statements in this report. Further declines in our regulatory capital ratios could result in formal regulatory actions that could compromise our ability to conduct businesses.

For more information about changes in our financial condition, read the following sections of this report:

•

The Regional Banking discussion.

•

The investment securities discussion and Note 7, “Investment securities.”

•

The capital resources discussion and Note 17, “Capital.”

•

The Consolidated Statement of Changes in Stockholders’ Equity.

INVESTMENT SECURITIES PORTFOLIO

We maintain an investment securities portfolio to generate cash flow, help manage interest rate risk, and provide collateral for deposits and other liabilities. Our policy is to invest in securities that have, at the time of purchase, investment-grade ratings of A or better from Standard & Poor’s or Moody’s Investors Service. We do not hold investment securities for trading purposes. There are no client funds in this portfolio.

Our investment securities balances were $588.7 million at December 31, 2010, which was $271.8 million lower than at the end of 2009. This decline was caused primarily by:

•

$390.3 million of maturities and sales of U.S. Treasury securities.

•

$700.4 million of maturities and calls of government agency securities.

•

$20.6 million of sales and calls of preferred stock, which resulted in net securities gains of $3.8 million.

•

$57.3 million of security write-downs that were deemed OTTI under GAAP. Of this amount, $37.9 million was credit-related and was recorded as an other-than-temporary impairment loss in the statement of income. For additional information about other-than-temporary impairments, read Note 11, “Investment securities,” in the consolidated financial statements in this report.

There was significant turnover in the portfolio during 2010. The declines discussed above were partially offset by $933.2 million of U.S. Treasury and government agency securities purchases during 2010. As calls and maturities occurred during 2010, we purchased these additional securities for collateral purposes. These changes caused the mix of investment securities, on a percentage basis, to shift.



Wilmington Trust Corporation 2010 Form 10-K		30

investment securities portfolio composition

As of December 31


	2010					2009
			Percent of					Percent of
(dollars in millions)	Amount		portfolio			Amount		portfolio

U.S. Treasury securities	$	48.9		8	%	$	232.8		27	%
Government agency securities ¹		245.9		42			225.1		26
Obligations of state and political subdivisions		9.5		1			5.7		1
Collateralized mortgage obligations		27.2		5			51.2		6
Mortgage-backed debt securities		145.4		25			203.4		23
Trust-preferred securities:
Single-issue trust-preferred securities		58.5		10			57.7		7
Pooled trust-preferred securities		41.8		7			53.3		6

Total trust-preferred securities		100.3		17			111.0		13
Preferred stock		4.5		1			23.9		3
Other marketable equity securities		7.0		1			7.4		1

Total investment securities	$	588.7		100	%	$	860.5		100	%

Amount invested in fixed rate instruments	$	476.2		81	%	$	723.6		84	%


¹		Includes $0.5 million of non-U.S. government agency securities.

average life and duration

As of December 31

Attrition and depressed TruPS valuations caused the portfolio’s average life and duration to change. The negative duration of the portfolio in total was caused by the lower TruPS valuations and historically low market interest rates. Excluding trust preferred securities (TruPS), duration would have been 1.28 years at December 31, 2010, and 1.38 years at December 31, 2009.

For additional information about our investment securities, their valuations, and related write-downs, read the Consolidated Statements of Cash Flows, Note 15, “Fair value measurement of assets and liabilities,” and Note 7, “Investment securities,” in this report.



Wilmington Trust Corporation 2010 Form 10-K		31

RESULTS OF OPERATIONS

We reported a $720.1 million net loss for 2010, compared to a $4.4 million net loss for 2009. Highlights of our 2010 net loss, compared to 2009, include:

•

A $41.1 million decline in net interest income, caused mainly by a decline in loan and investment balances and an increase in nonaccruing loans;

•

A $494.7 million increase in the provision for loan losses that stemmed from an increase in problem loans during 2010;

•

A $126.1 million increase in noninterest expense, which included write-downs and losses on other real estate owned, the reserve for unfunded lending commitments, and legal and other expenses associated with loan recoveries, workouts, and dispositions;

•

An $88.1 million increase in tax expense, caused mainly by our deferred tax asset valuation allowance; and

•

A $34.0 million increase in noninterest income, attributable primarily to an increase in CCS revenue, partially offset by a decrease in WAS revenue.

We discuss each of these topics in greater detail in other sections of this report.

After adjusting for dividends on preferred shares, the net loss available to common stockholders was $738.3 million for 2010, or $8.45 per common share.

weighted average common shares outstanding

For the years ended December 31

Our net loss per common share was affected by the increase in common shares outstanding, compared to 2009. This increase was due to the issuance of 21.7 million shares on March 1, 2010. For additional information about this common stock issuance, read the capital resources discussion in this report.

THE REGIONAL BANKING BUSINESS

OVERVIEW

Our Regional Banking business serves clients in the mid-Atlantic region. We define this region as the state of Delaware and the parts of Pennsylvania, New Jersey, and Maryland that are within approximately 150 miles of our Wilmington headquarters.

We provide consumer banking services to, and gather most of our core deposits from, clients in Delaware. We have 48 branch offices in Delaware. We make the public aware of our consumer banking products mainly through newspaper advertising and direct mail.



Wilmington Trust Corporation 2010 Form 10-K		32

We provide commercial banking services to clients throughout the mid-Atlantic region, principally in areas adjacent to the I-95 corridor between Princeton, New Jersey, and Baltimore, Maryland. We target our commercial banking services to family-owned or closely held businesses in this region with annual sales of up to $250 million, and with whom we can develop long-term banking and wealth management relationships. In addition to our branch offices in Delaware, we have five commercial banking offices in southeastern Pennsylvania, two in New Jersey, and two in Maryland.

The majority of our commercial loans are in amounts of $10 million or less. This reflects our focus on privately held and family owned business clients, and the loan amounts they tend to need. In general, most of our commercial borrowers concentrate their banking relationships with us.

Our commercial banking offices outside of Delaware are primarily sales offices. In these offices, commercial banking and WAS staff members work together in teams. Many of our commercial banking clients are also WAS clients. We have no traditional bank branch offices outside of Delaware.

Because we offer commercial banking services in a four-state region, but focus our consumer banking activities in just one:

•

Most of our loans are commercial loans.

•

Most of our core deposits are from clients in Delaware.

We prefer to originate loans ourselves, rather than purchase loans from brokers or other banks. In general, we do not pursue syndicated lending opportunities.

We consider average loan and deposit balances, rather than period-end balances, to be the better indicator of trends in the Regional Banking business. This is because average balances represent client activity over the longer term. This is especially true of core deposit balances, which often can be skewed by movements of transactional deposits made by CCS clients.

Most of the income our Regional Banking business generates is net interest income. Regional Banking also generates noninterest income in the form of loan and deposit service charges.

The severity of the recession and lack of sustained economic recovery during 2010 continued to affect our Regional Banking business, and resulted in a higher provision for loan losses and lower net interest income for the year. Because of this, operating income from the Regional Banking segment declined in 2010.

regional banking operating income

For the years ended December 31



(in millions)	2010			2009		2008

Segment operating net (loss)/income	$	(605.0	)	$	4.6	$	72.7

For more information about Regional Banking operating income, read Note 24, “Segment reporting,” in this report.



Wilmington Trust Corporation 2010 Form 10-K		33

LOANS

Our discussion of loans in this section exclude loans held for sale, unless otherwise indicated. For details about loans held for sale, read Note 8, “Loans, loans held for sale, and OREO,” in this report.

Total loan balances declined $1.44 billion, or 16%, during 2010, due to weak demand for new loans, loans charge-offs, and loan pay downs. There were balance declines in all commercial loan categories, consumer loans, and loans secured with investments. Approximately 79% of total loans outstanding at December 31, 2010, were floating rate loans.

total loans outstanding

As of December 31



(in millions)	2010		2009		2008		2007		2006

Commercial loans:
Commercial, financial, and agricultural	$	2,178.6	$	2,627.0	$	2,966.3	$	2,594.9	$	2,533.5
Commercial real estate — construction		1,429.1		1,956.4		1,923.8		1,780.4		1,663.9
Commercial mortgage — owner occupied		1,041.8		1,095.3		982.2		724.1		547.2
Commercial mortgage — non-owner occupied		917.7		1,007.0		888.0		739.3		748.9

Total commercial loans		5,567.2		6,685.7		6,760.3		5,838.7		5,493.5
Retail loans:
Residential mortgage		434.6		431.0		571.2		562.0		536.9
Consumer loans:
Home equity		539.0		568.6		565.4		492.6		488.3
Indirect		411.6		613.4		891.5		748.2		687.0
Credit card		65.1		66.4		67.8		69.1		64.5
Other consumer		118.6		160.5		208.2		261.7		277.2

Total consumer loans		1,134.3		1,408.9		1,732.9		1,571.6		1,517.0
Secured with investments ¹		389.8		441.6		554.7		503.5		547.5

Total retail loans	$	1,958.7	$	2,281.5	$	2,858.8	$	2,637.1	$	2,601.4


¹		Loans secured with investments are mainly loans to WAS clients. They do not indicate trends in the Regional Banking business.

loan portfolio composition on a percentage basis

As of December 31


	2010			2009			2008			2007			2006

Commercial loans:
Commercial, financial, and agricultural		29	%		29	%		31	%		31	%		31	%
Commercial real estate — construction		19	%		22	%		20	%		21	%		21	%
Commercial mortgage — owner occupied		14	%		12	%		10	%		9	%		7	%
Commercial mortgage — non-owner occupied		12	%		12	%		9	%		9	%		9	%

Total commercial loans		74	%		75	%		70	%		69	%		68	%
Retail loans:
Residential mortgage		6	%		5	%		6	%		7	%		7	%
Consumer loans:
Home equity		7	%		6	%		6	%		6	%		6	%
Indirect		6	%		7	%		9	%		8	%		8	%
Credit card		1	%		1	%		1	%		1	%		1	%
Other consumer		1	%		1	%		2	%		3	%		3	%

Total consumer loans		15	%		15	%		18	%		18	%		18	%
Secured with investments¹		5	%		5	%		6	%		6	%		7	%
Total retail loans		26	%		25	%		30	%		31	%		32	%


¹		Loans secured with investments are mainly loans to WAS clients. They do not indicate trends in the Regional Banking business.



Wilmington Trust Corporation 2010 Form 10-K		34

The composition of the loan portfolio by loan type remained relatively similar to year-end 2009. The mix of loans by geographic market also remained relatively unchanged. The Delaware market accounted for 52% of total loans outstanding at December 31, 2010, compared with 54% at December 31, 2009.

total loans by geographic market

As of December 31


	2010				2009				2008
			As a % of				As a % of				As a % of
(dollars in millions)	Amount		total loans		Amount		total loans		Amount		total loans

Delaware	$	3,936.8		52%	$	4,799.0		54%	$	5,162.9		54%
Pennsylvania		1,761.2		24%		2,105.0		23%		2,232.5		23%
Maryland		841.8		11%		933.2		10%		966.9		10%
New Jersey		611.3		8%		689.2		8%		694.5		7%
Other		374.8		5%		440.8		5%		562.4		6%

	$	7,525.9			$	8,967.2			$	9,619.2

COMMERCIAL LENDING

Most of our commercial loans have floating rates, are secured by the borrower’s assets, and are supported by personal guarantees. Decreases occurred in all categories of commercial loans from year-end 2009, most notably in commercial, financial, and agricultural (CF&A) loans and commercial construction loans. At December 31, 2010, commercial loans made up approximately 74% of our total loan portfolio. Although this was down slightly from 75% at year-end 2009, commercial loans continued to be the largest portion of our total loan portfolio.

The geographic distribution of commercial loans at December 31, 2010, remained similar to year-end 2009, with most of our commercial loans continuing to come from clients in Delaware.

commercial loans by geographic market

As of December 31


	2010				2009				2008
			As a % of total				As a % of total				As a % of total
(dollars in millions)	Amount		commercial loans		Amount		commercial loans		Amount		commercial loans

Delaware	$	2,854.5		51%	$	3,601.9		54%	$	3,707.9		55%
Pennsylvania		1,412.0		25%		1,696.4		25%		1,749.2		26%
Maryland		654.7		12%		684.2		10%		632.3		9%
New Jersey		484.7		9%		509.7		8%		490.6		7%
Other		161.3		3%		193.5		3%		180.3		3%

	$	5,567.2			$	6,685.7			$	6,760.3

On a percentage basis, the mix of loans by size shifted slightly from year-end 2009, as the volume of loans in amounts of $10 million or less increased slightly. At December 31, 2010, approximately 74% of commercial loan balances were for amounts of $10 million or less, compared with 73% at year-end 2009.



Wilmington Trust Corporation 2010 Form 10-K		35

commercial loans by loan amount ¹

As of December 31


	2010			2009			2008

Less than $250,000		3	%		3	%		3	%
$250,000 to $1 million		11	%		10	%		10	%
$1 million to $5 million		39	%		38	%		36	%
$5 million to $10 million		21	%		22	%		23	%
$10 million to $20 million		16	%		18	%		18	%
More than $20 million		10	%		9	%		10	%


¹		Aggregated by Employer Identification Number or Social Security Number

At December 31, 2010:

•

Approximately 54% of commercial loans were scheduled to mature within 5 years. This is similar to 59% at December 31, 2009.

•

Of the 90% of commercial loans with floating rates, 43% were tied to a prime rate, and 38% were tied to the 30-day London interbank offered rate (Libor).

For more information about the pricing characteristics of commercial loans, read the interest rate risk discussion in this report.

commercial loan maturities and interest rate sensitivities

As of December 31, 2010


	Less than		1 through		More than		Total gross
(in millions)	1 year		5 years		5 years		loans

Commercial, financial, and agricultural	$	943.9	$	624.4	$	610.3	$	2,178.6
Commercial real estate — construction		112.5		826.5		490.1		1,429.1
Commercial mortgage		1.3		501.7		1,456.5		1,959.5

Total	$	1,057.7	$	1,952.6	$	2,556.9	$	5,567.2

Commercial loans with fixed rates	$	12.6	$	125.1	$	411.9	$	549.6
Commercial loans with floating rates		1,045.1		1,827.5		2,145.0		5,017.6

Total	$	1,057.7	$	1,952.6	$	2,556.9	$	5,567.2



Wilmington Trust Corporation 2010 Form 10-K		36

COMMERCIAL, FINANCIAL, AND AGRICULTURAL LOANS

Weak demand for new loans, caused by continued recessionary conditions, plus loan pay downs and $146.7 million of charge-offs, contributed to the decline in CF&A loan balances during 2010. Balances at December 31, 2010, were $2.18 billion, or 17%, lower than at year-end 2009.

COMMERCIAL REAL ESTATE LOANS

The commercial construction and commercial mortgage loans we make are to established, middle-market business owners who have experienced a variety of economic cycles. Our commercial real estate borrowers are based — and their projects are located — in the mid-Atlantic region. In general, we do not lend to large developers who conduct business throughout the United States.

In general, we do not provide financing for high-rise office buildings or regional shopping malls. We do very little condominium construction or conversion financing.

Office projects we finance are typically warehouses, industrial properties, or low-rise office buildings for medical, legal, and other professional services providers. Retail projects we finance are typically community shopping centers anchored by grocery or drug stores.

Most of our commercial mortgage loans are for owner-occupied properties in Delaware. Most of our commercial construction loans are for single-family housing developments in Delaware. Most of the growth in commercial construction and commercial mortgage balances in recent years reflected the need for housing, services, and amenities to support population growth in Delaware.

For more information about our exposure to commercial real estate-related loans, read the credit risk discussion and Note 7, “Loans, loans held for sale, and OREO,” in the consolidated financial statements in this report.

Commercial construction loans

Commercial construction loan balances decreased $527.3 million, or 27%, from year-end 2009, mainly due to $296.1 million of charge-offs. Also, during 2010, approximately $69.0 million of performing loans were transferred from the commercial construction portfolio to the commercial mortgage portfolio. Generally, when a commercial construction project is completed, we transfer the loan to the commercial mortgage portfolio. Pay downs and weak demand for new construction loans also contributed to the decrease.

The breakdown of commercial construction loans by project type shifted slightly from year-end 2009. The percentage of commercial construction loans for residential projects and retail and office projects decreased, mainly due to charge-offs and projects that were completed in 2010. At December 31, 2010, the geographic breakdown of the commercial construction portfolio changed. We had a lower concentration of loans in Delaware, mainly because of charge-offs and the transfer of loans to loans held for sale.



Wilmington Trust Corporation 2010 Form 10-K		37

commercial construction loans by project type

As of December 31


(dollars in millions)	2010				2009				2008

Residential	$	659.7	46	%	$	983.3	51	%	$	1,030.9	54	%
Land development ¹		328.9	23	%		434.9	22	%		404.9	21	%
Retail and office		217.9	15	%		344.0	18	%		291.8	15	%
Owner-occupied		19.4	1	%		28.0	1	%		46.4	2	%
Multi-family		108.8	8	%		81.2	4	%		31.0	2	%
Other		94.4	7	%		85.0	4	%		118.8	6	%

Total commercial construction loans	$	1,429.1			$	1,956.4			$	1,923.8


¹		Land development consists of raw land and improved land in various stages of development.

commercial construction loans by geographic market

As of December 31


	2010			2009			2008

Delaware		55	%		59	%		60	%
Pennsylvania		25	%		23	%		23	%
Maryland		6	%		7	%		6	%
New Jersey		12	%		9	%		7	%
Other		2	%		2	%		4	%

Commercial mortgage loans

Commercial mortgage loan balances decreased $142.8 million, or 7%, from year-end 2009, mainly due to pay downs and weak demand for new loans, combined with $43.4 million of charge-offs. These decreases were offset partially by the transfer of approximately $69.0 million of commercial construction projects from the commercial construction portfolio to the commercial mortgage portfolio during 2010. The composition of the commercial mortgage portfolio by project type and its geographic distribution at December 31, 2010, remained similar to year-end 2009.

commercial mortgage loans by project type

As of December 31


(dollars in millions)	2010				2009				2008

Owner-occupied	$	1,041.8	53	%	$	1,095.3	52	%	$	982.2	53	%
Retail		330.4	17	%		368.3	18	%		205.2	11	%
Industrial		105.8	5	%		119.5	6	%		81.9	4	%
Office		165.2	9	%		156.7	7	%		73.0	4	%
Residential/land		76.9	4	%		90.2	4	%		7.7	1	%
Hotel		85.4	4	%		83.1	4	%		81.3	4	%
Other		154.0	8	%		189.2	9	%		438.9	23	%

Total commercial mortgage loans	$	1,959.5			$	2,102.3			$	1,870.2



Wilmington Trust Corporation 2010 Form 10-K		38

commercial mortgage loans by geography

As of December 31


	2010			2009			2008

Delaware		55	%		57	%		57	%
Pennsylvania		22	%		21	%		22	%
Maryland		15	%		14	%		14	%
New Jersey		6	%		6	%		5	%
Other		2	%		2	%		2	%

RETAIL LENDING

Most of our retail loans are consumer loans. We also make residential mortgage loans, primarily to clients in Delaware. Loans secured with investments are primarily loans to WAS clients, and they do not reflect trends in the Regional Banking business.

CONSUMER LOANS

Most of the consumer loans we make are to clients in Delaware, where we focus our consumer banking activities.

Consumer loan balances were $1.13 billion at December 31, 2010, a decline of $274.6 million from year-end 2009. Decreases occurred in all consumer loan categories, with the largest decline in the indirect lending category. Indirect loans involve three parties: merchants who extend credit to customers, borrowers who seek credit, and financial institutions (like us) that provide credit. Most of the indirect loans we make are for new and late-model used cars. We make these loans through automobile dealers in the mid-Atlantic region as an extension of the commercial banking relationships we have with them. Indirect loans decreased during 2010 mainly because pay downs on these loan balances exceeded new volume.

