PROSPECTUS
[WILMINGTON TRUST LOGO]
OFFER TO EXCHANGE
$250,000,000 AGGREGATE PRINCIPAL AMOUNT OF
4.875% SUBORDINATED NOTES DUE 2013,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, FOR
$250,000,000 AGGREGATE PRINCIPAL AMOUNT OF OUTSTANDING
4.875% SUBORDINATED NOTES DUE 2013
The exchange offer will expire at 5:00 p.m., New York City time, on
September 12, 2003, unless extended.
We are offering to exchange an aggregate principal amount of up to
$250,000,000 of 4.875% Subordinated Notes due 2013, which have been registered
under the Securities Act of 1933, for a like amount of our outstanding
$250,000,000 of 4.875% Subordinated Notes due 2013. When we refer to "exchange
notes," we are referring to the 4.875% Subordinated Notes due 2013 offered by
this prospectus, and when we refer to "outstanding notes," we are referring to
the outstanding 4.875% Subordinated Notes due 2013.
The terms of the exchange notes are substantially identical to the
terms of the outstanding notes, except for transfer restrictions, registration
rights and interest step-up provisions relating to the outstanding notes. There
is no existing market for the notes to be issued, and we do not intend to apply
for their listing on any securities exchange. We will not receive any proceeds
from the exchange offer.
You may withdraw your tender at any time prior to the expiration date
of the exchange offer.
The notes are not deposits or obligations of any bank or savings
association and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
SEE "RISK FACTORS" ON PAGES 10 TO 13 FOR A DISCUSSION OF THE RISKS THAT
YOU SHOULD CONSIDER BEFORE TENDERING YOUR OUTSTANDING NOTES FOR EXCHANGE.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
August 1, 2003
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of exchange notes in any state
in which the offer is not permitted. You should not assume that the information
contained in this prospectus or incorporated by reference herein is accurate as
of any date other than the date on the front of this prospectus or the date of
the documents incorporated by reference.
TABLE OF CONTENTS
Page
SUMMARY......................................................................1
SELECTED FINANCIAL DATA......................................................6
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION.............................8
RISK FACTORS................................................................10
RATIO OF EARNINGS TO FIXED CHARGES..........................................14
USE OF PROCEEDS.............................................................14
CAPITALIZATION..............................................................15
SUPERVISION AND REGULATION..................................................16
DESCRIPTION OF EXCHANGE OFFER...............................................21
DESCRIPTION OF EXCHANGE NOTES...............................................30
REGISTRATION RIGHTS.........................................................36
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS.............40
PLAN OF DISTRIBUTION........................................................43
LEGAL MATTERS...............................................................44
EXPERTS.....................................................................44
WHERE YOU CAN FIND MORE INFORMATION.........................................44
INCORPORATION BY REFERENCE..................................................44
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS.
THIS INFORMATION IS AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM
WILMINGTON TRUST CORPORATION, RODNEY SQUARE NORTH, 1100 NORTH MARKET STREET,
WILMINGTON, DELAWARE 19890-0001, ATTENTION: GERARD A. CHAMBERLAIN, (302)
651-1268, EMAIL: GCHAMBERLAIN@WILMINGTONTRUST.COM. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY SEPTEMBER 7, 2003.
As used in this prospectus, unless expressly stated otherwise or unless
the context otherwise requires, all references to "Wilmington Trust
Corporation," "we," "our," "us" and all similar references are to Wilmington
Trust Corporation and our consolidated subsidiaries.
FORWARD-LOOKING STATEMENTS
From time to time in this prospectus and the documents incorporated by
reference in it, as well as in other written reports or oral statements, we
discuss our expectations regarding future performance. For example, portions of
the sections entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in the Annual Report on Form 10-K
and the Quarterly Report on Form 10-Q incorporated by reference in this
prospectus contain various "forward-looking statements," within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. These include statements relating to our possible or assumed future results
of operations, business or earnings outlook, and those preceded by, followed by
or that include the words "will," "believe,"
"expect," "anticipate," "intend," "plan," "estimate" or similar expressions. For
those statements, we claim the protection of the safe harbor contained in the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on our management's knowledge and
belief as of the date of this prospectus and include information concerning our
possible or assumed future financial condition and our results of operations,
business and earnings outlook. These forward-looking statements are subject to
risks and uncertainties. A number of factors, many beyond our ability to control
or predict, could cause future results to differ, even materially, from those
contemplated by these forward-looking statements. These factors include (1)
changes in national or regional economic conditions, (2) changes in interest
rates, (3) significant changes in banking laws or regulations, (4) increased
competition in our markets, (5) higher-than-expected credit losses, (6) the
effect of acquisitions and integration of acquired businesses, (7) unanticipated
changes in regulatory, judicial or legislative tax treatment of business
transactions and (8) economic uncertainty created by increasing unrest in other
parts of the world. Weakness or a further decline in capital or consumer
spending could affect our performance adversely in a number of ways, including
decreased demand for our products and services and increased credit losses.
Likewise, changes in deposit interest rates, among other things, could slow our
rate of growth or put pressure on current deposit levels. Forward-looking
statements speak only as of the date they are made, and we do not undertake to
update any forward-looking statements to reflect circumstances or events that
occur after the date the statements are made, or to update earnings guidance,
including the factors that influence earnings.
SUMMARY
This summary does not contain all of the information that may be
important to your investment decision. You should read the entire prospectus and
the documents incorporated by reference herein before deciding to invest in the
exchange notes.
We are a bank and thrift holding company, and a financial holding
company under the Bank Holding Company Act. Our banking subsidiaries are
Wilmington Trust Company, a Delaware-chartered bank and trust company ("WTC"),
Wilmington Trust of Pennsylvania, a Pennsylvania-chartered bank and trust
company ("WTPA"), and Wilmington Trust FSB, a Federal savings bank with banking
offices in Maryland and Florida ("WTFSB") (WTC, WTPA and WTFSB are sometimes
collectively called the "Banks"). WTC is the largest full-service bank
headquartered in Delaware and one of the nation's largest personal trust
companies. At March 31, 2003, WTC had over $22.5 billion in assets under
management. Subsidiaries of WTC engage in the distribution of mutual funds WTC
sponsors, investment advising, the sale of securities and insurance and related
activities. At March 31, 2003, we had over $8.2 billion of total assets,
including approximately $6 billion of loans. At the same date, we were
well-capitalized, with $696.4 million of qualifying capital for risk-based
capital purposes, representing 10.20% of our risk-weighted assets, and $485.6
million of "Tier 1" capital, representing 7.11% of risk-weighted assets and
6.15% of average assets during the first quarter of 2003.
For 2002, we reported net income of $133.2 million, or $2.01 per
diluted share, a 6% increase over the $125.2 million, or $1.90 per diluted
share, reported for 2001. The improvement in earnings was attributable to growth
in both of the major components of our income. Net interest income increased 7%
to $276.5 million, an increase of $17.7 million over the $258.8 million reported
for 2001. Noninterest revenues increased 15% to $262.2 million, an increase of
$34.2 million over the $228.0 million reported for 2001. For the first quarter
of 2003, we reported net income of $29.4 million, or $.44 per diluted share, an
8.5% decrease from the $32.1 million, or $.48 per diluted share, reported for
the first quarter of 2002. The decrease in earnings was attributable to declines
in the net interest margin, volatility and declines in the equity markets and a
drop in the contribution from our asset manager affiliates. Net interest income
increased 4.8% to $68.3 million, an increase of $3.1 million over the $65.2
million reported for the first quarter of 2002. Noninterest revenues decreased
5.4% to $61.2 million, a decrease of $3.5 million from the $64.7 million
reported for the first quarter of 2002.
During 2002, we increased our reserve for loan losses from $80.8
million (1.47% of loans outstanding) to $85.2 million (1.41% of loans
outstanding) while our unallocated loan loss reserve declined from $6.3 million
to $6.1 million. The total dollar amount of loans past due 90 days or more,
nonaccruing loans and restructured loans increased from $51.9 million to $54.8
million, but decreased as a percentage of total loans from .95% to .91%. At
December 31, 2002, our loans past due 90 days or more, nonaccruing loans and
restructured loans represented 64.4% of loan loss reserves, compared to 64.3% at
the end of 2001. The reserve for loan losses at March 31, 2003 was $86.0
million, or 1.43% of loans outstanding at period-end, while our unallocated loan
loss reserve remained at $6.1 million. At March 31, 2003, loans past due 90 days
or more totaled $8.3 million, which was $4.2 million, or 33.6%, lower than at
December 31, 2002. The total dollar amount of loans past due 90 days or more,
nonaccruing loans and restructured loans increased from $41.3 million at March
31, 2002 to $72.9 million at March 31, 2003, increasing as a percentage of total
loans from .74% to 1.21%. At March 31, 2003, our loans past due 90 days or more,
nonaccruing loans and restructured loans represented 84.8% of loan loss
reserves, compared to 50.5% at March 31, 2002.
We are a legal entity separate and distinct from the Banks and our
nonbanking subsidiaries (together with the Banks, the "Affiliates").
Accordingly, our right, and thus the right of our creditors and stockholders, to
participate in any distribution of the assets or earnings of any Affiliate is
subject to the prior claims of creditors of the Affiliate, except to the extent
that claims in our capacity as a creditor may be recognized. The
principal sources of our revenues historically have been dividends from the
Affiliates. See "Business -- Regulation -- Dividend Limitations" in our Form
10-K for the year ended December 31, 2002 for a discussion of restrictions on
the payment of dividends by the Banks and us.
WTC was organized under Delaware law in 1903. We were incorporated
under Delaware law in 1985. Our executive offices are located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890 and our telephone
number is (302) 651-1000.
2
THE EXCHANGE OFFER
On April 4, 2003, we completed the private placement of $250,000,000
aggregate principal amount of 4.875% Subordinated Notes due 2013 in a
transaction exempt from the registration requirements of the Securities Act.
Simultaneously with that transaction, we entered into a registration rights
agreement with the initial purchasers of the outstanding notes, in which we
agreed to deliver this prospectus to you and to complete this exchange offer for
the outstanding notes. The following is a summary of the exchange offer.
Terms of the Offer.................................... We are offering to exchange a like amount of exchange
notes for the outstanding notes, in denominations of
$1,000 in principal amount and integral multiples of
that amount. In order to be exchanged, an outstanding
note must be properly tendered and accepted. As of the
date of this prospectus, there are $250,000,000
principal amount of outstanding notes outstanding. We
will issue exchange notes promptly after the expiration
of the exchange offer.
Expiration Date....................................... The exchange offer expires at 5:00 p.m., New York City
time, on September 12, 2003, unless extended in our sole
discretion.
Procedures for Tendering.............................. Letters of transmittal and certificates representing
outstanding notes should not be sent to us. Those
documents should only be sent to the exchange agent.
Questions regarding how to tender and requests for
information should be directed to the exchange agent.
See "The Exchange Offer--Exchange Agent."
Acceptance of Outstanding Notes for Exchange; Subject to the conditions stated in "The Exchange
Issuance of Exchange Notes............................ Offer--Conditions to the Exchange Offer," we will
accept for exchange any and all outstanding notes that
are properly tendered in the exchange offer and not
withdrawn before the expiration date. The exchange
notes will be delivered promptly after the expiration
date.
Withdrawal Rights..................................... You may withdraw your tender at any time prior to the
expiration date of the exchange offer.
United States Federal Income Tax Consequences......... Your exchange of outstanding notes for exchange notes
to be issued in the exchange offer will not result in
any gain or loss to you for United States federal
income tax purposes. See "Certain U.S. Federal Income
Tax Considerations for U.S. Holders."
Resales of Exchange Notes............................. Based on interpretations by the staff of the SEC, as
detailed in a series of no-action letters issued to
3
third parties, we believe that exchange notes will
generally be freely transferable without further
registration under the Securities Act, if:
- you acquire the exchange notes in the ordinary
course of your business;
- you have no arrangement or understanding with any
person to participate in the distribution (within
the meaning of the Securities Act) of the
exchange notes;
- you are not an "affiliate" of Wilmington Trust
Corporation (as defined in Rule 405 of the
Securities Act);
- you are not a broker-dealer and you are not
engaged in, and do not intend to engage in, the
distribution of the exchange notes;
- you are a broker-dealer, you receive exchange
notes for your own account in exchange for
outstanding notes that were acquired as a result
of market-making activities or other trading
activities and you deliver a prospectus in
connection with any resale of these exchange
notes; and
- you are not acting on behalf of any person who
could not truthfully make the foregoing
representations.
Each broker-dealer that receives exchange notes for
its own account in exchange for outstanding notes,
where such outstanding notes were acquired by such
broker-dealer as a result of market-making activities
or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any
resale of such exchange notes. See "Plan of
Distribution."
Exchange Agent........................................ Wells Fargo Bank Minnesota, National Association is
serving as the exchange agent in connection with the
exchange offer. The address and telephone and
facsimile numbers of the exchange agent are listed
under the heading "The Exchange Offer -- Exchange
Agent."
Use of Proceeds....................................... We will not receive any proceeds from the issuance of
exchange notes in the exchange offer.
4
THE EXCHANGE NOTES
The terms of the exchange notes and the outstanding notes are identical
in all material respects, except that:
- the exchange notes will have been registered under the
Securities Act;
- the exchange notes will not contain transfer restrictions or
registration rights that relate to the outstanding notes; and
- the exchange notes will not contain provisions relating to the
payment of special interest to the holders of the outstanding
notes under the circumstances related to the registration of
the outstanding notes and the timing of the exchange offer.
The following is a brief description of the material terms of
the exchange notes.
Issuer............................................... Wilmington Trust Corporation.
Securities Offered................................... Up to $250,000,000 aggregate principal amount of 4.875%
subordinated notes due 2013, which have been registered
under the Securities Act.
Maturity............................................. April 15, 2013.
Interest............................................. We will pay interest on the exchange notes at the rate of
4.875% per year payable in cash on April 15 and October 15
of each year, beginning on October 15, 2003.
