UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2011


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

For the transition period from to

Commission File Number: 1-14659

WILMINGTON TRUST CORPORATION

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		51-0328154 (I.R.S. Employer Identification No.)

Rodney Square North, 1100 North Market Street,
Wilmington, Delaware (Address of principal executive offices)		19890 (Zip Code)

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

None
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

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


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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding as of March 31, 2011
Common stock — Par Value $1.00		91,514,375 shares

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION

Item 1 Financial Statements (unaudited)

Consolidated Statements of Condition		1

Consolidated Statements of Income		3

Consolidated Statements of Changes in Stockholders’ Equity		5

Consolidated Statements of Cash Flows		6

Notes to Consolidated Financial Statements		8

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		60

Company overview		60

Executive summary		61

Results for the three months ended March 31, 2011		64

The Regional Banking business		65

Net interest income		69

Net interest margin		69

Noninterest income		73

Corporate Client Services business		74

Wealth Advisory Services business		75

Assets under management and administration		76

Affiliate money managers		78

Noninterest expense		78

Income taxes		79

Capital resources		80

Liquidity and funding		84

Credit risk and asset quality		89

Derivatives, hedging instruments, other off-balance-sheet arrangements, and other contractual obligations		105

Other information		107

Item 3 Quantitative and Qualitative Disclosures About Market Risk		109

Item 4 Controls and Procedures		114

PART II. OTHER INFORMATION

Item 1 Legal Proceedings		115

Item 1A Risk Factors		118

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		118

Item 3 Defaults upon Senior Securities		119

Item 4 Other Information		119

Item 5 Exhibits		119

Exhibit 31
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

PART I — FINANCIAL INFORMATION


ITEM 1.		FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)


	March 31,			December 31,
(dollars in millions)	2011			2010

ASSETS
Cash and due from banks	$	166.7		$	153.5
Interest-bearing deposits in other banks		2,423.3			2,091.8
Federal funds sold and securities purchased under agreements to resell		—			30.0
Investment securities available for sale		394.9			486.9
Investment securities held to maturity (fair value of $109.2 in 2011 and $101.3 in 2010)		102.7			101.8

Total investment securities		497.6			588.7
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		41.5			35.6
Loans:
Commercial, financial, and agricultural loans		2,027.2			2,178.6
Real estate — construction loans		1,300.5			1,429.1
Commercial mortgage loans		1,918.1			1,959.5

Total commercial loans		5,245.8			5,567.2
Residential mortgage loans		425.6			434.6
Consumer loans		1,061.7			1,134.3
Loans secured with investments		377.4			389.8

Total retail loans		1,864.7			1,958.7

Total loans, net of unearned income of $4.2 in 2011 and $4.3 in 2010		7,110.5			7,525.9
Reserve for loan losses		(409.5	)		(440.8	)

Net loans		6,701.0			7,085.1
Loans held for sale		24.4			52.5
Premises and equipment, net		131.4			133.2
Goodwill, net of accumulated amortization of $29.8 in 2011 and 2010		336.8			336.3
Other intangible assets, net of accumulated amortization of $52.6 in 2011 and $50.7 in 2010		27.5			29.2
Accrued interest receivable		20.3			20.8
Other assets		357.7			375.9

Total assets	$	10,728.2		$	10,932.6

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED) — (Continued)


	March 31,			December 31,
(dollars in millions)	2011			2010

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand deposits	$	1,476.7		$	1,092.6
Interest-bearing deposits:
Savings deposits		923.4			914.0
Interest-bearing demand deposits		3,830.8			4,078.3
Certificates under $100,000		930.7			961.7
Local certificates $100,000 and over		96.6			96.5

Total core deposits		7,258.2			7,143.1
National brokered certificates		1,581.4			1,832.0

Total deposits		8,839.6			8,975.1
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase		85.6			122.3
Other debt		0.8			0.9

Total short-term borrowings		86.4			123.2
Accrued interest payable		28.7			19.6
Other liabilities		361.7			368.0
Long-term debt		595.5			595.0

Total liabilities		9,911.9			10,080.9
Stockholders’ equity:
Wilmington Trust stockholders’ equity:
Preferred stock: $1.00 par value, 1,000,000 shares authorized, 330,000 5% cumulative shares issued and outstanding		325.4			325.0
Common stock: $1.00 par value, 150,000,000 shares authorized, 100,234,596 shares issued		100.2			100.2
Capital surplus		461.9			463.7
Retained earnings		322.6			360.7
Accumulated other comprehensive loss		(110.7	)		(112.4	)

Total contributed capital and retained earnings		1,099.4			1,137.2
Less: treasury stock: 8,720,221 shares in 2011 and 8,804,231 shares in 2010, at cost		(283.1	)		(285.5	)

Total stockholders’ equity		816.3			851.7

Total liabilities and stockholders’ equity	$	10,728.2		$	10,932.6

See Notes to Consolidated Financial Statements

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	For the three months ended
	March 31,
(dollars in millions, except per share amounts)	2011			2010

NET INTEREST INCOME
Interest and fees on loans	$	68.9		$	91.4
Interest and dividends on investment securities:
Taxable interest		4.1			5.5
Tax-exempt interest		0.1			0.1
Dividends		0.1			0.3
Interest on deposits in other banks		1.2			0.2

Total interest income		74.4			97.5
Interest on deposits		14.0			14.2
Interest on short-term borrowings		—			0.7
Interest on long-term debt		8.2			7.9

Total interest expense		22.2			22.8
Net interest income		52.2			74.7
Provision for loan losses		(41.3	)		(77.4	)

Net interest income/(loss) after provision for loan losses		10.9			(2.7	)

NONINTEREST INCOME
Advisory fees:
Wealth Advisory Services:
Trust and investment advisory fees		34.2			34.4
Mutual fund fees		0.6			0.9
Planning and other services		6.6			8.8

Total Wealth Advisory Services		41.4			44.1
Corporate Client Services:
Global corporate trust services		23.0			23.0
Retirement services		23.7			21.5
Investment/cash management services		3.8			3.5

Total Corporate Client Services		50.5			48.0
Cramer Rosenthal McGlynn		5.3			4.7
Roxbury Capital Management		—			0.1

Total advisory fees		97.2			96.9
Amortization of affiliate intangibles		(1.5	)		(1.9	)

Total advisory fees after amortization of affiliate intangibles		95.7			95.0
Service charges on deposit accounts		6.8			7.7
Loan fees and late charges		1.3			1.7
Card fees		2.3			2.2
Other noninterest income		1.4			0.7
Securities gains, net of losses		—			0.2
Total other-than-temporary impairment losses		(5.0	)		(29.9	)
Amount of loss recognized in other comprehensive income (before taxes)		—			11.9

Net other-than-temporary impairment losses recognized in income		(5.0	)		(18.0	)

Total noninterest income		102.5			89.5

Net interest and noninterest income	$	113.4		$	86.8

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) — (Continued)


	For the three months ended
	March 31,
(dollars in millions, except per share amounts)	2011			2010

NONINTEREST EXPENSE
Salaries and wages	$	49.8		$	49.2
Incentives and bonuses		11.0			7.1
Employment benefits		17.4			16.1

Total staffing-related expense		78.2			72.4
Net occupancy		8.0			8.1
Furniture, equipment, and supplies		10.4			10.2
Advertising and contributions		2.4			1.7
Servicing and consulting fees		5.0			3.5
Subadvisor expense		13.1			11.5
Travel, entertainment, and training		2.2			1.7
Originating and processing fees		2.7			2.9
Insurance		9.6			6.6
Legal and auditing fees		5.8			2.7
OREO and loans held for sale write-downs/losses and reserve for unfunded lending commitments		0.1			1.8
Other noninterest expense		8.8			8.4

Total noninterest expense		146.3			131.5

NET (LOSS)/INCOME
Loss before income taxes and noncontrolling interest		(32.9	)		(44.7	)
Income tax expense/(benefit)		0.6			(16.4	)

Net loss before noncontrolling interest		(33.5	)		(28.3	)
Net income attributable to noncontrolling interest		—			0.9

Net loss attributable to Wilmington Trust Corporation		(33.5	)		(29.2	)
Dividends and accretion on preferred stock		4.6			4.6

Net loss available to common stockholders	$	(38.1	)	$	(33.8	)


Net loss per common share:
Basic	$	(0.42	)	$	(0.44	)
Diluted	$	(0.42	)	$	(0.44	)
Weighted average common shares outstanding (in thousands):
Basic		90,976			76,465
Diluted		90,976			76,465

See Notes to Consolidated Financial Statements

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)


	Wilmington Trust Corporation
											Accumulated
											other
	Preferred		Common		Capital			Retained			comprehensive			Treasury			Noncontrolling
(dollars in millions, except per share amounts)	stock		stock ¹		surplus			earnings			loss ²			stock			interest			Total

2011
Balance at January 1, 2011	$	325.0	$	100.2	$	463.7		$	360.7		$	(112.4	)	$	(285.5	)	$	—		$	851.7
Comprehensive loss
Net loss ³		—		—		—			(33.5	)		—			—			—			(33.5	)
Other comprehensive income ²		—		—		—			—			1.7			—			—			1.7

Total comprehensive loss																					(31.8	)
Cash dividend paid on preferred stock		—		—		—			(4.2	)		—			—			—			(4.2	)
Common stock issued under employment benefit plans and to the Board of Directors (93,694 shares)		—		—		(2.5	)		—			—			2.5			—			—
Stock-based compensation expense		—		—		0.7			—			—			—			—			0.7
Preferred stock discount accretion		0.4		—		—			(0.4	)		—			—			—			—
Acquisition of treasury stock (9,684 shares)		—		—		—			—			—			(0.1	)		—			(0.1	)

Balance at March 31, 2011	$	325.4	$	100.2	$	461.9		$	322.6		$	(110.7	)	$	(283.1	)	$	—		$	816.3

2010
Balance at January 1, 2010	$	323.3	$	78.5	$	214.8		$	1,101.5		$	(116.3	)	$	(295.1	)	$	0.4		$	1,307.1
Comprehensive loss
Net loss ³		—		—		—			(29.2	)		—			—			—			(29.2	)
Other comprehensive income ²		—		—		—			—			6.7			—			—			6.7

Total comprehensive loss																					(22.5	)
Cash dividend paid: $0.01 per common share		—		—		—			(0.6	)		—			—			—			(0.6	)
Cash dividend paid on preferred stock		—		—		—			(4.2	)		—			—			—			(4.2	)
Common stock issued (21,706,250 shares)		—		21.7		251.6			—			—			—			—			273.3
Common stock issued under employment benefit plans and to the Board of Directors (102,757 shares)		—		—		(2.6	)		—			—			2.6			—			—
Stock-based compensation expense		—		—		1.4			—			—			—			—			1.4
Preferred stock discount accretion		0.4		—		—			(0.4	)		—			—			—			—
Acquisition of treasury stock (1,967 shares)		—		—		—			—			—			(0.1	)		—			(0.1	)
Net income attributable to noncontrolling interest		—		—		—			—			—			—			0.9			0.9
Decrease in noncontrolling interest		—		—		—			—			—			—			(1.3	)		(1.3	)

Balance at March 31, 2010	$	323.7	$	100.2	$	465.2		$	1,067.1		$	(109.6	)	$	(292.6	)	$	—		$	1,554.0


¹		Shares outstanding were 91,514,375 and 91,197,969 at March 31, 2011, and March 31, 2010, respectively.

²		See Note 4 for additional information on other comprehensive income.

³		Net loss attributable to Wilmington Trust Corporation.

See Notes to Consolidated Financial Statements

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the three months ended
	March 31,
(in millions)	2011			2010
OPERATING ACTIVITIES
Net loss before noncontrolling interest	$	(33.5	)	$	(28.3	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for loan losses		41.3			77.4
Provision for depreciation and other amortization		4.8			5.1
Amortization of other intangible assets		1.8			2.3
Amortization of discounts and premiums on investment securities available for sale		0.3			0.3
Accretion of discounts and premiums on investment securities held to maturity		0.1			(0.3	)
Tax refund received		0.4			33.5
Increase in deferred income taxes		(10.4	)		(22.0	)
Deferred tax asset valuation allowance		11.4			—
Originations of residential mortgages		(25.5	)		(32.8	)
Gross proceeds from sales of residential mortgages		25.8			33.4
Gains on sales of residential mortgages		(0.3	)		(0.6	)
Write-downs on other real estate owned and loans held for sale		5.2			—
Sale proceeds and payments made on other real estate owned and loans held for sale		28.5			2.0
Securities (gains)/losses:
Other-than-temporary impairment		5.0			18.0
Other		—			(0.2	)
Amortization of gain on interest rate floors		(1.0	)		(2.1	)
Stock-based compensation expense		0.7			1.4
Decrease in other assets		16.3			34.4
Increase/(decrease) in other liabilities		35.6			(12.9	)

Net cash provided by operating activities	$	106.5		$	108.6

INVESTING ACTIVITIES
Proceeds from sales of investment securities available for sale	$	—		$	0.2
Proceeds from maturities of investment securities available for sale		88.7			203.7
Proceeds from maturities of investment securities held to maturity		0.4			1.3
Purchases of investment securities available for sale		—			(112.5	)
Purchases of Federal Home Loan Bank and Federal Reserve Bank stock, at cost		(5.9	)		—
Decrease in cash due to divestiture of Grant Tani Barash & Altman		—			(3.2	)
Purchase of residential mortgages		—			(1.7	)
Net decrease in loans		303.9			208.9
Purchases of premises and equipment		(3.0	)		(3.5	)
Dispositions of premises and equipment		0.1			—

Net cash provided by investing activities	$	384.2		$	293.2

FINANCING ACTIVITIES
Net increase/(decrease) in demand, savings, and interest-bearing demand deposits	$	146.0		$	(394.6	)
Net decrease in certificates of deposit		(281.5	)		(173.0	)
Net decrease in federal funds purchased and securities sold under agreements to repurchase		(36.7	)		(146.3	)
Proceeds from issuance of common stock		—			274.0
Stock issuance costs		—			(0.7	)
Cash dividends		(4.2	)		(4.8	)
Acquisition of treasury stock		(0.1	)		(0.1	)

Net cash used for financing activities	$	(176.5	)	$	(445.5	)
Effect of foreign currency translation on cash		0.5			(0.9	)
Increase/(decrease) in cash and cash equivalents		314.7			(44.6	)
Cash and cash equivalents at beginning of period		2,275.3			383.4

Cash and cash equivalents at end of period	$	2,590.0		$	338.8

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION


	For the three months ended
	March 31,
(in millions)	2011		2010

Cash paid for:
Interest	$	13.1	$	22.0
Taxes	$	0.3	$	—

Non-cash items:
Loans transferred to other real estate owned	$	28.7	$	13.6
Net loans transferred out of loans held for sale	$	1.7	$	—

See Notes to Consolidated Financial Statements

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Proposed Merger with M&T Bank Corporation

ADVERSE FINANCIAL CONDITION

Our full-year 2010 losses were primarily the result of two factors. First, we continued to experience credit deterioration in our loan portfolio, reflecting the extent of our exposure to real estate construction lending and its concentration in Delaware. Second, our continued losses required us to establish a significant deferred tax asset valuation allowance.