In addition, $35.2 million of charge-offs contributed to the decline in total consumer loans. While consumer loan balances decreased, the mix of consumer loans by geographic market remained similar to year-end 2009, with approximately 57% of consumer loans in the Delaware market at December 31, 2010.

consumer loan portfolio

As of December 31


							Change 2010			Change 2009
(dollars in millions)	2010		2009		2008		vs. 2009			vs. 2008

Indirect	$	411.6	$	613.4	$	891.5		(33	)%		(31	)%
Home equity		539.0		568.6		565.4		(5	)%		1	%
Credit card		65.1		66.4		67.8		(2	)%		(2	)%
Other consumer		118.6		160.5		208.2		(26	)%		(23	)%

Total consumer loans	$	1,134.3	$	1,408.9	$	1,732.9		(19	)%		(19	)%

consumer loans by geography

As of December 31


	2010			2009			2008

Delaware		57	%		55	%		53	%
Pennsylvania		19	%		18	%		17	%
Maryland		12	%		14	%		16	%
New Jersey		8	%		9	%		9	%
Other		4	%		4	%		5	%



Wilmington Trust Corporation 2010 Form 10-K		39

RESIDENTIAL MORTGAGE LOANS

We focus our residential mortgage lending activities in the state of Delaware, where we are among the leading residential mortgage originators. Our residential mortgage portfolio includes low-income housing loans we originate or purchase as part of our compliance with the Community Reinvestment Act (CRA). We do not engage in subprime residential mortgage lending.

Almost all of our residential mortgages are for properties in Delaware. Most of the residential mortgages we originate are conventional, conforming first mortgage loans with fixed rates, typically with 15- or 30-year terms. We use a third-party provider to service our residential mortgage loans.

Our residential mortgage balances do not correlate directly with our origination volumes. This is because:

•

We sell the majority of the fixed rate residential mortgages we originate into the secondary market, instead of retaining them on our balance sheet. This is one of our interest rate risk management strategies, which we describe in more detail in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” in this report.

•

Our origination volumes include refinancings.

•

We do not include the CRA loans we purchase in our origination volumes.

Residential mortgage loan balances were $434.6 million at December 31, 2010, compared with $431.0 million at year-end 2009. During 2010, we sold $158.1 million of fixed-rate residential mortgages into the secondary market and realized a gain of approximately $2.7 million on these sales, which we recorded in the “other noninterest income” line of our statement of income.

Residential mortgage originations during 2010 were considerably lower than in 2009. Despite a continuing favorable interest rate environment in 2010, demand for refinancing was lower than in 2009.

residential mortgage originations

For the year ended December 31



(dollars in millions)	2010			2009			2008

Dollar amount of originations	$	216.3		$	317.4		$	166.7
Number of loans originated		917			1,450			739

Percentage for home purchase		23	%		21	%		48	%
Percentage for refinancing		77	%		79	%		52	%

Percentage of originations at fixed rates		92	%		95	%		83	%

LOANS HELD FOR SALE

During the fourth quarter of 2010, we transferred $52.5 million of loans to the loans-held-for-sale category because we were actively engaged in a plan to sell them in the future. We decided to sell these loans mainly to help us reduce the amount of nonperforming loans on our balance sheet. We are marketing these loans using third-party brokers. For more information about loans held for sale, read Note 8, “Loans, loans held for sale, and OREO,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		40

DEPOSITS

We record two types of deposits:

•

Core deposits, which are deposits from our clients. Most of our core deposits come from clients in Delaware, where we focus our consumer banking activities. Changes in core deposit balances, on average, primarily reflect trends in the Regional Banking business.

•

Non-core deposits, which include national brokered CDs. Non-core deposits are not associated with client activity, and changes in their balances do not reflect Regional Banking business trends. We have used non-core deposits to augment core deposits to fund earning asset growth.

Core deposits at December 31, 2010 were $7.14 billion, compared with $7.12 billion at year-end 2009. The marginal increase in core deposits during 2010 was primarily due to:

•

A $487.6 million, or 14%, increase in interest-bearing demand deposits, mainly due to Regional Banking and WAS client activity.

•

A $378.0 million, or 26%, decrease in noninterest bearing demand deposits, which was due mainly to CCS client activity. It is not unusual for CCS client deposit levels to fluctuate significantly from period to period, as CCS clients commonly make short-term transactional deposits.

•

Declines in retail certificate of deposit balances.

The geographic distribution of core deposits remained relatively similar to December 31, 2009, with the majority of our deposits coming from clients in Delaware.

core deposits

As of December 31


										Change 2010			Change 2009
(dollars in millions)	2010			2009			2008			vs. 2009			vs. 2008

Noninterest-bearing demand	$	1,092.6		$	1,470.6		$	1,231.7			(26	)%		19	%
Savings		914.0			921.5			815.7			(1	)%		13	%
Interest-bearing demand		4,078.3			3,590.7			2,632.9			14	%		36	%
CDs < $100,000		961.7			1,000.6			1,072.5			(4	)%		(7	)%
Local CDs ³ $100,000		96.5			136.9			230.7			(30	)%		(41	)%

Total core deposits	$	7,143.1		$	7,120.3		$	5,983.5			—	%		19	%

Percent from Delaware clients		78	%		77	%		86	%
Percent from Pennsylvania clients		7	%		7	%		4	%
Percent from Maryland clients		11	%		11	%		10	%
Percent from New Jersey clients		1	%		1	%		—	%
Percent from clients in other markets		3	%		4	%		—	%

Along with CDs under $100,000, we include balances of local CDs in amounts of $100,000 or more (local CDs) in core deposits because these CDs reflect client deposits. These deposits are not national, wholesale, or brokered deposits. Most local CDs are from clients in the mid-Atlantic region, including commercial banking clients and local municipalities, which frequently use these CDs to generate returns on their excess cash.



Wilmington Trust Corporation 2010 Form 10-K		41

We generally consider average core deposit balances to be a better indicator of trends in the Regional Banking business than period-end balances. On average, core deposits were higher for 2010 than for 2009, mainly because average interest-bearing demand deposits increased. The primary reason for this increase was higher Regional Banking and WAS client balances. On average, noninterest-bearing demand deposit balances were lower for 2010 than for 2009, primarily due to a decline in average CCS client deposit balances. For more detail on average core deposit balances, read the five-year summary of net interest income analysis that appears in the “Net interest income and margin” section in this report.

core deposits, on average

For the year ended December 31


							Change 2010			Change 2009
(dollars in millions)	2010		2009		2008		vs. 2009			vs. 2008

Noninterest-bearing demand	$	1,085.6	$	1,167.9	$	778.1		(7	)%		50	%
Savings		909.4		908.3		779.3		—	%		17	%
Interest-bearing demand		3,890.0		3,164.9		2,470.4		23	%		28	%
CDs < $100,000		991.4		1,072.5		1,006.3		(8	)%		7	%
Local CDs ³ $100,000		116.5		176.7		299.5		(34	)%		(41	)%

Total core deposits	$	6,992.9	$	6,490.3	$	5,333.6		8	%		22	%

For more information about our deposits, read the following sections in this report:

•		The capital resources discussion.

•		The net interest income summary.

•		The summary of changes in net interest income due to volume and rate.

•		Note 12, “Deposits,” in the consolidated financial statements in this report.

NET INTEREST INCOME AND MARGIN

Net interest income is the difference between the interest we earn on earning assets (such as loans and investment securities) and the interest we pay on interest-bearing liabilities (such as deposits and other borrowings). Most of our net interest income is generated by loan and deposit activity in our Regional Banking business. The WAS and CCS businesses also generate net interest income, because they have clients who use our banking services. Net interest income for 2010 was lower than for 2009 because interest income that we earned on our assets declined more than interest expense that we paid on our liabilities.

Our interest income declined in 2010 mainly because, in comparison to 2009, we had:

	•		Higher levels of nonaccruing loans.

	•		Lower average loan and investment securities balances.

	•		Higher average balances in lower yielding short-term investments, which reflected actions we took to enhance our liquidity during 2010.



Wilmington Trust Corporation 2010 Form 10-K		42

The decline in our interest expense partially offset the decline in interest income. This decline was mainly due to lower rates paid on our interest-bearing liabilities, mainly because of the continuing low interest rate environment. During 2010, as higher-yielding CDs and national brokered certificates matured, they were replaced by lower-yielding CDs and national brokered certificates.

net interest income

For the year ended December 31


										Change			Change
										2010 vs.			2009 vs.
(dollars in millions)	2010			2009			2008			2009			2008

Interest income	$	366.6		$	437.2		$	611.4			(16	)%		(28	)%
Interest expense		89.5			119.0			253.7			(25	)%		(53	)%

Net interest income	$	277.1		$	318.2		$	357.7			(13	)%		(11	)%

Percent generated by Regional Banking		91	%		92	%		94	%

For more information about the allocation of net interest income among the three businesses, read Note 24, “Segment reporting,” in this report.

effect of nonaccruing loans on interest income

For the year ended December 31



(in millions)	2010		2009		2008

Nonaccruing loans at December 31	$	1,009.6	$	455.6	$	196.4
Interest income that would have been recognized under original terms	$	42.3	$	11.5	$	5.0
Interest income actually received	$	3.4	$	2.9	$	4.3

net interest margin

For the year ended December 31


	2010			2009			2008

Net interest margin		2.81	%		3.08	%		3.28	%

The net interest margin measures the difference, or “spread,” between the yields we earn on earning assets and the rates we pay on interest-bearing liabilities. Our net interest margin is affected by the magnitude of changes in market interest rates and the pace at which those changes occur.

During 2010, our net interest margin declined primarily because we had higher levels of nonaccruing loans and low-yielding short-term investments.

More information about changes in our earning-asset yields and cost of funds appears in this report in the analysis of net interest income, the analysis of changes in interest income and expense due to volume and rate, and the interest rate risk discussion in the “Quantitative and Qualitative Disclosures about Market Risk” section.



Wilmington Trust Corporation 2010 Form 10-K		43

five-year summary of net interest income


	2010									2009
	Average			Income/			Average			Average			Income/			Average
(dollar amounts in millions; rates on a tax-equivalent basis)	balance			expense			rate			balance			expense			rate

ASSETS
Interest-bearing deposits in other banks	$	683.0		$	1.7			0.24	%	$	212.4		$	0.6			0.27	%
Federal funds sold and securities purchased under agreements to resell		13.7			—			0.16			22.4			0.1			0.50

Total short-term investments		696.7			1.7			0.24			234.8			0.7			0.30

U.S. Treasury securities		189.2			0.5			0.26			54.4			0.3			0.64
Government agency securities		207.6			2.6			1.24			247.1			8.2			3.30
Obligations of state and political subdivisions ¹		6.1			0.5			8.37			6.2			0.5			8.77
Preferred stock ¹		15.3			1.2			7.85			20.5			1.9			9.03
Mortgage-backed securities		203.6			8.7			4.29			354.2			15.7			4.44
Other securities ¹		132.1			8.0			6.08			211.8			10.0			4.71

Total investment securities		753.9			21.5			2.86			894.2			36.6			4.09

Federal Home Loan Bank and Federal Reserve Bank stock, at cost		30.3			0.5			1.78			24.8			0.4			1.72
Commercial, financial, and agricultural loans		2,459.8			99.9			4.06			2,732.0			116.4			4.26
Real estate — construction loans		1,782.0			57.7			3.24			1,958.3			69.4			3.54
Commercial mortgage loans		2,077.0			85.4			4.11			2,007.8			87.5			4.36

Total commercial loans		6,318.8			243.0			3.85			6,698.1			273.3			4.08

Residential mortgage loans		423.4			20.8			4.91			501.0			27.6			5.50
Consumer loans		1,258.3			68.8			5.46			1,565.2			87.9			5.61
Loans secured with investments		419.1			11.8			2.81			479.2			12.5			2.62

Total retail loans		2,100.8			101.4			4.82			2,545.4			128.0			5.03

Total loans ^1,2		8,419.6			344.4			4.09			9,243.5			401.3			4.34

Total earning assets at historical cost		9,900.5									10,397.3
Fair value adjustment on investment securities available for sale		(6.9	)								(38.4	)
Total earning assets		9,893.6			368.1			3.72			10,358.9			439.0			4.22
Other assets		871.9									990.3

Total assets	$	10,765.5								$	11,349.2


LIABILITIES AND STOCKHOLDERS’ EQUITY
Savings deposits	$	909.4		$	7.9			0.86	%	$	908.3		$	11.8			1.30	%
Interest-bearing demand deposits		3,890.0			10.8			0.28			3,164.9			11.8			0.37
Certificates under $100,000		991.4			21.6			2.18			1,072.5			30.0			2.80
Local certificates $100,000 and over		116.5			2.4			2.08			176.7			4.4			2.49

Total core interest-bearing deposits		5,907.3			42.7			0.72			5,322.4			58.0			1.09
National brokered certificates		1,288.9			12.8			0.99			1,333.2			24.0			1.80

Total interest-bearing deposits		7,196.2			55.5			0.77			6,655.6			82.0			1.23

Federal funds purchased and securities sold under agreements to repurchase		257.9			0.5			0.21			1,310.8			3.4			0.26
U.S. Treasury demand deposits		—			—			—			3.7			—			—
Line of credit and other debt		22.1			1.5			6.54			8.7			0.6			6.08

Total short-term borrowings		280.0			2.0			0.71			1,323.2			4.0			0.30

Long-term debt		488.1			32.0			6.55			463.0			33.0			7.13

Total interest-bearing liabilities		7,964.3			89.5			1.12			8,441.8			119.0			1.41
Demand deposits		1,085.6									1,167.9
Other noninterest funds		850.6									787.6

Total funds used to support earning assets		9,900.5			89.5			0.91			10,397.3			119.0			1.14
Noncontrolling interest		—									0.3
Wilmington Trust stockholders’ equity		1,372.7									1,331.3
Equity used to support earning assets		(850.6	)								(787.6	)
Other liabilities		342.9									407.9

Total liabilities and stockholders’ equity	$	10,765.5								$	11,349.2
Net interest income/margin ³					278.6			2.81	%					320.0			3.08	%
Tax-equivalent adjustment ¹					(1.5	)								(1.8	)

Net interest income				$	277.1								$	318.2



¹		Tax-advantaged income has been adjusted to a tax-equivalent basis using an income tax rate of 35% for all periods presented.

²		Loan balances include nonaccruing loans and loans held for sale. Interest income includes amortization of deferred loan fees.

³		To compute the net interest margin, we divide net interest income on a fully tax-equivalent basis by total earning assets, on average.


Note:		Average rates are calculated using average balances based on historical cost, and do not reflect market valuation adjustments.



Wilmington Trust Corporation 2010 Form 10-K		44


2008										2007									2006
	Average			Income/			Average			Average			Income/			Average			Average			Income/			Average
	balance			expense			rate			balance			expense			rate			balance			expense			rate


	$	94.0		$	1.4			1.51	%	$	4.4		$	0.3			6.95	%	$	2.9		$	0.1			4.16	%
		32.7			0.5			1.67			34.0			1.7			5.01			49.9			2.6			5.09

		126.7			1.9			1.55			38.4			2.0			5.23			52.8			2.7			5.04

		60.7			1.8			2.97			103.8			4.0			3.82			159.1			6.0			3.76
		485.6			23.0			4.73			659.5			31.3			4.75			485.9			20.4			4.20
		8.8			0.7			8.10			14.5			1.1			7.48			9.8			0.9			8.80
		41.8			3.2			7.60			68.5			5.3			7.76			90.6			6.9			7.65
		705.5			31.7			4.50			668.3			28.4			4.25			792.7			32.9			4.15
		355.5			16.9			4.74			377.5			24.1			6.36			386.1			23.6			6.14

		1,657.9			77.3			4.66			1,892.1			94.2			4.97			1,924.2			90.7			4.72

		22.2			0.7			3.28			12.4			0.4			3.59			9.1			0.6			6.23
		2,814.6			165.4			5.88			2,485.7			194.0			7.81			2,437.4			189.6			7.78
		1,860.6			102.3			5.50			1,731.9			144.4			8.34			1,516.8			128.5			8.47
		1,694.1			100.2			5.91			1,382.2			109.6			7.93			1,240.8			97.6			7.87

		6,369.3			367.9			5.77			5,599.8			448.0			8.00			5,195.0			415.7			8.00

		562.0			32.0			5.70			556.3			32.5			5.84			495.2			28.7			5.80
		1,728.7			110.9			6.42			1,526.6			113.2			7.41			1,458.2			104.6			7.18
		540.0			23.5			4.35			529.3			35.8			6.76			551.4			36.1			6.54

		2,830.7			166.4			5.88			2,612.2			181.5			6.95			2,504.8			169.4			6.76

		9,200.0			534.3			5.81			8,212.0			629.5			7.67			7,699.8			585.1			7.60

		11,006.8									10,154.9									9,685.9
		(96.7	)								(28.6	)								(40.2	)
		10,910.1			614.2			5.58			10,126.3			726.1			7.15			9,645.7			679.1			7.01
		971.1									871.1									849.4

	$	11,881.2								$	10,997.4								$	10,495.1



	$	779.3		$	17.7			2.28	%	$	500.1		$	11.8			2.35	%	$	311.4		$	1.3			0.41	%
		2,470.4			18.9			0.77			2,400.2			33.7			1.40			2,365.1			26.5			1.12
		1,006.3			35.2			3.49			1,010.1			43.6			4.32			979.4			36.5			3.73
		299.5			10.9			3.63			412.7			19.8			4.80			521.7			23.3			4.48

		4,555.5			82.7			1.81			4,323.1			108.9			2.52			4,177.6			87.6			2.10
		2,846.3			100.0			3.51			2,756.7			148.1			5.37			2,803.9			143.7			5.12

		7,401.8			182.7			2.47			7,079.8			257.0			3.63			6,981.5			231.3			3.31

		1,810.4			38.0			2.10			1,465.0			68.4			4.67			1,116.2			53.2			4.77
		18.5			0.2			1.28			9.8			0.5			4.77			11.1			0.5			4.77
		54.6			3.5			6.52			93.4			7.9			8.45			8.5			0.5			5.95

		1,883.5			41.7			2.22			1,568.2			76.8			4.90			1,135.8			54.2			4.77

		418.3			29.3			7.01			307.3			19.5			6.33			394.4			26.2			6.65

		9,703.6			253.7			2.61			8,955.3			353.3			3.95			8,511.7			311.7			3.66
		778.1									722.4									759.1
		525.1									477.2									415.1

		11,006.8			253.7			2.30			10,154.9			353.3			3.48			9,685.9			311.7			3.22
		0.2									0.2									0.3
		1,103.1									1,091.0									1,059.1
		(525.1	)								(477.2	)								(415.1	)
		296.2									228.5									164.9

	$	11,881.2								$	10,997.4								$	10,495.1
					360.5			3.28	%					372.8			3.67	%					367.4			3.79	%
					(2.8	)								(3.9	)								(4.3	)

				$	357.7								$	368.9								$	363.1



Wilmington Trust Corporation 2010 Form 10-K		45

changes in interest income and expense due to volume and rate


	2010 vs. 2009									2009 vs. 2008
	Increase/(decrease) due to changes in									Increase/(decrease) due to changes in
(in millions)	Volume ²			Rate ³			Total			Volume ²			Rate ³			Total

Interest income:
Interest-bearing deposits in other banks	$	1.3		$	(0.2	)	$	1.1		$	1.8		$	(2.6	)	$	(0.8	)
Federal funds sold and securities purchased under agreements to resell		—			(0.1	)		(0.1	)		(0.2	)		(0.2	)		(0.4	)