Ranking.............................................. The exchange notes will be Wilmington Trust Corporation's
unsecured subordinated obligations and will rank equally
with all of our other unsecured subordinated indebtedness.
The exchange notes will be subordinated to our senior
indebtedness and general obligations. The exchange notes
also will be effectively subordinated to all of our secured
indebtedness to the extent of the assets securing that
indebtedness and all indebtedness and other liabilities,
including trade payables, of our subsidiaries.
Redemption........................................... The exchange notes will not be redeemable prior to maturity.
Indenture............................................ We will issue the exchange notes under the same indenture
dated as of May 4, 1998 with Norwest Bank Minnesota,
National Association (now Wells Fargo Bank Minnesota,
National Association), as trustee, under which the
outstanding notes were issued. The indenture, among other
things, restricts our ability to sell all or substantially
all of our assets or merge or consolidate with or into other
entities without satisfying certain conditions. See
"Description of Notes."
5
SELECTED FINANCIAL DATA
The following table presents selected consolidated historical and other
financial data about us and our consolidated subsidiaries. That data should be
read in conjunction with, and is qualified in its entirety by, the more detailed
information, Management's Discussion and Analysis of Financial Condition and
Results of Operations and the consolidated financial statements and notes
thereto in the reports we have filed with the SEC described under the caption
"Where You Can Find More Information" and "Incorporation by Reference." The
selected consolidated balance sheet data as of December 31, 2002 and 2001 and
the consolidated statement of operations data for the years then ended are
derived from our consolidated financial statements incorporated in this
prospectus by reference, which financial statements have been audited by KPMG
LLP, independent auditors. The selected consolidated statement of operations
data presented below for the year ended December 31, 2000 is derived from our
consolidated financial statements incorporated in this prospectus by reference,
which financial statements have been audited by Ernst & Young LLP, independent
auditors. The selected consolidated balance sheet data as of December 31, 2000,
1999 and 1998 and the consolidated statement of operations data presented below
for each of the years ended December 31, 1999 and 1998 are derived from our
financial statements not included herein which have been audited by Ernst &
Young LLP, independent auditors. The selected consolidated balance sheet data
and consolidated statement of operations data presented below for the quarters
ended March 31, 2003 and 2002 are derived from our consolidated financial
statements incorporated in this prospectus by reference, which are unaudited.
AS OF OR FOR THE THREE AS OF OR FOR THE YEAR ENDED
MONTHS ENDED MARCH 31, DECEMBER 31,
---------------------- ------------
IN THOUSANDS, EXCEPT PER SHARE DATA 2003 2002 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA:
Interest income.................................. $92,788 $96,268 $392,871 $468,798 $530,454 $462,176 $456,939
Interest expense................................. 24,493 31,090 116,341 209,985 275,315 216,263 219,242
Net interest income.............................. 68,295 65,178 276,530 258,813 255,139 245,913 237,697
Provision for loan losses........................ (4,935) (5,295) (22,013) (19,850) (21,900) (17,500) (20,000)
Noninterest income............................... 61,163 64,671 262,159 228,003 216,210 191,453 183,917
Noninterest expense.............................. 79,633 75,280 309,892 276,917 264,682 258,204 230,066
Income before income taxes, minority interest and
cumulative effect of change in accounting
principle...................................... 44,890 49,274 206,784 190,049 184,767 161,662 171,548
Income tax expense............................... 15,287 17,119 73,002 66,009 63,828 54,365 57,223
Net income before minority interest and
cumulative effect of change in accounting
principle...................................... 29,603 32,155 133,782 124,040 120,939 107,297 114,325
Minority interest................................ 226 59 625 -- -- -- --
Net income before cumulative effect of change in
accounting principle........................... 29,377 32,096 133,157 124,040 120,939 107,297 114,325
Cumulative effect of change in accounting
principle (net of taxes of $584)............... -- -- -- 1,130 -- -- --
Net income....................................... $29,377 $32,096 $133,157 $125,170 $120,939 $107,297 $114,325
======= ======= ======== ======== ======== ======== ========
PER SHARE DATA:
Net income per share, basic.................... $ 0.45 $ 0.49 $ 2.03 $ 1.92 $ 1.87 $ 1.63 $ 1.71
Net income per share, diluted.................. $ 0.44 $ 0.48 $ 2.01 $ 1.90 $ 1.85 $ 1.61 $ 1.67
Cash dividends declared........................ $ 0.255 $ 0.240 $ 1.005 $ 0.945 $ 0.885 $ 0.825 $ 0.765
Book value per share........................... $11.49 $10.67 $11.30 $10.44 $ 9.14 $ 7.70 $ 8.19
Weighted average shares outstanding used to
compute income per share, basic.............. 65,692 65,619 65,617 65,147 64,610 65,826 66,974
Weighted average shares outstanding used to
compute income per share, diluted............ 66,174 66,510 66,301 65,942 65,360 66,766 68,550
6
AS OF OR FOR THE THREE AS OF OR FOR THE YEAR
MONTHS ENDED MARCH 31, ENDED DECEMBER 31,
---------------------- ----------------------
IN THOUSANDS, EXCEPT PER SHARE DATA 2003 2002 2002 2001
---- ---- ---- ----
BALANCE SHEET DATA -- AT PERIOD END:
Assets .................................. $ 8,267,994 $ 7,420,487 $ 8,131,275 $ 7,518,462
Deposits ................................ 6,577,059 5,418,956 6,337,093 5,590,785
Loans, net of unearned income ........... 6,008,174 5,537,807 6,025,104 5,487,959
Investment securities available for
sale, investment securities held
to maturity and federal funds
sold and securities purchased
under agreements to resell ............ 1,548,581 1,258,863 1,348,718 1,386,299
Interest-earning assets ................. 7,556,755 6,796,670 7,373,822 6,874,258
Shareholders' equity .................... 754,806 700,496 741,269 682,530
BALANCE SHEET DATA - AVERAGE BALANCE:
Assets .................................... $ 8,159,248 $ 7,375,762 $ 7,661,035 $ 7,229,234
Deposits .................................. 6,312,869 5,407,200 5,827,652 5,263,167
Loans ..................................... 5,977,647 5,464,481 5,691,252 5,235,297
Securities ................................ 1,485,631 1,260,674 1,323,602 1,370,523
Interest-earning assets ................... 7,463,278 6,725,155 7,014,854 6,605,820
Shareholders' equity ...................... 746,504 695,071 719,630 640,786
ASSET QUALITY:
Nonaccrual loans .......................... $ 64,642 $ 33,932 $ 42,352 $ 38,016
Other real estate owned ................... 3,934 504 3,118 398
----------- ----------- ----------- -----------
Total nonaccrual loans and other real
estate owned .......................... $ 68,576 $ 34,436 $ 45,470 $ 38,414
=========== =========== =========== ===========
ASSETS UNDER MANAGEMENT:
Wilmington Trust Corporation .............. $22,558,923 $24,226,627 $21,724,138 $23,829,165
Cramer Rosenthal McGlynn, LLC ............. 3,167,677 5,052,419 3,509,647 4,643,329
Roxbury Capital Management, LLC ........... 3,163,121 6,886,160 3,722,400 7,697,921
----------- ----------- ----------- -----------
Total assets under management ............. $28,889,721 $36,165,206 $28,956,185 $36,170,415
=========== =========== =========== ===========
PERFORMANCE RATIOS:
Return on average assets .................. 1.46% 1.76% 1.74% 1.73%
Return on average stockholders' equity .... 15.96 18.73 18.50 19.53
Net interest spread ....................... 3.55 3.63 3.74 3.41
Net interest margin ....................... 3.75 3.97 4.02 4.02
Average shareholders' equity to average
assets ................................ 9.15 9.42 9.39 8.86
Dividend payout ratio, per share (basic) .. 56.67 48.98 49.51 49.22
Efficiency ratio .......................... 60.92 57.40 56.99 56.12
ASSET QUALITY RATIOS:
Nonaccrual loans to total loans ........... 1.08 0.61 0.70 0.69
Nonaccrual loans and other real estate
owned to total loans .................. 1.14 0.62 0.75 0.70
Reserve to total loans .................... 1.43 1.48 1.41 1.47
Reserve to nonaccrual loans ............... 1.33 2.41 2.01 2.13
Net (chargeoffs) recoveries to average
loans ................................. 0.07 0.08 0.31 0.30
AS OF OR FOR THE YEAR ENDED
DECEMBER 31,
------------
IN THOUSANDS, EXCEPT PER SHARE DATA 2000 1999 1998
---- ---- ----
BALANCE SHEET DATA -- AT PERIOD END:
Assets .................................. $ 7,321,616 $ 7,201,944 $ 6,300,565
Deposits ................................ 5,286,016 5,369,484 4,536,763
Loans, net of unearned income ........... 5,188,409 4,820,079 4,319,633
Investment securities available for
sale, investment securities held
to maturity and federal funds
sold and securities purchased
under agreements to resell ............ 1,510,978 1,847,259 1,456,152
Interest-earning assets ................. 6,699,387 6,667,338 5,775,785
Shareholders' equity .................... 591,900 498,231 546,209
BALANCE SHEET DATA - AVERAGE BALANCE:
Assets .................................... $ 7,208,720 $ 6,689,065 $ 6,252,439
Deposits .................................. 5,271,051 4,766,376 4,427,329
Loans ..................................... 5,053,079 4,530,423 4,156,398
Securities ................................ 1,596,540 1,625,875 1,640,676
Interest-earning assets ................... 6,649,919 6,156,298 5,797,074
Shareholders' equity ...................... 531,471 531,592 526,742
ASSET QUALITY:
Nonaccrual loans .......................... $ 40,161 $ 29,184 $ 30,598
Other real estate owned ................... 717 576 1,532
----------- ----------- -----------
Total nonaccrual loans and other real
estate owned .......................... $ 40,878 $ 29,760 $ 32,130
=========== =========== ===========
ASSETS UNDER MANAGEMENT:
Wilmington Trust Corporation .............. $27,944,405 $25,529,653 $22,770,205
Cramer Rosenthal McGlynn, LLC ............. 3,495,283 3,203,522 4,318,510
Roxbury Capital Management, LLC ........... 11,717,045 11,155,392 6,030,239
----------- ----------- -----------
Total assets under management ............. $43,206,733 $39,888,567 $33,118,954
=========== =========== ===========
PERFORMANCE RATIOS:
Return on average assets .................. 1.68% 1.60% 1.83%
Return on average stockholders' equity .... 22.76 20.18 21.70
Net interest spread ....................... 3.20 3.47 3.56
Net interest margin ....................... 3.92 4.11 4.26
Average shareholders' equity to average
assets ................................ 7.37 7.95 8.42
Dividend payout ratio, per share (basic) .. 47.33 50.61 44.74
Efficiency ratio .......................... 55.30 57.99 53.51
ASSET QUALITY RATIOS:
Nonaccrual loans to total loans ........... 0.77 0.61 0.71
Nonaccrual loans and other real estate
owned to total loans .................. 0.79 0.62 0.74
Reserve to total loans .................... 1.48 1.60 1.66
Reserve to nonaccrual loans ............... 1.91 2.64 2.35
Net (chargeoffs) recoveries to average
loans ................................. 0.44 0.28 0.29
7
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
Our Form 10-K for 2002, by incorporating by reference certain portions
of our Annual Report to Shareholders for 2002, includes certain "non-GAAP"
financial measures. These include references to operating revenues and the net
profit margin, which utilizes operating revenues within its calculation.
Management believes that by having a revenue stream that is balanced
between net interest income and fee income, the Corporation will be better
positioned to weather economic cycles. Management measures this balance using a
ratio of fee income as a percentage of operating revenues. Operating revenues
includes net interest income before the loan loss provision and total fee
income. Total fee income differs from total noninterest income in that it
excludes amortization expense related to goodwill and other intangible assets
from affiliate asset manager acquisitions and securities gains and losses. As a
result of these adjustments, operating revenues, as defined by management, do
not equal the sum of net interest and noninterest income as reported in the
consolidated income statements. Operating revenue, therefore, is deemed to be a
non-GAAP performance measure.
Management believes that securities transactions are discretionary and
not reflective of day-to-day business activity. In addition, management believes
that netting affiliate manager amortization against fee income masks the true
growth of affiliate manager fees in relation to other sources of revenue.
Accordingly, management believes that, in certain circumstances, its discussion
of operating revenues and total fees provides a more meaningful measurement of
its ongoing revenue.
The GAAP equivalent of operating revenue discussed on pages 19 and 27
of our Annual Report to Shareholders for 2002 is contained on the "net interest
and noninterest income" line of the table below.
The net profit margin referred to on page 11 of our Annual Report to
Shareholders for 2002 measures operating revenue as a percentage of net income.
The corresponding GAAP measurement is net income as a percentage of net interest
and noninterest income. The comparative results of that calculation also are
reflected in the table below.