Throughout 2010, there was no significant economic or real estate recovery on the horizon in our markets. Therefore, we had little assurance that the credit quality of our loan portfolio would strengthen significantly in the near term, or that our capital position would not erode further. These risks caused our securities to be downgraded by credit rating agencies and increased the possibility of adverse regulatory actions which could compromise our businesses.

For all these reasons, management and the Board of Directors carefully studied the company’s strategic options. In the process, we reviewed a wide range of alternatives. Based on discussions that we had with our regulators, we believed that, without a change-of-control transaction acceptable to our regulators, we would face imminent significant regulatory actions, which would result in our inability to conduct business in a manner consistent with historical practice. Ultimately, the Board determined that the best option for our stockholders, as well as our clients and the employees of Wilmington Trust, was a merger with M&T Bank Corporation (M&T).

THE PROPOSED MERGER

On November 1, 2010, we announced that we signed a definitive merger agreement with M&T. In the merger, our common stockholders will receive 0.051372 shares of M&T common stock for each share of our common stock they hold. Our outstanding Series A Preferred Stock issued to the U.S. Department of the Treasury under the CPP will be exchanged for one-one hundredth (1/100) of a share of M&T preferred stock with substantially the same rights, powers, and preferences, and the warrants issued to the U.S. Department of the Treasury in connection with the issuance of the Series A Preferred Stock will be converted automatically into a warrant to purchase M&T common stock, subject to appropriate adjustments. The merger agreement contains certain customary covenants restricting the conduct of our business, other than in the ordinary course consistent with past practice, until the closing of the merger. The closing of the merger is subject to certain conditions, including approval by our stockholders and regulators. Our stockholders approved the merger on March 22, 2011 and we have obtained all necessary approvals to close the merger from our regulators. Subject to the terms and conditions of the merger agreement, we expect to close the merger on May 16, 2011, at which point we will become a wholly-owned subsidiary of MT&T. The merger agreement also contains a material adverse events clause and certain termination provisions and, under specified circumstances, we would be required to pay M&T a termination fee of $30 million.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. Accounting and reporting policies

We maintain our accounting records and prepare our financial statements in accordance with U.S. generally accepted accounting principles and reporting practices prescribed for the banking industry. Using these principles, we make subjective judgments about uncertainties and trends, and we make estimates and assumptions about the amounts we report in our financial statements and notes, including amounts for revenue recognition, the reserve for loan losses, pension and other benefit plans, stock-based employee compensation, investment securities valuations, goodwill impairment, loan origination fees and costs, income taxes, and other items. We evaluate these estimates on an ongoing basis.

The precision of these estimates and the possibility that they may change in the future are subject to various risks and uncertainties, and depend on a number of assumptions, estimates, expectations, assessments of potential developments, other underlying variables, and a range of possible outcomes. Circumstances that differ significantly from our judgments and estimates could cause our actual financial results to differ from our expectations.

Our financial results could be affected adversely by, among other things, failure to consummate a change-of-control transaction on a timely basis; additional regulatory restrictions or failure to comply with existing regulatory restrictions; changes in national or regional economic conditions; continued declines in the collateral values supporting our loans; deterioration in the credit quality of our borrowers; changes in our regulatory requirements; downgrades by the credit rating agencies; a change in conclusion about the realization of our deferred tax asset; changes in market interest rates or credit markets generally; fluctuations in equity or fixed income markets; changes in the market values of, or expected cash flows from, securities in our investment portfolio; significant changes in banking laws or regulations or the application of such laws or regulations to our businesses; changes in accounting policies, procedures, or guidelines; increased competition for business; higher-than-expected credit losses; the effects of our proposed merger with M&T, and restrictions on our businesses contained in the merger agreement with M&T; the effects of integrating our businesses with those of M&T after the merger is completed; a substantial and permanent loss of either client accounts and/or assets under management at Wilmington Trust and/or affiliate money managers Cramer Rosenthal McGlynn (CRM) and Roxbury Capital Management (RCM); changes in the regulatory, judicial, legislative, or tax treatment of business transactions; new litigation or developments in existing litigation; and economic uncertainty created by domestic or foreign unrest, hostilities, terrorism, or war.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We may use the following abbreviations throughout this report:


ASC:		Accounting Standards Codification

ASU:		Accounting Standards Update

CPP:		U.S. Department of the Treasury Capital Purchase Program

ESPP:		Employee Stock Purchase Plan

FASB:		Financial Accounting Standards Board

FHLB:		Federal Home Loan Bank of Pittsburgh

FIN:		FASB Interpretation (Number)

FOMC:		Federal Open Market Committee

FRB:		Federal Reserve Bank

GAAP:		U.S. generally accepted accounting principles

IRS:		Internal Revenue Service

NYSE:		New York Stock Exchange

OREO:		Other real estate owned

OCI:		Other comprehensive income

OTTI:		Other-than-temporarily impaired

SEC:		Securities and Exchange Commission

SERP:		Supplemental Executive Retirement Plan

SFAS:		Statements of Financial Accounting Standards

TARP:		U.S. Department of the Treasury Troubled Asset Relief Program

Throughout this report, we use “net (loss)/income” to mean “net (loss)/income attributable to Wilmington Trust Corporation.”

We have applied our critical accounting policies and estimation methods consistently in all periods presented in this report and we have discussed these policies with our Audit Committee. The information in this report has not been audited. It includes all adjustments of a normal recurring nature that we believe are necessary for fair presentation. We have reclassified certain prior-year amounts to conform to the current-year presentation. The consolidated financial statements in this report should be read in conjunction with the “Consolidated Financial Statements” and the “Notes to Consolidated Financial Statements” in our 2010 Annual Report on Form 10-K.

Our consolidated financial statements include the accounts of Wilmington Trust Corporation, our wholly-owned subsidiaries, and the subsidiaries in which we are majority owner. We eliminate intercompany balances and transactions in consolidation.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Although we are majority owner of CRM, we do not consolidate CRM’s results because CRM principals retain control over certain governance matters. We do not consolidate RCM’s results because we are not majority owner and RCM principals retain control over certain governance matters. For information on how we account for CRM, RCM, and other subsidiaries and affiliates, read Note 4, “Affiliates and acquisitions,” in our 2010 Annual Report on Form 10-K.

On February 16, 2010, we entered into an agreement with the principals of Grant Tani Barash & Altman, LLC (GTBA) and related parties, in which we sold 80% of our limited liability company interests in GTBA to those principals. This transaction resulted in a $0.1 million net loss, which we recorded in the 2010 first quarter. The agreement also limited future profit distributions to us. We account for our remaining ownership interest in GTBA under the cost method of accounting. We consolidated GTBA’s results in our financial statements until February 16, 2010.

GTBA contribution to Wilmington Trust’s financial statements


	Between
	Jan. 1 and Feb. 16,
(dollars in millions)	2010
Revenue (net of amortization)	$	2.2
Expense	$	1.8
Noncontrolling interest	$	0.9

3. Stock-based compensation plans

The Compensation Committee and the Select Committee of our Board of Directors administer a long-term incentive plan, an executive incentive plan, an employee stock purchase plan (ESPP), and a directors’ deferred fee plan. We account for our stock-based compensation plans in accordance with ASC 718, “Stock Compensation.” For more information about these plans, how we determine valuations of stock-based awards, and about how our merger agreement with M&T affects our ability to grant shares under these plans, read Note 20, “Stock-based compensation plans,” in our 2010 Annual Report on Form 10-K.

The common shares we issue as stock-based compensation come from our treasury, which held approximately 8.7 million shares at March 31, 2011. This is more than adequate to meet the requirements of our current stock-based compensation plans.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock-based compensation expense


	For the three months ended
	March 31,
(in millions)	2011			2010
Compensation expense:
Common stock options	$	0.4		$	0.6
Restricted common stock		0.7			0.5
Employee stock purchase plan		(0.4	)		0.3

Total compensation expense	$	0.7		$	1.4
Tax benefit¹		0.4			0.4

Net income effect	$	0.3		$	1.0


¹		Deferred tax assets related to the tax benefit shown are offset by a valuation allowance.

Stock options

Stock option valuation assumptions


	For the three months ended
	March 31,
	2011¹		2010
Risk-free interest rate		—		2.23% – 3.72	%
Volatility of Corporation’s common stock		—		34.06% – 44.50	%
Expected dividend yield		—		1.42% – 2.96	%
Expected life of options		—		4.6 to 8.7 years


¹		No stock options were granted during the first three months of 2011.

For the valuation assumptions in the table above:

•

We used the Black-Scholes valuation method.

•

The risk-free interest rate was the U.S. Treasury rate commensurate with the expected life of options on the date of each grant.

•

We based the volatility of our stock on historical volatility over a span of time equal to the expected life of the options.

•

We based the expected life of stock option awards on historical experience. Expected life is the period of time we estimate that granted stock options will remain outstanding.

Stock-based compensation expense for incentive stock options and the ESPP affects our income tax expense and effective tax rate, because we are not allowed a tax deduction unless the award recipient or ESPP subscriber makes a disqualifying disposition upon exercise. As a participant in the CPP, we may not deduct compensation of more than $500,000 paid to any named executive officer identified in Item 11 of our 2010 Annual Report on Form 10-K for any year in which the U.S. Treasury holds any debt or equity security we issued under the CPP.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

No stock options were exercised during the three months ended March 31, 2011 or 2010.

Long-term incentive plan option activity


				Weighted		Weighted
	Common			average		average	Aggregate
	stock			exercise		remaining	intrinsic value
For the three months ended March 31, 2011	options			price		contractual term	(in millions) ¹
Options outstanding at January 1, 2011		7,133,788		$	30.48
Options granted		—		$	—
Options exercised		—		$	—
Options expired		(580,775	)	$	32.75
Options forfeited		(93,700	)	$	16.56

Options outstanding at March 31, 2011		6,459,313		$	30.47	5.1 years	$	—
Options exercisable at March 31, 2011		4,953,113		$	36.11	4.1 years	$	—


¹		At March 31, 2011, the closing price of our common stock was $4.52, which was less than the strike price for all options.

Unvested stock options

At March 31, 2011, total unrecognized compensation cost related to unvested common stock options was $2.5 million, which we expect to record over a weighted average period of 1.4 years. Unvested stock options will be cancelled for no consideration upon consummation of our merger with M&T. If the merger is consummated, we expect our future expense related to these options to be zero.

Restricted common stock grants

We measure the fair value of restricted common stock by its last sale price on the date of the restricted stock grant. We amortize the value of restricted stock grants into stock-based compensation expense on a straight-line basis over the requisite service period for the entire award. We recorded $0.7 million of expense for restricted stock grants during the three months ended March 31, 2011. At March 31, 2011, total unrecognized compensation cost related to restricted stock grants was $2.9 million, which we expect to record over a weighted average period of 1.1 years.

Under our incentive plans, the vesting period for some of our restricted stock awards can accelerate upon retirement and in certain other circumstances. When we award restricted stock to people from whom we may not receive services in the future, such as those who are eligible for retirement, we recognize the expense of restricted stock grants when we make the award, instead of amortizing the expense over the vesting period of the award.