Total short-term investments		1.3			(0.3	)		1.0			1.6			(2.8	)		(1.2	)

U.S. Treasury securities		0.9			(0.7	)		0.2			(0.2	)		(1.3	)		(1.5	)
Government agency securities		(1.3	)		(4.3	)		(5.6	)		(11.3	)		(3.5	)		(14.8	)
Obligations of state and political subdivisions ¹		—			—			—			(0.2	)		—			(0.2	)
Preferred stock ¹		(0.5	)		(0.2	)		(0.7	)		(1.6	)		0.3			(1.3	)
Mortgage-backed securities		(6.7	)		(0.3	)		(7.0	)		(15.8	)		(0.2	)		(16.0	)
Other securities ¹		(3.8	)		1.8			(2.0	)		(6.8	)		(0.1	)		(6.9	)

Total investment securities		(11.4	)		(3.7	)		(15.1	)		(35.9	)		(4.8	)		(40.7	)

Federal Home Loan Bank and Federal Reserve Bank stock, at cost		0.1			—			0.1			0.1			(0.4	)		(0.3	)
Commercial, financial, and agricultural loans		(11.6	)		(4.9	)		(16.5	)		(4.9	)		(44.1	)		(49.0	)
Real estate — construction loans		(6.2	)		(5.5	)		(11.7	)		5.4			(38.3	)		(32.9	)
Commercial mortgage loans		3.0			(5.1	)		(2.1	)		18.5			(31.2	)		(12.7	)

Total commercial loans		(14.8	)		(15.5	)		(30.3	)		19.0			(113.6	)		(94.6	)

Residential mortgage loans		(4.3	)		(2.5	)		(6.8	)		(3.5	)		(0.9	)		(4.4	)
Consumer loans		(17.2	)		(1.9	)		(19.1	)		(10.5	)		(12.5	)		(23.0	)
Loans secured with investments		(1.6	)		0.9			(0.7	)		(2.6	)		(8.4	)		(11.0	)

Total retail loans		(23.1	)		(3.5	)		(26.6	)		(16.6	)		(21.8	)		(38.4	)

Total loans net of unearned income		(37.9	)		(19.0	)		(56.9	)		2.4			(135.4	)		(133.0	)

Total interest income	$	(47.9	)	$	(23.0	)	$	(70.9	)	$	(31.8	)	$	(143.4	)	$	(175.2	)

Interest expense:
Savings deposits	$	—		$	(3.9	)	$	(3.9	)	$	2.9		$	(8.8	)	$	(5.9	)
Interest-bearing demand deposits		2.7			(3.7	)		(1.0	)		5.3			(12.4	)		(7.1	)
Certificates under $100,000		(2.3	)		(6.1	)		(8.4	)		2.3			(7.5	)		(5.2	)
Local certificates $100,000 and over		(1.5	)		(0.5	)		(2.0	)		(4.5	)		(2.0	)		(6.5	)

Total core interest-bearing deposits		(1.1	)		(14.2	)		(15.3	)		6.0			(30.7	)		(24.7	)
National brokered certificates		(0.8	)		(10.4	)		(11.2	)		(53.1	)		(22.9	)		(76.0	)

Total interest-bearing deposits		(1.9	)		(24.6	)		(26.5	)		(47.1	)		(53.6	)		(100.7	)

Federal funds purchased and securities sold under agreements to repurchase		(2.7	)		(0.2	)		(2.9	)		(10.5	)		(24.1	)		(34.6	)
U.S. Treasury demand deposits		—			—			—			(0.2	)		—			(0.2	)
Line of credit and other debt		0.8			0.1			0.9			(3.0	)		0.1			(2.9	)

Total short-term borrowings		(1.9	)		(0.1	)		(2.0	)		(13.7	)		(24.0	)		(37.7	)

Long-term debt		1.8			(2.8	)		(1.0	)		3.1			0.6			3.7

Total interest expense		(2.0	)		(27.5	)		(29.5	)		(57.7	)		(77.0	)		(134.7	)

Change in net interest income	$	(45.9	)	$	4.5		$	(41.4	)	$	25.9		$	(66.4	)	$	(40.5	)



¹		We calculate variances on a fully tax-equivalent basis, which includes the effects of any disallowed interest expense deduction.

²		We define changes attributable to volume as changes in average balances multiplied by the prior year’s rate.

³		We define changes attributable to rate as changes in rate multiplied by the average balances 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.



Wilmington Trust Corporation 2010 Form 10-K		46

NONINTEREST INCOME

Noninterest income is income that is generated by fees we charge for services we provide. The pricing on these fees can be based on the valuations of assets in client portfolios, the level and complexity of services we provide, and other factors. In some cases, such as with money market mutual fund fees, the pricing can be related to market interest rates.

The WAS and CCS businesses generate most of our noninterest income. The Regional Banking business also generates noninterest income in the form of service charges, loan fees, and other types of fees. In addition, all of the revenue we receive from our investments in CRM and RCM is noninterest income. Noninterest income also includes securities gains and losses and OTTI securities charges.

Noninterest income was $396.7 million for 2010, or $34.0 million higher than the $362.7 million we reported for 2009. The main causes of this increase included:

	•		Higher CCS revenue. CCS revenue was $199.2 million for 2010, up 16% from 2009.

	•		Lower other-than-temporary impairment charges on investment securities in 2010. These charges were $37.9 million in 2010, compared with $77.5 million in 2009.

Partially offsetting these increases was a decrease in WAS revenue, which was $165.6 million for 2010, compared with $189.5 million for 2009.

Noninterest income increased as a percentage of total revenue. CCS and WAS advisory fees continued to account for the majority of our noninterest income. For more information about CCS and WAS fees, read the discussions of CCS and WAS businesses in this report.

noninterest income as a percentage of total revenue

For the year ended December 31



(dollars in millions)	2010			2009			2008

Noninterest income ¹	$	430.8		$	426.6		$	424.6
Noninterest income ¹ as a percentage of total revenue ²		61	%		57	%		54	%



¹		Excluding securities gains/losses and OTTI securities charges

²		Total revenue is the combination of net interest income (before the provision for loan losses) and total noninterest income (excluding other-than-temporary impairment losses and securities gains/losses).

Revenue from service charges on deposit accounts, which included overdraft fees, was $29.7 million in 2010. As a result of recent changes in the Federal Reserve’s Regulation E, we expect our overdraft fees to be lower in 2011. Regulation E requires consumer clients to consent before banks may charge overdraft fees on ATM and one-time debit card transactions that overdraw accounts. The amount of the decrease in our overdraft fees will depend largely on how many clients consent to the fees. Based on current client consent information, we estimate that service charges on deposit accounts will be approximately $2.0 million lower on an annualized basis.



Wilmington Trust Corporation 2010 Form 10-K		47

Our debit card interchange income, which is included in the “Card fees” line of our statement of income, was $8.0 million for 2010. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) was signed into law on July 21, 2010, and includes the Durbin amendment, which allows the Federal Reserve to set a maximum rate that banks may charge for electronic debit card transactions. Under this law, the Federal Reserve has until April 2011 to finalize rules that will set the maximum rate, and the rules are to become effective in July 2011. As a result, we expect our debit card interchange fee income to decrease. If the proposed maximum rates remain at current levels, this income could decrease by as much as 75%.

THE CORPORATE CLIENT SERVICES BUSINESS

OVERVIEW

The Corporate Client Services (CCS) business provides a variety of trustee, agency, investment management, and administrative services for corporations and institutions, investment bankers, corporate tax, finance, and legal executives, and other institutional clients who:

•		Use capital markets financing structures.

•		Seek to establish and maintain legal residency (nexus) for special purpose entities in preferred jurisdictions.

•		Use independent trustees to hold retirement plan assets.

•		Need investment and cash management services.

We do not own the assets or entities for which we serve as trustee or administrator, nor are any of these assets recorded on our balance sheet. In addition:

•		In general, we do not make loans to CCS clients, and we have no credit exposure to capital markets transactions.

•		We do not issue, underwrite, set pricing, or establish valuations for the financing structures or entities we support.

•		We do not consolidate these entities in our financial statements.

•		We do not offer high-volume, back-office processing services for capital markets transactions.

Most of our CCS clients are multinational corporations and institutions, and we have CCS clients in 90 countries. In the United States, we have CCS offices in Arizona, Connecticut, Delaware, Michigan, Minnesota, Nevada, New Jersey, New York, South Carolina, and Vermont. In Europe, we have CCS offices in the Channel Islands, Dublin, Frankfurt, London, Luxembourg, and The Netherlands. In the Caribbean, we have a CCS office in Grand Cayman.

We report CCS services revenue in three categories:

•

Global corporate trust services. This area of CCS provides a variety of services that support capital markets transactions and entity management activities. The legal documents that govern each financing structure, entity, and trust determine which services we provide. Fees for these services are based primarily on the complexity and duration of the services we provide. Some of these fees may be extraordinary or one-time in nature. Our global corporate trust services include:



Wilmington Trust Corporation 2010 Form 10-K		48

	•		Indenture, successor, collateral, and liquidating trustee and administrative services for corporate debt issuance and debt restructuring, reorganizations, mergers, and bankruptcies.

	•		Owner trustee, indenture trustee, and administrative services for securitizations and other structured finance transactions, and for capital equipment and project financing transactions.

	•		Successor loan agency services.

	•		Services that fulfill legal residency requirements for special purpose entities, such as providing independent directors and corporate governance, regulatory reporting, tax and accounting services, captive insurance company management, office management, and other administrative services.

•		Retirement services. We provide trust, custody, accounting, benefit payment, collective investment fund administration, and investment management services for retirement plans. A portion of the fees for these services is based on the market valuations of retirement plan assets and collective funds for which we are trustee. The remainder is based on the level of service we provide.

		We do not provide record-keeping services. A typical qualified U.S. retirement plan uses an investment manager, a record keeper, and a trustee. When a plan sponsor uses a single provider to perform all three functions, the plan is considered “bundled.” When a plan sponsor uses separate providers for each function, the plan is “unbundled.” We specialize in serving “unbundled plans,” and we work with leading record keepers and third-party administrators to market our services.

•		Institutional investment and cash management services. Our institutional investment and cash management services help clients increase their returns on fixed income investments and residual cash. Commodity funds, community banks, and clients who use construction fund, escrow agent, and other services may place large sums of cash with us for periods that range from as little as 24 hours to as long as several years. Fees for these services are based primarily on money market fund balances and the market valuations of investment-grade fixed income instruments.

Our primary competitive advantage in this business is the fact that we are an independent, conflict-free service provider. We typically do not lend to CCS clients, so we typically have no lending conflicts of interest. Since we are not an investment bank, we have no securities underwriting conflicts of interest.

Almost all CCS revenue is noninterest income. CCS generates some net interest income from deposit taking and cash management services. We do not attribute any portion of the provision for loan losses to CCS, because we typically do not lend to CCS clients. For more information about this, read Note 24, “Segment reporting,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		49

CCS RESULTS IN 2010

All three components of the business contributed to the growth in total CCS revenue for 2010, which rose 16% from 2009.

ccs revenue

For the year ended December 31


							Change			Change
							2010 vs.			2009 vs.
(in millions)	2010		2009		2008		2009			2008

Global corporate trust services	$	95.9	$	89.0	$	80.5		8	%		11	%
Retirement services		87.2		67.5		37.4		29	%		80	%
Investment/cash management services		16.1		15.6		15.0		3	%		4	%

Total Corporate Client Services revenue	$	199.2	$	172.1	$	132.9		16	%		29	%

During 2010, global corporate trust services revenue benefited from strong demand for successor loan agency services, default and bankruptcy administration services, and services that support corporate debt issuances. In 2010, CCS was appointed to represent clients on the unsecured creditors’ committee of some of the year’s largest bankruptcy filings, including those of The Great Atlantic & Pacific Tea Company (A&P), Credit-Based Asset Servicing and Securitization LLC, Midwest Banc Holdings, Inc., FGIC Corporation, Corus Bankshares, Orleans Homebuilders Inc., and Mesa Air Group, Inc. In addition, CCS continued to provide successor trustee and/or other services for most of the largest U.S. bankruptcies filed in recent years, including Lehman Brothers and General Motors.

Retirement services revenue for 2010 was 29% higher than for 2009, reflecting new business, additional plan contributions, and the effects of improved market values of retirement plan assets in client accounts. Approximately 87% of the 2010 retirement services revenue was based on retirement plan asset valuations, compared with 86% for 2009. Much of the retirement services business development was in collective investment fund services and services that support defined contribution plans. The increase in retirement services revenue correlates with an increase in retirement services subadvisor expense, which we discuss in the noninterest expense section of this report. Retirement services subadvisor expense was $41.9 million for 2010 compared with $29.5 million for 2009.

Institutional investment and cash management revenue was $16.1 million for 2010, up 3% from 2009, reflecting the addition of new clients. Approximately $700,000 of the 2010 revenue was a one-time fee that we do not expect to recur. Fees tied to U.S. investment-grade fixed income securities accounted for approximately 58% of institutional investment and cash management revenue for 2010, up from approximately 42% for 2009.

At December 31, 2010, CCS assets under management were $17.15 billion, compared with $15.09 billion at December 31, 2009. Retirement services assets accounted for the majority of this increase. For more information about this, read the assets under management and administration discussion in this report.

Although CCS revenue was higher for 2010 than for 2009, CCS profitability was lower because we allocated $8.5 million of the deferred tax asset valuation allowance to the CCS business unit.



Wilmington Trust Corporation 2010 Form 10-K		50

ccs operating income

For the year ended December 31


(in millions)	2010		2009		2008

Segment operating net income	$	19.5	$	22.6	$	10.0

For more information about CCS operating net income, read Note 24, “Segment reporting,” in the consolidated financial statements in this report.

THE WEALTH ADVISORY SERVICES BUSINESS

OVERVIEW

The Wealth Advisory Services (WAS) business helps high-net-worth clients grow their wealth, protect it, and transfer it to their heirs. We target our services to clients with liquid assets of $10 million or more. We have WAS clients throughout the United States and in 32 other countries, and our client relationships often span multiple generations. We have WAS offices in California, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, New Jersey, New York, and Pennsylvania.

We offer a comprehensive array of wealth management services, including:

•

Complete Asset Management ^SM. To our clients, managing risk is as important as increasing return. Our investment advisory firm, Wilmington Trust Investment Management, helps clients meet both objectives by focusing on portfolio construction, not stock-picking, and by:

	•		Emphasizing diversification.

	•		Applying forward-looking asset allocation.

	•		Performing strategic and tactical rebalancing.

	•		Employing a blend of active and passive funds.

		We use an open architecture approach to implement our asset allocation strategies. This means we use a mix of proprietary and third-party investment managers. For fixed income and core equity investing, we have in-house experts. For other asset classes and styles, we use independent investment managers.

•		Fiduciary services. Trust and estate attorneys and tax advisors throughout the United States regard us as a premier provider of fiduciary services, which include trust management, trust administration, philanthropic services, estate settlement, and a variety of financial, retirement, and succession planning services. We specialize in helping clients maximize the favorable trust laws in Delaware, which is considered the leading trust jurisdiction in the United States. Many of the legal and tax advantages available for trusts domiciled in Delaware are not available in other states.



Wilmington Trust Corporation 2010 Form 10-K		51

•

Family office services. We help family office clients identify, review, consolidate, and execute financial and lifestyle management needs. We specialize in the unique needs of these clients, including:

	•		Family office legal structures.

	•		Strategies for clients with inherited wealth.

	•		Compensation strategies for corporate executives.

The family office services we provide include planning and governance, cash flow management and budgeting, tax planning and compliance, real estate acquisition and disposition, risk assessment and insurance oversight, bill payment and payroll management, family security, and other services. Many, but not all, of our family office clients also use our asset management services.

Each WAS client has a relationship manager who coordinates a team of specialists. These specialists may include investment advisors, planning professionals, fiduciary advisors, tax professionals, and trust administrators, depending on each client’s individual needs.

We report WAS revenue in three categories:

•

Trust and investment advisory revenue. This category consists of fees for asset management, asset allocation, and trust management services. These fees are based on the market valuations of the assets we manage, direct, or hold in custody for clients. These fees are affected by movements in financial markets such as the Dow Jones Industrial Average, the Standard & Poor’s 500 (S&P 500), NASDAQ, and others. Changes in trust and investment advisory revenue may or may not correlate directly with financial market movements, depending on the mix of assets in client accounts.

•

Planning and other services revenue. This category consists of fees from family office, financial planning, estate settlement, tax, and other services. These fees are based on the level and complexity of the services we provide, regardless of the value of any associated assets. These fees can vary widely in amount, and portions may be nonrecurring. It is not unusual for revenue from these services to fluctuate from one reporting period to another.

When family office clients use our asset management services, the associated fees are based on market valuations and recorded as trust and investment advisory revenue.

•

Mutual fund revenue. Most of our mutual fund fees are tied to money market mutual funds and cash balances. Consequently, equity market movements typically have little, if any, effect on this category of revenue.

The majority of WAS revenue is noninterest income. WAS also generates net interest income from private banking and custom lending services, and we attribute a portion of the provision for loan losses to WAS. For more information about this, read Note 24, “Segment reporting,” in the consolidated financial statements in this report.

We believe that changes in revenue, rather than changes in managed asset levels, are the better indicator of trends in the WAS business. For more information about this, read the assets under management discussion in this report.



Wilmington Trust Corporation 2010 Form 10-K		52

WAS RESULTS IN 2010

Total WAS revenue for 2010 was lower than for 2009, primarily because of declines in revenue from mutual funds and planning and other services.

was revenue

For the year ended December 31


							Change		Change
							2010 vs.		2009 vs.
(in millions)	2010		2009		2008		2009		2008

Trust and investment advisory revenue	$	133.6	$	130.9	$	150.9		2%		(13)%
Mutual fund revenue		4.3		16.6		27.2		(74)%		(39)%
Planning and other services revenue		27.7		42.0		45.5		(34)%		(8)%

Total Wealth Advisory Services revenue	$	165.6	$	189.5	$	223.6		(13)%		(15)%

Trust and investment advisory revenue for 2010 increased 2% from 2009, primarily because of new business and improved market values of client assets under management. These increases were offset partially by lost business. Growth in this line of revenue was also muted somewhat, as many clients continued to opt for fixed income, index fund, and other investment strategies with fees that are lower than those for more active investment strategies.

Mutual fund revenue for 2010 was significantly lower than for 2009, partly because mutual fund balances declined but mainly because we continued to waive client fees on our money market mutual funds. We began waiving these fees in 2009, in order to maximize returns for our clients, after the market interest rate environment caused yields to reach historic lows. These waivers reduced WAS mutual fund revenue by approximately $16.5 million for 2010 and $10.6 million for 2009. We do not expect to begin reinstating these fees until the yields on money market mutual funds improve, which we estimate will require an increase of at least 50 basis points in short-term market interest rates.

Planning and other services revenue for 2010 was lower than for 2009, mainly because revenue from business management firm Grant Tani Barash & Altman (GTBA) declined. This happened because we reduced our GTBA ownership position in the 2010 first quarter. Revenue from GTBA in 2010 was $2.2 million. In 2009, revenue from GTBA was approximately $13.7 million. For more information about this, read Note 5, “Affiliates and acquisitions,” in the consolidated financial statements in this report.