(IN MILLIONS) 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
--------------------------------------------------------------------------------------------------
Net interest income............ $277 $259 $255 $246 $238 $230 $214 $197 $184 $175 $165
Fee income
Advisory fees.............. 207 185 173 155 132 115 98 88 83 78 77
Service charges............ 30 27 25 24 22 21 19 17 17 16 15
Other noninterest income... 24 22 26 18 26 22 20 20 16 19 16
--------------------------------------------------------------------------------------------------
Total fee income........... $261 $235 $224 $196 $181 $158 $137 $125 $115 $113 $108
--------------------------------------------------------------------------------------------------
Total operating revenue........ 538 493 479 442 418 388 351 323 300 288 273
--------------------------------------------------------------------------------------------------
Amortization of affiliate
goodwill and other
intangibles.................... (1) (8) (7) (6) (4) 0 0 0 0 0 0
Securities gains / (losses).... 2 2 (0) 1 7 0 1 2 (2) 0 2
--------------------------------------------------------------------------------------------------
Net interest and
noninterest income, before
loan loss provision............ 539 487 471 437 422 388 352 325 297 289 275
Provision for loan losses...... (22) (20) (22) (18) (20) (22) (16) (12) (5) (10) (13)
--------------------------------------------------------------------------------------------------
Net interest and
noninterest income............. 517 467 449 420 402 366 336 313 293 279 262
==================================================================================================
(IN MILLIONS) 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
--------------------------------------------------------------------------------------------------
Total fee income............... $261 $235 $224 $196 $181 $158 $137 $125 $115 $113 $108
Amortization of affiliate
goodwill and other
intangibles.................... (1) (8) (7) (6) (4) 0 0 0 0 0 0
8
Securities gains / (losses).. 2 2 0 1 7 0 1 2 (2) 0 2
--------------------------------------------------------------------------------------------------
Total noninterest income..... $262 $228 $216 $191 $184 $158 $138 $128 $113 $114 $110
--------------------------------------------------------------------------------------------------
Fee income as a percentage
of operating revenues........ 48.59% 47.55% 46.76% 44.40% 43.20% 40.65% 39.02% 38.85% 38.47% 39.34% 39.53%
Noninterest income as a
percentage of net interest
and noninterest income....... 50.74% 48.83% 48.11% 45.60% 45.79% 43.04% 41.09% 40.82% 38.61% 40.74% 42.01%
NET PROFIT MARGIN:
Net income................... $133 $125 $121 $107 $114 $106 $ 97 $ 90 $ 85 $ 83 $ 64
Operating revenues........... $538 $493 $479 $442 $418 $388 $ 351 $ 323 $ 300 $ 288 $ 273
Non-GAAP net profit margin... 24.75% 25.36% 25.23% 24.26% 27.32% 27.36% 27.69% 27.90% 28.43% 28.71% 23.43%
Net income................... $133 $125 $121 $107 $114 $106 $ 97 $ 90 $ 85 $ 83 $ 64
Net interest and
noninterest income........... $517 $467 $449 $420 $402 $366 $ 336 $ 313 $ 293 $ 279 $ 262
GAAP net profit margin....... 25.77% 26.80% 26.91% 25.56% 28.47% 28.97% 28.91% 28.79% 29.08% 29.66% 24.39%
9
RISK FACTORS
Before tendering outstanding notes in the exchange offer, you should
carefully review the information contained elsewhere in this prospectus and
should particularly consider the following discussion of the risks involved.
YOU MAY HAVE DIFFICULTY SELLING THE OUTSTANDING NOTES YOU DO NOT EXCHANGE.
If you do not exchange your outstanding notes for exchange notes in the
exchange offer, you will continue to be subject to the restrictions on transfer
of your outstanding notes as described in the legend on the global security
representing the outstanding notes. There are restrictions on transfer of your
outstanding notes because we issued the outstanding notes under an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, you may only
offer or sell the outstanding notes if they are registered under the Securities
Act and applicable state securities laws or offered and sold under an exemption
from, or in a transaction not subject to, these requirements. We do not intend
to register any outstanding notes not tendered in the exchange offer and, upon
consummation of the exchange offer, you will not be entitled to any rights to
have your untendered outstanding notes registered under the Securities Act. In
addition, the trading market, if any, for the remaining outstanding notes will
be adversely affected depending on the extent to which outstanding notes are
tendered and accepted in the exchange offer.
YOU MAY HAVE DIFFICULTY SELLING THE EXCHANGE NOTES BECAUSE THERE IS NO EXISTING
TRADING MARKET FOR THEM.
The exchange notes are being offered to the holders of the outstanding
notes, which were issued on April 4, 2003 to a small number of institutional
investors. There is no existing trading market for the exchange notes. We do not
intend to apply for listing or quotation of the exchange notes on any exchange
and no one has informed us that they intend to make a market in the exchange
notes. Consequently, we do not know the extent to which investor interest will
lead to the development of a trading market or how liquid that market might be.
As a result, the market price of the exchange notes could be adversely affected.
CERTAIN HOLDERS MAY NEED TO COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT.
Based on interpretations of the SEC staff, exchange notes issued
pursuant to the exchange offer may be offered for resale, resold or otherwise
transferred by their holders, other than any holder that is our "affiliate"
within the meaning of Rule 405 under the Securities Act, without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided the holder acquired the exchange notes in the ordinary course of its
business and has no arrangement or understanding regarding the distribution of
the exchange notes to be acquired in the exchange offer. Any holder who tenders
in the exchange offer for the purpose of participating in a distribution of the
exchange notes cannot rely on the applicable interpretations of the SEC and must
therefore comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
Any broker-dealer that exchanges its outstanding notes in the exchange offer for
the purpose of participating in a distribution of the exchange notes or that
resells exchange notes that were received by it for its own account in the
exchange offer may be deemed to have received restricted notes and may be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction by that
broker-dealer. Any profit on the resale of the exchange
10
notes and any commission or concessions received by a broker-dealer may be
deemed to be underwriting compensation under the Securities Act.
YOU MAY NOT RECEIVE EXCHANGE NOTES IN THE EXCHANGE OFFER IF THE EXCHANGE OFFER
PROCEDURE IS NOT FOLLOWED.
We will issue the exchange notes in exchange for your outstanding notes
only if you tender the outstanding notes and deliver a properly completed and
duly executed letter of transmittal and other required documents before
expiration of the exchange offer. You should allow sufficient time to ensure
timely delivery of the necessary documents. Neither the exchange agent nor we
are under any duty to give notification of defects or irregularities with
respect to the tenders of outstanding notes for exchange. If you are the
beneficial holder of outstanding notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, and you wish to
tender in the exchange offer, you should promptly contact that person and
instruct it to tender on your behalf.
THE OUTSTANDING NOTES AND THE EXCHANGE NOTES ARE UNSECURED AND SUBORDINATED.
The outstanding notes and the exchange notes are our general unsecured
obligations. Because the outstanding notes and the exchange notes are unsecured,
holders of the outstanding notes and the exchange notes do not have a lien on
our assets. The outstanding notes and the exchange notes are subordinated to our
existing and future general obligations (as defined herein) and senior
indebtedness (as defined herein). In the event of a bankruptcy or similar
proceeding involving us, our assets and the assets of our subsidiaries would be
used to satisfy our general obligations and our senior indebtedness before any
payments are made on the outstanding notes or the exchange notes. If any of our
subsidiaries becomes insolvent, liquidates, reorganizes, dissolves or otherwise
winds up, the assets of that subsidiary will be used first to satisfy the claims
of its creditors, including its trade creditors. Consequently, claims of holders
of the outstanding notes and the exchange notes will be effectively subordinated
to all of our subsidiaries' liabilities. As of March 31, 2003, we had
$36,427,165 in general obligations (including $927,165 of deferred directors'
fees) and no senior indebtedness outstanding.
THERE IS NO LIMITATION ON THE AMOUNT OF INDEBTEDNESS THAT WE MAY INCUR.
There is no limitation on the amount of indebtedness, including senior
indebtedness to which the outstanding notes and the exchange notes would be
subordinated, that we and our subsidiaries may incur in the future. Our
incurrence of additional indebtedness could increase our vulnerability to
economic downturns and competitive pressures, reduce the amount and availability
of our cash flow, limit our flexibility and make it more difficult for us to
satisfy our obligations to you under the outstanding notes and the exchange
notes.
THERE ARE CERTAIN PRINCIPAL INTEREST RATE AND CREDIT RISKS ASSOCIATED WITH
CONSUMER AND COMMERCIAL LENDING.
A certain degree of credit risk is inherent in the Banks' various
lending activities. The Banks offer fixed and adjustable interest rates on
loans, with terms of up to 30 years. Although the majority of residential
mortgage loans the Banks originate are fixed-rate, adjustable rate mortgage
("ARM") loans increase the responsiveness of the Banks' loan portfolios to
changes in market interest rates. However, ARM loans generally carry lower
initial interest rates than fixed-rate loans. Accordingly, they may be less
profitable than fixed-rate loans during the initial interest rate period. In
addition, since they are more responsive to changes in market interest rates
than fixed-rate loans, ARM loans can increase the possibility of delinquencies
in periods of high interest rates.
11
The Banks also originate loans secured by mortgages on commercial real
estate and multi-family residential real estate. Since these loans usually are
larger than one-to-four family residential mortgage loans, they generally
involve greater risks than one-to-four family residential mortgage loans. In
addition, since customers' ability to repay those loans often is dependent on
operating and managing those properties successfully, adverse conditions in the
real estate market or the economy generally can impact repayment more severely
than loans secured by one-to-four family residential properties. Moreover, the
commercial real estate business is subject to downturns, overbuilding and local
economic conditions.
The Banks also make construction loans for residences and commercial
buildings, as well as on unimproved property. While these loans also enable the
Banks to increase the interest rate sensitivity of their loan portfolios and
receive higher yields than those obtainable on permanent residential mortgage
loans, the higher yields correspond to the higher risks perceived to be
associated with construction lending. Those include risks associated generally
with loans on the type of property securing the loan. Consistent with industry
practice, the Banks sometimes fund the interest on a construction loan by
including the interest as part of the total loan. Moreover, commercial
construction lending often involves disbursing substantial funds with repayment
dependent largely on the success of the ultimate project instead of the
borrower's or guarantor's ability to repay. Again, adverse conditions in the
real estate market or the economy generally can impact repayment more severely
than loans secured by one-to-four family residential properties.
In the event of slow economic conditions or deterioration in commercial
and real estate markets, we would expect increased nonperforming assets, credit
losses and provisions for loan losses.
A PORTION OF OUR INCOME IS SUBJECT TO MARKET VALUATION RISKS.
A significant portion of the fee income we earn in our private client,
corporate client and asset management businesses is based upon market valuations
of securities we hold for clients. Accordingly, downturns in these valuations
can adversely effect that fee income.
WE FACE INCREASING COMPETITION FOR DEPOSITS, LOANS AND ASSETS UNDER MANAGEMENT.
The Banks compete for deposits, loans and assets under management. Many
of the Banks' competitors are larger and have greater financial resources than
the Banks. These disparities have been accelerated with increasing consolidation
in the financial services industry. Savings banks, savings and loan associations
and commercial banks located in the Banks' principal market areas historically
have provided the most direct competition for deposits. Dealers in government
securities, deposit brokers and credit card, direct and internet based financial
institutions outside of the Banks' principal market areas also provide
competition for deposits. Savings banks, savings and loan associations,
commercial banks, mortgage banking companies, insurance companies and other
institutional lenders provide the principal competition for loans. This
competition can increase the rates the Banks pay to attract deposits and reduce
the interest rates they can charge on loans, and impact the Banks' ability to
retain existing customers and attract new customers.
Banks, trust companies, investment advisers, mutual fund companies and
insurance companies provide the Banks' principal competition for trust and asset
management business.
WE ARE SUBJECT TO REGULATORY RESTRICTIONS.
We and our subsidiaries are subject to a variety of regulatory
restrictions in conducting business by federal and state authorities. These
include restrictions imposed by the Bank Holding Company Act,
12
the Federal Deposit Insurance Act, the Federal Reserve Act, the Home Owners'
Loan Act and a variety of Federal and state consumer protection laws. See
"Supervision and Regulation."
OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW INCLUDE CERTAIN
ANTI-TAKEOVER PROVISIONS.
In addition to the regulations described under "Supervision and
Regulation" below, certain provisions of our certificate of incorporation,
bylaws and Delaware's General Corporation Law could discourage potential
acquisition proposals or delay or prevent a change in control of us. Those
provisions include a classified Board of Directors, special provisions for
notice to us for shareholders to nominate directors and our ability to issue up
to 1 million shares of preferred stock and 150 million shares of common stock.
These authorized but unissued shares provide us desirable flexibility for
possible acquisitions and other corporate purposes, but could also delay or
hinder an unsolicited acquisition of us.
13
RATIO OF EARNINGS TO FIXED CHARGES
The following table describes our consolidated ratios of earnings to
fixed charges for the periods indicated.
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
--------------- -------------------------------
2003 2002 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ---- ----
RATIO OF EARNINGS TO FIXED CHARGES:
Excluding Interest on Deposits.... 8.7x 6.8x 8.3x 4.3x 3.2x 3.4x 3.6x
Including Interest on Deposits.... 2.8x 2.6x 2.8x 1.9x 1.7x 1.7x 1.8x
The ratio of earnings to fixed charges has been computed by dividing
income before income taxes plus fixed charges by fixed charges. Fixed charges,
excluding interest on deposits, consist of interest on indebtedness other than
deposits and the portion of rental expense deemed representative of an interest
factor. Fixed charges, including interest on deposits, consist of both of the
foregoing items plus interest on deposits.
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under a
registration rights agreement we entered into with the initial purchasers of the
outstanding notes. We will not receive proceeds from the issuance of the
exchange notes we are offering. In consideration for issuing the exchange notes
in exchange for outstanding notes as described in this prospectus, we will
receive outstanding notes of like principal amount. The outstanding notes
surrendered in exchange for the exchange notes will be retired and canceled.
Accordingly, the issuance of the exchange notes will not result in any increase
in our outstanding debt.
14
CAPITALIZATION
The following table sets forth our unaudited consolidated
capitalization as of March 31, 2003, on an actual basis and "as adjusted" to
give effect to the issuance and sale of the outstanding notes as if the offering
occurred on March 31, 2003. You should read this summary in conjunction with the
information included in "Selected Financial Data" and our consolidated financial
statements and related notes contained in our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2003 and incorporated by reference in this
prospectus. See "Where You Can Find More Information."