Restricted stock awarded to certain officers since we became a participant in the CPP does not vest until the stated vesting period or until the U.S. Treasury no longer holds any debt or equity securities we issued under the CPP, whichever is later. In addition, under other regulatory restrictions to which we are subject, restricted stock may not vest upon retirement without prior approval of our regulators. Further, most unvested restricted stock awards are scheduled to vest upon or immediately following consummation of our merger with M&T.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Restricted stock activity


				Weighted average fair
For the three months ended March 31, 2011	Number of shares			value at grant date
Restricted shares outstanding at January 1, 2011		458,082		$	15.51
Restricted shares granted		93,694		$	4.40
Restricted shares vested		(43,588	)	$	20.64
Restricted shares forfeited		—		$	—

Restricted shares outstanding at March 31, 2011		508,188		$	13.02

Employee stock purchase plan (ESPP)

For the ESPP, we base stock-based compensation expense on the fair value of plan participants’ options to purchase shares, amortized over the plan’s fiscal year. We use the Black-Scholes method to determine the fair value of these options. For the three months ended March 31, 2011, the total recognized compensation cost related to the ESPP was $(0.4) million. On March 23, 2011, in accordance with our merger agreement with M&T, our Board of Directors authorized the termination of the ESPP effective immediately preceding the closing of our merger with M&T. Because the ESPP will terminate prior to the closing of our merger with M&T, we expect our future expense related to this plan to be zero.

ESPP Activity


	Shares reserved for			Subscriptions			Price per
	future subscriptions			outstanding			share
Balance at January 1, 2010		547,059			251,143
Forfeitures		26,881			(26,881	)	$	12.67
Shares issued		—			(224,262	)	$	12.67
Subscriptions entered into on June 1, 2010		(217,119	)		217,119		$	12.45
Forfeitures		154,798			(154,798	)	$	12.45

Balance at January 1, 2011		511,619			62,321
Forfeitures		57,581			(57,581	)	$	12.45

Balance at March 31, 2011		569,200			4,740

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4. Comprehensive (loss)/income


	For the three months
	ended March 31,
(in millions)	2011			2010
Net loss before noncontrolling interest	$	(33.5	)	$	(28.3	)

Other comprehensive income, net of tax¹:
Net unrealized (losses)/gains on securities, net of taxes of $(0.3) and $1.0		(0.4	)		1.9
Reclassification adjustment for securities losses included in net income, net of taxes of $0.0 and $(0.1)		—			(0.1	)
Non-credit portion of OTTI held-to-maturity investment securities recognized in other comprehensive income (OCI), net of taxes of $0.0 and $(4.3)		—			(7.6	)
Accretion of non-credit portion of OTTI investment security losses that were recognized previously in OCI, net of taxes of $(0.1) and $(0.1)		(0.2	)		(0.2	)
Reclassification of unrealized losses recorded previously at the time of transfer to held-to-maturity, net of taxes of $0.0 and $2.2		—			3.8
Reclassification adjustment of current period other-than-temporary impairment that was previously recognized in OCI, net of taxes of $1.1 and $6.1		1.8			11.0
Reclassification from accumulated OCI into earnings of discontinued cash flow hedges, net of taxes of $(0.4) and $(0.7)		(0.7	)		(1.4	)
Foreign currency translation adjustments, net of taxes of $0.3 and $(0.6)		0.5			(1.1	)
SERP liability adjustment, net of taxes of $0.0 and $0.1		0.3			0.2
Minimum pension liability adjustment, net of taxes of $0.2 and $0.0		0.4			0.2

Total other comprehensive income		1.7			6.7


Comprehensive loss before the noncontrolling interest	$	(31.8	)	$	(21.6	)
Comprehensive income attributable to the noncontrolling interest		—			0.9

Comprehensive loss attributable to Wilmington Trust Corporation	$	(31.8	)	$	(22.5	)


¹		Deferred tax assets related to the tax effects shown are offset by a valuation allowance.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. Earnings per share

Computation of basic and diluted earnings per share


	For the three months
	ended March 31,
(in millions, except per share amounts)	2011			2010

Net loss	$	(33.5	)	$	(29.2	)
Dividends and accretion on preferred stock		4.6			4.6

Net loss available to common shareholders	$	(38.1	)	$	(33.8	)

Average common shares issued and outstanding		91.0			76.5

Dilutive common shares from employee stock options, unvested restricted stock, ESPP subscriptions, and stock warrants		—			—

Total diluted common shares issued and outstanding		91.0			76.5

Basic loss per common share	$	(0.42	)	$	(0.44	)
Diluted loss per common share¹	$	(0.42	)	$	(0.44	)
Cash dividends declared per common share	$	—		$	0.01
Anti-dilutive equity instruments excluded from calculation		8.8	²		10.3


¹		To calculate diluted earnings per share, we applied the two-class method under the assumption that all potentially dilutive securities other than the unvested restricted stock had been exercised. For the purposes of this calculation, dilutive shares were determined in accordance with the treasury method.

²		At March 31, 2011, the closing price of our common stock was less than the strike price for all share equivalents.

6. Fair value measurement of assets and liabilities

In accordance with ASC 825, “Financial Instruments,” we disclose the estimated fair values of certain financial instruments, whether or not we recognize them at fair value in our Consolidated Statements of Condition. This note summarizes the methods and assumptions we use to estimate fair value.

Fair value generally is the exchange price on which a willing buyer and a willing seller would agree when market conditions are not distressed. Because of the uncertainties inherent in determining fair value, fair-value estimates may not be precise. Many of our fair-value estimates are based on highly subjective judgments and assumptions we make about market information and economic conditions. Changes in market interest rates or any of the assumptions underlying our estimates could cause our estimates to change significantly.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We measure the fair values of assets and liabilities in accordance with ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 establishes a three-level hierarchy that prioritizes the factors (inputs) used to calculate the fair value of assets and liabilities:

•

Level 1. Level 1 inputs are unadjusted quoted prices, such as NYSE closing prices, in active markets for identical assets. Level 1 is the highest priority in the hierarchy.

•

Level 2. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as other significant inputs that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates, and yield curves.

•

Level 3. Level 3 inputs are unobservable inputs. Typically, our own assumptions determine these inputs, since there is little, if any, related market activity. Level 3 is the lowest priority in the hierarchy.

If we use multiple input levels to calculate the fair value of an asset or liability, then the lowest-level significant input determines the level for the entire fair value measurement of that asset or liability. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the asset or liability.

In accordance with GAAP, we may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. These adjustments typically relate to lower-of-cost or fair value accounting, or write-downs of individual assets due to impairment.

Following is a summary of how we determine fair values and the inputs we use to calculate them.

Cash and due from banks, short-term investments, accrued interest receivable, short-term borrowings, and accrued interest payable. Since these instruments have short maturities, their fair values are approximately the same as their carrying values.

Investment securities. We review our debt and equity investment securities at least quarterly to determine their fair values. The key determinants of fair value are market interest rates, credit spreads, and investor perceptions. When market interest rates rise or credit spreads widen, the fair values of debt and equity securities typically decline and unrealized losses increase. Conversely, when market interest rates fall or credit spreads tighten, the fair values of debt and equity securities typically increase. As a security’s fair value rises, unrealized losses may decrease or unrealized gains may increase.

To determine the fair values of most of our investment securities, we consider a variety of factors and use criteria specified by the SEC and FASB. We use financial market data, credit data, cash flow projections, and other analytics generated internally and by third parties. Where possible, we draw parallels from the trades and quotes of securities with similar features. If these trades and quotes are not available, we base fair values on the market prices of comparable instruments as quoted by broker-dealers, with adjustments for maturity dates, underlying assets, credit ratings, and other items, if necessary.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We base the fair-value estimates of our collateralized mortgage obligations and mortgage-backed debt securities on the quoted prices of similar issues. We base the fair-value estimates of our obligations of state and political subdivisions (municipal bonds) on the quoted prices of similar issues and index rates, taking into account any estimated prepayment rates. We then make sector spread, credit rating spread, and coupon structure spread adjustments to the quoted prices of these similar issues and index rates. We base the fair-value estimates of our government agency securities on the quoted price of the issue or, if this is not available, the quoted price of a similar issue. We base the fair-value estimates of our preferred stocks on the quoted prices of the stocks.

Because the market for pooled trust-preferred securities (TruPS) remains illiquid, we use mainly Level 3 inputs obtained from brokers or third-party advisors to determine the fair values of these securities. We also use an internal model that reflects liquidity and credit risk to discount cash flow projections provided by the third-party advisors.

The base cash flow for these calculations is the remaining expected future cash flow of each pooled TruPS, based on its contractual terms, and adjusted for current and expected future defaults. We adjust our default assumptions each quarter based on, among other factors, the current financial sector environment, developments related to the financial institutions whose securities underlie the pooled TruPS, and estimates of loss severity. We also adjust the discount rate for appropriate risk premiums, including liquidity risk and credit risk. Based on changes in certain yield curves related to the financial sector and other factors, we estimate the associated risk premium for each individual security and adjust its discount rate accordingly.

While estimating fair values and the inputs to fair value calculations in illiquid markets is inherently uncertain, we believe that our methodology applies assumptions that market participants would find relevant, and that it provides the best estimate of fair value at each reporting period.

For more information about our investment securities, read Note 12, “Investment securities,” in these financial statements.

FHLB and FRB stock. The fair value of FHLB and FRB stock is assumed to equal its cost basis, since the stock is nonmarketable but redeemable at its par value.

Derivative financial instruments. We base the fair-value estimates of derivative instruments on pricing models that use assumptions about market conditions and risks that are current as of the reporting date.

We use data provided by an independent third-party advisor to determine the fair values of our interest rate swaps and use a standard methodology that nets the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). We base the variable cash payments (or receipts) on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

To comply with ASC 820, we incorporate credit valuation adjustments to reflect both our nonperformance risk and the respective counterparty’s nonperformance risk. In adjusting the fair value of our derivative contracts for the effects of nonperformance risk, we consider the effects of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Most of the inputs we use to value our swap contracts are Level 2 inputs. For credit valuation adjustments, we use some Level 3 inputs, such as internal estimates of current credit spreads for our swap clients, to evaluate the likelihood of default by us and our counterparties. For more information about our use of derivatives, read Note 7, “Derivative and hedging activities,” in these financial statements.

At times, we may use interest rate swaps and floors, primarily to hedge the interest rate risk associated with floating rate commercial loans and subordinated long-term debt. In accordance with ASC 815, “Derivatives and Hedging,” the estimated fair values of these instruments represent the amounts we would have expected to receive or pay to terminate such agreements.

Loans. To determine the fair values of loans that are not impaired, we use discounted cash flow analyses, which we present net of the reserve for loan losses. In these analyses, we use discount rates that are similar to the interest rates and terms currently being offered to borrowers. The fair values that are shown in the table below include risk premiums that were added to the discount rates used for loans with watchlist or substandard-accruing ratings to reflect the uncertainty of the cash flows within these portfolios. These methodologies are consistent with the guidance in ASC 825-10-55-3, and we believe our disclosures provide fair values that are more indicative of an entry price. This technique does not contemplate an exit price. We do not record loans at fair value on a recurring basis. We record fair value adjustments to loans on a nonrecurring basis to reflect full and partial charge-offs due to impairment. For impaired loans, we use a variety of techniques to measure fair value, such as using the current appraised value of the collateral, discounting the contractual cash flows, and analyzing market data that we may adjust due to the specific characteristics of the loan or collateral.

Loans held for sale. The fair value of loans held for sale was determined based on third-party written offers, third-party broker estimates, or other means such as appraisal data.

Deposits. The fair values of demand deposits equal the amount payable on demand as of the reporting date. The carrying amounts for variable rate deposits approximate their fair values as of the reporting date. To estimate the fair values of fixed rate CDs, we use a discounted cash flow analysis that incorporates prevailing market rates for CDs with comparable maturities.

Long-term debt. Under the guidance of ASC 820, “Fair Value Measurements and Disclosures,” we base the fair value of long-term debt on recent market activity in our own debt issuances.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments to extend credit and letters of credit. The fair values of loan commitments and letters of credit approximate the fees we charge for providing these services.

Carrying values and estimated fair values


	As of March 31, 2011				As of December 31, 2010
	Carrying		Fair		Carrying		Fair
(in millions)	value		value		value		value

Financial assets:
Cash and due from banks	$	166.7	$	166.7	$	153.5	$	153.5
Short-term investments		2,423.3		2,423.3		2,121.8		2,121.8
Investment securities		497.6		504.1		588.7		588.2
FHLB and FRB stock		41.5		41.5		35.6		35.6
Loans, net of reserves		6,701.0		6,595.8		7,085.1		6,993.5
Loans held for sale		24.4		24.4		52.5		52.5
Interest rate swap contracts		34.5		34.5		40.1		40.1
Accrued interest receivable		20.3		20.3		20.8		20.8

Financial liabilities:
Deposits	$	8,839.6	$	8,919.4	$	8,975.1	$	9,053.1
Short-term borrowings		86.4		86.4		123.2		123.2
Interest rate swap contracts		36.0		36.0		41.8		41.8
Accrued interest payable		28.7		28.7		19.6		19.6
Long-term debt		595.5		628.8		595.0		630.6

Fair values measured on a recurring basis

To determine fair values measured on a recurring basis at March 31, 2011:

•

We used Level 1 and Level 2 inputs for investment securities. To determine the proper level of detail for disclosure, we considered the nature of each type of security listed and its associated risk, as well as its industry sector, vintage, geographic concentration, credit quality, and economic characteristics.

•

We used Level 2 inputs for interest rate swap contracts. Credit valuation adjustments did not significantly change the overall valuation of these contracts.