WAS profitability was lower for 2010 than for 2009, primarily because of the provision for loan losses attributable to WAS increased.

was operating income

For the year ended December 31



(in millions)	2010			2009		2008

Segment operating net (loss)/income	$	(69.8	)	$	8.5	$	13.3

For more information about WAS operating net income, read Note 24, “Segment reporting,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		53

ASSETS UNDER MANAGEMENT AND ADMINISTRATION

We report two types of client assets:

•

Assets under management (AUM). These are assets for which we make investment decisions on behalf of clients. Most of our AUM are associated with WAS clients.

•

Assets under administration (AUA). These are assets we hold in custody, or for which we serve as fiduciary, on behalf of clients. Most of our AUA are associated with CCS retirement services clients.

Changes in our AUM or AUA levels do not necessarily reflect new or lost business, nor do they always correlate with financial market movements. This is because most of the assets we manage or administer for clients are held in trusts. Trust asset levels can be decreased by fund distributions for tax payments, philanthropic obligations, discretionary spending, trust terminations, and other purposes. Asset levels also are affected by the duration of trust agreements, which can range from a few months to 99 years or more.

We believe that changes in revenue, rather than changes in AUM or AUA levels, are better indicators of trends in the WAS and CCS businesses, because:

•

The pricing on many of our services is not based on asset valuations.

•

WAS and CCS revenue may include fees for direction trust services, but direction trust assets are not included in our AUM amounts. Direction trusts allow clients to have their assets and fiduciary matters managed separately and by different providers. The state of Delaware permits direction trusts, but the laws in many other states do not.

•

Monetary assets we manage or administer for CCS clients can fluctuate by hundreds of millions of dollars from one reporting period to the next, depending on the cash management needs of these clients.

For more information about the portion of our revenue that is based on asset valuations, read Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” in this report. For more information about the asset management and administration services offered by CCS and WAS, read the discussions of those two businesses in this report.

client assets at wilmington trust ¹

As of December 31


							Change			Change
							2010 vs.			2009 vs.
(dollars in billions)	2010		2009		2008		2009			2008

WAS assets under management	$	26.49	$	27.05	$	26.77		(2	)%		1	%
CCS assets under management		17.15		15.09		9.73		14	%		55	%

Total Wilmington Trust assets under management	$	43.64	$	42.14	$	36.50		4	%		15	%

WAS assets under administration	$	24.88	$	24.82	$	11.58		—	%		114	%
CCS assets under administration		84.35		81.65		79.55		3	%		3	%

Total Wilmington Trust assets under administration	$	109.23	$	106.47	$	91.13		3	%		17	%

Combined AUM and AUA at Wilmington Trust	$	152.87	$	148.61	$	127.63		3	%		16	%



¹		Excludes CRM and RCM. Includes estimates of asset values that are not readily available, such as those held in limited partnerships.



Wilmington Trust Corporation 2010 Form 10-K		54

In 2010, approximately $0.50 billion of WAS AUM were reclassified as CCS AUM. Absent this reclassification, WAS AUM at year-end 2010 would have been relatively unchanged from year-end 2009. Improvements in market valuations of WAS AUM in 2010 were offset by lost business.

CCS AUM at December 31, 2010 was higher than at December 31, 2009, reflecting new business as well as improved market valuations of retirement plan assets.

Investment mix trends generally reflected increases and decreases in the market valuation of AUM, particularly equity securities, which tend to be more volatile than other types of investment categories.

investment mix of wilmington trust aum ¹

As of December 31


	2010			2009			2008

Equities		38	%		40	%		38	%
Fixed income		34	%		34	%		33	%
Cash and cash equivalents		19	%		15	%		18	%
Other assets		9	%		11	%		11	%


¹		Excludes Cramer Rosenthal McGlynn and Roxbury Capital Management.

AFFILIATE MONEY MANAGERS

We have ownership positions in two money management firms:

•

Cramer Rosenthal McGlynn (CRM), a value-style manager based in New York.

•

Roxbury Capital Management (RCM), a growth-style manager based in Minneapolis.

affiliate money manager revenue

For the year ended December 31

The revenue we record from CRM and RCM is net of their expenses and based on our ownership position in each. We do not consolidate CRM or RCM in our financial statements because the principals of these firms retain management controls, including veto powers, over a variety of matters. CRM and RCM are not part of our WAS business; their managers and employees are not Wilmington Trust staff members; and there is very little overlap between their clients and ours. For more information about our investments in CRM and RCM, read Note 5, “Affiliates and acquisitions,” and Note 24, “Segment reporting,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		55

CRAMER ROSENTHAL MCGLYNN

Revenue from CRM increased during 2010 primarily because CRM assets under management increased.

crm results

As of December 31



(in millions)	2010		2009		2008

CRM assets under management	$	14,480.0	$	11,852.8	$	7,817.4
Revenue (net of expenses)	$	19.0	$	17.6	$	16.4

ROXBURY CAPITAL MANAGEMENT

RCM revenue for 2010 was higher than for 2009 because of a reduced cost structure initiative that was implemented during the second half of 2009, and because of higher RCM assets under management, due mainly to improved market valuations. Despite the fact that RCM revenue and AUM increased for 2010, we recorded an impairment write-down on our investment in RCM during the 2010 fourth quarter. For additional information about this, read Note 11, “Goodwill and other intangibles assets,” in the consolidated financial statements in this report.

Because of the impairment write-down and the reduced business prospects for the RCM business, we discontinued equity method accounting for our ownership interests in RCM and do not expect to record any revenue for RCM in 2011.

rcm results

As of December 31



(in millions)	2010		2009			2008

RCM assets under management	$	2,025.1	$	1,675.8		$	1,336.6
Revenue (net of expenses)	$	0.4	$	(2.4	)	$	(0.7	)



Wilmington Trust Corporation 2010 Form 10-K		56

NONINTEREST EXPENSE

Noninterest expense for 2010 was $641.7 million. This included a $24.5 million goodwill impairment write-down that consisted of:

•

A $20.7 million impairment write-down on our investment in RCM, due to declines in RCM’s projections for revenue and assets under management.

•

A $3.8 million impairment write-down on the Regional Banking segment, due to loan losses that reduced the valuation of that business.

For more information about our goodwill impairment write-downs, read Note 11, “Goodwill and other intangibles assets,” in the consolidated financial statements in this report.

Excluding the goodwill impairment write-downs, noninterest expense was $617.2 million for 2010, an increase of $101.6 million, or 20% higher from 2009. Most of this increase resulted from costs associated with managing credit risk, which totaled approximately $74.8 million in 2010. This amount includes servicing and consulting expense, legal expense, and the expense recorded for the reserve for unfunded loan commitments and OREO write-downs and losses.

Expenses for the reserve for unfunded loan commitments and OREO write-downs and losses totaled $67.7 million for 2010, compared with $5.0 million for 2009, and comprised the largest component of the 2010 increase in total noninterest expense.

The amount recorded for the reserve for unfunded loan commitments was $50.8 million for 2010, compared with $1.9 million for 2009. These amounts are included in the “OREO write-downs/losses and reserve for unfunded commitments” line of our statement of income. We base the reserve for unfunded loan commitments, specifically letters of credit, on assumptions about the probability of draws on such commitments, risk ratings, and the estimated losses if such commitments are drawn. The increase in this expense during 2010 reflected risk ratings downgrades and loss assumptions that correlated with changes in the loan portfolio. The reserve for unfunded loan commitments was $58.2 million at December 31, 2010, compared with $7.4 million at December 31, 2009, and is included in the “Other liabilities” line of our balance sheet. For more information about unfunded loan commitments, read Note 9, “Credit quality and the reserve for loan losses,” and Note 13, “Commitments and Contingencies,” in the consolidated financial statements in this report.

The amount recorded for OREO write-downs and losses was $16.9 million for 2010, compared with $3.1 million for 2009. OREO write-downs and losses are included in the “OREO write-downs/losses and reserve for unfunded commitments” line of our statement of income and include losses on the disposition of OREO properties and write-downs of properties held as OREO. These amounts increased primarily because collateral valuations continued to decline throughout 2010, and because OREO balances overall rose during 2010. Loans transferred to OREO amounted to $34.7 million in 2010 and $28.2 million in 2009.



Wilmington Trust Corporation 2010 Form 10-K		57

Staffing-related costs continued to comprise the largest concentration of our total noninterest expense. Total staffing-related expense for 2010 increased $9.1 million, or 3%, from 2009. As a percentage of total noninterest expense, staffing-related costs declined due to increases in other categories of noninterest expense.

staffing-related expense

For the year ended December 31


(dollars in millions)	2010			2009			2008

Salaries and wages	$	201.6		$	197.8		$	196.3
Incentives and bonuses		36.1			31.5			48.1
Employment benefits		58.8			58.1			51.7

Total staffing-related expenses	$	296.5		$	287.4		$	296.1

Staffing-related expense as a percentage of total noninterest expense		46	%		56	%		53	%

The increase in total staffing-related expense for 2010 was primarily due to:

•

A $3.8 million, or 2%, increase in salaries and wages, mainly due to the addition of credit and other risk management staff members.

•

A $4.6 million, or 15%, increase in incentives and bonuses expense, mainly because of $2.0 million for staff retention incentives. The retention incentives are part of our overall strategy to attract and retain staff members amid highly competitive employment market conditions. The increase was also due to an unusually low incentive and bonus expense in 2009. This line for 2009 reflected downward adjustments that were made to align amounts accrued in 2008 with payments actually made in 2009. Incentives and bonus expense for 2010 also reflected a $2.0 million expense reversal related to the cancellation of restricted stock and stock options during 2010.

We had 2,793 full-time-equivalent staff members at December 31, 2010. This was 105 fewer than at December 31, 2009. Much of this decline was associated with the reduction in the 2010 first quarter of our ownership position in GTBA. Before then, GTBA’s revenue and expenses were consolidated in Wilmington Trust’s financial statements, and GTBA staff members were Wilmington Trust staff members. GTBA’s operations accounted for approximately $1.8 million of noninterest expense in 2010 and $12.0 million in 2009. For more information about our investment in GTBA, read Note 3, “Summary of significant accounting policies,” and Note 5, “Affiliates and acquisitions,” in the consolidated financial statements in this report.

Other factors in the changes in noninterest expense included:

•

Higher servicing and consulting expense for 2010. This expense was $8.5 million higher than for 2009, due mainly to merger costs as well as our use of outside consultants for credit, risk, tax, loan, and human resource services.

•

Retirement services subadvisor expense of $41.9 million for 2010, compared with $29.5 million for 2009. This increase was a direct result of new business, and correlated with the 2010 increase in CCS retirement services revenue. We discuss the increase in CCS retirement services revenue in the CCS business discussion.



Wilmington Trust Corporation 2010 Form 10-K		58

•

Insurance expense of $27.1 million for 2010, compared to $26.1 million for 2009. Most of our insurance expense was for deposit insurance premiums that we pay to the Federal Deposit Insurance Corporation (FDIC). Insurance expense for 2009 included a special insurance premium assessment that the FDIC levied on all banks in the 2009 second quarter. This special assessment added $5.3 million to our 2009 insurance expense. For 2010, our FDIC insurance expense was $23.5 million, compared with $17.2 million in 2009 (excluding the $5.3 million 2009 special assessment). The increases in insurance expense reflected growth in average core deposit balances, as well as an industry-wide premium increase and a revision to the methodology the FDIC uses to calculate premiums, which became effective in 2009.

•

Higher legal and auditing fee expense. This expense was $5.7 million higher than for 2009, due mainly to merger costs as well as costs related to loan workout and recovery activities.

•

A $2.8 million expense recorded during the 2009 first quarter that stemmed from an error during a systems conversion.

INCOME TAXES

Continued net losses and uncertainty about how credit quality problems might affect our financial performance in the future led us to conclude that the majority of our deferred tax asset would not be realizable. We had a $292.2 million valuation allowance against our deferred tax asset at December 31, 2010, which caused income tax expense to increase for 2010.

income taxes and tax rate

For the year ended December 31


(dollars in millions)	2010			2009			2008

Pre-tax loss (less non-controlling interest)	$	(668.5	)	$	(40.9	)	$	(25.6	)
Income tax expense/(benefit)	$	51.6		$	(36.5	)	$	(2.0	)
Effective tax rate		(7.7	)%		89.2	%		7.8	%

For 2010, our effective tax rate was affected by our net loss and our valuation allowance. Excluding the impact from the valuation allowance, we would have had a $238.1 million benefit and an effective tax rate of 35.6%, which is comparable to our 2010 statutory tax rate.

In comparison, our effective tax rate for 2009 was 89.2%, which was significantly higher than our 2009 statutory rate mainly because of certain adjustments and permanent differences including a previous year provision to return adjustment, release of previously established tax reserves, changes in state tax rates, and the restoration of tax assets that were previously written off.

For more information about our income tax expense, deferred tax assets, and our valuation allowance, read Note 21, “Income taxes,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		59

CAPITAL RESOURCES

We manage capital to meet or exceed appropriate standards of financial safety and soundness, comply with existing and impending regulatory requirements, and provide for future growth. We review our capital position and make adjustments as needed to ensure we can achieve these objectives. Our wholly-owned bank subsidiaries are the main users of our capital, and they are subject to regulatory capital requirements. The CCS and WAS businesses are not as capital-intensive. Neither CCS nor WAS is subject to regulatory capital requirements, although some of our trust agreements specify certain capital requirements.

During 2010, our capital benefited from an underwritten public offering of 21,706,250 shares of common stock, which we completed in the 2010 first quarter. The offering priced at $13.25 per share, raised $274.0 million, net of $13.7 million of underwriting discounts and commissions, and qualified as both tangible common equity and regulatory Tier 1 capital. We used the proceeds for general corporate purposes. Since the offering, we have contributed $400 million of capital to our wholly-owned bank subsidiaries.

Even though we added capital through the common equity offering, our capital levels at December 31, 2010, were lower than at December 31, 2009, because of the continued economic pressures that we experienced during 2010. These pressures were evident in the increase in the provision for loan losses, additional investment securities and goodwill impairment charges, and a deferred tax asset valuation allowance, all of which resulted in a net loss and, therefore, caused our retained earnings to decline. With no significant economic or real estate recovery on the horizon in our markets, we had little assurance that our loan portfolio would strengthen significantly in the near term or that our capital position would not erode further. Accordingly, after carefully studying our strategic alternatives, our Board of Directors determined that the best option for our stockholders, as well as for our clients and staff members, was a merger with M&T. On November 1, 2010, we announced that we signed a definitive merger agreement with M&T. This merger is subject to approval by regulators and our stockholders. For additional information about this, read Item 1, “Business,” and Note 1, “Adverse financial condition and the proposed merger with M&T Bank Corporation,” in the consolidated financial statements in this report.

capital

As of and for the year ended December 31


(dollars in millions)	2010			2009			2008

Common stockholders’ equity (period end)	$	526.7		$	983.4		$	1,012.4
Common stockholders’ equity (on average)	$	1,048.6		$	1,009.0		$	1,085.2
Loss on average common stockholders’ equity		(68.67)	%		(0.44)	%		(2.17)	%
Loss on average assets		(6.69)	%		(0.04)	%		(0.20)	%

Decreases in the return on average common stockholders’ equity and the return on average assets for 2010 reflected the net loss that we experienced during 2010.

Our capital at December 31, 2010, included $330.0 million of Wilmington Trust Series A preferred stock and warrants, which we sold to the U.S. Department of the Treasury under the CPP in December 2008. We are required to pay a 5% dividend on this preferred stock annually until 2013, and 9% annually thereafter, as long as this stock is outstanding. We were directed by our regulators not to pay this dividend without their prior approval. Subsequent to year-end, our regulators approved the payment of our



Wilmington Trust Corporation 2010 Form 10-K		60

2011 first quarter preferred stock dividend. The Series A preferred stock qualifies as Tier 1 capital, has no maturity date, and ranks senior to our common stock for dividend payments and other matters. Full details of our participation in the CPP and its terms are in a prospectus supplement and amended shelf registration statement dated January 12, 2009. These documents are available on www.wilmingtontrust.com in the Investor Relations section, under SEC filings. Under the terms of our merger agreement with M&T and upon closing of the merger, our Series A preferred stock will be converted into preferred stock of M&T, with substantially the same rights, powers and preferences, and M&T will assume all of our obligations relating to the Series A preferred stock. In addition, the warrants we issued to the U.S. Department of the Treasury in connection with the issuance of the Series A preferred stock will be converted automatically in the merger into warrants to purchase M&T common stock, subject to appropriate adjustments.

REGULATORY CAPITAL RATIOS

Regulatory bodies establish minimum capital requirements that provide a context for measuring a bank’s capital position and the varying degrees of risk associated with different on- and off-balance-sheet items. These requirements are expressed as ratios. For more information about these ratios and how they are calculated, read the UBPR User’s Guide, which is published by the Federal Financial Institution Examination Council and available free of charge at www.ffiec.gov/ubprguide.htm.

Although our net loss for 2010 reduced capital levels and our capital ratios were lower at year-end 2010 than at year-end 2009, all of our regulatory capital levels at the ends of both years continued to exceed the minimums required by regulators for banks and bank holding companies to be considered well-capitalized. Banking regulators make qualitative judgments about the components of our capital, risk weightings, and other factors. Their views of our financial condition and circumstances could cause them to adjust their well-capitalized minimum standards. Subsequent to year-end, the OTS deemed Wilmington Trust FSB to be adequately capitalized and set targets for its future capital ratios. For additional information about this, read Note 26, “Subsequent events,” in the consolidated financial statements in this report. Further declines in our regulatory capital ratios could result in formal regulatory actions that could compromise our ability to conduct business.

regulatory capital ratios

As of December 31


							Minimum to be
	2010			2009			well-capitalized

Total risk-based capital		12.29	%		14.31	%		10	%
Tier 1 risk-based capital		7.51	%		9.86	%		6	%
Tier 1 leverage capital		6.02	%		10.10	%		5	%



Wilmington Trust Corporation 2010 Form 10-K		61

amounts of regulatory capital

As of December 31


	2010				2009
			Minimum to be				Minimum to be
(in millions)	WL capital		well-capitalized		WL capital		well-capitalized

Total risk-based capital	$	1,060.2	$	862.6	$	1,568.8	$	1,095.9
Tier 1 risk-based capital	$	648.1	$	517.6	$	1,080.1	$	657.6
Tier 1 leverage capital	$	648.1	$	538.2	$	1,080.1	$	534.5

OTHER CAPITAL METRICS

Two of the tools we use to measure the adequacy of our capital are the tangible common equity-to-assets (TCE) ratio and the Tier 1 common equity ratio. These ratios declined during 2010 because our net loss for the year decreased our equity.

Both of these measures constitute non-GAAP disclosures. The tables below reconcile tangible common equity, Tier 1 common equity, and tangible assets at year-ends 2010 and 2009, to the most directly comparable financial measures calculated and presented in accordance with GAAP.

tangible common equity

As of December 31



(dollars in millions)	2010			2009

Total equity	$	851.7		$	1,307.1
Less:
Preferred stock		325.0			323.3
Noncontrolling interest		—			0.4
Goodwill		336.3			363.2
Other intangible assets		29.2			40.2

Tangible common equity	$	161.2		$	580.0

Total assets	$	10,932.6		$	11,097.1
Less:
Goodwill		336.3			363.2
Other intangible assets		29.2			40.2

Tangible assets	$	10,567.1		$	10,693.7

TCE ratio		1.53	%		5.42	%

tier 1 common equity

As of December 31



(dollars in millions)	2010			2009

Tier 1 capital	$	648.1		$	1,080.1
Less:
Noncontrolling interest		—			0.4
Preferred stock		325.0			323.3

Tier 1 common equity	$	323.1		$	756.4

Total risk-weighted assets	$	8,626.2		$	10,959.4

Tier 1 common equity ratio		3.75	%		6.90	%



Wilmington Trust Corporation 2010 Form 10-K		62

Although the TCE ratio and the Tier 1 common equity ratio are non-GAAP disclosures, we believe they are useful tools because they reflect the level of capital we have available to withstand unexpected market conditions. In addition, they are measures that credit rating agencies and industry analysts use to evaluate our financial condition and capital strength.