MARCH 31, 2003
----------------------------
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN THOUSANDS)
LONG-TERM DEBT:
Long-term borrowings(1)................................................. $ 35,500 $ 35,500
6.625% subordinated notes due 2008...................................... 125,000 125,000
4.875% subordinated notes due 2013...................................... -- 250,000
--------- ----------
Total long-term debt.................................................. $ 160,500 $ 410,500
========= ==========
STOCKHOLDERS' EQUITY:
Common stock, par value $1.00; authorized 150,000,000 shares;
issued 78,528,346 shares.............................................. $ 78,528 $78,528
Additional paid-in capital.............................................. 49,965 49,965
Retained earnings....................................................... 896,827 896,827
Accumulated other comprehensive income.................................. (1,837) (1,837)
Treasury stock, at cost; 12,823,691 shares.............................. (268,677) (268,677)
--------- ----------
Total stockholders' equity............................................ $ 754,806 $ 754,806
========= ==========
Total long-term debt, capital securities and stockholders' equity.......... $ 915,306 $1,165,306
========= ==========
CAPITAL RATIOS(2):
Tier 1 capital ratio.................................................... 7.11% 7.11%
Risk-adjusted capital ratio............................................. 10.20% 11.92%
Leverage capital ratio.................................................. 6.15% 6.15%
------------------
(1) Consists of advances from the Federal Home Loan Bank.
(2) Capital ratios shown in the "as adjusted" column assume that the
estimated net proceeds of $246,580,000 from the sale of the outstanding
notes are invested in short-term money market instruments.
15
SUPERVISION AND REGULATION
Bank holding companies, banks and thrifts are extensively regulated
under both federal and state law. Below is a summary description of the laws and
regulations that most affect our operations and those of our subsidiaries. This
description is qualified in its entirety by reference to the applicable laws and
regulations.
GENERAL
We are a bank holding company and a thrift holding company, as well as
a financial holding company under the Bank Holding Company Act (the "BHCA"). The
Banks are deposit-taking institutions whose deposits are insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Federal statutes that apply to us
and/or the Banks include the BHCA, the Federal Reserve Act, the Federal Deposit
Insurance Act and the Home Owners' Loan Act. We are regulated by the Delaware
Department of Banking and the Federal Reserve Board (the "FRB"). Our Delaware
bank subsidiary, WTC, is regulated by the Delaware Department of Banking and the
FDIC; our Pennsylvania bank subsidiary, WTPA, is regulated by the Pennsylvania
Department of Banking and the FRB; and our federal savings bank subsidiary with
branches in Maryland and Florida, WTFSB, is regulated by the Office of Thrift
Supervision (the "OTS"). In addition, certain other of our subsidiaries are
regulated by federal and state authorities.
BHCA
Under the BHCA and FRB regulations adopted under the BHCA, the FRB's
approval is required before a bank holding company may acquire "control" of a
bank or before any company may acquire "control" of a bank holding company. The
BHCA defines "control" of a bank to include ownership or the power to vote 25%
or more of any class of a bank's voting stock, the ability to otherwise control
the election of a majority of a bank's directors or the power to exercise a
controlling influence over a bank's management or policies. In addition, the
FRB's prior approval is required for:
- The acquisition by a bank holding company of ownership or
control of more than five percent of the outstanding shares of
any class of voting securities of a bank or a bank holding
company;
- The acquisition by a bank holding company, or any nonbanking
subsidiary of a bank holding company, of all or substantially
all of a bank's assets; or
- The merger or consolidation of bank holding companies.
Accordingly, before obtaining "control" of us, a bank holding company
or other company would need to obtain the FRB's prior approval. Since we are a
savings and loan holding company, the entity also would need to obtain the OTS's
approval.
A bank holding company and its subsidiaries generally may not, with
certain exceptions, engage in, acquire or control voting securities or assets of
a company engaged in any activity other than (1) banking or managing or
controlling banks and other subsidiaries that are engaged in activities
authorized under the BHCA and (2) any activity the FRB determines to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. These include any incidental activities necessary to carry on
those activities. The FRB has approved a lengthy list of activities permissible
for bank holding companies and their non-banking subsidiaries. Those include:
16
- Making, acquiring and servicing loans and other extensions of
credit;
- Performing functions a trust company can perform;
- Acting as an investment or financial advisor;
- Performing certain insurance agency and underwriting
activities directly related to extensions of credit by the
holding company or its subsidiaries and engaging in insurance
agency activities in towns of 5,000 or less;
- Performing appraisals of real estate and tangible and
intangible personal property;
- Acting as an intermediary for the financing of commercial and
industrial income-producing real estate;
- Providing certain securities brokerage services;
- Underwriting and dealing in government obligations and money
market instruments; and
- Providing tax planning and preparation services.
In addition, under the BHCA, a bank holding company that meets certain
qualifications can elect to become a financial holding company. A financial
holding company can engage in the activities permitted generally for bank
holding companies, including the activities listed above, without obtaining the
FRB's approval that would otherwise be required. A financial holding company
also may engage in additional activities not otherwise permitted for a bank
holding company, generally without obtaining the FRB's prior approval. These
additional permitted activities include engaging in, acquiring or controlling a
company engaged in securities underwriting and distribution, merchant banking,
certain insurance agency, brokerage and underwriting activities and other
activities the FRB determines are financial in nature, incidental to a financial
activity or complementary to a financial activity and do not pose a substantial
risk to the company's or the financial system's safety and soundness.
To qualify to become a financial holding company, a bank holding
company's subsidiary depository institutions must all be "well-managed" and
"well-capitalized" and have at least a "satisfactory" rating under the Community
Reinvestment Act (the "CRA"). In 2000, we became a financial holding company.
Our status as a financial holding company should permit greater flexibility in
the future growth of our fee businesses. If any of the Banks fails to meet
applicable capital and management requirements, the FRB may impose any
limitations or conditions it deems appropriate on the activities of us or any of
our subsidiaries, and we could not commence any additional financial holding
company activities without the FRB's approval. If the problem was not corrected
within 180 days after notice from the FRB or such additional time as the FRB
permits, we could be required to cease engaging in the financial holding company
activity or divest ownership of one or more of the Banks.
INTERSTATE BANKING ACT
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Banking Act"), adequately capitalized and managed bank
holding companies are permitted to acquire a bank in any state, subject to
regulatory approval and certain limitations, and regardless of certain state law
restrictions such as reciprocity requirements and regional compacts. States
cannot "opt out" of these interstate acquisition provisions.
In addition, under the Interstate Banking Act, banks located in
different states are allowed to merge, subject to regulatory approval and
certain limitations, as long as neither bank is headquartered in a state that
"opted out" of those provisions.
Under the Interstate Banking Act, states may permit out-of-state banks
to establish new branches within their borders or acquire existing branches
within their borders. Delaware exercised its authority under the Interstate
Banking Act to allow mergers between Delaware banks and out-of-state banks, as
17
well as the opening of new Delaware offices by the resulting institutions.
However, Delaware did not permit out-of-state banks to establish new branches in
Delaware or acquire Delaware branches of other institutions without merging with
them.
SAFETY AND SOUNDNESS LIMITATIONS
As a bank holding company, we are required to conduct our operations in
a safe and sound manner. If the FRB believes an activity of a bank holding
company or control of a nonbank subsidiary, other than a nonbank subsidiary of a
bank, presents a serious risk to the financial safety, soundness or stability of
a subsidiary bank of the bank holding company and is inconsistent with sound
banking practices or the purposes of the BHCA or certain other federal banking
statutes, the FRB may require the bank holding company to terminate the activity
or the holding company's control of the subsidiary.
Under Section 23B of the Federal Reserve Act, each of the Banks may
engage in transactions with its affiliates only on an arms'-length basis. Under
Section 23A of the Federal Reserve Act, each of the Banks is subject to dollar
amount and collateral requirements with respect to loans to its affiliates and
asset purchases from its affiliates. For these purposes, we and the companies we
control, including the Banks, are "affiliates" of the Banks. In addition to
their restrictions on transactions with affiliates, the Federal Reserve Act and
FRB regulations impose dollar amount, credit quality and other limitations on
loans by the Banks to directors, officers and principal shareholders of the
Banks and their subsidiaries and to related interests of those persons.
CAPITAL STANDARDS
The FRB and the other federal banking agencies have adopted
"risk-based" capital standards to assist in assessing the capital adequacy of
bank holding companies and banks under those agencies' jurisdiction. Those
risk-based capital standards include both a definition of capital and a
framework for calculating "risk-weighted" assets. For this purpose, a bank's
risk-weighted assets include both its assets and off-balance sheet items, such
as loan commitments and standby letters of credit, and each asset and
off-balance sheet item is assigned a risk weight. An institution's risk-based
capital ratio is calculated by dividing its qualifying capital by its
risk-weighted assets. At least one-half of risk-based capital must consist of
Tier 1 capital (generally including common stockholders' equity, qualifying
cumulative and noncumulative perpetual preferred stock and minority interests in
consolidated subsidiaries). The FRB also adopted minimum leverage ratios of
"Tier 1" capital to total assets. At March 31, 2003, we and the Banks were all
well-capitalized, with capital levels in excess of applicable risk-based and
leverage thresholds.
FDIC INSURANCE AND REGULATION
The FDIC insures deposits in the Banks up to applicable limits. None of
the Banks is currently required to pay premiums for FDIC insurance coverage.
The FDIC and the other federal banking agencies may impose a variety of
sanctions if we or one of the Banks does not operate in accordance with
applicable laws, regulations, policies or directives. These include instituting
cease-and-desist proceedings, assessing civil monetary penalties and removing
officers. In addition, the FDIC has the authority to terminate deposit insurance
coverage, after notice and hearing, if it determines that an insured
deposit-taking institution is engaged in an unsafe or unsound practice that has
not been corrected, is in an unsafe or unsound condition to continue operation,
or has violated any law, regulation, rule or order of, or condition imposed by,
the FDIC. We are not aware of any past or current practice, condition or
violation that might lead to termination of the deposit insurance
18
coverage of any of the Banks or any proceeding against us, any of the Banks or
any of their respective directors, officers or staff members.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"Improvement Act") requires annual on-site examinations of insured depository
institutions, and authorizes the appropriate federal banking agency to take
prompt corrective action to resolve an institution's problems. The nature and
extent of the corrective action depends primarily on the institution's capital
level. While the Banks are all well-capitalized, if any of them became
undercapitalized, remedies available to the appropriate federal banking agency
would include:
- Requiring recapitalization or a capital restoration plan;
- Restricting transactions with affiliates;
- Restricting interest rates, asset growth, activities and
investments in subsidiaries; and
- Ordering a new election of directors, dismissing directors or
senior executive officers and requiring the employment of
qualified senior executive officers.
In any such event, we could be required to guarantee compliance with
the Bank's capital restoration plan and provide assurance of performance under
the plan.
DIVIDEND LIMITATIONS
The FRB's policy generally is that banks and bank holding companies
should not pay dividends unless the institution's prospective earnings retention
rate is consistent with its capital needs, asset quality and overall financial
condition. FRB policy also is that bank holding companies should be a source of
managerial and financial strength to their subsidiary banks. Accordingly, the
FRB believes that those subsidiary banks should not be compromised by a level of
cash dividends that places undue pressure on their capital.
The FDIC can prohibit a bank from paying dividends if it believes the
dividend payment would constitute an unsafe or unsound practice. Federal law
also prohibits dividend payments that would result in a bank failing to meet its
applicable capital requirements. Delaware law restricts WTC from declaring
dividends that would impair its stated capital.
OTS regulations limit capital distributions by WTFSB. Under OTS
regulations, WTFSB must give notice to the OTS at least 30 days before a
proposed capital distribution and must file an application with the OTS if the
proposed distribution plus prior distributions in the same calendar year would
exceed the sum of (1) 100% of its net income to date during the calendar year
plus (2) its retained net income for the preceding two years, of if the proposed
distribution would not leave WTFSB at least adequately capitalized.
OTHER LAWS AND REGULATIONS
The lending and deposit-taking activities of the Banks are subject to a
variety of federal and state consumer protection laws, including:
- The Truth-in-Lending Act (which principally mandates certain
disclosures in connection with loans made for personal, family
or household purposes and imposes substantive restrictions
with respect to home equity lines of credit);
- The Truth-in-Savings Act (which principally mandates certain
disclosures in connection with deposit-taking activities);
19
- The Equal Credit Opportunity Act (which prohibits
discrimination in all aspects of credit-granting and requires
notice of adverse action to persons denied credit);
- The Fair Credit Reporting Act (which requires a lender to
disclose the name and address of a credit bureau that has
provided a report that resulted in a denial of credit and
imposes requirements in connection with pre-screened offers of
credit and the sharing of information with affiliates and
third parties);
- The Real Estate Settlement Procedures Act (which requires
residential mortgage lenders to provide loan applicants with
closing cost information and prohibits referral fees in
connection with loans and other real estate settlement
services);
- The Electronic Funds Transfer Act (which requires certain
disclosures in connection with electronic funds transactions);
and
- The Expedited Funds Availability Act (which requires that
deposited funds be made available for withdrawal in accordance
with a prescribed schedule that must be disclosed to
customers).
Under the CRA and the Fair Housing Act, depository institutions are
prohibited from certain discriminatory practices that limit or withhold services
to individuals residing in economically depressed areas. In addition, the CRA
imposes certain affirmative obligations to provide lending and other financial
services to those individuals. CRA performance is considered by all of the
federal banking agencies in reviewing applications to relocate an office, merge,
acquire a financial institution or establish new branch or deposit facilities.
Federal legislation has permanently pre-empted all state usury laws on
residential first mortgage loans made by insured depository institutions in any
state that did not override that preemption. Although some states overrode that
preemption, Delaware, Florida, Maryland and Pennsylvania did not. Accordingly,
there is currently no limit on the interest rate the Banks can charge on such
loans governed by the laws of those states. In addition, the usury limitations
of the Banks' respective home states apply to all other loans the Banks offer
nationwide. In today's interest rate environment, those usury laws do not
materially affect the Banks' lending programs.
DELAWARE LAW
The state of Delaware is generally regarded as a premier jurisdiction
in the United States for corporate and trust matters. This reputation stems from
the favorable legal and tax environment established by the Delaware legislature
and the 200-year case law history of the state's Chancery Court system, which
has jurisdiction over corporate and trust matters. In general, trusts governed
by Delaware law can be administered more flexibly, more economically, for longer
periods of time, with a greater degree of protection from creditors and with a
greater degree of confidentiality than is available in many other states.