•

There were no transfers between Level 1 and Level 2 during the first three months of 2011.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fair value of assets and liabilities measured on a recurring basis as of March 31, 2011


	Quoted prices
	in active
	markets for		Significant other		Significant
	identical		observable		unobservable
	instruments		inputs		inputs
(in millions)	(Level 1)		(Level 2)		(Level 3)		Total

Assets:
Investment securities available for sale:
U.S. Treasury securities	$	31.8	$	—	$	—	$	31.8
Government agency securities		—		190.4		—		190.4
Obligations of state and political subdivisions		—		9.0		—		9.0
Collateralized mortgage obligations:
Secured by residential mortgages		—		21.9		—		21.9
Mortgage-backed debt securities:
Residential mortgage-backed securities		—		133.0		—		133.0
Preferred stock:
Large financial institutions		—		1.5		—		1.5
Small financial institutions		—		3.0		—		3.0

Total preferred stock		—		4.5		—		4.5
Other marketable equity securities:
Mutual funds		—		3.0		—		3.0
Other		—		1.3		—		1.3

Total other marketable equity securities		—		4.3		—		4.3

Total investment securities available for sale		31.8		363.1		—		394.9
Interest rate swap contracts		—		34.5		—		34.5
Total assets	$	31.8	$	397.6	$	—	$	429.4

Liabilities:
Interest rate swap contracts	$	—	$	36.0	$	—	$	36.0

Total liabilities	$	—	$	36.0	$	—	$	36.0

Fair values measured on a nonrecurring basis

To determine fair values measured on a nonrecurring basis at March 31, 2011:

•

For loans, we used Level 2 or Level 3 inputs, consisting principally of third-party appraisals and the previously described techniques. Loan amounts are based mainly on the fair value of the loan’s collateral or the loan balance, whichever is lower. Typically, loans measured at fair value on a nonrecurring basis are loans for which we have recorded a partial charge-off in the current period. These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet. Also, according to ASC 820, measurements for impaired loans that are determined using a present value technique are not considered fair value measurements under the standard and, therefore, are not included. Because an appraisal values the underlying collateral and not the specific loan, and because the real estate market is not consistent or active for all property types, we consider third-party appraisals to meet the definition of Level 2 inputs as described in ASC 820. Internal appraisals may be considered Level 2 or Level 3 inputs, depending on the factors used in the calculation. We make no adjustments to third-party appraised values, other than costs to sell, in estimating the fair value of the loans.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

•

For loans held for sale, we used a Level 2 input consisting of either an offer price that a third party gave to us on these specific loans, a quote from a third-party broker, or other means, such as appraisal data.

•

For OREO, we used Level 2 or Level 3 inputs, which consist of appraisals or internal estimates of fair value. We record OREO on our balance sheet at the related loan balance or the fair value of the property, net of cost to sell, whichever is lower. We consider third-party appraisals to meet the definition of Level 2 inputs.

•

For TruPS, we used Level 2 and Level 3 inputs, as continued illiquidity in the market for these instruments made it difficult to determine their valuation. We use input information, provided by third-party advisors and brokers in an internal model that considers liquidity and credit risk, to discount cash flow projections.

At March 31, 2011, all of our held-to-maturity (HTM) investment securities with fair values measured on a nonrecurring basis were OTTI TruPS. For more information about these securities, read Note 12, “Investment securities,” in these financial statements.

Fair value of assets and liabilities measured on a nonrecurring basis as of March 31, 2011


	Quoted prices in		Significant
	active markets for		other		Significant
	identical		observable		unobservable
	instruments		inputs		inputs
(in millions)	(Level 1)		(Level 2)		(Level 3)		Total

Loans	$	16.6	$	40.3	$	14.3	$	71.2
Loans held for sale		—		24.4		—		24.4
OREO		—		25.3		—		25.3
Investment securities held to maturity:
Pooled trust-preferred securities		—		17.6		—		17.6

Total assets	$	16.6	$	107.6	$	14.3	$	138.5

Liabilities	$	—	$	—	$	—	$	—

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. Derivative and hedging activities

We may use derivative financial instruments, primarily interest rate swaps and floors, to help manage (hedge) the effects that changes in market interest rates may have on net interest income, the fair value of assets and liabilities, and cash flows. We do not hold or issue derivative financial instruments for trading purposes. We account for derivative financial instruments in accordance with ASC 815, “Derivatives and Hedging,” and calculate their fair values in accordance with ASC 820, “Fair Value Measurements and Disclosures.”

As of March 31, 2011, we had:

•

A total notional amount of $1.04 billion in interest rate swap contracts.

•

No other derivative instruments.

Fair value of derivative instruments


	At March 31,		At December 31,
(in millions)	2011		2010
Asset derivatives recorded in other assets:
Interest rate swap contracts	$	34.5	$	40.1

Total asset derivatives	$	34.5	$	40.1

Liability derivatives recorded in other liabilities:
Interest rate swap contracts	$	36.0	$	41.8

Total liability derivatives	$	36.0	$	41.8

We use interest rate swaps to allow commercial borrowers to manage their interest rate risk. When we enter into an interest rate swap contract with a commercial loan client, we simultaneously enter into a “mirror” swap contract with a third party (counterparty). We retain the credit risk inherent in making a commercial loan. The swap with the counterparty effectively exchanges the client’s fixed rate loan payments for floating rate loan payments. These counterparties are large international money center banks. Our arrangements with some of these counterparties require us to post collateral when our swaps are in a liability position. When our swaps are in an asset position, we retain the credit risk that is associated with the potential failure of these counterparties, and our arrangements with some of these counterparties allow us to request collateral.

As of March 31, 2011:

•

We had 118 client swap contracts with a total notional amount of $519.7 million and an equal amount of “mirror” swap contracts with third-party financial institutions, for a total notional amount of $1.04 billion in swaps associated with loans to clients.

•

All of our interest rate swaps were associated with loans to commercial clients.

•

Most of our “mirror” counterparty swaps were in liability positions.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Client swap contract gain/(loss) recognized in other noninterest income


	For the three months ended
	March 31,
(in millions)	2011			2010
Interest rate swap contracts in asset positions	$	(5.6	)	$	0.2
Interest rate swap contracts in liability positions		5.8			(1.0	)

Total	$	0.2		$	(0.8	)

We have not designated our client swap contracts and the related “mirror” swaps as hedging instruments under ASC 815, and we have not applied hedge accounting to these instruments. We record gains and losses associated with these contracts in our income statement in the “other noninterest income” line. We do not offset amounts for the right to reclaim collateral (a receivable) or the obligation to return collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty. At March 31, 2011, we had $14.2 million of cash collateral posted with our counterparties, compared with $17.0 million at December 31, 2010. These balances are recorded in the “interest-bearing deposits in other banks” line of our statement of condition.

All of our “mirror” (non-client) swap derivative contracts have credit risk contingent features that, if triggered, could require us to post collateral or make payments in full settlement of our obligations to the third parties. Collateral requirements are based on contractual arrangements and vary by counterparty. The amount of collateral we are required to post is based on:

The termination values (fair value excluding the credit valuation adjustment) of the swaps,

Thresholds defined in the swap contracts, and

The risk associated with the securities that we pledge, which may result in collateral postings that exceed the termination values of the collateralized swaps.

These credit risk contingent features include:

•

Cross-default provisions. The agreements with each of our non-client swap derivative counterparties contain cross-default provisions. If we were to default on certain obligations, independent of our swap obligations, then we also could be declared in default on our derivative obligations and the swap arrangement could terminate.

•

Credit rating contingent features resulting in a collateral call. The agreements with some of our non-client swap derivative counterparties contain provisions which could increase the amount of collateral we are required to post if certain credit rating agencies downgrade our credit ratings.

•

Credit rating contingent features resulting in swap termination. The agreement with one of our non-client swap derivative counterparties contains a provision under which the counterparty could terminate the swap agreement if our credit ratings fall below investment grade. Currently, certain of our credit ratings are below investment grade.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At March 31, 2011:

•

The aggregate fair value of all derivative instruments with credit risk-related contingent features that were in liability positions was $36.0 million, for which we had posted collateral of $36.4 million in cash and mortgage-related securities in the normal course of business.

•

The aggregate fair value of all derivative instruments with cross-default provisions that were in liability positions was $36.0 million. If all of our “mirror” swaps had terminated on March 31, 2011, due to cross-default provisions, we could have been required to settle our obligations under these agreements at their termination values of $36.0 million. At March 31, 2011, we had already posted $36.4 million as collateral with our counterparties.

•

The aggregate fair value of all derivative instruments with collateral call provisions related to the credit rating contingent feature that were in liability positions was $29.7 million. As of March 31, 2011, additional credit rating downgrades would not have resulted in additional collateral calls.

•

The derivative instrument with a contingent feature resulting in a swap termination was in a liability position. Its fair value was $1.5 million, and no collateral was posted. If this swap had terminated on March 31, 2011, the credit rating-contingent feature could have required us to settle this arrangement at its termination value of $1.5 million.

At December 31, 2010:

•

The aggregate fair value of all derivative instruments with credit risk-related contingent features that were in liability positions was $41.8 million, for which we had posted collateral of $50.0 million in cash and mortgage-related securities in the normal course of business.

•

The aggregate fair value of all derivative instruments with cross-default provisions that were in liability positions was $41.8 million. If all of our “mirror” swaps had terminated on December 31, 2010, due to cross-default provisions, we could have been required to settle our obligations under these agreements at their termination values of $41.9 million. At December 31, 2010, we had already posted $50.0 million as collateral with our counterparties.

•

The aggregate fair value of all derivative instruments with collateral call provisions related to the credit rating contingent feature that were in liability positions was $34.7 million. As of December 31, 2010, additional credit rating downgrades could have resulted in a maximum collateral call of $0.6 million.

•

The derivative instrument with a contingent feature resulting in a swap termination was in a liability position. Its fair value was $1.6 million, and no collateral was posted. If this swap had terminated on December 31, 2010, the credit rating-contingent feature could have required us to settle this arrangement at its termination value of $1.7 million.

•

During 2010, 4 swaps with a total notional value of $26.0 million were terminated when borrowers defaulted on their loans, resulting in $2.1 million of expense.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We sold all of our interest rate floor contracts in January 2008. We realized a gain of $35.5 million on the sale of these contracts, which had a notional amount of $1.00 billion. We are reclassifying this gain from accumulated other comprehensive income to interest and fees on loans based on the remaining terms of the originally hedged portfolio of loans. These monthly reclassifications began in February 2008 and will continue until July 2014.

We reclassified $1.0 million of this gain into income during the first three months of 2011. Between April 1, 2011 and March 31, 2012, we expect to reclassify approximately $2.3 million of pretax net gains, or approximately $1.4 million after tax, on discontinued cash flow hedges reported in accumulated other comprehensive income. If we add other hedges, the amounts we actually recognize could differ from these estimates.

For more information about our derivative and hedging activities and how we account for them, read Note 3, “Summary of significant accounting policies,” and Note 16, “Derivative and hedging activities,” in our 2010 Annual Report on Form 10-K. For more information about the fair values of derivatives, read Note 6, “Fair value measurement of assets and liabilities,” in this report, and Note 15, “Fair value measurement of assets and liabilities,” in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8. Loans, loans held for sale, and OREO

Loan concentrations

Loans as a percentage of total loans outstanding


	March 31,			December 31,
	2011			2010
Commercial, financial, and agricultural		29	%		29	%
Commercial real estate — construction		18	%		19	%
Commercial mortgage		27	%		26	%
Residential mortgage		6	%		6	%
Consumer		15	%		15	%
Secured with investments		5	%		5	%

In addition to loans outstanding, we had unfunded commitments to lend in the real estate sector of approximately $604.1 million and $686.7 million at March 31, 2011 and December 31, 2010, respectively. For more information on this, read Note 9, “Credit quality and the reserve for loan losses,” in these financial statements.

For more information about loan concentrations, read Note 8, “Loans, loans held for sale, and OREO,” in our 2010 Annual Report on Form 10-K.

Composition of commercial real estate — construction portfolio


	March 31,			December 31,
	2011			2010
Project type:
Residential real estate construction		44	%		46	%
Land development		24	%		23	%
Retail and office		16	%		15	%
Owner-occupied		2	%		1	%
Multi-family		7	%		8	%
Other		7	%		7	%

Geographic location:
Delaware		55	%		55	%
Pennsylvania		27	%		25	%
Maryland		5	%		6	%
New Jersey		12	%		12	%
Other		1	%		2	%

In addition to servicing our own residential mortgage loan portfolio, we service $770.8 million of residential mortgage loans for Fannie Mae and other private investors. For more information about mortgage servicing rights, read Note 10, “Goodwill and other intangible assets,” in these financial statements.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At March 31, 2011, loans with an aggregate book value of $877.2 million were pledged as collateral to provide borrowing capacity at the Federal Reserve.

Loans with interest reserves

As part of our construction project financing, we employ interest reserves. Using interest reserves benefits both us and our borrowers, because interest reserves provide borrowers with temporary sources of cash flow which they can use to make interest payments during the development/construction phases of projects. We allow payments from interest reserves as they reach various stages of completion, and because we expect that cash flows will be positive once sales begin and/or stabilization occurs. We record these payments as interest income and we capitalize them by increasing the loan principal due from the borrower. We monitor loans with interest reserves throughout the project’s life and periodically evaluate the loan for an appropriate risk rating, interest accrual status, and classification as a troubled restructured loan. We may suspend interest accrual on loans that are not currently delinquent, but which have risk rating classifications of substandard or lower. We place loans and lines of credit with risk ratings of substandard or lower, and which depend on interest reserves for future interest payments, on nonaccruing status. At times, we may modify the terms of loans with interest reserves. These modifications may include maturity extensions, renewals, changes in the loan’s interest rate, additional collateral requirements, and/or additional capital infusions into the project by the borrower to reduce debt or to support future debt service. These modifications typically result from delays or other issues in the underlying construction projects, such as slower-than-anticipated sell-outs of the projects, insufficient leasing activity, and/or depreciation in the values of the collateral securing the loans. Under such circumstances, we believe that working with a borrower to restructure a loan provides us with a better likelihood of recovering our loan. At March 31, 2011, we had $206.8 million of loans that were supported by $15.9 million of interest reserve balances. Included in the $206.8 million of loans were $69.2 million of nonaccruing loans that were supported by interest reserves. At December 31, 2010, we had $274.5 million of loans that were supported by $22.2 million of interest reserve balances. Included in the $274.5 million of loans were $92.4 million of nonaccruing loans that were supported by interest reserves.