Because these metrics are non-GAAP disclosures, some limitations are inherent in their use. They may not offer relevant comparisons to other companies. In addition, other companies might calculate these ratios differently. Consequently, the TCE ratio and the Tier 1 common equity ratio should not be considered in isolation, or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP.

In our calculation of the TCE ratio, the numerator is stockholders’ equity (excluding preferred stock and the noncontrolling interest) minus the sum of goodwill and other intangibles. The denominator is total assets minus the sum of goodwill and other intangibles.

In our calculation of the Tier 1 common equity ratio, the numerator is Tier 1 capital minus preferred stock. The denominator is total risk-weighted assets.

COMMON STOCK DIVIDEND

At the direction of our regulators, our Board of Directors did not declare a dividend on our common stock for the 2010 third and fourth quarters. Prior to this, we reduced our common stock dividend twice during 2009. On January 29, 2009, we reduced the quarterly cash dividend from $0.345 per common share to $0.1725 per common share and on July 22, 2009, we reduced the quarterly cash dividend to $0.01 per common share.

dividend declared per common share


	2010		2009		2008

First quarter	$	0.0100	$	0.1725	$	0.3450
Second quarter	$	0.0100	$	0.0100	$	0.3450
Third quarter	$	—	$	0.0100	$	0.3450
Fourth quarter	$	—	$	0.0100	$	0.1725

dividend statistics

For the year ended December 31


	2010		2009		2008

Total dividends declared per common share	$	0.02	$	0.2025	$	1.21
Total dividends paid per common share	$	0.03	$	0.3650	$	1.37

Capital payout for cash dividend payments on common shares (in millions)	$	2.5	$	25.2	$	92.5



Wilmington Trust Corporation 2010 Form 10-K		63

LIQUIDITY AND FUNDING

As a bank holding company, we need funding and liquidity to support operating and investing activities, comply with regulatory requirements, and minimize the risk of having insufficient funds to conduct business. We believe our liquidity position is adequate because:

•

We have access to several sources of funding, which help to mitigate our liquidity risk and give us the ability to adjust the mix and amount of funding as we deem appropriate.

•

Our liquidity management practices give us the flexibility to react to changes that might affect our liquidity adversely.

Our funding strategy is to use a blend of core and non-core funding and typically includes:

•

Core deposits, which are deposits made by clients. For more information about core deposits, read the Regional Banking discussion in this report.

•

National brokered CDs, which we gather through various broker networks and which typically consist of aggregated deposits from individuals, mutual funds, or financial institutions. At December 31, 2010, all of the underlying deposits in our national brokered CDs were from individual depositors.

•

Short-term borrowings.

The mix between national brokered CDs and short-term borrowings can change over time and depends on our maturity and pricing needs, as well as availability.

Our non-core funding:

•

Supplements our core deposit base by making available large sums of funding that can be gathered over short timeframes and at desired maturities.

•

Provides diversity to the funding mix.

•

Allows us to build an appropriate liquidity cushion, as determined by our Contingency Funding Plan and Liquidity & Funding Risk Management Plan.

To manage the risk of having insufficient liquidity, we:

•

Monitor our existing and projected liquidity requirements continually.

•

Follow policies in the Liquidity and Funding Risk Management Plan approved by our Board of Directors.

•

Calculate a wholesale funding coverage ratio monthly using three-, six-, and twelve-month time horizons.

•

Identify our exposure to volatile liabilities and calculate liquid asset coverage ratios.

•

Monitor cash flows.

In addition, we maintain a contingency funding plan (CFP). The CFP articulates various internal and external scenarios that could create or exacerbate liquidity risk, outlines potential outcomes in each scenario, and specifies strategies to employ in response. We use the guidelines in the CFP to stress-test our liquidity position in a normal operating scenario, a moderately disruptive scenario, a severely disruptive scenario, a pre-crisis scenario, and a crisis scenario. Response strategies in the CFP identify alternative funding sources and our borrowing capabilities for each. The plan allows for adjusting the borrowing capacities, depending on the stress scenario and the funding source.



Wilmington Trust Corporation 2010 Form 10-K		64

Factors or conditions that could affect our liquidity position or cost of funding adversely include changes in:

•

The types of assets and liabilities on our balance sheet.

•

Our investment, loan, and deposit balances.

•

Our financial performance.

•

Our asset quality.

•

Economic conditions that limit the range of capital-raising options available to us and/or our ability to sell certain types of investment securities.

•

Credit ratings downgrades.

•

Our status as a well-capitalized bank or bank holding company.

•

Our reputation.

These factors could affect our results of operations, our financial condition, and our ability to conduct business. In addition to the factors listed above, external events impacting the financial services industry could affect our liquidity position or cost of funding adversely.

LIQUIDITY AND FUNDING IN 2010

In 2010, our funding mix shifted, and we took steps to enhance liquidity because of our net losses and loan credit quality problems.

liquidity and funding

As of December 31


					Change
(in millions)	2010		2009		$			%

Core deposit balances	$	7,143.1	$	7,120.3	$	22.8			—	%
National brokered CDs		1,832.0		1,270.6		561.4			44	%
Short-term borrowings		123.2		603.8		(480.6	)		(80	)%
Long-term debt		595.0		442.9		152.1			34	%
Wilmington Trust stockholders’ equity		851.7		1,306.7		(455.0	)		(35	)%
Investment securities		588.7		860.5		(271.8	)		(32	)%
Unused borrowing capacity secured with collateral from the Federal Home Loan Bank of Pittsburgh (FHLB) ¹		985.6		635.9		349.7			55	%
Unused borrowing capacity secured with collateral from the Federal Reserve ²		460.1		2,469.9		(2,009.8	)		(81	)%

Total	$	12,579.4	$	14,710.6	$	(2,131.2	)		(14	)%


¹		Wilmington Trust Company and Wilmington Trust FSB are FHLB members. The FHLB adjusts our borrowing capacity quarterly, but we do not receive the adjustment calculations until after the filing dates of our quarterly and annual reports. The amounts shown are based on financial information as of September 30.

²		Our borrowing capacity with the Federal Reserve declined during 2010 because the asset quality of the loans which we pledge as collateral declined. In addition, we reallocated collateral from the Federal Reserve to the FHLB during 2010.

For more information about our long-term debt, read Note 13, “Borrowings,” in the consolidated financial statements in this report.

In 2010, our average need for non-core funding declined because our loan and investment securities portfolio balances declined and core deposits increased. Consequently, balances of national brokered CDs were nominally lower, on average, for 2010 than for 2009, while balances of short-term borrowings were significantly lower on both an average-balance and period-end basis. Core deposits provided 82% of our funding, on average, up from 71% for 2009.



Wilmington Trust Corporation 2010 Form 10-K		65

On a period-end basis, however, national brokered CD balances increased, which reflected liquidity enhancement steps we took in accordance with our established contingency funding plan. Our liquidity enhancements were evident in the year-end balance of interest-bearing deposits in other banks, which was $2.09 billion. In comparison, this balance was $165.4 million at December 31, 2009.

selected asset and liability balance changes

As of December 31


					Change
(dollars in millions)	2010		2009		$			%

Total investment securities balances	$	588.7	$	860.5	$	(271.8	)		(32	)%

Total loan balances	$	7,525.9	$	8,967.2	$	(1,441.3	)		(16	)%

Core deposit balances	$	7,143.1	$	7,120.3	$	22.8			0.3	%

Non-core funding:
National brokered CDs	$	1,832.0	$	1,270.6	$	561.4			44	%
Short-term borrowings		123.2		603.8		(480.6	)		(80	)%

Total non-core funding	$	1,955.2	$	1,874.4	$	80.8			4	%

funding sources (on average)

As of December 31


	2010						2009
	Average						Average
	balance			%			balance			%

Core deposits	$	6,992.9			82	%	$	6,490.3			71	%
Non-core funding:
National brokered CDs	$	1,288.9			15	%	$	1,333.2			15	%
Short-term borrowings		280.0			3	%		1,323.2			14	%

Non-core funding	$	1,568.9			18	%	$	2,656.4			29	%

Loan-to-deposit ratio ¹		102	%					118	%
Loan-to-core deposit ratio		120	%					142	%


¹		Include core deposits and national brokered CDs

CREDIT RATINGS

Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s publish credit ratings on Wilmington Trust Corporation and Wilmington Trust Company. Fitch and Standard and Poor’s downgraded our ratings in 2010, citing the increases in problem loans, diminished earnings power, and erosion of our capital.

These downgrades had no significant effect on our financial condition. In the future, however, downgrades to our current credit ratings by any of the rating agencies could increase our cost of funds, reduce or limit our access to certain types of funding, place us in violation of certain client and other contract covenants to which we are a party and, as a result, adversely affect our results of operations, financial condition, liquidity, and ability to conduct business.



Wilmington Trust Corporation 2010 Form 10-K		66

On February 16, 2011, Standard & Poor’s lowered its credit ratings on Wilmington Trust Corporation and Wilmington Trust Company, citing our continued credit quality problems, our fourth quarter net loss, and further erosion of our capital. Because we expect that our credit ratings will be consistent with M&T’s upon consummation of the merger, we believe that these lower credit ratings will not have a material effect on our business, operating results, or financial condition. This or further credit rating downgrades could have a material adverse effect on our business, operating results, or financial condition if our merger agreement with M&T is terminated.

As of February 25, 2011, our current credit ratings were:

wilmington trust corporation

Moody’s Investors

Fitch Ratings

Service

Standard & Poor’s

(As of 11/2/10)

(As of 11/1/10)

(As of 2/16/11)

Outlook

Rating Watch Positive

Under review

CreditWatch Positive

Issuer rating (long-term/short-term)

BBB+/F2

Baa3 / *

CCC+/C

Subordinated debt

BBB

Ba1

CCC


*		No rating in this category

wilmington trust company

Moody’s Investors

Fitch Ratings

Service

Standard & Poor’s

(As of 11/2/10)

(As of 11/1/10)

(As of 2/16/11)

Outlook

Rating Watch Positive

Under review

CreditWatch Positive

Bank financial strength

C-

Issuer rating (long-term/short-term)

BBB+/F2

Baa2

B/B

Bank deposits (long-term/short-term)

A-/F1

Baa2/P-2

B/B


*		No rating in this category



Wilmington Trust Corporation 2010 Form 10-K		67

RISK

•

Regulatory risk: The risk that significant additional regulatory actions might cause our business prospects to worsen dramatically.

•

Credit risk: The risk that borrowers might be unable to repay their loans, which could increase loan losses, increase the provision for loan losses, and reduce net interest income.

•

Interest rate risk: The risk that fluctuations in market interest rates could decrease the profitability of loans or investment securities, compress the net interest margin, and reduce net interest income.

•

Financial market risk: The risk that volatility in the financial markets might reduce the market valuations of assets in:

•

Client portfolios, which could decrease fee income.

•

Our investment securities portfolio, which could require us to record securities losses.

•

Economic risk: The risk that economic conditions might affect our ability to conduct business.

All of these risks could affect our financial performance and condition adversely. We believe that some of our exposure to these risks is mitigated by our business mix, which:

•

Provides geographic, product, and client diversification.

•

Produces two balanced and diversified sources of revenue:

•

Net interest income, primarily from our Regional Banking business.

•

Noninterest income, primarily from our Corporate Client Services and Wealth Advisory Services businesses.

For more information about the risks to which we are exposed, read:

•

Item 1A, “Risk Factors,” in this report.

•

Item 7A, “Quantitative and Qualitative Factors about Market Risk,” in this report.

•

The discussion of asset quality and credit risk below.

ASSET QUALITY

Asset quality is a measure of the risk associated with loans, investment securities, and other assets on our balance sheet. Asset quality affects cash flows, capital, income, expenses, and ultimately, our profitability. Our principal assets are loans, investment securities, and the goodwill we record in conjunction with acquisitions and our investments in affiliate money managers.

At year-end 2010, loans accounted for 69% of our assets; investment securities accounted for 5%; and other types of assets accounted for the remainder. The two main factors that affected our asset quality in 2010 were:

•

Higher levels of problem loans, which we discuss in the credit risk section below.

•

Declines in the market value of some of our investment securities, which led to other-than-temporary impairment losses. For more information about this, read the investment securities portfolio discussion in this report and Note 7, “Investment securities,” in the consolidated financial statements in this report.



Wilmington Trust Corporation 2010 Form 10-K		68

CREDIT RISK

Lending money is inherently risky. When we make a loan, we make subjective judgments about the borrower’s ability to meet the loan’s terms and conditions. No matter how financially sound a client or lending decision may seem, the borrower’s ability to repay can be affected adversely by economic changes and other external factors.

We make objective and subjective valuation assessments on assets we finance, which, in most cases, secure loans we make. Over time, changes in market conditions can affect these valuations, either positively or negatively.

We have industry and geographic concentrations of credit risk in our portfolio. In particular, we have a concentration of exposure to the commercial real estate industry and to the mid-Atlantic region (within our Regional Banking geographic footprint). We make commercial construction and mortgage loans to clients whose businesses are headquartered in this region and whose projects are located in this region.

Our commercial real estate borrowers are well-established businesses that are family-owned or closely held. We do not lend to large, national homebuilders. Most of our construction loans are for single-family homes in Delaware and southeastern Pennsylvania. We do very little condominium construction or conversion financing.

In addition to the collateral provided by the project itself, we generally obtain personal guarantees from the principals of commercial real estate borrowers. Before extending credit, we:

•

Conduct separate evaluations of the project’s finances and the borrower’s finances.

•

Stress-test the project’s estimated cash flows in a variety of economic scenarios, including changes in absorption rates and financing costs.

The key measures we use to evaluate our exposure to credit risk are internal risk rating classifications, levels of loans past due 90 days or more, levels of nonperforming assets, net charge-offs, the net charge-off ratio, the reserve for loan losses, and the provision for loan losses.

How we mitigate credit risk

To mitigate credit risk, we:

•

Employ loan underwriting standards that we apply consistently.

•

Prefer to grow loan balances ourselves, using our own underwriting standards, instead of purchasing loans.

•

Focus on building long-term relationships with clients.

•

Typically obtain collateral and personal guarantees from commercial borrowers.

•

Monitor the loan portfolio to identify potential problems.

•

Regularly review all past-due loans, loans not being repaid according to contractual terms, and loans we doubt will be paid on a timely basis.



Wilmington Trust Corporation 2010 Form 10-K		69

•

Perform an internal risk-rating analysis that classifies all commercial and some consumer loans outstanding into one of four primary categories of risk, with gradations in each category. We analyze migrations within the classifications quarterly. The four risk categories are:

•

Pass: Loans with no current or potential problems.

•

Watchlist: Accruing loans that are potentially problematic.

•

Substandard: Accruing or nonaccruing loans with identified weaknesses and some probability of loss.

•

Doubtful/loss: Nonaccruing loans with a high probability of loss, or which we have fully or partially charged off.

We divide credit risk-related responsibilities among different groups of staff members, including lending, loan recovery, credit policy and administration, appraisal, and credit risk management staff members. These groups have different reporting relationships:

•

The lending group is part of our Regional Banking business, and its reporting relationships follow the Regional Banking organizational structure.

•

The credit policy and administration group, including the chief credit officer, reports directly to our chief executive officer.

•

Loan recovery and appraisal staff members report to our general counsel.

•

The credit risk management group functions independently and reports directly to the Audit Committee of our Board of Directors.

The credit risk management group prepares a variety of analyses designed to help us understand the condition of the loan portfolio, including:

•

Analyses of the portfolio by type of loan, geographic exposure, and individual lender.

•

Annual reviews of a minimum percentage of the portfolio.

•

Assessments of the accuracy of internal risk ratings within specific portfolio segments.

•

Assessments of the adequacy of monitoring and administration for specific portfolio segments.

•

Reviews of our largest credit exposures.

In 2010, we engaged external consultants to supplement our credit risk management group.

In addition to the mitigation activities listed above, we apply the following underwriting standards to commercial construction loans:

•

Maximum term:

•

Two years on unimproved land

•

Three years on land development

•

Target loan size: $1 million to $10 million

•

Maximum loan-to-value requirements:

•

50% on unimproved land

•

65% on land development for lots the borrower plans to sell to a third party



Wilmington Trust Corporation 2010 Form 10-K		70

•

75% on land development for lots to be built out by the borrower

•

80% on residential construction and income-producing properties

•

70% on special-purpose income-producing properties (e.g., self storage facilities, hotels, etc.)

•

Construction limits on residential projects: Pre-sold inventory plus a maximum of:

•

4 unsold single-family homes or

•

10 unsold townhomes

•

Pre-leasing requirements for commercial construction projects:

•

100% coverage of all debt on an interest-only basis

•

70% coverage of all debt on an amortizing basis

•

Sales covenants on residential construction projects: Minimum of 75% of pro forma sales pace

Consistent with industry practice, when we fund an interest reserve on a construction loan, we include it in the loan-to-value calculation and as part of the total loan amount.

For more information about our commercial real estate industry exposure, read the Regional Banking discussion and Note 8, “Loans, loans held for sale, and OREO” in the consolidated financial statements in this report.

How we identify potential problem loans

To identify potential problem loans, we:

•

Monitor payment performance on an ongoing basis.

•

Utilize the principal lending officer to identify early noncompliance with loan terms.

•

Analyze account overdrafts.

•

Monitor compliance with established loan covenants or collateral formulas.

•

Perform targeted reviews and analyses of loans by type, geography, class, size, and borrower.

For consumer and residential mortgage loans, we identify problems primarily by reviewing payment performance. We do not assign risk ratings to most consumer and residential mortgage loans.

For commercial loans and loans secured with investments, the process is more complex, and it involves a high degree of management review and judgment.

Every commercial loan (and loan secured with investments) receives an initial risk rating that is assigned by the client relationship manager. It is the client relationship manager’s responsibility to identify deterioration in the quality of a loan, as soon as such conditions are known or suspected, by changing the loan’s assigned risk rating. The independent credit risk management group examines the client’s financial condition and other relevant information and confirms these risk ratings to ensure that they reflect the



Wilmington Trust Corporation 2010 Form 10-K		71

risk profile of the loan accurately. The independent credit risk management group also performs reviews of various portfolios on a sample basis.

For each significant potential problem loan in the commercial and secured with investments portfolios, the client relationship manager prepares a written summary that contains information about the borrower’s financial performance, payment history, and collateral position, as well as an action plan for managing the credit. These summaries are reviewed and discussed by lending staff members in each of our Regional Banking markets and by representatives of credit risk management at quarterly loan quality meetings. The summaries are also distributed to our Board of Directors. Depending on the risk profile, Regional Banking managers may ask loan recovery staff members to consult on, or assume responsibility, for managing the credit.

We also conduct quarterly credit strategies meetings to review significant relationships with risk ratings that are substandard or lower, or other credits that demonstrate rapid and/or severe deterioration and a high probability of income and/or principal loss. Among the issues we analyze and review at these meetings are collection strategies, plans to improve performance, and levels of available collateral support. Members of senior management attend these meetings.

When we downgrade a loan to a substandard rating, we require loan recovery staff members, at a minimum, to consult on the loan. When a substandard loan’s risk profile deteriorates such that it is placed on nonaccrual status, we transfer the client relationship from the lending unit to our loan recovery unit. Exceptions to this policy must be approved by the manager of the division in which the loan resides and by the loan recovery group.