More corporations are incorporated in Delaware than in any other state
in the country. Many Fortune 500 companies are headquartered in Delaware,
especially those in the pharmaceutical, life sciences, chemical and financial
services industries. The presence of these companies and the favorable legal and
tax environment historically have contributed to Wilmington Trust's and WTC's
operating results.
While in recent years several states, including Nevada and Alaska, have
implemented advantageous legal and tax provisions similar to those available in
Delaware, Delaware continues to provide a spectrum of advantages for corporate
and trust matters that is widely regarded as unparalleled in any other state.
20
DESCRIPTION OF EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the outstanding notes, we entered into a
registration rights agreement with the initial purchasers of those notes,
pursuant to which we agreed to file and to use our reasonable best efforts to
cause to be declared effective by the SEC a registration statement with respect
to the exchange of the outstanding notes for the exchange notes. See
"Registration Rights." We are making this exchange offer to fulfill our
contractual obligations under that agreement. A copy of the registration rights
agreement has been filed as an exhibit to the registration statement of which
this prospectus is a part.
Pursuant to the exchange offer, we will issue the exchange notes in
exchange for outstanding notes. The form and terms of the exchange notes are
substantially the same as the form and terms of the outstanding notes, except
that the exchange notes (1) will have been registered under the Securities Act
and therefore will not be subject to the restrictions on transfer (and related
legends) applicable to the outstanding notes and (2) will not contain
registration rights or provide for any increase in the interest rate related to
our failure to fulfill our obligations under the registration rights agreement
to register the outstanding notes and complete the exchange offer. The exchange
notes will evidence the same debt as the outstanding notes and will be issued
under and entitled to the benefits of the same indenture under which the
outstanding notes were issued. See "Description of the Exchange Notes" for more
information on the terms of the exchange notes.
We are not making the exchange offer to, and will not accept tenders
for exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities and blue sky laws of that jurisdiction. When we refer to a "holder"
with respect to the exchange offer, unless the context otherwise requires, we
refer to any person in whose name the outstanding notes are registered on our
books, any other person who has obtained a properly completed bond power from
the registered holder or any person whose outstanding notes are held of record
by The Depository Trust Company ("DTC"), the book-entry transfer facility for
the notes, who desires to deliver such outstanding notes by book-entry transfer
at DTC.
We make no recommendation to the holders of outstanding notes as to
whether to tender or refrain from tendering all or any portion of their
outstanding notes pursuant to the exchange offer. In addition, no one has been
authorized to make any such recommendation. Holders of outstanding notes must
make their own decision whether and what aggregate amount of outstanding notes
to tender pursuant to the exchange offer, after reading this entire prospectus
(including the section entitled "Risk Factors" and the documents incorporated by
reference in this prospectus) and the letter of transmittal that has been filed
as an exhibit to the registration statement of which this prospectus is a part.
Holders are urged to consult their financial and tax advisors in making their
own decision on what action to take.
TERMS OF THE EXCHANGE
Upon the terms and conditions described in this prospectus and in the
accompanying letter of transmittal, which together constitute the exchange
offer, we will accept for exchange outstanding notes that are properly tendered
and not withdrawn on or prior to the expiration date. As of the date of this
prospectus, $250,000,000 aggregate principal amount of the outstanding notes is
outstanding, all of which are registered in the name of Cede & Co., as nominee
for DTC. This prospectus, together with the letter of transmittal, is first
being sent on or about August 1, 2003, to all holders of outstanding notes
known to us. There will be no fixed record date for determining registered
holders of outstanding notes entitled
21
to participate in the exchange offer. Outstanding notes tendered in the exchange
offer must be in denominations of principal amount of $1,000 and any integral
multiple of that amount.
Our acceptance of a tender of outstanding notes by a tendering holder
will form a binding agreement between the tendering holder and us upon the terms
and subject to the conditions provided in this prospectus and in the
accompanying letter of transmittal.
EXPIRATION, EXTENSION AND AMENDMENT
The exchange offer will expire at 5:00 p.m., New York City Time, on
September 12, 2003. However, we may, in our sole discretion, extend the period
of time for which the exchange offer is open and set a later expiration date.
The term "expiration date" as used in this prospectus means the latest time and
date to which we extend the exchange offer. If we decide to extend the exchange
offer period, we will then delay acceptance of any outstanding notes by giving
oral or written notice of the extension to the exchange agent. During any
extension period, all outstanding notes previously tendered will remain subject
to the exchange offer and may be accepted for exchange by us. Any outstanding
notes not accepted for exchange will be returned to the tendering holder after
the expiration or termination of the exchange offer.
Our obligation to accept outstanding notes for exchange in the exchange
offer is subject to the conditions described below under "--Conditions to the
Exchange Offer." We may decide to waive any of those conditions in our
discretion. Furthermore, we reserve the right to amend or terminate the exchange
offer, and not to accept for exchange any outstanding notes not previously
accepted for exchange, upon the occurrence of any of the conditions of the
exchange offer specified under that heading below. We will give oral or written
notice of any extension, amendment, non-acceptance or termination to the
exchange agent as promptly as practicable. If we change the terms of the
exchange offer in a manner that we determine constitutes a material change, we
will promptly disclose that amendment by means of a prospectus supplement that
will be distributed to the registered holders of the outstanding notes. If the
change is made less than five business days before the expiration date of the
exchange offer, we will extend the offer so that holders will have at least five
business days to tender. We will notify holders of any extension by means of a
press release or other public announcement no later than 9:00 a.m., New York
City time, on the first business day after the previously scheduled expiration
date.
PROCEDURES FOR TENDERING
Valid Tender
Except as described below, a tendering holder must, prior to the
expiration date, transmit to Wells Fargo Bank Minnesota, National Association,
the exchange agent, at the address listed under the heading "--Exchange Agent":
- a properly completed and duly executed letter of transmittal,
including all other documents required by the letter of
transmittal; or
- if notes are tendered in accordance with the book-entry
procedures listed below, an agent's message in lieu of the
letter of transmittal.
In addition, either:
22
- the exchange agent must receive outstanding notes along with
the letter of transmittal; or
- the exchange agent must receive, before expiration date of the
exchange offer, a timely confirmation of book-entry transfer
of the outstanding notes into the exchange agent's account at
DTC according to the procedure for book-entry transfer
described below; or
- the holder must comply with the guaranteed delivery procedures
described below.
The term "agent's message" means a message, transmitted to the exchange
agent's account at DTC and received by the exchange agent and forming a part of
a book-entry confirmation, that states that DTC has received an express
acknowledgment that the tendering holder agrees to be bound by the letter of
transmittal and that we may enforce the letter of transmittal against this
holder.
If the letter of transmittal is signed by a person other than the
registered holder of outstanding notes, the outstanding notes must be endorsed
or accompanied by a properly completed bond power. The bond power must be signed
by the registered holder exactly as the name of the registered holder appears on
the outstanding notes, and an "eligible institution" (as defined below) must
guarantee the signature.
If the letter of transmittal or any outstanding notes or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, those persons should so indicate when signing. Unless
waived by us, proper evidence satisfactory to us of their authority to so act
must be submitted.
By tendering, each holder will represent to us that (1) the exchange
notes are being acquired in the ordinary course of business of the person
receiving the exchange notes, whether or not that person is the holder, (2)
neither the holder nor the other person has any arrangement or understanding
with any person to participate in the distribution (within the meaning of the
Securities Act) of the exchange notes, (3) the holder is not an "affiliate" (as
defined in Rule 405 of the Securities Act) of Wilmington Trust Corporation or,
if it is such an affiliate, that it understands and acknowledges that the
exchange notes may not be offered for resale, resold or otherwise transferred by
it without registration under, or an exemption from, the Securities Act, (4) the
holder, if not a broker-dealer, is not engaged in and does not intend to engage
in a distribution of the exchange notes, (5) the holder, if a broker-dealer, is
receiving exchange notes for its own account in exchange for outstanding notes
that were acquired as a result of market-making activities or other trading
activities, and (6) the holder is not acting on behalf of any person who could
not truthfully make the foregoing representations.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes, where such outstanding notes were acquired by
the broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such registered notes. The letter of transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of exchange notes
received in exchange for outstanding notes where such outstanding notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. We have agreed that, starting on the expiration date and
ending on the close of business 210 days after the expiration date, we will make
this prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
The method of delivery of outstanding notes, letters of transmittal and
all other required documents is at your election and risk. If the delivery is by
mail, we recommend that you use registered mail, properly insured, with return
receipt requested. In all cases, you should allow sufficient time to assure
timely delivery. You should not send letters of transmittal or outstanding notes
to us.
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If you are a beneficial owner whose outstanding notes are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee,
and wish to tender, you should promptly instruct the registered holder to tender
on your behalf. Any registered holder that is a participant in DTC's book-entry
transfer facility system may make book-entry delivery of the outstanding notes
by causing DTC to transfer the outstanding notes into the exchange agent's
account.
Signature Guarantees
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed, unless the outstanding notes surrendered for exchange are tendered:
- by a registered holder of the outstanding notes who has not
completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the letter of transmittal,
or
- for the account of an "eligible institution."
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantees must be by an "eligible institution."
An "eligible institution" is a financial institution, including most banks,
savings and loan associations and brokerage houses, that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program.
Book-Entry Transfer
The exchange agent will make a request to establish an account for the
outstanding notes at DTC for purposes of the exchange offer promptly after the
date of this prospectus. Any financial institution that is a participant in
DTC's systems must make book-entry delivery of outstanding notes by causing DTC
to transfer those outstanding notes into the exchange agent's account at DTC in
accordance with DTC's procedure for transfer. The participant should transmit
its acceptance to DTC at or prior to the expiration date or comply with the
guaranteed delivery procedures described below. DTC will verify this acceptance,
execute a book-entry transfer of the tendered outstanding notes into the
exchange agent's account at DTC and then send to the exchange agent confirmation
of this book-entry transfer. The confirmation of this book-entry transfer will
include an agent's message confirming that DTC has received an express
acknowledgment from the participant that the participant has received and agrees
to be bound by the letter of transmittal and that we may enforce the letter of
transmittal against that participant.
Delivery of exchange notes issued in the exchange offer may be effected
through book-entry transfer at DTC. However, the letter of transmittal or
facsimile of it or an agent's message, with any required signature guarantees
and any other required documents, must be transmitted to and received by the
exchange agent at the address listed under "--Exchange Agent" at or prior to the
expiration date. Holders of outstanding notes who are unable to deliver
confirmation of the book-entry tender of their outstanding notes into the
exchange agent's account at DTC or all documents required by the letter of
transmittal to the exchange agent on or prior to the expiration date must tender
their outstanding notes according to the guaranteed delivery procedures
described below.
Delivery of documents to DTC in accordance with DTC's procedures does
not constitute delivery to the exchange agent.
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Guaranteed Delivery
If a registered holder of outstanding notes desires to tender the
outstanding notes, and the outstanding notes are not immediately available, or
time will not permit the holder's outstanding notes or the letter of transmittal
or other required documents to reach the exchange agent before the expiration
date, or the procedure for book-entry transfer described above cannot be
completed on a timely basis, a tender may nonetheless be made if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent received from
an eligible institution a properly completed and duly executed
notice of guaranteed delivery, substantially in the form
provided by us, by facsimile transmission, mail or hand
delivery:
- stating the name and address of the holder of
outstanding notes and the amount of outstanding notes
tendered,
- stating that the tender is being made, and
- guaranteeing that within three New York Stock Exchange
trading days after the expiration date, the certificates
for all physically tendered outstanding notes, in proper
form for transfer, or a book-entry confirmation, as the
case may be, and a properly completed and duly executed
letter of transmittal, or an agent's message, and any
other documents required by the letter of transmittal will
be deposited by the eligible institution with the exchange
agent; and
- the certificates for all physically tendered outstanding
notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and a properly completed and
duly executed letter of transmittal, or an agent's message,
and all other documents required by the letter of transmittal,
are received by the exchange agent within three New York Stock
Exchange trading days after the expiration date.
DETERMINATION OF VALIDITY
We will determine in our sole discretion all questions as to the
validity, form and eligibility of outstanding notes tendered for exchange. This
discretion extends to the determination of all questions concerning the timing
of receipt, acceptance and withdrawal of tenders. These determinations will be
final and binding. We reserve the right to reject any particular outstanding
note not properly tendered or of which our acceptance might, in our judgment, be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of the exchange offer as to any particular outstanding note either
before or after the expiration date, including the right to waive the
ineligibility of any tendering holder. Our interpretation of the terms and
conditions of the exchange offer as to any particular outstanding note, either
before or after the expiration date, including the letter of transmittal and the
instructions to the letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of outstanding notes must be cured within such time as we determine.
Neither we, the exchange agent nor any other person will be under any
duty to give notification of any defect or irregularity in any tender of
outstanding notes. Moreover, neither we, the exchange agent nor any other person
will incur any liability for failing to give notification of any defect or
irregularity.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; ISSUANCE OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the exchange offer, we
will accept, promptly after the expiration date, all outstanding notes properly
tendered and not withdrawn. We will issue the exchange notes promptly after
acceptance of the outstanding notes. For purposes of the exchange offer, we will
be deemed to have accepted properly tendered outstanding notes for exchange
when, as and if we
25
have given oral or written notice to the exchange agent, with prompt written
confirmation of any oral notice.
In all cases, issuance of exchange notes for outstanding notes will be
made only after timely receipt by the exchange agent of:
- certificates for the outstanding notes or a timely book-entry
confirmation of the outstanding notes into the exchange
agent's account at DTC;
- a properly completed and duly executed letter of transmittal
or an agent's message; and
- any other required documents.
For each outstanding note accepted for exchange, the holder of the
outstanding note will receive an exchange note having a principal amount equal
to that of the surrendered outstanding note. Unaccepted or non-exchanged
outstanding notes will be returned without expense to the tendering holder of
the outstanding notes. Unaccepted or non-exchanged outstanding notes tendered by
book-entry transfer will be credited to an account maintained with DTC as
promptly as practicable after the expiration or termination of the exchange
offer.