OREO

We had $67.0 million and $45.6 million in OREO held for sale as of March 31, 2011 and December 31, 2010, respectively. During the first three months of 2011, property valued at $28.7 million was transferred to OREO and we had sales and write-downs of $7.3 million, which resulted in a net loss of $0.1 million. This loss is in the “OREO write-down/losses and reserve for unfunded lending commitments” line of the statement of income.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Loans held for sale

At March 31, 2011, we had $24.4 million of loans in the loans-held-for-sale category because we were actively engaged in a plan to sell these loans in the future. The types of loans that comprise the loans-held-for-sale balance are shown in the following table:


	At March 31,		At December 31,
(in millions)	2011		2010

Commercial, financial, and agricultural	$	6.0	$	6.7
Commercial real estate — construction		10.0		23.7
Commercial mortgage		6.7		20.4
Consumer		1.7		1.7

Total	$	24.4	$	52.5

Loans held for sale decreased $28.1 million from the balance at December 31, 2010. In the first quarter, we sold $22.5 million of our loans held for sale and realized a $2.4 million loss on the sale. The remaining decrease in loans held for sale of $5.6 million was due to a combination of additional write-downs, payments on held-for-sale loans and transfers into/out of the held-for-sale category. The fair value of loans held for sale was determined either on an aggregate basis, aggregated by lending relationship, using third-party written offers or third-party broker estimates, or on an individual basis using appraisal data or other means.

Nonaccruing and accruing status of loans held for sale
At March 31, 2011


(in millions)	Nonaccruing^1,3		Accruing^2,3

Commercial, financial, and agricultural	$	6.0	$	—
Commercial real estate — construction		10.0		—
Commercial mortgage		6.7		—
Consumer		—		1.7

Total	$	22.7	$	1.7


¹		All of the nonaccruing loans held for sale are greater than 90 days past due and have substandard ratings.

²		None of the accruing loans held for sale are delinquent.

³		There was no troubled restructured debt in accruing or nonaccruing loans held for sale.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. Credit quality and the reserve for loan losses

Credit quality indicators

Information about our primary credit quality indicators is shown in the tables below. For more information about this, read Note 9, “Credit quality and the reserve for loan losses,” in our 2010 Annual Report on Form 10-K.

Internal risk-rating analysis
At March 31, 2011


							Doubtful		Total loan
(in millions)	Pass		Watchlist		Substandard		& loss		balance

Commercial, financial, and agricultural — auto dealer floorplan	$	110.3	$	14.8	$	30.3	$	—	$	155.4
Commercial, financial, and agricultural — other		1,154.1		166.1		535.1		16.5		1,871.8

Total commercial, financial, and agricultural		1,264.4		180.9		565.4		16.5		2,027.2

Real estate — construction — land development		45.3		75.0		166.5		30.3		317.1
Real estate — construction — residential construction		101.2		41.1		376.4		50.7		569.4
Real estate — construction — other		253.1		59.5		99.2		2.2		414.0

Total real estate — construction		399.6		175.6		642.1		83.2		1,300.5

Commercial mortgage — owner occupied		668.0		117.8		235.2		2.8		1,023.8
Commercial mortgage — non-owner occupied		600.3		118.3		174.9		0.8		894.3

Total commercial mortgage		1,268.3		236.1		410.1		3.6		1,918.1

Residential mortgage ²		400.3		—		25.3		—		425.6

Consumer — loans to commercial clients ¹		43.1		5.7		25.6		0.2		74.6
Consumer — other ²		975.8		—		11.3		—		987.1

Total consumer		1,018.9		5.7		36.9		0.2		1,061.7

Loans secured with investments		347.2		7.4		18.8		4.0		377.4

Total	$	4,698.7	$	605.7	$	1,698.6	$	107.5	$	7,110.5


¹		Consumer loans to commercial clients are consumer loans that are more complex than other typical consumer loans, are usually related to commercial loan relationships, and are managed by commercial loan staff in a manner similar to commercial loans.

²		We included consumer loans and residential mortgage loans that do not receive risk ratings in this analysis. We included these loans in the substandard category if they are nonaccruing and in the pass category if they are accruing. We consider the primary credit quality indicator of these types of loans to be the delinquency status. Please refer to the loan aging analysis table in this note for details regarding retail loan aging.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At December 31, 2010


							Doubtful		Total loan
(in millions)	Pass		Watchlist		Substandard		& loss		balance

Commercial, financial, and agricultural — auto dealer floorplan	$	153.3	$	15.2	$	52.3	$	—	$	220.8
Commercial, financial, and agricultural — other		1,181.6		195.9		557.0		23.3		1,957.8

Total commercial, financial, and agricultural		1,334.9		211.1		609.3		23.3		2,178.6

Real estate — construction — land development		80.5		39.9		176.8		31.7		328.9
Real estate — construction — residential construction		117.3		77.3		408.9		56.2		659.7
Real estate — construction — other		283.0		46.2		107.5		3.8		440.5

Total real estate — construction		480.8		163.4		693.2		91.7		1,429.1

Commercial mortgage — owner occupied		686.9		153.7		201.1		0.1		1,041.8
Commercial mortgage — non-owner occupied		630.3		138.4		148.7		0.3		917.7

Total commercial mortgage		1,317.2		292.1		349.8		0.4		1,959.5

Residential mortgage ²		405.5		—		29.1		—		434.6

Consumer — loans to commercial clients ¹		44.2		6.2		26.9		0.2		77.5
Consumer — other ²		1,039.7		—		17.1		—		1,056.8

Total consumer		1,083.9		6.2		44.0		0.2		1,134.3

Loans secured with investments		362.7		0.6		22.6		3.9		389.8

Total	$	4,985.0	$	673.4	$	1,748.0	$	119.5	$	7,525.9


¹		Consumer loans to commercial clients are consumer loans that are more complex than other typical consumer loans, are usually related to commercial loan relationships, and are managed by commercial loan staff in a manner similar to commercial loans.

²		We included consumer loans and residential mortgage loans that do not receive risk ratings in this analysis. We included these loans in the substandard category if they are nonaccruing and in the pass category if they are accruing. We consider the primary credit quality indicator of these types of loans to be the delinquency status. Please refer to the loan aging analysis table in this note for details regarding retail loan aging.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Loan aging analysis

At March 31, 2011


	30-59		60-89		90 days
	days past		days past		or more		Total past
(in millions)	due		due		past due		due		Current		Total loans

Commercial, financial, and agricultural — auto dealer floorplan	$	—	$	—	$	0.2	$	0.2	$	155.2	$	155.4
Commercial, financial, and agricultural — other		34.9		4.4		280.0		319.3		1,552.5		1,871.8

Total commercial, financial, and agricultural		34.9		4.4		280.2		319.5		1,707.7		2,027.2

Real estate — construction — land development		4.1		9.9		127.5		141.5		175.6		317.1
Real estate — construction — residential construction		16.6		1.3		317.2		335.1		234.3		569.4
Real estate — construction — other		23.7		0.7		70.5		94.9		319.1		414.0

Total real estate — construction		44.4		11.9		515.2		571.5		729.0		1,300.5

Commercial mortgage — owner occupied		15.0		0.8		87.4		103.2		920.6		1,023.8
Commercial mortgage — non-owner occupied		16.0		16.6		84.6		117.2		777.1		894.3

Total commercial mortgage		31.0		17.4		172.0		220.4		1,697.7		1,918.1

Residential mortgage		17.5		—		22.3		39.8		385.8		425.6

Consumer — home equity		2.4		1.0		7.0		10.4		512.7		523.1
Consumer — indirect secured		5.0		0.8		3.5		9.3		353.1		362.4
Consumer — direct secured		0.1		0.1		0.1		0.3		17.5		17.8
Consumer — unsecured		0.7		0.5		0.7		1.9		80.8		82.7
Consumer — overdrafts		—		—		—		—		1.1		1.1
Consumer — loans to commercial clients		1.4		—		21.2		22.6		52.0		74.6

Total consumer		9.6		2.4		32.5		44.5		1,017.2		1,061.7

Loans secured with investments		12.5		0.1		8.8		21.4		356.0		377.4

Total	$	149.9	$	36.2	$	1,031.0	$	1,217.1	$	5,893.4	$	7,110.5

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At December 31, 2010


	30-59		60-89		90 days
	days past		days past		or more		Total past
(in millions)	due		due		past due		due		Current		Total loans

Commercial, financial, and agricultural — auto dealer floorplan	$	—	$	—	$	0.3	$	0.3	$	220.5	$	220.8
Commercial, financial, and agricultural — other		9.6		3.7		294.3		307.6		1,650.2		1,957.8

Total commercial, financial, and agricultural		9.6		3.7		294.6		307.9		1,870.7		2,178.6

Real estate — construction — land development		8.1		2.6		127.7		138.4		190.5		328.9
Real estate — construction — residential construction		23.1		2.4		373.6		399.1		260.6		659.7
Real estate — construction — other		3.0		0.3		57.2		60.5		380.0		440.5

Total real estate — construction		34.2		5.3		558.5		598.0		831.1		1,429.1

Commercial mortgage — owner occupied		11.9		5.4		59.7		77.0		964.8		1,041.8
Commercial mortgage — non-owner occupied		15.3		0.9		78.8		95.0		822.7		917.7

Total commercial mortgage		27.2		6.3		138.5		172.0		1,787.5		1,959.5

Residential mortgage		22.3		—		25.3		47.6		387.0		434.6

Consumer — home equity		1.5		0.6		11.8		13.9		525.1		539.0
Consumer — indirect secured		7.7		1.3		3.1		12.1		399.7		411.8
Consumer — direct secured		0.2		—		0.3		0.5		12.0		13.7
Consumer — unsecured		0.9		0.6		0.8		2.3		86.6		88.9
Consumer — overdrafts		—		—		—		—		3.4		3.4
Consumer — loans to commercial clients		0.6		—		20.9		21.5		57.2		77.5

Total consumer		10.9		2.5		36.9		50.3		1,084.0		1,134.3

Loans secured with investments		5.9		0.1		12.6		18.6		371.2		389.8

Total	$	110.1	$	17.9	$	1,066.4	$	1,194.4	$	6,331.5	$	7,525.9

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Nonaccruing loans and accruing loans past due 90 days or more

At March 31, 2011


			Accruing loans
	Nonaccruing		past due 90 days
(in millions)	loans		or more

Commercial, financial, and agricultural — auto dealer floorplan	$	0.2	$	—
Commercial, financial, and agricultural — other		278.1		1.9

Total commercial, financial, and agricultural		278.3		1.9

Real estate — construction — land development		119.4		8.1
Real estate — construction — residential construction		311.9		5.3
Real estate — construction — other		67.2		3.3

Total real estate — construction		498.5		16.7

Commercial mortgage — owner occupied		80.0		7.4
Commercial mortgage — non-owner occupied		79.7		4.9

Total commercial mortgage		159.7		12.3

Residential mortgage		22.3		—

Consumer — home equity		7.0		—
Consumer — indirect secured		3.5		—
Consumer — direct secured		0.1		—
Consumer — unsecured		—		0.7
Consumer — overdrafts		—		—
Consumer — loans to commercial clients		21.2		—

Total consumer		31.8		0.7

Loans secured with investments		8.0		0.8

Total	$	998.6	$	32.4

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At December 31, 2010


			Accruing loans
	Nonaccruing		past due 90 days
(in millions)	loans		or more

Commercial, financial, and agricultural — auto dealer floorplan	$	0.3	$	—
Commercial, financial, and agricultural — other		285.8		8.5

Total commercial, financial, and agricultural		286.1		8.5

Real estate — construction — land development		114.8		12.9
Real estate — construction — residential construction		356.8		16.8
Real estate — construction — other		55.0		2.2

Total real estate — construction		526.6		31.9

Commercial mortgage — owner occupied		51.6		8.1
Commercial mortgage — non-owner occupied		72.4		6.4

Total commercial mortgage		124.0		14.5

Residential mortgage		25.3		—

Consumer — home equity		11.8		—
Consumer — indirect secured		3.1		—
Consumer — direct secured		0.3		—
Consumer — unsecured		0.1		0.7
Consumer — overdrafts		—		—
Consumer — loans to commercial clients		20.9		—

Total consumer		36.2		0.7

Loans secured with investments		11.4		1.2

Total	$	1,009.6	$	56.8

Effect of nonaccruing loans on interest income


	At		At
(in millions)	March 31, 2011		December 31, 2010

Nonaccruing loans	$	998.6	$	1,009.6


	Q1 2011		Q1 2010
Interest income that would have been recognized on nonaccruing loans under original terms	$	18.3	$	6.7
Payments received recorded as interest income on nonaccruing loans	$	0.7	$	0.7