How we manage problem loans

When a loan becomes 30 or more days past due, we consider this a sign of a possible problem, and we increase our monitoring of that loan in an effort to prevent more severe delinquency. When a loan becomes 90 or more days past due, or if it has been identified as a potential problem loan, we may take one or more of the following steps:

•

Confirm the loan’s assigned risk rating.

•

Review our collateral position and valuations.

•

Review the financial condition of guarantors on the loan.

•

Allocate an appropriate incremental amount to the reserve for loan losses.

•

Transfer all or part of the loan relationship to nonaccruing status.

•

Renegotiate all or part of the loan’s terms.

•

Foreclose on real property or accept a deed to real property in lieu of foreclosure and record the property’s value as OREO.

•

Charge off all or part of the loan.

When we transfer a loan to nonaccruing status, we allocate a specific, associated amount to the reserve for loan losses, in accordance with ASC 310, “Receivables.” We base most of these allocations on the underlying value of the collateral supporting the loan. We also may consider the net present value of the loan’s future cash flows and/or the observed market price of the loan.



Wilmington Trust Corporation 2010 Form 10-K		72

We update our reserve allocations quarterly. If necessary, we adjust the reserve by increasing or decreasing the provision for loan losses. For more information about how we establish the reserve, read Note 3, “Summary of significant accounting policies,” and Note 9, “Reserve for loan losses,” in the consolidated financial statements in this report.

Loan recovery and credit risk management staff members analyze all problem credits on a quarterly basis to determine collection potential and identify collateral deficiencies. If a collateral shortfall exists, we typically revise the loan’s structure by requiring additional principal payments, additional collateral, or additional support in the form of other guaranties, to the extent that the loan’s documentation permits such remedies. If there is a collateral or cash flow shortfall on an impaired loan, we record a specific reserve for loan losses in accordance with ASC 310. In recent years, declining collateral values have been a significant cause of risk rating downgrades, increasing nonaccrual loans, and higher provisions for loan losses. Continued declines in collateral values in the future could have a material adverse effect on our financial statements.

Loan recovery and credit risk management staff members use the quarterly analyses of collection potential and collateral deficiencies as a basis for recommending whether a loan should be charged off partially or fully. We record charge-offs when both of the following conditions are present:

•

It is probable that we will not be able to collect the full amount of the loan’s principal.

•

We can measure the amount of loss reliably.

Unless both of these conditions are met, we maintain the estimated loss exposure as a specific allocation in the reserve for loan losses.

When we transfer a property to OREO through foreclosure or deed-in-lieu of foreclosure, we analyze its value to determine if a charge-off is necessary to bring the loan to the fair value of the property, less cost to sell, at the time we take possession.

How we determine collateral valuations for problem credits secured with real estate

Our lenders obtain updated valuations, regardless of loan size, when they believe there has been an obvious and material deterioration in market conditions, project performance, or physical aspects of the property itself that could jeopardize our collateral position. We assess the need for revaluation when the amount of the loan is $500,000 or more and one or more of the following conditions exists:

•

The client relationship manager recommends we renew or extend the loan.

•

The loan is downgraded to a risk rating of substandard or lower.

•

The loan has had a watchlist rating for 18 months or a substandard rating for 12 months.

Appraisal staff members determine whether revaluations should be performed by themselves or by third-party appraisers, unless the property secures a loan which has been determined to be impaired under ASC 310, “Receivables,” in which case, we require that revaluations be performed by third-party appraisers. Our appraisal staff members review all appraisals performed by third-party professionals.



Wilmington Trust Corporation 2010 Form 10-K		73

Appraisal staff members collect and analyze data that we use to determine the reliability of appraisals. These data include internal and external reports on trends in real estate valuation, appreciation and depreciation, absorption rates, lease rates, occupancy rates, capitalization rates, as well as information we obtain from appraisal reviews and conversations with third-party appraisers and other market participants. We assess real estate market changes on a quarterly basis in meetings led by staff members with Member, Appraisal Institute (MAI) credentials. The MAI is the highest professional designation a commercial property appraiser can achieve.

If the data we collect indicate it is probable that the value of a particular type of property remained stable or appreciated over the time period under consideration, we do not require a new appraisal. If the data indicate probable deterioration in value, we require a new appraisal. Appraisal staff members review the valuations of substandard loans secured with real estate annually.

As the real estate market has deteriorated, demand for independent appraisals has increased, and we are waiting longer to receive them. To offset these delays, we may use estimates in place of formal appraisals, when necessary, to evaluate collateral valuations. These estimates consider all available evidence, including historical loss experience, economic trends, values of similar or nearby properties, values derived from specific geographic market studies, and other metrics. As we receive updated independent appraisals in the future, our estimates of collateral values may change.

CREDIT QUALITY IN 2010

The recession that began in 2008 continued to have a significant effect on our credit quality in 2010. Economic conditions in Delaware remained tentative, as activity in the housing and construction industries declined. Delaware’s unemployment rate reached a historic high in the first quarter of 2010, and remained elevated throughout the year.

The prolonged economic deterioration took its toll on many of our customers. Throughout 2010, more borrowers and guarantors fell behind on loan payments, as they experienced declining cash flows, liquidity, and net worth. As a result, the risk ratings of more loans were downgraded, and the amount of our nonaccruing loans increased. As this occurred, new and updated appraisals indicated significant declines in collateral values. These conditions required us to charge off more loans and increase our reserve for loan losses.

Commercial construction loans continued to account for most of our problem loans in 2010 but, as recessionary conditions persisted, pressures began to extend to commercial mortgage clients and CF&A clients with businesses tied to the real estate and construction sectors. Geographically, most of our problem loans continued to be concentrated in Delaware, particularly in the southern part of the state (Kent and Sussex Counties).

Further declines in the collateral values supporting our loans, material worsening of financial conditions of borrowers, and continued lack of improvement in the Delaware economy could have additional adverse effects on our results of operations and financial condition in the future.



Wilmington Trust Corporation 2010 Form 10-K		74

Given the significant increase in problem loans, we took certain actions during 2010 to ensure that our process for approving loans as well as identifying and managing problem loans was sound. These actions included:

•

Implementation of additional mandatory training and diagnostic testing for commercial and consumer lending staff, portfolio managers, loan recovery staff, and credit officers.

•

Focusing loan approval decisions on the entire client relationship and global supporting cash flows, rather than individual transactions.

•

Credit department evaluation, approval, and endorsement of every loan above certain dollar and credit score thresholds as part of the loan approval process.

•

Mandatory periodic reviews of every loan above certain dollar thresholds for appropriate risk rating decisions and documentation.

•

Implementing an automated system that manages the appraisal-ordering process.

•

Increasing staff resources in credit risk management and hiring a third party to supplement our portfolio reviews to ensure that we are reviewing, risk rating, valuing, and acting on problem loans appropriately and timely.

•

Increasing our resources surrounding our collection efforts, including adding collection and workout staff to address the significant increases in the number and amount of problem loans.

The loan balances presented in this section exclude loans held for sale, unless noted otherwise. For details about the credit quality of loans held for sale, read Note 8, “Loans, loans held for sale, and OREO,” in the consolidated financial statements in this report.

risk elements


(in millions)	2010		2009		2008		2007		2006

As of December 31

Total loans outstanding	$	7,525.9	$	8,967.2	$	9,619.1	$	8,475.8	$	8,094.9
Reserve for loan losses		440.8		251.5		157.1		101.1		94.2
Loans held for sale		52.5		—		—		—		—

Nonperforming assets:
Nonaccruing loans	$	1,009.6	$	455.6	$	196.4	$	52.5	$	31.0
Troubled restructured loans (accruing)		43.9		28.5		—		19.0		—
Nonaccruing loans held for sale		45.9		—		—		—		—
OREO		45.6		34.6		14.5		9.1		4.8

Total nonperforming assets	$	1,145.0	$	518.7	$	210.9	$	80.6	$	35.8

Accruing loans past due 90 days or more	$	56.8	$	30.6	$	34.3	$	13.7	$	5.8

For the year ended December 31

Provision for loan losses	$	699.7	$	205.0	$	115.5	$	28.2	$	21.3
Net charge-offs	$	510.4	$	112.3	$	52.4	$	21.3	$	18.5



Wilmington Trust Corporation 2010 Form 10-K		75

selected credit quality ratios

As of December 31


	2010			2009			2008

Loan loss reserve ratio		5.86	%		2.80	%		1.63	%
Nonperforming assets ratio (including OREO and loans held for sale)		15.02	%		5.76	%		2.19	%
Accruing loans past-due 90 days or more ratio		0.75	%		0.34	%		0.36	%
Net charge-off ratio		6.06	%		1.21	%		0.57	%
Serious-doubt loan ratio		0.41	%		0.61	%		1.14	%

The loan loss reserve ratio differs from the nonperforming asset ratio because:

•

An asset’s nonperformance does not automatically generate a partial or total loss.

•

The denominator of the nonperforming asset ratio includes OREO.

INTERNAL RISK RATING ANALYSIS

In 2010, as we identified that more of our borrowers were experiencing financial difficulties, we downgraded more loans to risk ratings of substandard or lower. At year-end 2010, approximately 75% of total loans outstanding had risk ratings of pass or watchlist, down from 88% at year-end 2009. Approximately 25% of total loans outstanding had risk ratings of substandard or lower at year-end 2010, up from 12% at year-end 2009. The amount of loans with substandard ratings was 72% higher at year-end 2010 than at year-end 2009. The amount of substandard-rated loans that were nonaccruing more than doubled from year-end 2009.

loan balances by Internal risk rating

As of December 31



(in millions)	2010		2009		2008

Pass	$	4,985.0	$	7,289.6	$	8,714.0
Watchlist		673.4		607.4		500.4
Substandard:
Substandard-accruing		857.9		614.6		208.3
Substandard-nonaccruing		890.1		399.2		195.2

Total substandard		1,748.0		1,013.8		403.5
Doubtful-nonaccruing		119.5		56.4		1.2

Total loans	$	7,525.9	$	8,967.2	$	9,619.1

Within the substandard-rated loan category, the largest increase was in the commercial construction category.

Loans with substandard risk ratings by loan type

As of December 31



(in millions)	2010		2009		2008

Commercial, financial, and agricultural	$	609.3	$	398.2	$	188.1
Commercial real estate — construction		693.2		336.8		123.9
Commercial mortgage		349.8		208.8		46.5
Consumer and other retail		95.7		70.0		45.0

Total substandard loans	$	1,748.0	$	1,013.8	$	403.5



Wilmington Trust Corporation 2010 Form 10-K		76

The following table shows the loan loss reserve coverage on loans with substandard risk ratings that are still accruing interest.

Substandard-accruing loan loss reserve coverage

As of December 31


	Loan		Reserve		Reserve as a
(dollars in millions)	balances		balances		percent of loans

Commercial, financial, and agricultural	$	346.5	$	37.5		11	%
Commercial real estate — construction		258.3		69.6		27	%
Commercial mortgage		226.2		11.0		5	%
Consumer and other retail		26.9		4.4		16	%

Total substandard-accruing loans	$	857.9	$	122.5		14	%

ACCRUING LOANS PAST DUE 90 DAYS OR MORE

Loans we report as being past due 90 days or more continue to accrue interest, and we do not consider them to be nonperforming. These are loans for which we believe borrowers have, or will have, the ability to comply with the terms of their loan agreements. Most of the accruing loans past due 90 days or more at December 31, 2010, are commercial construction and commercial mortgage loans.

Accruing loans past due 90 days or more

As of December 31



(dollars in millions)	2010			2009			2008

Commercial, financial, and agricultural	$	8.5		$	4.2		$	8.4
Commercial real estate — construction		31.9			4.5			5.0
Commercial mortgage		14.5			2.2			1.6
Consumer and other retail		1.9			19.7			19.3

Total loans past due 90 days or more	$	56.8		$	30.6		$	34.3

Ratio of loans past due 90 days to total loans outstanding		0.75	%		0.34	%		0.36	%

NONPERFORMING ASSETS

Nonperforming assets consist of:

•

Nonaccruing loans. These are loans for which we do not expect to receive principal or interest payments according to contractual terms. This category includes troubled restructured loans that are nonaccruing.

•

Troubled restructured loans (accruing). These are accruing loans for which we and the borrowers have renegotiated terms or conditions.

•

Nonaccruing loans held for sale. These are loans that are categorized as held for sale on our balance sheet, for which we do not expect to receive principal or interest payments according to contractual terms.

•

OREO, which consists of properties we acquire through foreclosure or when the borrower defaults. We record these properties at their fair value, less cost to sell.


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Nonperforming assets

As of December 31


(dollars in millions)	2010			2009			2008

Nonaccruing loans:
Commercial, financial, and agricultural	$	286.1		$	80.9		$	41.3
Commercial real estate — construction		526.6			264.8			112.7
Commercial mortgage		124.0			69.0			21.7
Consumer and other retail		72.9			40.9			20.7

Total nonaccruing loans		1,009.6			455.6			196.4
Troubled restructured loans (accruing)		43.9			28.5			—

Total nonaccruing and troubled restructured loans		1,053.5			484.1			196.4
Nonaccruing loans held for sale		45.9			—			—
OREO		45.6			34.6			14.5

Total nonperforming assets	$	1,145.0		$	518.7		$	210.9
Nonperforming asset ratio (includes OREO and loans held for sale)		15.02	%		5.76	%		2.19	%

Nonaccruing loans

During 2010, we transferred $1.23 billion of loans to nonaccruing status. These transfers were offset partially by pay downs, $499.1 million of charge-offs, the transfer of $45.9 million of loans to loans held for sale, and the transfer of $34.7 million of loans to OREO. In total, nonaccruing loans increased $554.0 million, or 122%, from year-end 2009. Significant increases in nonaccruing loans occurred across all loan categories and, as discussed above, was the result of cash flow and liquidity problems that many of our borrowers experienced during 2010 as a result of the prolonged recession.

The following table presents cumulative charge-offs and the reserve balances for each category of nonaccruing commercial loans as of December 31, 2010.

Nonaccruing commercial loan loss analysis

As of December 31


	Loan		Cumulative		Reserve		Potential
(dollars in millions)	balances ¹		charge-offs		balances		loss ratio ²

Commercial, financial, and agricultural	$	286.1	$	65.6	$	60.5		35.9	%
Commercial real estate — construction		526.6		227.7		83.4		41.2	%
Commercial mortgage		124.0		20.4		12.0		22.4	%

Total nonaccruing commercial loans ³	$	936.7	$	313.7	$	155.9		37.6	%



¹		Net of cumulative charge-offs.

²		The sum of the cumulative charge-offs plus the reserve balance, divided by the loan balance plus the charge-offs.

³		Includes substandard-nonaccruing and doubtful loans.

Troubled restructured loans

Troubled restructured loans are loans for which we have granted concessions due to a borrower’s financial difficulty that we would not have considered otherwise. A troubled restructured loan may be either accruing or nonaccruing, depending on its delinquency status, risk rating, and our assessment of the likelihood of principal and interest payment.


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Most often, the concessions we grant are modifications of loan terms, such as interest rate reductions, maturity extensions, and principal or interest forgiveness. Sometimes we may grant multiple types of concessions on a particular loan. We base our decision to grant these concessions on our belief that working with these borrowers to restructure their loans improves the likelihood we will be repaid.

At December 31, 2010 and 2009, the percentage of troubled restructured loans with principal moratorium concessions were 38% and 74%, respectively. At the same period-ends, troubled restructured loans that had payment extension concessions were 55% and 60%, respectively. In addition, troubled restructured loans that had interest rate concessions at the same dates, were 26% and 9%, respectively. These interest rate concessions constituted rate changes from the original contractual rates. At December 31, 2010, approximately 89% of troubled restructured loans were in compliance with their modified terms, compared with 88% at December 31, 2009.

Troubled restructured loans

As of December 31


	2010						2009
(in millions)	Accruing		Nonaccruing		Total		Accruing		Nonaccruing		Total

Commercial, financial, and agricultural	$	17.6	$	10.3	$	27.9	$	14.7	$	20.4	$	35.1
Commercial real estate — construction		—		19.3		19.3		—		84.2		84.2
Commercial mortgage		13.4		6.6		20.0		10.3		10.6		20.9
Consumer and other retail		12.9		1.9		14.8		3.5		1.5		5.0

Total troubled restructured loans	$	43.9	$	38.1	$	82.0	$	28.5	$	116.7	$	145.2

Accruing troubled restructured loans at December 31, 2010, were $43.9 million, an increase of $15.4 million from year-end 2009. Nonaccruing troubled restructured loans decreased $78.6 million from the prior year-end, mainly due to charge-offs.

As is the case with all nonaccruing loans, we may restore troubled restructured loans for which we are not accruing interest to accrual status, provided the restructurings are based on current, well-documented credit evaluations that support a borrower’s ability to repay under the modified terms. These evaluations must include consideration of a borrower’s sustained historical payment performance for reasonable periods (a minimum of six months) prior to the dates on which the loan returns to accrual status.

OREO

Most of the properties that we hold as OREO are commercial properties and many are residential development projects in various stages of completion. During 2010, we transferred property valued at $34.7 million to OREO, and we sold or wrote down OREO property valued at $23.7 million.

Composition of oreo balances

As of December 31


(dollars in millions)	2010				2009				2008

Commercial properties	$	41.4	91	%	$	32.4	94	%	$	14.0	97	%
Residential properties		4.2	9	%		2.2	6	%		0.5	3	%

Total OREO	$	45.6			$	34.6			$	14.5

As we continue to manage the foreclosure process on many of our problem loans, we expect OREO balances to increase in the future.


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NET CHARGE-OFFS

Most of the loans we charge off are commercial loans. Commercial loan charge-offs are very unpredictable, because:

•		Negotiations with borrowers can affect the timing and extent of charge-offs, or avert them altogether.

•		Associated legal proceedings can affect the timing and amount of charge-offs or recoveries.

•		Collateral valuations can change.

There are few charge-offs in our residential mortgage portfolio, because:

•		We sell most of our newly originated fixed rate residential mortgages into the secondary market.

•		We do not make subprime, Alt-A, or any other so-called “exotic” residential mortgage loans.

Even after we charge loans off, we continue to pursue repayment. When we receive repayments on charged-off loans, we record them as loan recoveries.

Charge-offs increased in 2010, generally as a function of the sustained recession and continued declines in the values of underlying collateral. Charge-offs increased in all commercial loan categories, but most of the loans we charged off in 2010 were commercial construction loans. These were mainly residential development projects in southern Delaware, and were largely for parcels of land in various stages of development.

Net charge-offs

For the year ended December 31


(dollars in millions)	2010			2009			2008

Commercial, financial, and agricultural	$	(142.1	)	$	(34.9	)	$	(11.9	)
Commercial real estate — construction		(295.5	)		(40.2	)		(13.5	)
Commercial mortgage		(42.5	)		(5.6	)		(1.2	)
Residential mortgage		(0.2	)		(0.5	)		(0.3	)
Consumer and other retail		(30.1	)		(31.1	)		(25.5	)

Total net loans charged off	$	(510.4	)	$	(112.3	)	$	(52.4	)

Net charge-off ratio		6.06	%		1.21	%		0.57	%

For more detail on gross charge-offs and loan recoveries, read the loan loss reserve and loan loss provision discussion at the end of this section.

SERIOUS-DOUBT LOANS

Serious-doubt loans are loans that are performing in accordance with their contractual terms, or were fewer than 90 days past due, at the time of classification, but which we think have the potential to become nonperforming loans in the future. The decrease in this balance during 2010 was mainly due to loans that went to nonaccrual status during 2010, combined with serious doubt loans that were paid down or were removed from the serious-doubt list. These decreases were offset partially by new serious-doubt loans during 2010.