INTEREST PAYMENTS ON THE EXCHANGE NOTES
The exchange notes will bear interest from the most recent date to
which interest has been paid on the outstanding notes exchanged therefor or, if
no interest has been paid on such outstanding notes, from April 4, 2003.
Accordingly, registered holders of exchange notes on the relevant record date
for the first interest payment date following the consummation of the exchange
offer will receive interest accruing from the most recent date on which interest
has been paid or, if no interest has been paid, from April 4, 2003. Outstanding
notes accepted for exchange will cease to accrue interest from and after that
date. Holders of outstanding notes whose outstanding notes are accepted for
exchange will not receive any payment in respect of accrued interest on those
outstanding notes.
WITHDRAWAL RIGHTS
Tenders of outstanding notes may be withdrawn at any time prior to the
expiration date of the exchange offer.
For a withdrawal to be effective, the exchange agent must receive a
written notice of withdrawal at the address or, in the case of eligible
institutions, at the facsimile number, indicated under "--Exchange Agent" prior
to the expiration date of the exchange offer. Any notice of withdrawal must:
- specify the name of the person, which we refer to as the
"depositor," having tendered the outstanding notes to be
withdrawn;
- identify the outstanding notes to be withdrawn, including the
certificate number or numbers and principal amount of the
outstanding notes;
- contain a statement that the holder is withdrawing its
election to have the outstanding notes exchanged;
- be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the
outstanding notes were tendered, including any required
signature guarantees, or be accompanied by documents of
transfer to have the trustee with respect to the outstanding
notes register the transfer of the outstanding notes in the
name of the person withdrawing the tender; and
- specify the name in which the outstanding notes are
registered, if different from that of the depositor.
26
If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of those
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution, unless this holder is an
eligible institution. If outstanding notes have been tendered in accordance with
the procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawn outstanding notes and otherwise comply with DTC's procedures.
Any outstanding notes properly withdrawn will be deemed not to have
been validly tendered for exchange. Exchange notes will not be issued in
exchange unless the outstanding notes so withdrawn are validly re-tendered.
Properly withdrawn outstanding notes may be re-tendered by following the
procedures described under "--Procedures for Tendering" above at any time on or
prior to the expiration date.
We will determine all questions as to the validity, form and
eligibility, including time of receipt, of notices of withdrawal, and our
determination will be final and binding on all parties.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, or any
extension of the exchange offer, we will not be required to accept for exchange,
or to exchange, any outstanding notes for any exchange notes, and, as described
below, may terminate the exchange offer, whether or not any outstanding notes
have been accepted for exchange, or may waive any of the conditions to or amend
the exchange offer, if any of the following conditions has occurred or exists:
- the exchange notes to be received will not be tradable by the
holder without restriction under the Securities Act and the
Exchange Act and without material restrictions under the
securities or blue sky laws of substantially all of the states
of the United States;
- the exchange offer, or the making of an exchange by a holder
of outstanding notes, violates any applicable law or any
applicable interpretation of the staff of the SEC; or
- any action or proceeding has been instituted or threatened in
any court or by or before any governmental agency with respect
to the exchange offer which, in our judgment, would reasonably
be expected to impair our ability to proceed with the exchange
offer.
In addition, we will not be obligated to accept for exchange
outstanding notes of any holder that has not made to us:
- the representations described under "Procedures for Tendering"
and in the letter of transmittal; and
- any other representations that may be reasonably necessary
under applicable SEC rules, regulations or interpretations to
make available to us an appropriate form for registration of
the exchange notes under the Securities Act.
If we determine in our sole discretion that any of the foregoing events
or conditions has occurred or exists, we may, subject to applicable law,
terminate the exchange offer, whether or not any outstanding notes have been
accepted for exchange, or may waive either that condition or otherwise amend the
terms of the exchange offer in any respect. See "--Expiration, Extension and
Amendment" above.
27
EXCHANGE AGENT
We have appointed Wells Fargo Bank Minnesota, National Association as
the exchange agent for the exchange offer. Delivery of the letters of
transmittal and any other required documents, and all questions and requests for
assistance relating to the exchange offer, should be directed to the exchange
agent as follows:
By Registered or By Regular Mail or By Hand: By Facsimile
Certified Mail: Overnight Courier: (Eligible Institutions
only):
Wells Fargo Bank Wells Fargo Bank
Minnesota, Wells Fargo Bank Minnesota,
National Association Minnesota, National Association 612-667-4927
MAC #N9303-121 National Association Corporate Trust Attn: Specialized Finance
Corporate Trust MAC #N9303-121 Operations
Operations Corporate Trust 12th Floor Confirm by Telephone:
P.O. Box 1517 Operations 608 Second Avenue 800-344-5128
Minneapolis, MN 6th & Marquette Avenues South
55480-1517 Minneapolis, MN 55479 Minneapolis, MN 55402
Delivery of the letter of transmittal to an address other than as set
forth above or transmission via facsimile other than as set forth above does not
constitute a valid delivery of the letter of transmittal.
FEES AND EXPENSES
The principal solicitation is being made by mail by Wells Fargo Bank
Minnesota, National Association, as exchange agent; however, additional
solicitations may be made by telegraph, facsimile transmission, telephone or in
person by our officers and regular employees or those of our affiliates. We will
pay the exchange agent customary fees for its services, reimburse the exchange
agent for its reasonable out-of-pocket expenses incurred in connection with the
provision of these services and pay other registration expenses, including fees
and expenses of the trustee under the indenture relating to the exchange notes,
filing fees, blue sky fees, accounting and legal fees and printing and
distribution expenses.
TRANSFER TAXES
Holders who tender their outstanding notes for exchange will not be
obligated to pay any transfer taxes on the exchange. If, however, exchange notes
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of the outstanding notes tendered, or if a transfer
tax is imposed for any reason other than the exchange of outstanding notes in
connection with the exchange offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of those taxes or
exemption therefrom is not submitted with the letter of transmittal, the amount
of those transfer taxes will be billed directly to that tendering holder.
ACCOUNTING TREATMENT
We will record the exchange notes in our accounting records at the same
carrying value as the outstanding notes, which is the aggregate principal
amount, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes in
connection with the exchange offer. We will record the expenses of the exchange
offer as incurred.
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REPURCHASE OF OUTSTANDING NOTES
We may in the future seek to acquire untendered outstanding notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. However, we have no present plans to acquire any
outstanding notes that are not tendered in the exchange offer.
29
DESCRIPTION OF EXCHANGE NOTES
We will issue the exchange notes under the same indenture, dated as of
May 4, 1998 between us and Norwest Bank Minnesota, National Association (now
Wells Fargo Bank Minnesota, National Association), as trustee, under which the
outstanding notes were issued. The following describes the general terms and
provisions of the exchange notes. The following description of the exchange
notes is not complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the indenture. We urge you to read the
indenture because it, and not this description, defines your rights as a holder
of the exchange notes. A copy of the indenture may be obtained from us upon
request. In this "Description of Exchange Notes," unless indicated otherwise,
all references to "Wilmington Trust Corporation," "we," "us" and "our" are only
to Wilmington Trust Corporation and not to any of its subsidiaries.
GENERAL
The exchange notes initially will be limited to $250 million in
aggregate principal amount and will mature on April 15, 2013. The exchange notes
will bear interest at the rate of 4.875% per annum from April 4, 2003, payable
semiannually in arrears on April 15 and October 15 of each year, commencing
October 15, 2003, to the persons in whose names the exchange notes are
registered at the close of business on the preceding April 1 or October 1, as
the case may be. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. The exchange notes may not be redeemed prior
to their stated maturity and will not be subject to any sinking fund.
We may, from time to time, without notice to or the consent of the
registered holders of the exchange notes, create and issue additional notes
ranking pari passu with the exchange notes in all respects, or in all respects
except for the payment of interest accruing prior to the issue date of the
additional notes or except for the first payment of interest following the issue
date of the additional notes. The additional notes may be consolidated and form
a single series with the exchange notes and have the same terms as the exchange
notes as to status, redemption or otherwise.
The indenture does not limit the aggregate principal amount of notes
which may be issued thereunder and provides that notes of any series may be
issued thereunder up to the aggregate principal amount that we may authorize
from time to time. In addition to the outstanding notes, we have previously
issued and have outstanding $125 million in aggregate principal amount of 6.625%
subordinated notes due 2008 under the indenture. Those notes will rank pari
passu with the exchange notes offered hereby. Neither the indenture nor the
exchange notes limits or otherwise restricts the amount of other indebtedness
that may be incurred or the other securities that may be issued by us or any of
our subsidiaries.
Because we are a holding company, our rights and the rights of our
creditors, including the holders of the exchange notes offered hereby, to
participate in the distribution of the assets of any of our subsidiaries upon
its liquidation or reorganization will be subject to the prior claims of those
subsidiaries' creditors, except to the extent that we may ourselves be a
creditor with recognized claims against such subsidiary.
DELIVERY AND FORM
The exchange notes initially will be represented by a global note
deposited with the Depository Trust Company, or DTC, and registered in the name
of DTC's nominee, Cede & Co., or held in the custody of the trustee pursuant to
an agreement between DTC and the trustee. The global note may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another
30
nominee of DTC or by DTC or any nominee of DTC to a successor depositary or any
nominee of that successor.
Interests in the exchange notes will be available for purchase in
denominations of $1,000 and integral multiples thereof in book-entry form only.
Unless and until certificated notes are issued under the limited circumstances
described below, no beneficial owner of an exchange note will be entitled to
receive a definitive certificate representing an exchange note. As long as DTC
or any successor depositary or its nominee is the registered holder of the
global note, DTC, the depositary or the nominee, as the case may be, will be
considered to be the sole owner or holder of the exchange notes for all purposes
of the indenture.
BOOK-ENTRY SYSTEM
The following description of the operations and procedures of DTC is
provided as a matter of convenience. Neither we nor the initial purchasers take
any responsibility for these operations or procedures, which are solely within
the control of DTC and are subject to change from time to time. The information
in the section concerning DTC has been taken from sources that we believe to be
reliable, but we take no responsibility for its accuracy. Investors are urged to
contact DTC or its participants directly to discuss these matters.
DTC will act as securities depository for the exchange notes. The
exchange notes will be issued as one fully-registered certificate registered in
the name of Cede & Co. (DTC's partnership nominee) or such other name as an
authorized representative of DTC may request.
DTC, the world's largest depository, is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds and provides asset
servicing for over two million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments from over 85
countries that DTC's participants ("direct participants") deposit with DTC. DTC
also facilitates the post-trade settlement among direct participants of sales
and other securities transactions in deposited securities through electronic
computerized book-entry transfers and pledges between direct participants'
accounts. This eliminates the need for physical movement of securities
certificates. Direct participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of direct
participants of DTC and members of the National Securities Clearing Corporation,
Government Securities Clearing Corporation, MBS Clearing Corporation and
Emerging Markets Clearing Corporation ("NSCC," "GSCC," "MBSCC" and "EMCC," also
subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the
American Stock Exchange LLC and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others, such as both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies and clearing
corporations that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly ("indirect participants"). DTC
has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its
direct participants are on file with the Securities and Exchange Commission.
More information about DTC can be found at www.dtcc.com.
Purchases of exchange notes under the DTC system must be made by or
through direct participants, which will receive a credit for the exchange notes
on DTC's records. The ownership interest of each actual purchaser or beneficial
owner of each exchange note is in turn to be recorded on the
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records of direct participants or indirect participants. Beneficial owners will
not receive written confirmation from DTC of their purchases. Beneficial owners
are, however, expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the direct
participant or indirect participant through which the beneficial owner entered
into the transaction. Transfers of ownership interests in the exchange notes are
to be accomplished by entries made on the books of direct participants and
indirect participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in exchange
notes, except in the event that use of the book-entry system for the exchange
notes is discontinued.
To facilitate subsequent transfers, all exchange notes deposited by
direct participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of exchange notes with DTC and their
registration in the name of Cede & Co. or such other DTC nominee do not effect
any change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the exchange notes; DTC's records reflect only the identity
of the direct participants to whose accounts those exchange notes are credited,
which may or may not be the beneficial owners. The direct participants and the
indirect participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Beneficial owners of exchange notes may wish
to take certain steps to augment the transmission to them of notices of
significant events with respect to the exchange notes such as redemptions,
tenders, defaults, proposed amendments to the exchange note documents and the
exchange offer. For example, beneficial owners of exchange notes may wish to
ascertain that the nominee holding the exchange notes for their benefit has
agreed to obtain and transmit notices to beneficial owners. In the alternative,
beneficial owners may wish to provide their names and addresses to the registrar
and request that copies of notices be provided directly to them.
Neither DTC, Cede & Co. nor any other DTC nominee will consent or vote
with respect to exchange notes unless authorized by a direct participant in
accordance with DTC's procedures. Under its usual procedures, DTC would mail an
omnibus proxy to us as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants to
whose accounts exchange notes are credited on the record date as identified in a
listing attached to the omnibus proxy.
Redemption proceeds, distributions and dividend payments on the
exchange notes will be made to Cede & Co. or another nominee as an authorized
representative of DTC may request. DTC's practice is to credit direct
participants' accounts upon DTC's receipt of funds and corresponding detail
information from an agent or us on the payment date in accordance with their
respective holdings shown on DTC's records. Payments by direct participants and
indirect participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of those direct participants or indirect participants
and not of DTC or its nominee, agent or us, subject to any statutory or
regulatory requirements that may be in effect from time to time. Payment of
redemption proceeds, distributions and dividend payments to Cede & Co. (or
another nominee as an authorized representative of DTC may request) is the
responsibility of the agent or us, disbursement of those payments to direct
participants will be the responsibility of DTC and disbursement of those
payments to the beneficial owners will be the responsibility of direct
participants and indirect participants.
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DTC may discontinue providing its services as depository with respect
to the exchange notes at any time by giving reasonable notice to the agent or
us. Under these circumstances, if a successor depository is not obtained, note
certificates are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC or a successor securities depository. In that event, note
certificates will be printed and delivered.