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The reserve for loan losses

We establish a reserve for loan losses in accordance with GAAP by charging a provision for loan losses against income. Determining the reserve for loan losses is an inherently subjective process. Estimates we make, including estimates of collateral values and the amounts and timing of payments we expect to receive on impaired loans, may be susceptible to significant change. If actual circumstances differ substantially from the assumptions we use to determine the reserve, including continued declines in the collateral values supporting our loans, worsening financial conditions of some of our borrowers, and continued lack of improvement in the Delaware economy, future adjustments to the reserve may be necessary. This could have a material adverse effect on our results of operations and financial condition. For more information about the reserve for loan losses, read Note 9, “Credit quality and the reserve for loan losses,” in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Changes in the reserve for loan losses


	For the three months ended
	March 31,
(in millions)	2011			2010
Reserve for loan losses at beginning of period:
Commercial, financial, and agricultural loans	$	140.7		$	65.9
Commercial real estate — construction loans		188.5			100.8
Commercial mortgage loans		61.6			40.6
Residential mortgage		5.9			3.3
Consumer and other retail loans		39.4			36.4
Loans secured with investments		4.7			4.5

Total reserve for loan losses at beginning of period	$	440.8		$	251.5
Loans charged off:
Commercial, financial, and agricultural loans	$	(33.2	)	$	(8.2	)
Commercial real estate — construction loans		(43.2	)		(12.1	)
Commercial mortgage loans		(2.5	)		(2.4	)
Residential mortgage		(0.1	)		—
Consumer and other retail loans		(5.5	)		(8.1	)

Total loans charged off	$	(84.5	)	$	(30.8	)
Recoveries on loans previously charged off:
Commercial, financial, and agricultural loans	$	1.7		$	0.3
Commercial real estate — construction loans		1.0			—
Commercial mortgage loans		0.1			—
Consumer and other retail loans		1.2			1.4

Total recoveries	$	4.0		$	1.7
Net loans charged off:
Commercial, financial, and agricultural loans	$	(31.5	)	$	(7.9	)
Commercial real estate — construction loans		(42.2	)		(12.1	)
Commercial mortgage loans		(2.4	)		(2.4	)
Residential mortgage		(0.1	)		—
Consumer and other retail loans		(4.3	)		(6.7	)

Total net loans charged off	$	(80.5	)	$	(29.1	)
Provision charged to operations:
Commercial, financial, and agricultural loans	$	11.2		$	16.7
Commercial real estate — construction loans		22.6			38.5
Commercial mortgage loans		7.1			12.9
Residential mortgage		0.5			0.9
Consumer and other retail loans		0.4			9.4
Loans secured with investments		(0.5	)		(1.0	)

Total provision charged to operations	$	41.3		$	77.4
Transfers from reserve for lending commitments
Commercial, financial, and agricultural loans	$	7.9		$	—

Total transfers from reserve for lending commitments	$	7.9		$	—
Reserve for loan losses at end of period:
Commercial, financial, and agricultural loans	$	128.3		$	74.7
Commercial real estate — construction loans		168.9			127.3
Commercial mortgage loans		66.3			51.2
Residential mortgage		6.3			4.1
Consumer and other retail loans		35.5			39.0
Loans secured with investments		4.2			3.5

Total reserve for loan losses at end of period	$	409.5		$	299.8

Reserve for lending commitments in other liabilities	$	45.4		$	8.9

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reserve analysis
At March 31, 2011


	Loan balances						Reserve balances
	Individually		Collectively				Individually		Collectively
	evaluated for		evaluated for				evaluated for		evaluated for
(in millions)	impairment		impairment		Total		impairment		impairment		Total

Commercial, financial, and agricultural	$	281.8	$	1,745.4	$	2,027.2	$	47.6	$	80.7	$	128.3
Commercial real estate — construction		498.8		801.7		1,300.5		72.6		96.3		168.9
Commercial mortgage		172.4		1,745.7		1,918.1		12.5		53.8		66.3
Residential mortgage		27.6		398.0		425.6		1.8		4.5		6.3
Consumer		33.4		1,028.3		1,061.7		4.2		31.3		35.5
Loans secured with investments		16.2		361.2		377.4		—		4.2		4.2

Total	$	1,030.2	$	6,080.3	$	7,110.5	$	138.7	$	270.8	$	409.5

At December 31, 2010


	Loan balances						Reserve balances
	Individually		Collectively				Individually		Collectively
	evaluated for		evaluated for				evaluated for		evaluated for
(in millions)	impairment		impairment		Total		impairment		impairment		Total

Commercial, financial, and agricultural	$	303.7	$	1,874.9	$	2,178.6	$	60.7	$	80.0	$	140.7
Commercial real estate — construction		526.6		902.5		1,429.1		83.6		104.9		188.5
Commercial mortgage		137.3		1,822.2		1,959.5		13.1		48.5		61.6
Residential mortgage		29.4		405.2		434.6		1.5		4.4		5.9
Consumer		38.2		1,096.1		1,134.3		5.2		34.2		39.4
Loans secured with investments		19.6		370.2		389.8		—		4.7		4.7

Total	$	1,054.8	$	6,471.1	$	7,525.9	$	164.1	$	276.7	$	440.8

Impaired loans


	At		At
	March 31,		December 31,
(in millions)	2011		2010

Impaired loans subject to a reserve for loan losses:
2011 reserve: $138.7	$	405.8
2010 reserve: $164.1			$	451.9
Impaired loans requiring no reserve for loan losses, net of cumulative charge-offs of:
2011 cumulative charge-offs: $300.0	$	624.4
2010 cumulative charge-offs: $291.4			$	602.9

Total impaired loans	$	1,030.2	$	1,054.8

Impaired loans classified as nonaccruing¹	$	998.6	$	1,009.6
Impaired loans classified as troubled restructured debt (accruing)	$	30.6	$	43.9

¹ Includes nonaccruing loans that are classified as troubled debt restructurings	$	42.9	$	38.1

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	For the three months ended
	March 31, 2011
	Average				Interest income
	investment		Interest income		recognized on
	recorded in		recognized on		impaired loans
(in millions)	impaired loans		impaired loans		(cash basis)¹

Commercial, financial, and agricultural — auto dealer floorplan	$	0.3	$	—	$	—
Commercial, financial, and agricultural — other		306.4		—		0.3

Total commercial, financial, and agricultural		306.7		—		0.3

Real estate — construction — land development		370.7		—		0.1
Real estate — construction — residential construction		79.8		—		—
Real estate — construction — other		68.0		—		—

Total real estate — construction		518.5		—		0.1

Commercial mortgage — owner occupied		82.2		0.2		0.2
Commercial mortgage — non-owner occupied		77.2		—		0.1

Total commercial mortgage		159.4		0.2		0.3

Residential mortgage		29.0		—		—

Consumer — home equity		7.5		—		0.1
Consumer — indirect secured		3.3		0.1		0.1
Consumer — direct secured		0.2		—		—
Consumer — unsecured		0.9		—		—
Consumer — overdrafts		—		—		—
Consumer — loans to commercial clients		20.8		—		—

Total consumer		32.7		0.1		0.2

Loans secured with investments		18.3		0.1		0.1

Total	$	1,064.6	$	0.4	$	1.0


¹		Interest income recognized on impaired loans using the cash basis method of income recognition.


	For the three
	months ended
(in millions)	March 31, 2010

Average investment recorded in impaired loans	$	515.9

Interest income recognized on impaired loans	$	1.2

Interest income recognized using the cash basis method of income recognition	$	1.2

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Impaired loans with no related reserve recorded


	At March 31, 2011				At December 31, 2010
			Unpaid				Unpaid
	Loan		principal		Loan		principal
(in millions)	balance ¹		balance		balance ¹		balance

Commercial, financial, and agricultural — auto dealer floorplan	$	0.1	$	0.1	$	0.2	$	0.2
Commercial, financial, and agricultural — other		174.9		222.3		161.7		215.6

Total commercial, financial, and agricultural		175.0		222.4		161.9		215.8

Real estate — construction — land development		209.8		404.1		222.2		397.6
Real estate — construction — residential construction		51.8		71.9		57.7		78.6
Real estate — construction — other		29.1		49.6		37.9		55.4

Total real estate — construction		290.7		525.6		317.8		531.6

Commercial mortgage — owner occupied		59.3		66.1		35.9		43.7
Commercial mortgage — non-owner occupied		51.6		61.4		37.4		49.2

Total commercial mortgage		110.9		127.5		73.3		92.9

Residential mortgage		12.6		12.6		10.6		10.6

Consumer — home equity		1.3		1.3		3.4		3.4
Consumer — indirect secured		—		—		—		—
Consumer — direct secured		—		—		—		—
Consumer — unsecured		—		—		—		—
Consumer — overdrafts		—		—		—		—
Consumer — loans to commercial clients		17.7		18.8		16.3		19.8

Total consumer		19.0		20.1		19.7		23.2

Loans secured with investments		16.2		16.2		19.6		20.2

Total	$	624.4	$	924.4	$	602.9	$	894.3


¹		Loan balance is net of cumulative charge-offs, if any.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Impaired loans with a reserve recorded


	At March 31, 2011						At December 31, 2010
			Unpaid						Unpaid
	Loan		principal		Related		Loan		principal		Related
(in millions)	balance ¹		balance		Reserve		balance ¹		balance		reserve

Commercial, financial, and agricultural — auto dealer floorplan	$	0.1	$	0.1	$	—	$	12.9	$	14.5	$	0.4
Commercial, financial, and agricultural — other		106.7		112.3		47.6		128.9		139.0		60.3

Total commercial, financial, and agricultural		106.8		112.4		47.6		141.8		153.5		60.7

Real estate — construction — land development		139.1		149.9		49.8		156.1		168.9		61.1
Real estate — construction — residential construction		23.0		24.2		14.8		26.5		27.0		13.2
Real estate — construction — other		46.0		46.4		8.0		26.2		26.9		9.3

Total real estate — construction		208.1		220.5		72.6		208.8		222.8		83.6

Commercial mortgage — owner occupied		33.4		34.0		4.6		28.3		29.0		4.8
Commercial mortgage — non-owner occupied		28.1		28.7		7.9		35.7		35.8		8.3

Total commercial mortgage		61.5		62.7		12.5		64.0		64.8		13.1

Residential mortgage		15.0		15.0		1.8		18.8		18.8		1.5

Consumer — home equity		6.8		6.8		1.3		9.4		9.4		2.3
Consumer — indirect secured		3.4		3.4		0.5		3.1		3.1		0.3
Consumer — direct secured		0.1		0.1		—		0.5		0.5		0.2
Consumer — unsecured		0.7		0.7		0.8		0.9		0.9		0.5
Consumer — overdrafts		—		—		—		—		—		—
Consumer — loans to commercial clients		3.4		4.0		1.6		4.6		5.2		1.9

Total consumer		14.4		15.0		4.2		18.5		19.1		5.2

Loans secured with investments		—		—		—		—		—		—

Total	$	405.8	$	425.6	$	138.7	$	451.9	$	479.0	$	164.1


¹		Loan balance is net of cumulative charge-offs, if any.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The reserve for unfunded commitments

In accordance with current accounting policies, we record a separate reserve amount on our balance sheet under other liabilities for unfunded loan commitments, mainly letters of credit. This reserve is based on assumptions about the probability of draws on these commitments, their risk ratings, and the estimated losses that we may incur if the commitments are drawn upon. Increases and decreases to this reserve are recorded in the “OREO write-downs/losses and reserve for unfunded commitments” line of the statement of income.

Reserve for unfunded lending commitments roll-forward
For the three months ended March 31, 2011


(in millions)
Reserve for unfunded commitments at January 1, 2011	$	58.2
Additions due to new commitments during the period		5.4
Reductions due to expired or funded commitments during the period		(19.8	)
Additions due to changes in reserve assumptions during the period ¹		1.5

Net change in reserve for unfunded commitments		(12.9	)
Reserve for unfunded commitments at March 31, 2011	$	45.3


¹		The major assumptions used in determining the reserve amount are funding probability, credit quality of the underlying borrower, and historical loss experience.

Unfunded lending commitments


	At		At
(in millions)	March 31, 2011		December 31, 2010

Unfunded commitments to extend credit	$	2,168.3	$	2,282.3
Standby and commercial letters of credit		221.9		248.3

Total exposure to unfunded commitments	$	2,390.2	$	2,530.6

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10. Goodwill and other intangible assets


	At March 31, 2011							At December 31, 2010
	Gross					Net		Gross				Net
	carrying		Accumulated			carrying		carrying		Accumulated		carrying
(in millions)	amount		amortization			amount		amount		amortization		amount
Goodwill (nonamortizing)	$	366.6	$	29.8		$	336.8	$	366.1	$	29.8	$	336.3
Other intangibles (amortizing):
Mortgage servicing rights	$	13.6	$	10.5		$	3.1	$	13.5	$	10.2	$	3.3
Client lists		62.7		38.7			24.0		62.6		37.1		25.5
Acquisition costs		1.7		1.7			—		1.7		1.7		—
Other intangibles		2.1		1.7			0.4		2.1		1.7		0.4

Total other intangibles	$	80.1	$	52.6	¹	$	27.5	$	79.9	$	50.7	$	29.2


¹		The change in accumulated amortization during the first three months of 2011 included an increase of $0.1 million due to foreign currency translation adjustments.