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Serious-doubt loans

As of December 31


(dollars in millions)	2010			2009			2008

Commercial, financial, and agricultural	$	17.0		$	26.1		$	82.9
Commercial real estate — construction		2.9			21.0			8.4
Commercial mortgage		7.9			4.0			15.0
Consumer and other retail		—			0.8			0.6
Contingency allocation		3.0			3.0			3.0

Total serious-doubt loans	$	30.8		$	54.9		$	109.9

Serious-doubt loan ratio		0.41	%		0.61	%		1.14	%

LOAN LOSS RESERVE AND LOAN LOSS PROVISION

The protracted recessionary environment, particularly in Delaware, caused more of our borrowers to experience financial difficulty, doubled our level of nonperforming loans, and led to declines in collateral values. These factors contributed to increases in our charge-offs, our reserve, and our provision for loan losses in the following ways during 2010:

Reserves for non-impaired loans that we reserve for collectively in pools were higher because:

	•		As we downgraded the risk ratings of our loans, the level of our reserves increased because pools of lower-rated loans (such as substandard) have a higher reserve factor.

	•		As we experienced charge-offs, higher levels of loss experience were added to the loss history in our pooled factor calculation, which drove higher calculated loss factors, and led directly to higher reserves.

	•		We increased the qualitative components of the reserve, given the depth and duration of the recession and the uncertainty surrounding the economic outlook.

Charge-offs and reserves for impaired loans that we individually evaluate for impairment were higher because:

	•		We valued a large number of newly-impaired loans using collateral values, which had declined significantly.

	•		We received updated appraisals for loans that were previously impaired. Many of these appraisals showed a significant decline in collateral value from previous appraised values.

Loan loss reserve composition by loan type

As of December 31


(in millions)	2010		2009		2008		2007		2006

Commercial, financial, and agricultural	$	140.7	$	65.9	$	57.5	$	33.7	$	36.3
Commercial real estate — construction		188.5		100.8		40.1		25.7		19.2
Commercial mortgage		61.6		40.6		18.6		15.9		14.5
Residential mortgage		5.9		3.3		2.3		1.4		1.3
Consumer and other retail		44.1		40.9		36.5		18.3		16.8
Unallocated		—		—		2.1		6.1		6.1

Total loan loss reserve	$	440.8	$	251.5	$	157.1	$	101.1	$	94.2


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The loan loss reserve and provision represent what we believe are reasonable assessments of our known, estimated, and inherent loan losses. In assessing these risks, we make subjective judgments about the likelihood that loans will be repaid, and about unpaid amounts we might be able to recover. We also consider increases and decreases in loan balances, the results of the internal risk rating analysis, the levels of loan recoveries and repayments, the stability of the mid-Atlantic regional economy, market interest rates, regulatory guidelines, and other factors.

We believe our process provides a reasonable estimate of required reserves at each reporting date, and that our methodology is sound. Our process, however, is under continuous evaluation and, as market conditions and trends change, we may make changes to our loan loss reserve methodology in the future.

Determining the reserve is an inherently subjective process. Estimates we make, including estimates of the amounts and timing of payments we expect to receive on impaired loans, may be susceptible to significant change. If actual circumstances differ substantially from the assumptions we use to determine the reserve, future adjustments to the reserve may be necessary. This could have a materially adverse effect on our financial performance and condition.

During 2010, there were significant declines in the values of collateral supporting our loans, particularly for construction loans in southern Delaware. In addition, the financial condition of many of our borrowers deteriorated. As a result, our charge-offs, provision for loan losses, and loan loss reserve were higher than in prior periods. These trends could continue in the future, which could have a material adverse effect on our financial statements.

Loan loss reserve composition by internal risk rating

As of December 31


(in millions)	2010		2009		2008

Pass	$	129.6	$	115.3	$	102.5
Watchlist		29.3		11.8		9.7
Substandard-accruing		122.5		36.7		21.3
Substandard-nonaccruing		124.7		81.3		21.2
Doubtful-nonaccruing		34.7		6.4		0.3
Unallocated		—		—		2.1

Total loan loss reserve	$	440.8	$	251.5	$	157.1


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Impaired loan analysis

As of December 31, 2010


	Loan		Cumulative		Reserve		Reserve/
(dollars in millions)	balances ¹		charge-offs		balances		loans

Individually impaired loans with reserves	$	451.9	$	27.1	$	164.1		36.3	%
Individually impaired loans without reserves ²	$	602.9	$	291.4	$	—		—	%

Other loans	$	6,471.1	$	—	$	276.7		4.3	%


Total	$	7,525.9	$	318.5	$	440.8		5.9	%



¹		Net of cumulative charge-offs.

²		The $602.9 million of loans includes $246.6 million of loans that are net of $291.4 million of cumulative charge-offs, for which we do not have a specific reserve recorded because we believe that the net carrying values of the loans are equal to their net realizable values. The remaining $356.3 million do not have associated charge-offs and do not have a specific reserve because we believe that our ability to recover our investment fully is supported by the value of the underlying collateral.

As of December 31, 2009


	Loan		Cumulative		Reserve		Reserve/
(dollars in millions)	balances ¹		charge-offs		balances		loans

Individually impaired loans with reserves	$	348.3	$	33.3	$	88.5		25.4	%
Individually impaired loans without reserves ²	$	151.5	$	23.6	$	—		—	%

Other loans	$	8,467.4	$	—	$	163.0		1.9	%

Total	$	8,967.2	$	56.9	$	251.5		2.8	%



¹		Net of cumulative charge-offs.

²		The $151.5 million of loans includes $21.5 million of loans that are net of $23.6 million of cumulative charge-offs, for which we do not have a specific reserve recorded because we believe that the net carrying values of the loans are equal to their net realizable values. The remaining $130.0 million do not have associated charge-offs and do not have a specific reserve because we believe that our ability to recover our investment fully is supported by the value of the underlying collateral.


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DERIVATIVES, HEDGING INSTRUMENTS, OTHER OFF-BALANCE-SHEET ARRANGEMENTS, AND OTHER CONTRACTUAL OBLIGATIONS

We use a variety of financial instruments and contracts to help us manage capital, liquidity, interest rate risk, credit risk, and other aspects of our day-to-day operations. As permissible under regulatory guidelines, we include these instruments in our calculations of regulatory risk-based capital ratios. These instruments and contracts include:

•		Derivative instruments, such as interest rate swaps and interest rate floors. These instruments help us manage the effects of fluctuating interest rates on net interest income. We also use interest rate swap contracts to help commercial loan clients manage their interest rate risk. We do not hold or issue derivative financial instruments for trading purposes. For more information about our use of derivatives, read Note 16, “Derivative and hedging activities,” in the consolidated financial statements in this report.

•		Instruments that generally accepted accounting principles deem to be off-balance-sheet arrangements. These instruments include standby letters of credit, unfunded lending commitments, unadvanced lines of credit, operating lease obligations, and other guaranties. For more information about this, read Note 13, “Borrowings,” and Note 14, “Commitments and contingencies,” in the consolidated financial statements in this report.

•		Pension and other postretirement benefit plan obligations. We contributed $3.1 million and $43.3 million in 2010 and 2009, respectively, to these plans. For more information about this, read Note 19, “Pension and other postretirement benefits,” in the consolidated financial statements in this report.

•		Contractual obligations including certificates of deposit and long-term debt, which appear on our balance sheet. For more information about this, read Note 12, “Deposits,” and Note 13, “Borrowings,” in the consolidated financial statements in this report.

When we enter into an interest rate swap contract with a commercial loan client, we simultaneously enter into a “mirror” swap contract in the same amount with a third party. This practice allows a client to swap floating rates for fixed rates. We then mirror the client swap by swapping, with a third party, the fixed rate for a floating rate. We retain the associated credit risk in these transactions.

At December 31, 2010, we had interest rate swap contracts associated with loans to clients with a total notional amount of $1.08 billion, including the mirror swaps described above. For more information about our derivative and hedging instruments, read Note 16, “Derivative and hedging activities,” in the consolidated financial statements in this report.

Other contractual obligations

As of December 31


(in millions)	2010		2009

FHLB advances	$	150.0	$	28.0	¹
Lease commitments for offices, net of sublease arrangements ²	$	82.3	$	72.7
Certificates of deposit	$	2,890.2	$	2,408.1
Letters of credit, unfunded lending commitments, and unadvanced lines of credit	$	2,530.6	$	3,136.4



¹		We used these funds to construct Wilmington Trust Plaza, our operations center in Wilmington, Delaware, which was completed in 1998.

²		These lease commitments are for many of our branch offices in Delaware and all of our branch and non-branch offices outside of Delaware.


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Amount and duration of payments due on current contractual obligations

As of December 31, 2010


			Less than 1		1 to 3		3 to 5		More than 5
(in millions)	Total		year		years		years		years

Certificates of deposit	$	2,890.2	$	1,646.7	$	1,035.0	$	204.6	$	3.9
Debt obligations		600.0		—		400.0		—		200.0
Interest on debt obligations		153.2		30.5		50.4		34.0		38.3
Operating lease obligations		82.3		13.4		25.0		19.1		24.8
Benefit plan obligations		3.9		3.9		—		—		—

Total	$	3,729.6	$	1,694.5	$	1,510.4	$	257.7	$	267.0

The debt obligations in the table above are included in the “Long-term debt” line of our balance sheet and consist of:

•

$250.0 million of subordinated long-term debt that was issued in 2003 and is due in 2013.

•

$200.0 million of subordinated long-term debt that was issued on April 1, 2008 and is due on April 2, 2018.

•

$150.0 million of FHLB advances.

Contractual obligations in the table above do not include uncertain tax liabilities that we have not paid. At December 31, 2010, we had unrecognized tax benefits that, if recognized, would affect our effective tax rate in future periods. The amounts that we ultimately may pay, and when we ultimately may pay them, remain uncertain. For more information on our income taxes, read Note 21, “Income taxes,” in the consolidated financial statements in this report.

Our agreements with CRM and RCM permit principal members and designated key staff members of each firm, subject to certain restrictions, to put (relinquish) their interests in their respective firms to us. For more information about these agreements, read Note 5, “Affiliates and acquisitions,” in the consolidated financial statements in this report.

We have agreed with our regulators that we will not incur any debt, subject to certain exceptions, and that Wilmington Trust Company will not incur debt having maturity of greater than one year, in each case without prior written approval from our regulators.


Wilmington Trust Corporation 2010 Form 10-K			85

OTHER INFORMATION

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies conform with GAAP, and with reporting practices prescribed for the banking industry. We maintain our accounting records and prepare our financial statements using the accrual basis of accounting. In applying our critical accounting policies, we make estimates and assumptions about revenue recognition, the reserve for loan losses, stock-based employee compensation, investment securities valuations, goodwill impairments, loan origination fees and costs, income taxes, and other items. For more information about our critical accounting policies, read Note 3, “Summary of significant accounting policies,” and Note 4, “Recent accounting pronouncements,” in the consolidated financial statements in this report.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION

This report contains estimates, predictions, opinions, and other statements that might be construed as “forward-looking” statements under the Private Securities Litigation Reform Act of 1995. These statements include references to our financial goals, dividend policy, financial and business trends, new business results and outlook, business prospects, market positioning, pricing trends, strategic initiatives, credit quality and the reserve for loan losses, the effects of changes in market interest rates, the effects of downgrades in our credit ratings, the effects of changes in securities valuations, the effects of accounting pronouncements, and other internal and external factors that could affect our financial performance.

These statements are based on a number of assumptions, estimates, expectations, and assessments of potential developments, and they are subject to various risks and uncertainties that could cause our actual results to differ from our expectations. Our ability to achieve the results reflected in these statements could be affected adversely by, among other things, failure to consummate a change-of-control transaction on a timely basis; additional regulatory restrictions or failure to comply with existing regulatory restrictions; changes in national or regional economic conditions, including continued declines in the collateral values supporting our loans; deterioration in the credit quality of our borrowers; changes in our regulatory requirements; downgrades in our credit ratings; a change in conclusion about the realization of our deferred tax asset; changes in market interest rates or credit markets generally; fluctuations in equity or fixed income markets; significant changes in banking laws or regulations or the application of such laws or regulations to our businesses; changes in accounting policies, procedures, or guidelines; increased competition for business; higher-than-expected credit losses; the effects of our proposed merger with M&T, and the restrictions on our businesses contained in the merger agreement; the effects of integrating our businesses with those of M&T after the merger is completed; a substantial and permanent loss of either client accounts and/or assets under management at Wilmington Trust and/or our affiliate money managers, CRM and RCM; changes in the regulatory, judicial, legislative, or tax treatment of business transactions; new litigation or developments in existing litigation; and economic uncertainty created by domestic or foreign unrest, hostilities, terrorism, or war. Forward-looking statements are effective as of the date of this report and we assume no duty to update them.

This report contains forward-looking statements relating to our proposed merger with M&T, including the expected date of closing and effects of the merger agreement. The actual results of the merger could vary materially as a result of a number of factors, including: the possibility that competing offers may be made; the possibility that various closing conditions for the transaction may not be satisfied or waived; and the possibility that the merger agreement may be terminated.


Wilmington Trust Corporation 2010 Form 10-K			86

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

The normal course of business exposes us to a variety of operational, reputational, legal, and regulatory risks, which we monitor closely to safeguard our clients’ assets and our company’s assets. All of these risks could affect our financial performance and condition adversely. Our primary risks are credit risk, interest rate risk, financial market risk, regulatory risk, and economic risk. For more information about these risks, read the risk factors, asset quality, and credit quality discussions in this report.

Market interest rates present more risk to us than inflation. As a financial institution, nearly all of our assets and liabilities are monetary in nature. Their values are more likely to be eroded by changes in market interest rates than by the effects of inflation on currency valuations.

INTEREST RATE RISK

Changes in market interest rates, and the pace at which they occur, can affect the yields we earn on loans and investments and the rates we pay on deposits and other borrowings. These changes can compress or expand our net interest margin and reduce or increase our net interest income.

We have more floating rate assets than floating rate liabilities, and our interest rate risk position is asset sensitive. In general, this means that:

•

In a rising market interest rate environment, our net interest income is more likely to increase.

•

In a declining market interest rate environment, our net interest income is more likely to decrease.

When market interest rates change, our floating rate assets reprice more quickly than our deposits, because:

•

The pricing adjusts on most of our floating rate loans within 30 to 45 days of a rate change.

•

Certificates of deposit have fixed rates and typically take more than nine months to mature.

Our interest rate risk management objective is to minimize reductions in net interest income that might result from changes in market interest rates. To mitigate interest rate risk, we:

•

Maintain a mix of assets and liabilities that gives us flexibility in a dynamic marketplace.

•

Manage the relative proportion of fixed and floating rate assets and liabilities so we can manage their repricing characteristics as closely as possible.

•

Manage the size of our investment securities portfolio and the mix of instruments in it. For more information about this, read Note 7, “Investment securities,” in the consolidated financial statements in this report.

•

Sell most newly originated fixed rate residential mortgages into the secondary market. By limiting the fixed rate residential mortgages in our loan portfolio, we eliminate much of the long-term risk inherent in holding instruments with fixed rates and long-term maturities.


Wilmington Trust Corporation 2010 Form 10-K			87

•

Prefer to manage our exposure to fixed rate mortgages through our investment securities portfolio. The mortgage-backed instruments in our investment securities portfolio typically have shorter maturity and duration characteristics than a portfolio of individual mortgage loans.

•

Use derivative instruments. For more information about this, read the discussion of off-balance-sheet arrangements and contractual obligations and Note 16, “Derivative and hedging activities,” in the consolidated financial statements in this report.

To achieve our interest rate risk management objectives, we follow guidelines set by an interest rate risk policy that is approved annually by our Board of Directors. The table below presents the percentage reductions in net interest income allowable by the current policy over a 12-month period from gradual changes in market interest rates over a 10-month period.

net interest income sensitivity policy limit


	Net interest income
Gradual change in market interest rates over a 10-month period	sensitivity policy limit

+/- 250 basis points		(16.5	)%
+/- 150 basis points		(9.5	)%
+/- 50 basis points		(3.0	)%

The primary tool we use to assess our exposure to interest rate risk is a computer modeling technique that simulates how gradual and sustained changes in market interest rates might affect net interest income. We perform simulations quarterly that compare a stable interest rate environment to multiple hypothetical interest rate scenarios. As a rule, our model employs scenarios in which rates gradually move up or down by 50 to 250 basis points over a period of 10 months.

We believe the primary measure of interest rate risk management is the net interest margin.

In 2010 and 2009, the balances of floating rate assets exceeded the balances of floating rate liabilities and our interest rate risk position remained asset sensitive.

In 2010, 2009, and 2008, our net interest margin was affected negatively by increases in nonaccruing loans, weakening demand for new loans, and the historically low levels of short-term market interest rates. For more information about the margin, read the net interest income discussion and the analysis of changes in interest income and expense due to volume and rate, in the net interest income and margin section of this report.

Net interest margin

For the year ended December 31


	2010			2009			2008

Net interest margin		2.81	%		3.08	%		3.28	%


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Repricing characteristics

As of December 31


(in millions)	2010		2009		2008

Commercial loans repricing within 30 to 45 days	$	5,071.1	$	5,901.5	$	5,946.2
Non-core funding repricing in 90 or fewer days	$	250.2	$	1,927.6	$	3,345.8

Loan and deposit repricing characteristics as a percentage of total loan balances

As of December 31


	2010			2009

Total loans outstanding with floating rates		79	%		79	%
Commercial loans with floating rates		90	%		90	%
Floating rate commercial loans tied to a prime rate		43	%		53	%
Floating rate commercial loans tied to the 30-day Libor		38	%		39	%
Non-core funding maturing in < 90 days		19	%		91	%

The table below presents various hypothetical scenarios of gradual changes in market interest rates over the next 10 months and the corresponding estimated percentage change in net interest income over the next 12 months. At year-end 2010, our interest rate risk simulation model projected that, if short-term rates were to increase gradually over a 10-month period in a series of equal-sized moves that totaled 250 basis points, our net interest income would increase 19.7% over the 12 months beginning December 31, 2010. We discontinued modeling the declining rate scenario in December 2008, after the FOMC included zero percent in its target rate range, since the declining rate scenario would have created negative interest rates in the model.

Simulated effect of interest rate changes on net interest income

For the 12 months beginning December 31


Gradual change in market interest rates over a 10-month period	2010			2009			2008

+ 250 basis points		19.7	%		10.8	%		4.0	%
+ 150 basis points		10.5	%		4.6	%		0.1	%
+ 50 basis points		2.4	%		(0.1	)%		(1.7	)%

In our estimation, the marginal impact of the first 75 basis point increase in short-term market rates is limited because:

	•		Some of our variable-rate loans are priced at rates that currently are higher than prevailing short-term market rates.

	•		We established a minimum commercial lending rate of 4.00%, which exceeds the current National Prime rate of 3.25%.

Our discussion of the interest rate risk simulation model contains forward-looking statements about the anticipated effects on net interest income that may result from hypothetical changes in market interest rates. Assumptions about loan and deposit growth, loan and core deposit rates, loan prepayments, asset-backed securities, and collateralized mortgage obligations play a significant role in our interest rate simulations. Our assumptions about rates and the pace of changes in payments differ for assets and liabilities in rising as well as in declining rate environments. These assumptions are inherently uncertain, and the simulations cannot predict precisely how actual interest rate changes might affect our net interest income.