CONSOLIDATION, MERGER OR SALE OF ASSETS
The indenture provides that we may, without the consent of the holders
of any of the notes outstanding under the indenture, consolidate with, merge
into or transfer our assets substantially as an entirety to any person or
entity, provided that:
- Any successor expressly assumes our obligations on the notes
and under the indenture;
- After giving effect to the transaction (and after the lapse of
time or notice or both), no Default (as defined in the
indenture) has happened and is continuing; and
- Certain other conditions under the indenture are met.
Accordingly, any such consolidation, merger or transfer of assets substantially
as an entirety that meets the conditions described above would not create any
Default which would entitle holders of the exchange notes, or the trustee on
their behalf, to take any of the actions described below under "-- Events of
Default, Defaults, Waivers, Etc."
The indenture and the exchange notes do not contain provisions that
would protect holders of the exchange notes in the event of a highly leveraged
or other transaction involving us which could adversely affect the holders of
the exchange notes.
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
The indenture provides that, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding notes of
each affected series, additions or changes to the indenture may be made that
modify the rights of the holders of those notes; provided that no such addition
or change may be made without the consent of the holder of each note so affected
that would:
- Change the maturity of the principal of, or of any installment
of interest or any premium on, any note issued pursuant to the
indenture;
- Reduce the principal amount of or any premium on or the
minimum rate of interest on any note issued pursuant to the
indenture;
- Reduce the amount of principal of an original issue discount
note that would be due and payable upon acceleration of the
maturity of any note issued pursuant to the indenture;
- Change the method of calculating interest or the currency of
payment of principal or interest or any premium if any on any
note issued pursuant to the indenture;
- Impair the right to institute suit for the enforcement of any
payment on or with respect to any note issued pursuant to the
indenture; or
- Reduce the percentage in principal amount of outstanding notes
required to modify, alter or waive certain results under the
indenture.
SUBORDINATION
The exchange notes will be unsecured and subordinated and junior in
right of payment to our obligations to the holders of senior indebtedness (as
defined below) and our general obligations (as
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defined below). At March 31, 2003, we had $36,427,165 of general obligations
(including $927,165 of deferred directors' fees) and no senior indebtedness
outstanding. The indenture does not prohibit or limit the incurrence of senior
indebtedness or general obligations, including senior indebtedness or general
obligations with respect to our subsidiaries.
It is our intent that the exchange notes will be treated as capital in
calculating regulatory capital ratios. The FRB has issued interpretations of its
capital regulations generally providing, among other things, that subordinated
debt of bank holding companies is includable in capital in calculating
regulatory capital ratios only if the subordination of the debt meets certain
criteria and the debt may be accelerated only for bankruptcy, insolvency and
similar matters. The indenture contains subordination and acceleration
provisions for the exchange notes that are intended to be consistent with the
FRB's interpretations.
If any distribution of our assets occurs upon any dissolution, winding
up, liquidation or reorganization, any holders of senior indebtedness will be
entitled to receive payment in full of all amounts due or to become due before
the holders of any of the notes will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest on any of the notes.
If, after any such payment or distribution of assets there remain, after giving
effect to the subordination provisions in favor of the holders of senior
indebtedness, any amounts of cash, property or securities available for payment
or distribution in respect of any of the notes and if, at that time, any
creditors in respect of general obligations have not received payment in full of
all amounts due or to become due on or in respect of those general obligations,
then those excess proceeds will first be applied to pay or provide for the
payment in full of those general obligations before any payment or distribution
may be made in respect of any of the notes.
In addition, no payment may be made of the principal of, premium, if
any, or interest on the notes, or in respect of any redemption, retirement,
purchase or other acquisition of any of the notes, at any time when:
- There is a default in the payment of the principal of,
premium, if any, or interest on any senior indebtedness; or
- Any event of default with respect to any senior indebtedness
has occurred and is continuing, or would occur as a result of
that payment on the notes or any redemption, retirement,
purchase or other acquisition of any of the notes, permitting
the holders of that senior indebtedness to accelerate the
maturity thereof.
Except as described above, our obligation to make payment of the principal of,
premium, if any, or interest on the exchange notes will not be affected.
Subject to payment in full of all senior indebtedness, the holders of
the exchange notes will be subrogated to the rights of the holders of senior
indebtedness to receive payments or distributions of cash, property or
securities of us applicable to senior indebtedness. Subject to payment in full
of all general obligations, the holders of the exchange notes will be subrogated
to the rights of the creditors in respect of general obligations to receive
payments or distributions of cash, property or securities applicable to general
obligations.
"Senior indebtedness" means the principal of, premium, if any, and
interest on:
- All of our indebtedness for money borrowed, other than the
exchange notes and any other notes issued under the indenture,
whether outstanding on the date of execution of the indenture
or created, assumed or incurred thereafter, except that
indebtedness as by its
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terms is expressly stated to be not superior in right of
payment to the notes issued under the indenture, or to rank
pari passu with the notes issued under the indenture; and
- Any deferrals, renewals or extensions of any such senior
indebtedness.
The term "indebtedness for money borrowed" includes, without limitation, any
obligation of, or any obligation guaranteed by, us for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets. There is no limitation on our issuance of senior
indebtedness.
"General obligations" is defined in the indenture to mean all of our
obligations to make payments on account of claims in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements, other than:
- Obligations on account of senior indebtedness;
- Obligations on account of indebtedness for money borrowed
ranking pari passu with or subordinate to the exchange notes;
and
- Obligations which by their terms are expressly stated not to
be superior in right of payment to the notes or to rank pari
passu with the exchange notes.
The indenture also provides that, if any rule, guideline or interpretation
promulgated or issued by the FRB (or other competent regulatory agency or
authority), as from time to time in effect, establishes or specifies criteria
for the inclusion in regulatory capital of subordinated debt of a bank holding
company requiring that such subordinated debt be subordinated to obligations to
creditors in addition to those set forth above, then the term "general
obligations" also will include such additional obligations to creditors in
effect from time to time pursuant to those rules, guidelines or interpretations.
Under current FRB interpretations, subordinated debt qualifying as regulatory
capital must be subordinated in right of payment to the claims of the issuer's
general creditors and thus, under current FRB regulations, the notes are
subordinated in right of payment to the claims of our general creditors. For
purposes of the definition of "general obligations," the term "claim" will have
the meaning assigned to it in Section 101(5) of the Bankruptcy Code of 1978, as
amended to the date of the indenture.
LIMITED RIGHT OF ACCELERATION
Payment of principal of the exchange notes may be accelerated only in
case of our bankruptcy, insolvency or reorganization. There is no right of
acceleration in the case of a default in the payment of principal of, premium,
if any, or interest on the exchange notes or the performance of any other
covenant of ours in the indenture or in the exchange notes.
EVENTS OF DEFAULT, DEFAULTS, WAIVERS, ETC.
An "Event of Default" with respect to the exchange notes is defined in
the indenture as certain events involving our bankruptcy, insolvency or
reorganization. A "Default" with respect to the exchange notes is defined in the
indenture as:
- An Event of Default with respect to the exchange notes;
- Default in the payment when due of the principal of or
premium, if any, on any exchange note;
- Default in the payment when due of interest upon any exchange
note and the continuance of that default for 30 days;
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- Default in the observance or performance of any other covenant
or agreement in the indenture with respect to the exchange
notes and the continuance of that default for 90 days after
written notice; or
- Any other default provided with respect to the exchange notes.
If an Event of Default with respect to the exchange notes occurs and is
continuing, either the trustee or the holders of not less than 25% in aggregate
principal amount of the exchange notes may declare the principal amount of all
of the exchange notes to be due and payable immediately. If a Default occurs and
is continuing, the trustee may, in its discretion, or at the written request of
holders of not less than a majority in aggregate principal amount of the
exchange notes and upon reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with that request and subject to
certain other conditions set forth in the indenture, proceed to protect its
rights and the rights of the holders of all of the exchange notes. The holders
of a majority in aggregate principal amount of the exchange notes may waive an
Event of Default or Default, except a default not theretofore cured in payment
of the principal of, premium, if any, or interest on any exchange note or in
respect of a covenant or provision in the indenture which cannot be modified or
amended without the consent of the holders of all of the exchange notes.
The indenture also provides that, notwithstanding any other provision
of the indenture, the holder of any exchange note will have the right to
institute suit to enforce any payment of principal of, premium, if any, or
interest on that exchange note expressed in that exchange note, and that such
right will not be impaired without the consent of that holder.
We are required to file with the trustee annually a written statement
of certain of our officers as to the existence or non-existence of defaults
under the indenture or the exchange notes.
REGARDING THE TRUSTEE
We have agreed to indemnify the trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of its duties under the indenture, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties thereunder. We have
other business relationships with the trustee.
REGISTRATION RIGHTS
We have entered into a registration rights agreement with the initial
purchasers of the outstanding notes, for your benefit, in which we agreed to
conduct a registered exchange offer, subject to the terms and conditions of the
registration rights agreement. The exchange offer generally will permit holders
of outstanding notes to exchange their outstanding notes for a new issue of
notes, which we refer to as the "exchange notes," that are identical in all
material respects to the outstanding notes, except that the exchange notes will
not contain terms relating to transfer restrictions, registration rights or
interest rate increases.
This summary of certain provisions of the registration rights agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions of the registration rights
agreement, a copy of which has been filed as an exhibit to the registration
statement of which this prospectus is a part.
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EXCHANGE OFFER
Pursuant to the registration rights agreement, we have agreed that we
will, at our cost:
- Not later than 120 days after the date of original issuance of
the outstanding notes (or if that day is not a business day,
the first business day thereafter), file with the SEC a
registration statement, which we refer to as the "exchange
offer registration statement," with respect to a registered
offer to exchange the outstanding notes for the exchange
notes; and
- Use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the
Securities Act not later than 210 days after the date of
original issuance of the outstanding notes (or if that day is
not a business day, the first business day thereafter) and to
complete the exchange offer within 45 days after such
effectiveness (or if that day is not a business day, the first
business day thereafter).
Upon the effectiveness of the exchange offer registration statement, we
will offer the exchange notes in exchange for surrender of the outstanding
notes. We will keep the exchange offer open for not less than 20 business days
after the date notice of the exchange offer is mailed to the holders of the
outstanding notes (or longer if applicable law requires). For each outstanding
note surrendered to us in the exchange offer, the holder of that outstanding
note will receive an exchange note having a principal amount equal to that of
the surrendered outstanding note. Interest on each exchange note will accrue
from the last interest payment date on which interest was paid on the
outstanding note surrendered in exchange therefor or, if no interest has been
paid on that outstanding note, from the date of its original issue.
Under existing SEC interpretations, the exchange notes would be freely
transferable by holders of the outstanding notes other than affiliates of us
after the exchange offer without further registration under the Securities Act,
if the holder of the exchange notes makes the representations described below.
Any broker-dealer receiving exchange notes in the exchange offer, however, will
have a prospectus delivery requirement with respect to resales of the exchange
notes. The SEC has taken the position that any such participating broker-dealer
may fulfill its prospectus delivery requirement with respect to exchange notes
(other than a resale of an unsold allotment from the original sale of the
outstanding notes) with the prospectus contained in the exchange offer
registration statement. Under the registration rights agreement, we are
required, subject to the terms of that agreement, to allow participating
broker-dealers and other persons, if any, with similar prospectus delivery
requirements to use the prospectus contained in the exchange offer registration
statement in connection with the resale of those exchange notes. A participating
broker-dealer that delivers such a prospectus to purchasers in connection with
those resales will be subject to certain civil liability provisions under the
Securities Act and will be bound by the provisions of the registration rights
agreement (including certain indemnification rights and obligations therein).
A holder of outstanding notes that wishes to exchange them for exchange
notes in the exchange offer will be required to represent that:
- Any exchange notes it receives will be acquired in the
ordinary course of its business;
- At the time of the exchange offer's commencement, it has no
arrangement or understanding with any person to participate in
the distribution (within the meaning of the Securities Act) of
the exchange notes;
- It is not an "affiliate" of us, as defined in Rule 405 of the
Securities Act, or, if it is an affiliate, it will comply with
the registration and prospectus delivery requirements of the
Securities Act to the extent applicable; and
37
- It is not engaged in, and does not intend to engage in, the
distribution of the exchange notes.
If the holder is a broker-dealer that will receive exchange notes for
its own account in exchange for outstanding notes that were acquired as a result
of market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
these exchange notes.
SHELF REGISTRATION
If:
- Applicable interpretations of the SEC's staff subsequent to
the issuance of the outstanding notes do not permit us to
effect the exchange offer as contemplated by the registration
rights agreement;
- For any other reason the exchange offer registration statement
is not declared effective within 210 days after the date of
the original issuance of the outstanding notes (or if that day
is not a business day, the first business day thereafter), or
the exchange offer is not consummated within 45 days after the
exchange offer registration statement becomes effective;
- Any initial purchaser so requests with respect to outstanding
notes not eligible to be exchanged for exchange notes in the
exchange offer and that are held by it following consummation
of the exchange offer, or with respect to any exchange notes
constituting part of an unsold allotment that are not freely
tradable after such exchange; or
- Any holder of outstanding notes (other than an initial
purchaser) is not eligible to participate in the exchange
offer or does not receive freely tradable exchange notes in
the exchange offer other than because that holder is an
affiliate of us;
we will, at our cost:
- As promptly as reasonably practicable (but not later than 45
days after required or requested as provided above), file a
shelf registration statement covering resales of the
outstanding notes or the exchange notes, as the case may be;
- Use our reasonable best efforts to cause the shelf
registration statement to be declared effective under the
Securities Act as promptly as reasonably practicable; and
- Use our reasonable best efforts to keep the shelf registration
statement continuously effective until two years after its
effective date or such shorter period that will terminate when
all of the outstanding notes or exchange notes, as applicable,
covered by the shelf registration statement have been sold
thereunder, have become freely tradable under the Securities
Act or have otherwise ceased to be eligible for registration
under the registration rights agreement.