Amortization expense of other intangible assets


	For the three months ended
	March 31,
(in millions)	2011		2010
Amortization expense of other intangible assets	$	1.8	$	2.3

Future amortization expense of other intangible assets


	For the year ended December 31,
(in millions)	2012		2013		2014		2015		2016

Estimated annual amortization expense of other intangible assets	$	5.5	$	4.3	$	3.1	$	2.3	$	1.9

Carrying amount of goodwill by business segment


			Wealth		Corporate		Affiliate
	Regional		Advisory		Client		Money
(in millions)	Banking		Services		Services		Managers		Total
Balance as of January 1, 2011	$	—	$	129.5	$	85.5	$	121.3	$	336.3
Increase in carrying value due to foreign currency translation adjustments		—		—		0.5		—		0.5

Balance as of March 31, 2011	$	—	$	129.5	$	86.0	$	121.3	$	336.8

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Changes in other intangible assets


	For the three months ended March 31,
	2011					2010
					Weighted						Weighted
					average						average
	Amount		Residual		amortization	Amount			Residual		amortization
(dollars in millions)	assigned		value		period	assigned			value		period
Mortgage servicing rights	$	0.1	$	—	8 years	$	0.2		$	—	8 years
Increase/(decrease) in carrying value of client lists due to foreign currency translation adjustments		0.1		—			(0.3	)		—
Decrease in carrying value due to reduction in GTBA ownership		—		—			(11.0	)		—

Changes in other intangible assets	$	0.2	$	—		$	(11.1	)	$	—

For more information about goodwill and other intangible assets, read Note 3, “Summary of significant accounting policies,” and Note 11, “Goodwill and other intangible assets,” in our 2010 Annual Report on Form 10-K.

11. Components of net periodic benefit cost

We offer a pension plan, a supplemental executive retirement plan (SERP), and a postretirement benefit plan for which we record net periodic benefit costs. For more information about these plans, read Note 19, “Pension and other postretirement benefits,” in our 2010 Annual Report on Form 10-K.

Components of net periodic benefit cost


	For the three months ended March 31,
											Postretirement
	Pension benefits						SERP benefits				benefits
(in millions)	2011			2010			2011		2010		2011			2010

Service cost	$	3.4		$	3.1		$	0.4	$	0.4	$	0.2		$	0.2
Interest cost		3.8			3.6			0.6		0.6		0.4			0.4
Expected return on plan assets		(5.3	)		(5.6	)		—		—		—			—
Amortization of prior service cost		—			—			0.1		0.1		(0.5	)		(0.5	)
Recognized actuarial losses		0.7			0.4			0.2		0.3		0.2			0.2

Net periodic benefit cost	$	2.6		$	1.5		$	1.3	$	1.4	$	0.3		$	0.3

Employer contributions	$	—		$	—		$	0.6	$	0.1	$	0.7		$	0.7
Expected annual contributions	$	—					$	1.6			$	2.9

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. Investment securities

We maintain an investment securities portfolio to generate cash flow, help manage interest rate risk, and provide collateral for deposits and other liabilities. We do not invest in securities for trading purposes. There are no client funds in this portfolio.

Our investment securities portfolio consists of:

•

Securities issued by the U.S. Treasury.

•

Discount notes and other securities issued by other U.S. government agencies, including the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Bank System.

•

Obligations of state and political subdivisions, which primarily are bonds issued by the state of Delaware and municipalities in Delaware.

•

Mortgage-backed securities and collateralized mortgage obligations issued by Fannie Mae, Freddie Mac, and Ginnie Mae, in which the underlying collateral consists of fixed and adjustable rate residential mortgages. All of the loans underlying these securities were originated subject to the underwriting guidelines and standards of the respective government agency.

•

Corporate debt securities, including single-issue and pooled trust preferred securities (TruPS) issued by financial institutions.

•

Perpetual preferred stock, which consists of securities issued by Fannie Mae, Freddie Mac, and two other financial institutions. (The carrying value of our Fannie Mae and Freddie Mac perpetual stock is zero, due to impairment charges we recorded in 2008).

•

Non-U.S. government agency securities and small amounts of other types of marketable debt and equity securities.

Numerous factors affect the valuations at which we record these securities on our balance sheet, including market interest rates, credit spreads, and investor perceptions. We review the securities in our investment portfolio at least quarterly in order to determine their fair values, which can be equal to, more than, or less than their amortized costs. To determine a security’s fair value, we use a variety of techniques and consult with third-party valuation experts. For more information about the key determinants of a security’s fair value, read Note 6, “Fair value measurement of assets and liabilities,” in this report.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We classify investment securities in one of two categories:

Available-for-sale (AFS). This means we have the ability to hold the security, but we may elect to sell it, depending on our needs.

Held-to-maturity (HTM). This means we have not only the ability, but also the intent, to retain the security on our books until it matures.

AFS securities are carried at their estimated fair value. When the fair value of an AFS security exceeds its book value, we record an unrealized gain as a change in stockholders’ equity through accumulated other comprehensive income. This increases stockholders’ equity. It does not affect earnings.

HTM securities are carried at their amortized cost. When the fair value of an HTM security exceeds its amortized cost, we disclose the change as an unrealized gain in the investment securities footnotes that accompany our financial statements. There is no corresponding change to stockholders’ equity or earnings.

When a security’s fair value falls below its book value, it is considered impaired, and we are required to assess whether it is either temporarily impaired or OTTI. To determine whether a security is temporarily impaired or OTTI, we consider factors that include:

•

Whether the present value of cash flows we expect to collect is less than the amortized cost basis of the security.

•

The causes of the decline in fair value, such as credit problems, interest rate fluctuations, industry conditions, and/or market volatility.

•

The severity and duration of the decline in the security’s fair value (from its amortized cost basis).

•

The security issuer’s ability to make scheduled interest or principal payments.

•

Changes made by credit rating agencies to the credit rating of the security or its issuer.

•

Whether we intend to sell the security or hold it until it recovers in value, matures, or is called.

•

Whether it is more likely than not that we will be required to sell the security before it recovers its amortized cost basis.

When we believe the security’s valuation decline (impairment) is primarily a function of short-term financial market forces, we classify it as temporarily impaired. When we believe that conditions in addition to financial market forces have contributed to the security’s valuation decline, we classify it as OTTI.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Under ASC 320, “Investments — Debt and Equity Securities,” if we do not intend to sell a debt security, and if it is not more likely than not that we will be required to sell the security, we must separate other-than-temporary impairments into two amounts, each of which is accounted for differently:

A portion related to credit loss. This portion is recognized in earnings as an impairment loss.

A portion related to all other factors. This portion is recognized in comprehensive income, net of taxes.

The credit-related portion of an other-than-temporary impairment is the difference between the security’s amortized cost (the security’s carrying value plus any previous other-than-temporary impairment recorded in accumulated other comprehensive income) and the present value of the security’s expected future cash flows. We base our calculations of a security’s expected cash flows on its contractual terms, discounted at a rate equal to the effective interest rate implicit when we acquired the security. We adjust the expected cash flows of each security for current and anticipated defaults each quarter.

For the pooled TruPS in our portfolio, we use a third party to help us calculate estimated future cash flows using default/deferral assumptions based on an analysis of the creditworthiness of every underlying issuer in each pool. In assessing creditworthiness, we consider each issuer’s capital strength, liquidity position, asset quality, loan composition, earnings, and credit rating, as well as other financial measures. We believe that our methodology gives us the best estimate of the expected future cash flows for each of these securities.

In the 2011 first quarter, 14 of the 38 pooled TruPS in our investment securities portfolio were determined to be OTTI, which resulted in an impairment loss of $2.9 million. Of this amount, $2.9 million was credit-related and was recorded as an other-than-temporary impairment loss in the statement of income. The $2.9 million credit-related loss was caused by continued deterioration in the credit quality of the institutions whose preferred stock underlie the pooled TruPS that we own. Less than $0.1 million of non-credit-related write-down reduced stockholders’ equity and was recorded in other comprehensive income.

In the 2011 first quarter, we also recorded a $2.1 million write-down on an other marketable equity security that was determined to be OTTI.

In comparison, for the 2010 first quarter, 23 of the 38 pooled TruPS in our investment securities portfolio were determined to be OTTI, which resulted in an impairment loss of $29.8 million. Of this amount, $17.9 million was related to credit quality and was recorded as an other-than-temporary impairment loss in the statement of income. The remaining $11.9 million noncredit portion was recorded in other comprehensive income, which reduced stockholders’ equity. In addition to the $17.9 million OTTI pooled TruPS loss, a $0.1 million loss was recorded on an available-for-sale equity security that was determined to be OTTI in the 2010 first quarter.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Credit loss roll forward


(in millions)
Balance of credit-related other-than-temporary impairment at January 1, 2011	$	135.5
Additions:
Credit losses for which other-than-temporary impairments were not recognized previously		—
Additional credit losses for which other-than-temporary impairments were recognized previously		2.9

Balance of credit-related other-than-temporary impairment at March 31, 2011	$	138.4

Amortized cost and fair value of available-for-sale securities at March 31, 2011


			OTTI
	Amortized		recognized		Unrealized		Unrealized			Fair
(in millions)	cost		in OCI		gains		losses			value

Investment securities available for sale:
U.S. Treasury securities	$	31.8	$	—	$	—	$	—		$	31.8
Government agency securities		191.0		—		0.1		(0.7	)		190.4
Obligations of state and political subdivisions		9.0		—		—		—			9.0
Collateralized mortgage obligations:
Secured by residential mortgages		21.3		—		0.6		—			21.9
Mortgage-backed debt securities:
Residential mortgage-backed securities		126.0		—		7.0		—			133.0
Preferred stock:
Large financial institutions		1.1		—		0.4		—			1.5
Small financial institutions		3.0		—		—		—			3.0

Total preferred stock		4.1		—		0.4		—			4.5
Other marketable equity securities:
Mutual funds		3.0		—		—		—			3.0
Other		1.3		—		—		—			1.3

Total other marketable equity securities		4.3		—		—		—			4.3

Total investment securities available for sale	$	387.5	$	—	$	8.1	$	(0.7	)	$	394.9

Amortized cost and fair value of available-for-sale securities at December 31, 2010


			OTTI
	Amortized		recognized		Unrealized		Unrealized			Fair
(in millions)	cost		in OCI		gains		losses			value

Investment securities available for sale:
U.S. Treasury securities	$	48.8	$	—	$	0.1	$	—		$	48.9
Government agency securities		245.7		—		0.1		(0.4	)		245.4
Obligations of state and political subdivisions		9.2		—		—		—			9.2
Collateralized mortgage obligations:
Secured by residential mortgages		26.4		—		0.8		—			27.2
Mortgage-backed debt securities:
Residential mortgage-backed securities		138.0		—		7.4		—			145.4
Preferred stock:
Large financial institutions		1.1		—		0.4		—			1.5
Small financial institutions		3.0		—		—		—			3.0

Total preferred stock		4.1		—		0.4		—			4.5
Other marketable equity securities:
Mutual funds		3.0		—		—		—			3.0
Other		3.3		—		—		—			3.3

Total other marketable equity securities		6.3		—		—		—			6.3

Total investment securities available for sale	$	478.5	$	—	$	8.8	$	(0.4	)	$	486.9

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Amortized cost, carrying value, and fair value of held-to-maturity securities at March 31, 2011


			OTTI
	Amortized		recognized		Carrying		Unrealized		Unrealized			Fair
(in millions)	cost		in OCI		value		gains		losses			value

Investment securities held to maturity:
Obligations of state and political subdivisions	$	0.4	$	—	$	0.4	$	—	$	—		$	0.4
Corporate debt securities:
Single-issue trust-preferreds		58.6		—		58.6		0.9		(2.8	)		56.7
Pooled trust-preferreds		112.1		69.4		42.7		9.6		(1.2	)		51.1

Total corporate debt securities		170.7		69.4		101.3		10.5		(4.0	)		107.8
Non-U.S. government agency debt securities		0.5		—		0.5		—		—			0.5
Other debt securities		0.5		—		0.5		—		—			0.5

Total investment securities held to maturity	$	172.1	$	69.4	$	102.7	$	10.5	$	(4.0	)	$	109.2

Amortized cost, carrying value, and fair value of held-to-maturity securities at December 31, 2010


			OTTI
	Amortized		recognized		Carrying		Unrealized		Unrealized			Fair
(in millions)	cost		in OCI		value		gains		losses			value

Investment securities held to maturity:
Obligations of state and political subdivisions	$	0.3	$	—	$	0.3	$	—	$	—		$	0.3
Corporate debt securities:
Single-issue trust-preferreds		58.5		—		58.5		0.1		(4.6	)		54.0
Pooled trust-preferreds		113.7		71.9		41.8		5.6		(1.6	)		45.8

Total corporate debt securities		172.2		71.9		100.3		5.7		(6.2	)		99.8
Non-U.S. government agency debt securities		0.5		—		0.5		—		—			0.5
Other debt securities		0.7		—		0.7		—		—			0.7

Total investment securities held to maturity	$	173.7	$	71.9	$	101.8	$	5.7	$	(6.2	)	$	101.3

Temporarily impaired securities

When a security is determined to be temporarily impaired, and there is an associated unrealized loss, the security’s accounting treatment depends on whether it is classified as AFS or HTM.

For temporarily impaired AFS securities, we are required to:

•

Report the amount of the impairment as an unrealized loss.

•

Record the unrealized loss as a reduction in stockholders’ equity through accumulated other comprehensive income. This reduces stockholders’ equity. It does not affect earnings.

For temporarily impaired HTM securities, we are required to:

•

Disclose the amount of the decline in fair value in a footnote disclosure, not as a change in stockholders’ equity. This has no effect on our financial statements or earnings.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A continued downturn in the financial markets could cause us to reassess whether any or all of these securities remain temporarily impaired, or if any or all of them should be assessed as OTTI.