Wilmington Trust Corporation 2010 Form 10-K			89

FINANCIAL MARKET RISK

We define financial market risk as the risk that declines in equity and debt market valuations could reduce the fees we receive for providing asset management, custody, and other services. Most WAS revenue, some CCS revenue, and all of the revenue we receive from affiliate money managers CRM and RCM are based on the market values of assets in client portfolios. Equity and debt markets determine these values. Fluctuations in one or more of these markets can increase or decrease revenue that is based on asset valuations.

The amount of total revenue subject to financial market risk was higher for 2010 than for 2009, primarily because revenue from CCS was higher and net interest income was lower.

We discuss these changes in revenue more fully in earlier sections of this report.

Revenue subject to financial market risk

For the year ended December 31


(dollars in millions)	2010			2009			2008

Wealth Advisory Services (WAS):
Trust and investment advisory fees	$	133.6		$	130.9		$	150.9
Mutual fund fees		4.3			16.6			27.2

Total WAS revenue subject to financial market risk	$	137.9		$	147.5		$	178.1
Total WAS revenue	$	165.6		$	189.5		$	223.6

Corporate Client Services (CCS):
Retirement services	$	87.2		$	67.5		$	37.4
Investment/cash management services		16.1			15.6			15.0

Total CCS revenue subject to financial market risk	$	103.3		$	83.1		$	52.4
Total CCS revenue	$	199.2		$	172.1		$	132.9

Affiliate money managers revenue	$	19.4		$	15.2		$	15.7

Total revenue subject to financial market risk	$	260.6		$	245.8		$	246.2
Total revenue ¹	$	707.9		$	744.8		$	782.3
Percent of total revenue subject to financial market risk ¹		37	%		33	%		31	%



¹		Total revenue is the combination of net interest income (before the provision for loan losses) and total noninterest income (excluding other-than-temporary impairment losses and securities gains/losses).

Our investment securities portfolio is also subject to financial market risk, because financial markets determine the valuations of the instruments we hold in the portfolio. For more information about this, read the investment securities portfolio discussion in this report and the analysis of changes in interest income and expense due to volume and rate, in the net interest income and margin section of this report.


Wilmington Trust Corporation 2010 Form 10-K			90

ECONOMIC RISK

Changes in economic conditions could change demand for the services we provide and, ultimately, affect loan and deposit balances, revenue, net income, and our overall results adversely.

Among our businesses, Regional Banking has the most exposure to economic risk. Most of that risk is tied to economic conditions within the mid-Atlantic region, where our Regional Banking business is focused. We discuss the regional economy in more detail in the Regional Banking section of this report.

Changes in economic conditions at the national and international level that eliminate or slow demand for our services could affect all of our businesses, loan and deposit balances, revenue, net income, and overall results.

OTHER RISK

For more information about risk, read Item 1A and the credit quality discussion in the MD&A in this report.


Wilmington Trust Corporation 2010 Form 10-K		91

Item 8. Financial Statements and Supplementary Data

Five-Year Comparison of Consolidated Average Statement of Condition

For the year ended December 31


(in millions)	2010			2009			2008			2007			2006

ASSETS
Cash and due from banks	$	181.1		$	188.7		$	226.2		$	208.7		$	210.6
Interest-bearing deposits in other banks		683.0			212.4			94.0			4.4			2.9
Federal funds sold and securities purchased under agreements to resell		13.7			22.4			32.7			34.0			49.9
Investment securities:
U.S. Treasury securities		189.3			54.5			61.0			103.0			156.5
Government agency securities		207.8			250.4			493.3			657.8			478.9
Obligations of state and political subdivisions		6.1			6.3			9.0			14.7			10.0
Preferred stock		18.0			19.3			35.6			66.2			90.2
Mortgage-backed securities		213.6			363.6			700.2			647.5			761.9
Other securities		112.2			161.7			262.1			374.3			386.5

Total investment securities		747.0			855.8			1,561.2			1,863.5			1,884.0
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		30.3			24.8			22.2			12.4			9.1
Loans:
Commercial, financial, and agricultural loans		2,459.8			2,732.0			2,814.6			2,485.7			2,437.4
Real estate — construction loans		1,782.0			1,958.3			1,860.6			1,731.9			1,516.8
Commercial mortgage loans		2,077.0			2,007.8			1,694.1			1,382.2			1,240.8

Total commercial loans		6,318.8			6,698.1			6,369.3			5,599.8			5,195.0
Residential mortgage loans		423.4			501.0			562.0			556.3			495.2
Consumer loans		1,258.3			1,565.2			1,728.7			1,526.6			1,458.2
Loans secured with investments		419.1			479.2			540.0			529.3			551.4

Total retail loans		2,100.8			2,545.4			2,830.7			2,612.2			2,504.8

Total loans, net of unearned income of $5.0 in 2010 and $6.4 in 2009		8,419.6			9,243.5			9,200.0			8,212.0			7,699.8
Reserve for loan losses		(350.4	)		(175.5	)		(108.1	)		(95.5	)		(91.8	)

Net loans		8,069.2			9,068.0			9,091.9			8,116.5			7,608.0
Premises and equipment, net		139.3			150.7			153.5			149.6			150.6
Goodwill		360.7			358.9			356.0			314.3			339.6
Other intangibles		33.1			43.6			42.4			36.6			37.4
Other assets		508.1			423.9			301.1			257.4			203.0

Total assets	$	10,765.5		$	11,349.2		$	11,881.2		$	10,997.4		$	10,495.1


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand deposits	$	1,085.6		$	1,167.9		$	778.1		$	722.4		$	759.1
Interest-bearing deposits:
Savings deposits		909.4			908.3			779.3			500.1			311.4
Interest-bearing demand deposits		3,890.0			3,164.9			2,470.4			2,400.2			2,365.1
Certificates under $100,000		991.4			1,072.5			1,006.3			1,010.1			979.4
Local certificates $100,000 and over		116.5			176.7			299.5			412.7			521.7

Total core deposits		6,992.9			6,490.3			5,333.6			5,045.5			4,936.7
National brokered certificates		1,288.9			1,333.2			2,846.3			2,756.7			2,803.9

Total deposits		8,281.8			7,823.5			8,179.9			7,802.2			7,740.6
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase		257.9			1,310.8			1,810.4			1,465.0			1,116.2
U.S. Treasury demand deposits		—			3.7			18.5			9.8			11.1
Line of credit and other debt		22.1			8.7			54.6			93.4			8.5

Total short-term borrowings		280.0			1,323.2			1,883.5			1,568.2			1,135.8
Other liabilities		342.9			407.9			296.2			228.5			164.9
Long-term debt		488.1			463.0			418.3			307.3			394.4

Total liabilities		9,392.8			10,017.6			10,777.9			9,906.2			9,435.7
Wilmington Trust stockholders’ equity:
Preferred stock		324.1			322.3			17.9			—			—
Other stockholders’ equity		1,048.6			1,009.0			1,085.2			1,091.0			1,059.1

Total Wilmington Trust stockholders’ equity		1,372.7			1,331.3			1,103.1			1,091.0			1,059.1
Noncontrolling interest		—			0.3			0.2			0.2			0.3

Total stockholders’ equity		1,372.7			1,331.6			1,103.3			1,091.2			1,059.4

Total liabilities and stockholders’ equity	$	10,765.5		$	11,349.2		$	11,881.2		$	10,997.4		$	10,495.1


Wilmington Trust Corporation 2010 Form 10-K		92

Five-Year Comparison of Consolidated Statements of Income

For the year ended December 31


(dollars in millions, except per share amounts)	2010			2009			2008			2007			2006

NET INTEREST INCOME
Interest income	$	366.6		$	437.2		$	611.4		$	722.2		$	674.8
Interest expense		89.5			119.0			253.7			353.3			311.7

Net interest income		277.1			318.2			357.7			368.9			363.1
Provision for loan losses		(699.7	)		(205.0	)		(115.5	)		(28.2	)		(21.3	)

Net interest (loss)/income after provision for loan losses		(422.6	)		113.2			242.2			340.7			341.8

NONINTEREST INCOME
Advisory fees:
Wealth Advisory Services		165.6			189.5			223.6			218.7			190.4
Corporate Client Services		199.2			172.1			132.9			100.0			87.2
Cramer Rosenthal McGlynn		19.0			17.6			16.4			20.7			19.3
Roxbury Capital Management		0.4			(2.4	)		(0.7	)		1.2			1.2

Total advisory fees		384.2			376.8			372.2			340.6			298.1
Amortization of affiliate intangibles		(6.6	)		(8.5	)		(7.7	)		(4.7	)		(4.2	)

Advisory fees after amortization of affiliate intangibles		377.6			368.3			364.5			335.9			293.9
Service charges on deposit accounts		29.7			31.2			30.2			28.3			28.2
Other noninterest income		23.5			27.1			29.9			22.0			23.8
Securities gains, net of losses		3.8			13.6			0.1			0.1			0.2
Net other-than-temporary impairment losses recognized in income		(37.9	)		(77.5	)		(130.7	)		—			—

Total noninterest income		396.7			362.7			294.0			386.3			346.1

Net interest and noninterest (loss)/income		(25.9	)		475.9			536.2			727.0			687.9

NONINTEREST EXPENSE
Salaries and wages		201.6			197.8			196.3			172.8			154.4
Incentives and bonuses		36.1			31.5			48.1			46.9			39.8
Employment benefits		58.8			58.1			51.7			50.9			48.3

Total staffing-related expense		296.5			287.4			296.1			270.6			242.5
Net occupancy		29.9			30.9			30.8			28.3			25.7
Furniture, equipment, and supplies		39.1			40.7			43.3			39.2			38.3
OREO write-downs/losses and reserve for unfunded lending commitments		67.7			5.0			1.6			0.3			—
Other noninterest expense		184.0			151.6			122.6			106.0			92.8

Total noninterest expense before goodwill impairment		617.2			515.6			494.4			444.4			399.3
Goodwill impairment write-down		24.5			—			66.9			—			72.3

Total noninterest expense		641.7			515.6			561.3			444.4			471.6

NET (LOSS)/INCOME
(Loss)/income before income taxes and noncontrolling interest		(667.6	)		(39.7	)		(25.1	)		282.6			216.3
Income tax expense/(benefit)		51.6			(36.5	)		(2.0	)		99.7			72.7

Net (loss)/income before noncontrolling interest		(719.2	)		(3.2	)		(23.1	)		182.9			143.6
Net income/(loss) attributable to noncontrolling interest		0.9			1.2			0.5			0.9			(0.2	)

Net (loss)/income attributable to Wilmington Trust Corporation		(720.1	)		(4.4	)		(23.6	)		182.0			143.8
Dividends and accretion on preferred stock		18.2			18.3			0.9			—			—
Net (loss)/income available to common stockholders	$	(738.3	)	$	(22.7	)	$	(24.5	)	$	182.0		$	143.8


Net (loss)/income per common share — basic	$	(8.45	)	$	(0.33	)	$	(0.36	)	$	2.68		$	2.10
Net (loss)/income per common share — diluted	$	(8.45	)	$	(0.33	)	$	(0.36	)	$	2.64		$	2.06

Weighted average common shares outstanding (in thousands):
Basic		87,367			68,966			67,454			67,946			68,413
Diluted		87,367			68,966			67,454			68,851			69,675

Net (loss)/income as a percentage of:
Average total assets		(6.69	)%		(0.04	)%		(0.20	)%		1.65	%		1.37	%
Average stockholders’ equity		(68.67	)%		(0.04	)%		(2.17	)%		16.68	%		13.58	%


Wilmington Trust Corporation 2010 Form 10-K		93

Summary of Consolidated Quarterly Results of Operations (unaudited)


For the quarter ended	2010												2009
(in millions, except per share amounts)	Dec 31			Sep 30			Jun 30			Mar 31			Dec 31			Sep 30			Jun 30			Mar 31

NET INTEREST INCOME
Interest income	$	82.8		$	90.0		$	96.3		$	97.5		$	102.4		$	106.3		$	111.3		$	117.1
Interest expense		22.9			22.3			21.5			22.8			24.5			26.3			29.7			38.6

Net interest income		59.9			67.7			74.8			74.7			77.9			80.0			81.6			78.5
Provision for loan losses		(135.6	)		(281.5	)		(205.2	)		(77.4	)		(82.8	)		(38.7	)		(54.0	)		(29.5	)

Net interest (loss)/income after provision for loan losses		(75.7	)		(213.8	)		(130.4	)		(2.7	)		(4.9	)		41.3			27.6			49.0

NONINTEREST INCOME
Advisory fees:
Wealth Advisory Services		41.1			39.4			40.9			44.1			47.2			45.8			47.0			49.5
Corporate Client Services		51.6			48.3			51.3			48.0			47.0			44.0			41.4			39.6
Cramer Rosenthal McGlynn		5.3			4.8			4.2			4.7			4.4			5.3			5.0			3.0
Roxbury Capital Management		0.1			—			0.2			0.1			(0.5	)		(0.6	)		(0.6	)		(0.8	)

Total advisory fees		98.1			92.5			96.6			96.9			98.1			94.5			92.8			91.3
Amortization of affiliate intangibles		(1.5	)		(1.5	)		(1.6	)		(1.9	)		(2.0	)		(2.1	)		(2.1	)		(2.3	)

Advisory fees after amortization of affiliate intangibles		96.6			91.0			95.0			95.0			96.1			92.4			90.7			89.0
Service charges on deposit accounts		7.0			7.5			7.5			7.7			7.7			8.1			7.5			7.9
Other noninterest income		7.8			5.1			6.1			4.6			7.9			6.0			7.0			6.3
Securities gains, net of losses		—			3.4			0.1			0.2			0.1			1.5			—			12.1
Total other-than-temporary impairment losses		(9.1	)		(7.0	)		(11.3	)		(29.9	)		(17.7	)		(57.5	)		(67.7	)		(4.5	)
Amount of loss recognized in other comprehensive income (before taxes)		1.4			2.6			3.5			11.9			6.2			19.4			44.3			—

Net other-than-temporary impairment losses recognized in income		(7.7	)		(4.4	)		(7.8	)		(18.0	)		(11.5	)		(38.1	)		(23.4	)		(4.5	)

Total noninterest income		103.7			102.6			100.9			89.5			100.3			69.9			81.8			110.8

Net interest and noninterest income/(loss)		28.0			(111.2	)		(29.5	)		86.8			95.4			111.2			109.4			159.8

NONINTEREST EXPENSE
Salaries and wages		52.1			50.9			49.3			49.2			50.7			49.3			48.6			49.1
Incentives and bonuses		9.9			7.4			11.7			7.1			9.1			9.7			7.8			4.9
Employment benefits		14.6			14.5			13.7			16.1			13.2			14.0			14.2			16.7

Total staffing-related expense		76.6			72.8			74.7			72.4			73.0			73.0			70.6			70.7
Net occupancy		7.3			7.4			7.1			8.1			7.6			7.7			7.7			7.8
Furniture, equipment, and supplies		9.7			9.3			9.9			10.2			10.4			10.1			10.0			10.5
Advertising and contributions		3.0			1.8			2.0			1.7			1.9			1.4			1.8			2.5
Servicing and consulting fees		9.7			5.4			4.3			3.5			3.7			3.1			3.5			4.1
Subadvisor expense		12.5			11.5			12.0			11.5			9.8			8.8			8.3			8.1
Travel, entertainment, and training		2.5			2.0			2.5			1.7			2.3			1.8			1.9			1.8
Originating and processing fees		2.7			2.8			2.8			2.9			2.4			2.4			3.1			2.3
Insurance		7.0			6.3			7.2			6.6			6.1			5.6			10.3			4.2
Legal and auditing fees		7.7			2.9			4.2			2.7			2.9			2.9			3.6			2.3
OREO write-downs/losses and reserve for unfunded lending commitments		28.2			21.0			16.7			1.8			3.9			2.4			(1.2	)		(0.1	)
Other noninterest expense		11.2			10.2			10.8			8.4			8.7			8.6			9.0			12.5

Total noninterest expense before goodwill impairment		178.1			153.4			154.2			131.5			132.7			127.8			128.6			126.7
Goodwill impairment write-down		24.5			—			—			—			—			—			—			—

Total noninterest expense		202.6			153.4			154.2			131.5			132.7			127.8			128.6			126.7
NET (LOSS)/INCOME

(Loss)/income before income taxes and noncontrolling interest		(174.6	)		(264.6	)		(183.7	)		(44.7	)		(37.3	)		(16.6	)		(19.2	)		33.1
Income tax expense/(benefit)		34.7			100.7			(67.3	)		(16.4	)		(26.9	)		(10.8	)		(10.2	)		11.2

Net (loss)/income before noncontrolling interest		(209.3	)		(365.3	)		(116.4	)		(28.3	)		(10.4	)		(5.8	)		(9.0	)		21.9
Net income attributable to noncontrolling interest		—			—			—			0.9			0.8			0.1			0.1			0.1

Net (loss)/income attributable to Wilmington Trust Corporation		(209.3	)		(365.3	)		(116.4	)		(29.2	)		(11.2	)		(5.9	)		(9.1	)		21.8
Dividends and accretion on preferred stock		4.5			4.6			4.5			4.6			4.5			4.5			4.5			4.6

Net (loss)/income available to common stockholders	$	(213.8	)	$	(369.9	)	$	(120.9	)	$	(33.8	)	$	(15.7	)	$	(10.4	)	$	(13.6	)	$	17.2

Net (loss)/income per common share — basic	$	(2.35	)	$	(4.06	)	$	(1.33	)	$	(0.44	)	$	(0.23	)	$	(0.15	)	$	(0.20	)	$	0.25
Net (loss)/income per common share — diluted	$	(2.35	)	$	(4.06	)	$	(1.33	)	$	(0.44	)	$	(0.23	)	$	(0.15	)	$	(0.20	)	$	0.25


Wilmington Trust Corporation 2010 Form 10-K		94

factors affecting quarterly operating results

During the annual valuation process of the benefit plans, management determined that the deferred tax asset associated with Wilmington Trust’s benefit plans had not been included in the consideration of the valuation allowance recorded in the third quarter of 2010. After considering quantitative and qualitative factors, management determined the amount was not material to the third quarter financial statements, so it was recorded in the fourth quarter of 2010 when it was identified. If this entry had been recorded in the third quarter, our assets and stockholders’ equity at September 30, 2010 would have been lower by $33.8 million and our tax expense for the 2010 third quarter would have been higher by the same amount. By recording the amount in the 2010 fourth quarter, our tax expense for the 2010 fourth quarter was higher by $33.8 million than if we had recorded this entry in the third quarter. Recording this entry in the fourth quarter instead of the third quarter did not affect our reported results for the year ended December 31, 2010 or our statement of condition as of December 31, 2010.


Wilmington Trust Corporation 2010 Form 10-K		95

Consolidated Statements of Condition

As of December 31


(dollars in millions)	2010			2009

ASSETS
Cash and due from banks	$	153.5		$	202.9
Interest-bearing deposits in other banks		2,091.8			165.4
Federal funds sold and securities purchased under agreements to resell		30.0			15.1
Investment securities available for sale		486.9			747.6
Investment securities held to maturity (fair value of $101.3 in 2010 and $101.8 in 2009)		101.8			112.9

Total investment securities		588.7			860.5
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		35.6			26.8
Loans:
Commercial, financial, and agricultural loans		2,178.6			2,627.0
Real estate — construction loans		1,429.1			1,956.4
Commercial mortgage loans		1,959.5			2,102.3

Total commercial loans		5,567.2			6,685.7
Residential mortgage loans		434.6			431.0
Consumer loans		1,134.3			1,408.9
Loans secured with investments		389.8			441.6

Total retail loans		1,958.7			2,281.5

Total loans, net of unearned income of $4.3 in 2010 and $6.4 in 2009		7,525.9			8,967.2
Reserve for loan losses		(440.8	)		(251.5	)

Net loans

Average life