If a shelf registration statement is filed, we will, among other
things, provide each holder for which that shelf registration statement was
filed copies of the prospectus that is a part of the shelf registration
statement, notify each such holder when the shelf registration statement has
become effective and take certain other actions as are required to permit
unrestricted resales of the outstanding notes or the exchange notes, as the case
may be.
A holder selling such outstanding notes or exchange notes pursuant to
the shelf registration statement generally will be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain civil liability provisions under the
38
Securities Act in connection with those sales and will be bound by the
provisions of the registration rights agreement that are applicable to that
holder (including certain indemnification obligations).
ADDITIONAL INTEREST
If a registration default (as defined below) occurs, additional
interest at a rate of 0.25% per annum will accrue on the principal amount of the
applicable outstanding notes and exchange notes (in addition to the stated
interest on those outstanding notes and exchange notes) from and including the
date on which any such registration default occurs to but excluding the date on
which all registration defaults have been cured.
A "registration default" would occur if:
- On or prior to the 120th day following the date of original
issuance of the outstanding notes (or if that day is not a
business day, the first business day thereafter), neither the
exchange offer registration statement nor the shelf
registration statement has been filed with the SEC;
- On or prior to the 210th day following the date of original
issuance of the outstanding notes (or if that day is not a
business day, the first business day thereafter), neither the
exchange offer registration statement nor the shelf
registration statement has been declared effective;
- On or prior to the 45th day following effectiveness of the
exchange offer registration statement, the exchange offer has
not been consummated (provided no shelf registration statement
is required or requested to be filed); or
- After either the exchange offer registration statement or the
shelf registration statement has been declared effective, that
registration statement thereafter ceases to be effective or
usable in connection with resales of outstanding notes or
exchange notes in accordance with and during the periods
specified in the registration rights agreement, except as a
result of our right to suspend use of that registration
statement in accordance with the terms of the registration
rights agreement.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS
The following summary describes certain United States federal income
tax consequences resulting from the exchange of the outstanding notes for
exchange notes pursuant to the exchange offer and the ownership and disposition
of the exchange notes. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), administrative pronouncements, judicial decisions
and existing and proposed Treasury regulations, and interpretations of the
foregoing, changes to any of which subsequent to the date of this prospectus may
affect the tax consequences described below, possibly with retroactive effect.
This summary discusses only notes held as capital assets within the meaning of
Section 1221 of the Code. This summary does not deal with holders that may be
subject to special tax rules (including, but not limited to, insurance
companies, tax exempt organizations, financial institutions, retirement plans,
regulated investment companies, dealers in securities or currencies, traders in
securities who elect to apply the mark-to-market method of accounting,
partnerships and other entities treated as pass-through for federal income tax
purposes, expatriates, foreign persons, holders whose functional currency is not
the United States dollar, and holders of the notes held as part of a "straddle,"
"hedge," "constructive sale" or "conversion transaction" for federal income tax
purposes, or as part of an integrated investment). THIS SUMMARY IS FOR GENERAL
INFORMATION ONLY AND DOES NOT ADDRESS ALL ASPECTS OF UNITED STATES FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO HOLDERS OF OUTSTANDING NOTES IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES, AND IT DOES NOT ADDRESS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
HOLDERS OF OUTSTANDING NOTES SHOULD CONSULT THEIR TAX ADVISORS AS TO THE
APPLICATION OF UNITED STATES FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS
WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR
FOREIGN TAXING JURISDICTION.
EXCHANGE OFFER
The exchange of an outstanding note for an exchange note pursuant to
the exchange offer will not constitute a "significant modification" of the
outstanding note for federal income tax purposes. Accordingly, the exchange will
be disregarded and the exchange note received will be treated as a continuation
of the outstanding note in the hands of each holder of an exchange note. As a
result, there will be no federal income tax consequences to a holder who
exchanges an outstanding note for an exchange note pursuant to the exchange
offer. Each holder will have the same adjusted tax basis and holding period in
the exchange note as that holder had in the outstanding note immediately before
the exchange. Although the exchange of an outstanding note for an exchange note
will not create additional "market discount" or "amortizable premium," to the
extent that a holder acquired an outstanding note at a market discount or with
amortizable premium, that discount or premium would generally carry over to the
exchange note received in exchange for the outstanding note. See the discussions
below of the market discount and amortizable premium rules applicable to
subsequent purchasers of the exchange notes, which would generally also be
relevant to purchasers of outstanding notes subsequent to their original issue.
PAYMENTS ON THE EXCHANGE NOTES
Payments received by holders on exchange notes will be accorded the
same tax treatment pursuant to the Code as payments received on other taxable
debt instruments. Except for exchange notes that were acquired with market
discount or at a premium (as discussed below), interest paid or accrued on an
exchange note will be treated as ordinary income to the holder, and a principal
payment on an exchange note will be treated as a return of capital. Interest
paid to holders who report their income on the cash receipts and disbursements
method should be taxable to them when received. Interest earned by holders who
report their income on the accrual method will be taxable when accrued,
regardless of when it is actually received.
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MARKET DISCOUNT
A subsequent purchaser of an exchange note at a discount from its
outstanding principal amount will acquire the note with market discount. The
purchaser generally will be required to recognize the market discount as
ordinary income as provided below.
An exchange note will not be considered to have market discount if the
amount of the market discount is de minimis (i.e., less than the product of: (i)
0.25% of the remaining principal amount, multiplied by (ii) the number of
complete years to maturity remaining after the date of purchase). Regardless of
whether the subsequent purchaser of an exchange note with more than a de minimis
amount of market discount is a cash-basis or accrual-basis taxpayer, market
discount generally will be taken into income as principal payments are received
in an amount equal to the lesser of (a) the amount of the principal payment
received and (b) the amount of market discount that has "accrued" but that has
not yet been included in income.
Elections. Market discount generally accrues ratably (in equal amounts)
on a daily basis from the day following the date of purchase to maturity,
although the purchaser of an exchange note may elect to accrue market discount
on the note pursuant to the constant yield method. The purchaser of an exchange
note with market discount also may separately make an election, which applies to
all market discount instruments held or acquired by the purchaser in the taxable
year of election or afterwards, to recognize market discount currently as it
accrues.
Sale or Exchange of an Exchange Note with Market Discount. A holder who
has acquired an exchange note with market discount generally will be required to
treat a portion of any gain on a sale or exchange of the note as ordinary income
to the extent of the market discount accrued to the date of disposition, less
any accrued market discount previously reported as ordinary income. Moreover,
the holder generally must defer interest deductions attributable to any
indebtedness incurred or continued to purchase or carry the exchange note to the
extent they exceed income on the note. Any deferred interest expense is, in
general, allowed as a deduction no later than the year in which the related
market discount income is recognized. If a holder makes the election to
recognize market discount currently as it accrues, the interest deferral rule
will not apply.
As Treasury Regulations implementing the market discount rules have not
yet been issued, and uncertainty exists with respect to many aspects of those
rules, it is suggested that prospective investors consult their own tax advisors
regarding the application of the market discount rules to the exchange notes.
AMORTIZABLE PREMIUM
A subsequent purchaser of an exchange note at a premium over its
outstanding principal amount will acquire the note with amortizable premium.
That holder may elect to amortize the premium on the constant yield method (in
amounts increasing over time). Pursuant to Treasury Regulations, a holder of an
exchange note amortizes premium by offsetting the interest income allocable to
an accrual period with the premium allocable to that period.
GAIN OR LOSS ON DISPOSITION
If an exchange note is sold, the holder will recognize gain or loss
equal to the difference between the amount realized on the sale (not including
amounts attributable to accrued but unpaid interest, which will be taxable as
ordinary income) and the holder's adjusted basis in the note. The adjusted basis
of an exchange note will equal the cost of the note to the holder, increased by
any market discount previously
41
included in the holder's gross income with respect to the note and reduced by
the portion of the basis of the note allocable to payments on the note
previously received by the holder and by any previously amortized premium.
Similarly, a holder who receives a scheduled or prepaid principal payment with
respect to an exchange note will recognize gain or loss equal to the difference
between the amount of the payment and the allocable portion of the holder's
adjusted basis in the note. Except to the extent that the market discount rules
apply, any gain or loss on the sale or other disposition of an exchange note
generally will be capital gain or loss. This gain or loss will be long-term
capital gain or loss if the note is held as a capital asset for the applicable
long-term holding period. Certain limitations may apply to the holder's use of
capital losses.
INFORMATION REPORTING AND BACKUP WITHHOLDING
For each calendar year in which the exchange notes are outstanding, we,
our agents or paying agents or a broker may be required to provide the IRS with
certain information, including the holder's name, address and taxpayer
identification number, the aggregate amount of principal and interest paid to
that holder during the calendar year and the amount of tax withheld, if any.
This obligation, however, does not apply with respect to certain holders
including corporations, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
If a holder subject to the reporting requirements described above fails
to supply its correct taxpayer identification number in the manner required by
applicable law or underreports its tax liability, we, our agents or paying
agents or a broker may be required to "backup" withhold at a rate currently
equal to 28% on each payment of interest and principal and sales proceeds on the
exchange notes.
Backup withholding is not an additional tax; any amounts so withheld
may be credited against the United States federal income tax liability of the
holder or refunded if the amounts withheld exceed such liability, provided that
the required information is furnished to the IRS. The information reporting
requirements may apply regardless of whether withholding is required.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES
FEDERAL TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF HIS,
HER OR ITS PARTICULAR CIRCUMSTANCES AND TAX SITUATION. EACH HOLDER SHOULD
CONSULT HIS, HER OR ITS TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO HIM,
HER OR IT OF THE EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE
EXCHANGE NOTES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS OR SUBSEQUENT VERSIONS THEREOF.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for outstanding notes where such outstanding notes were acquired as a
result of market-making activities or other trading activities. We have agreed
that, starting on the expiration date of the exchange offer and ending on the
close of business 210 days after that expiration date, we will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
We will not receive any proceeds from any sale of exchange notes by
brokers-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of those methods
of resale, at market prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of those exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit resulting
from any such resale of exchange notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that, by acknowledging that
it will deliver and delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 210 days after the expiration date of the exchange
offer, we will as promptly as practicable send additional copies of this
prospectus and any amendment or supplement to this prospectus to any
broker-dealer that requests those documents in the letter of transmittal.
Notwithstanding the foregoing, we are entitled under the registration rights
agreement to suspend the use of this prospectus by any broker-dealer under
specified circumstances, in which case the period referred to above will be
extended by a number of days equal to the period of suspension.
We have agreed to pay expenses incident to the exchange offer other
than commissions or concessions of any brokers or dealers, and that we will
indemnify the holders of the notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
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LEGAL MATTERS
The validity of the exchange notes offered hereby will be passed upon
for us by Gerard A. Chamberlain, Esquire. Mr. Chamberlain is an employee of
Wilmington Trust Company and owns stock and options to purchase stock of
Wilmington Trust Corporation. Certain other legal matters will be passed upon
for us by Ballard Spahr Andrews & Ingersoll, LLP, special United States tax
counsel to Wilmington Trust Corporation for this offering.
EXPERTS
Our consolidated financial statements as of December 31, 2002 and 2001,
and for each of the years then ended, have been incorporated by reference herein
in reliance upon the report of KPMG LLP, independent accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. The aforementioned audit report of KPMG LLP includes an
explanatory paragraph referring to the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, in
2002 and SFAS No. 133, Accounting for Derivative Investments and Hedging
Activities, in 2001.
Our consolidated financial statements for the year ended December 31,
2000 have been incorporated by reference herein in reliance upon the report of
Ernst & Young LLP, independent auditors, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934. We are required to file annual, quarterly and current
reports and other information with the SEC. You may read and copy any of the
reports, statements and other information that we file with the SEC at the
public reference room maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on
the public reference room. Our filings also are available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at www.sec.gov. In addition, our Forms 10-K, 10-Q and 8-K are posted on our
website at www.wilmingtontrust.com. Our common stock is listed and traded on the
New York Stock Exchange under the trading symbol "WL." You also may inspect the
information that we file with the SEC at the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
INCORPORATION BY REFERENCE
Rather than include in this prospectus some of the information we
include in reports we file with the SEC, we are incorporating that information
by reference, which means that we are disclosing important information to you by
referring to those publicly filed documents that contain the information. The
information incorporated by reference is considered part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede certain information in this prospectus. Accordingly, we incorporate by
reference our Annual Report on Form 10-K for the fiscal year ended December 31,
2002 (which we filed with the SEC on March 27, 2003), our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2003 (which we filed with the SEC on
May 15, 2003) and our Current Reports on Form 8-K filed on April 3, 2003 and
April 17, 2003.
On July 17, 2003, we issued a press release with respect to the results
of our operations for the quarter ended June 30, 2003. A copy of the press
release was furnished to the SEC in a Current Report on Form 8-K filed on July
17, 2003. The information furnished to the SEC in the Form 8-K is not
incorporated by reference herein.
In addition, all reports and other documents we subsequently file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this prospectus will be deemed to be incorporated by reference in this
prospectus and to be part of it from the date of the filing of those reports and
documents. Any statement contained in this prospectus or in a document
incorporated or deemed to be
44
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in any
subsequently filed document that is or is deemed to be incorporated by reference
herein modifies or supersedes that statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this propsectus.
We will provide without charge to each person to whom this prospectus
is delivered, upon request of that person, a copy of any or all documents that
are incorporated in this prospectus by reference, other than exhibits to those
documents unless those exhibits are specifically incorporated by reference in
the document this prospectus incorporates. You should direct those requests to
Wilmington Trust Corporation, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Gerard A. Chamberlain, (302)
651-1268, e-mail: gchamberlain@wilmingtontrust.com.
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[WILMINGTON TRUST LOGO]
$250,000,000 AGGREGATE PRINCIPAL AMOUNT OF
4.875% SUBORDINATED NOTES DUE 2013
OFFER TO EXCHANGE
August 1, 2003
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