Temporarily impaired securities as of March 31, 2011


	Fewer than 12
	months					12 months or more					Total
			Estimated					Estimated					Estimated
	Fair		unrealized			Fair		unrealized			Fair		unrealized
(in millions)	value		losses			value		losses			value		losses

U.S. Treasury securities	$	5.0	$	—		$	—	$	—		$	5.0	$	—
Government agency securities		130.3		(0.7	)		—		—			130.3		(0.7	)
Obligations of state and political subdivisions		4.2		—			—		—			4.2		—
Corporate debt securities:
Single-issue trust-preferreds		—		—			31.1		(2.8	)		31.1		(2.8	)
Pooled trust-preferreds		—		—			51.1		(70.6	)		51.1		(70.6	)

Total corporate debt securities		—		—			82.2		(73.4	)		82.2		(73.4	)

Total temporarily impaired securities	$	139.5	$	(0.7	)	$	82.2	$	(73.4	)	$	221.7	$	(74.1	)

Temporarily impaired securities as of December 31, 2010


	Fewer than 12
	months					12 months or more					Total
			Estimated					Estimated					Estimated
	Fair		unrealized			Fair		unrealized			Fair		unrealized
(in millions)	value		losses			value		losses			value		losses

Government agency securities	$	159.2	$	(0.4	)	$	—	$	—		$	159.2	$	(0.4	)
Corporate debt securities:
Single-issue trust-preferreds		—		—			50.0		(4.6	)		50.0		(4.6	)
Pooled trust-preferreds		—		—			45.8		(73.5	)		45.8		(73.5	)

Total corporate debt securities		—		—			95.8		(78.1	)		95.8		(78.1	)

Total temporarily impaired securities	$	159.2	$	(0.4	)	$	95.8	$	(78.1	)	$	255.0	$	(78.5	)

Trust-preferred securities

Our TruPS portfolio consists of 38 pooled issues and 9 single-issue securities. The single-issue TruPS are from money center and large regional banks. The pooled instruments include securities issued by banks, insurance companies, and other financial institutions. Our positions in pooled TruPS generally are secured by over-collateralization or default protections provided by subordinated tranches.

All of our TruPS are recorded on our balance sheet as HTM investment securities and as corporate debt securities in our footnote disclosures.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We determined that some of our pooled TruPS were OTTI in 2008, 2009, 2010, and 2011. In total, as of March 31, 2011:

•

We have recorded other-than-temporary impairment write-downs on 33 of the 38 pooled TruPS in our portfolio.

•

We have not recorded other-than-temporary impairment write-downs on any of the 9 single-issue TruPS in our portfolio.

Illiquidity persists in the market for TruPS. Consequently, determining their estimated fair values requires substantial judgment and the use of factors that are difficult to estimate. Changes in the creditworthiness of the underlying financial institutions, market conditions, and other factors could cause us to determine that more of our TruPS are OTTI. Such determinations would require us to record additional write-downs in TruPS values, and additional impairment losses for the portions of any write-downs that are related to credit losses.

For more information on our TruPS portfolio valuations, see the disclosures of amortized cost, carrying value, and fair value of HTM securities that appear earlier in this note.

Other matters

At March 31, 2011, securities with an aggregate book value of $301.3 million were pledged to secure public deposits, short-term borrowings, demand notes issued to the U.S. Treasury, FHLB borrowings, repurchase agreements, interest rate swap agreements, and other purposes required by law.

We had investments in the securities of regulatory authorities that totaled $41.5 million at March 31, 2011, and $35.6 million at December 31, 2010. These securities are carried at cost.

Contractual maturities of debt securities available for sale at March 31, 2011


				After 1 year			After 5 years
	1 year			through			through			After
(dollars in millions)	or less			5 years			10 years			10 years			Total

U.S. Treasury securities	$	26.4		$	5.4		$	—		$	—		$	31.8
Government agency securities		25.0			166.0			—			—			191.0
Obligations of state and political subdivisions		0.3			—			—			8.7			9.0
Collateralized mortgage obligations:
Secured by residential mortgages		—			—			1.6			19.7			21.3
Mortgage-backed securities:
Residential mortgage-backed securities		—			9.4			100.7			15.9			126.0

Total amortized cost of debt securities available for sale	$	51.7		$	180.8		$	102.3		$	44.3		$	379.1
Fair value of debt securities available for sale	$	51.8		$	180.5		$	108.0		$	45.8		$	386.1
Weighted average yield of debt securities available for sale ¹		0.65	%		1.17	%		4.25	%		4.56	%		2.32	%


¹		Weighted average yields are not on a tax-equivalent basis.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Contractual maturities of debt securities held to maturity at March 31, 2011


				After 1			After 5
				year			years
	1 year			through			through			After 10
(dollars in millions)	or less			5 years			10 years			years			Total

Obligations of state and political subdivisions	$	0.4		$	—		$	—		$	—		$	0.4
Corporate debt securities:
Single-issue trust-preferreds		—			—			—			58.6			58.6
Pooled trust-preferreds		—			—			—			42.7			42.7

Total corporate debt securities		—			—			—			101.3			101.3
Non-U.S. government agency debt securities		—			0.5			—			—			0.5
Other debt securities		0.3			0.2			—			—			0.5

Total carrying value of debt securities held to maturity	$	0.7		$	0.7		$	—		$	101.3		$	102.7
Fair value of debt securities held to maturity	$	0.7		$	0.7		$	—		$	107.8		$	109.2
Weighted average yield of debt securities held to maturity ¹		3.39	%		1.40	%		—	%		6.12	%		6.11	%


¹		Weighted average yields are not on a tax-equivalent basis.

Sale and write-down of investment securities available for sale


	For the three months ended
	March 31,
(in millions)	2011			2010
Proceeds:
Other marketable equity securities:
Other	$	—		$	0.2

Total proceeds	$	—		$	0.2

Gross gains realized:
Other marketable equity securities:
Other	$	—		$	0.2

Total gains realized	$	—		$	0.2

Other-than-temporary impairment charges:
Other marketable equity securities:
Other	$	(2.1	)	$	(0.1	)

Total other marketable equity securities		(2.1	)		(0.1	)

Total other-than-temporary impairment charges	$	(2.1	)	$	(0.1	)

There were no gains or losses on called investment securities in the first quarter of 2011 or 2010.

For more information about our investment securities portfolio, read Note 7, “Investment securities,” in our 2010 Annual Report on Form 10-K. For more information about how we account for investment securities, read Note 6, “Fair value measurement of assets and liabilities,” in this report, as well as Note 3, “Summary of significant accounting policies,” Note 15, “Fair value measurement of assets and liabilities,” and Note 22, “Accumulated other comprehensive income,” in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13. Borrowings

Our short-term borrowings consist of federal funds purchased, securities sold under agreements to repurchase, and an advance from the FHLB.

Our long-term debt at March 31, 2011, was $595.5 million. This amount included:

•

$150.0 million FHLB advances, summarized as follows:

Amount issued and

Fixed

outstanding

Quarterly

payment

Issue date

(in millions)

Term

payment dates

rate

Maturity

July 9, 2010

50.0

2 years

January 9, April 9,

1.11

July 9, 2012

July 9, October 9

October 20, 2010

50.0

18 months

January 20, April 20,

0.70

April 20, 2012

July 20, October 20

October 20, 2010

50.0

2 years

January 20, April 20,

0.79

October 22, 2012

July 20, October 20

•

Two issuances of subordinated debt, totaling $450 million, summarized as follows:

Amount issued and

Fixed

outstanding

Semiannual

payment

Issue date

(in millions)

Term

payment dates

rates

Maturity

April 4, 2003

250.0

10 years

April 15 and October 15

4.875

April 15, 2013

April 1, 2008

200.0

10 years

April 1 and October 1

8.50

April 2, 2018

•

$(3.8) million of unamortized losses related to terminated interest rate swaps on long-term debt.

•

$(0.1) million of unamortized discounts on the $250.0 million of subordinated long-term debt that matures on April 15, 2013.

•

$(0.6) million of unamortized discounts on the $200.0 million of subordinated long-term debt that matures on April 2, 2018.

None of our long-term debt is redeemable prior to maturity or subject to any sinking fund.

For more information on our borrowings, read Note 13, “Borrowings,” in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

14. Capital

All of our regulatory capital ratios at March 31, 2011 exceeded the minimums required by regulators for banks and bank holding companies to be considered well-capitalized. However, banking regulators also make qualitative judgments about the components of our capital, risk weightings, and other factors. Therefore, the well-capitalized minimum thresholds presented below are subject to change by our regulators, based on their view of our financial condition and circumstances. During the first quarter of 2011, Wilmington Trust FSB entered into a supervisory agreement with the Office of Thrift Supervision (OTS) under which, among other things, Wilmington Trust FSB is deemed adequately capitalized and which sets targets for Wilmington Trust FSB’s future capital ratios. The agreement requires Wilmington Trust FSB to maintain a Tier 1 capital ratio of at least 9% and a risk-based capital ratio of at least 14% by June 30, 2011. At March 31, 2011, Wilmington Trust FSB’s Tier 1 capital and risk-based capital ratios were 12.92% and 14.21%, respectively. Further declines in our capital ratios could result in additional formal regulatory actions, which could compromise our businesses.

U.S. regulatory capital ratios


											Well-capitalized minimum
	As of March 31,					As of December 31,					As of March 31,
	2011					2010					2011
(dollars in millions)	Ratio			Amount		Ratio			Amount		Ratio			Amount
Total capital (to risk-weighted assets)
Wilmington Trust Corporation		12.55	%	$	1,021.6		12.29	%	$	1,060.2		10.00	%	$	814.2
Wilmington Trust Company		10.63	%	$	760.0		10.59	%	$	807.2		10.00	%	$	715.1
Wilmington Trust FSB		14.21	%	$	163.2		13.34	%	$	150.7		10.00	%	$	114.8
Tier 1 capital (to risk-weighted assets)
Wilmington Trust Corporation		7.57	%	$	616.0		7.51	%	$	648.1		6.00	%	$	488.5
Wilmington Trust Company		9.32	%	$	666.7		9.28	%	$	707.5		6.00	%	$	429.1
Wilmington Trust FSB		12.92	%	$	148.3		12.04	%	$	136.1		6.00	%	$	68.9
Tier 1 leverage capital (to average assets)
Wilmington Trust Corporation		5.99	%	$	616.0		6.02	%	$	648.1		5.00	%	$	514.4
Wilmington Trust Company		7.60	%	$	666.7		7.61	%	$	707.5		5.00	%	$	438.7
Wilmington Trust FSB		6.79	%	$	148.3		7.32	%	$	136.1		5.00	%	$	109.2

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

15. Income taxes

Income taxes and tax rate


	For the three months
	ended March 31,
(dollars in millions)	2011			2010
Pre-tax loss (less non-controlling interest)	$	(32.9	)	$	(45.6	)
Income tax expense/(benefit)	$	0.6		$	(16.4	)
Effective tax rate		(1.8	)%		36.0	%

We continued to record a valuation allowance against our deferred tax asset during the first quarter of 2011. This affected our income tax expense and our effective tax rate because the tax benefit recorded for the period was offset by tax expense from the establishment of additional valuation allowance. At March 31, 2011, the balance of this valuation allowance was $303.6 million, compared to $292.2 million at December 31, 2010. Tax expense for the first quarter of 2011 also included tax expense related to profitable state and foreign tax entities.

The income tax benefit reported in the first quarter of 2010 was subsequently reversed in the third quarter of 2010 when management determined that the deferred tax asset was no longer more likely than not to be realized.

Under ASC 740, “Income Taxes,” we recognize interest and penalties related to uncertain tax benefits as income tax expense. We have reviewed and, where necessary, accrued for uncertain tax benefits for periods open to examination. We have applied this methodology consistently with prior periods.

We file income tax returns in multiple tax jurisdictions. In some of these jurisdictions, we file returns for multiple legal entities. Generally, we are subject to examination by tax auditors in these jurisdictions for three to six years (open tax years). As of March 31, 2011, there were no material changes regarding uncertain tax benefits related to prior periods, and statutes of limitations had not been extended materially in any of our significant locations.

Our IRS examination for the tax year 2006 was completed during 2009. The tax years 2007, 2008, and 2009 remain open to examination by the IRS. We periodically are under examination by various state and local authorities.

For more information about our income taxes and our deferred tax asset valuation allowance, read Note 21, “Income taxes,” in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

16. Segment reporting

We report business segment results for four segments: one for each of our three core businesses — Regional Banking, Wealth Advisory Services (WAS), and Corporate Client Services (CCS) — and one that combines the results of affiliate money managers Cramer Rosenthal McGlynn (CRM) and Roxbury Capital Management (RCM).

Our business segment accounting policies are the same as those described in Note 3, “Summary of significant accounting policies,” in our 2010 Annual Report on Form 10-K. Our business segment disclosures mirror the internal profitability reports we produce and review each quarter. We report segment assets on an average-balance basis, because we believe average balances offer a more relevant measure of business trends than period-end balances; we maintain and review all internal segment data on an average-balance basis; and we base some expense allocations on an average-balance basis. We have adjusted segment data for prior periods due to changes in reporting methodology and/or organizational structure.

For more information about our business segments, read Item 2 in Part I of this report, as well as Note 2, “Nature of business,” Note 5, “Affiliates and acquisitions,” and Note 24, “Segment reporting,” in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2011


				Wealth			Corporate			Affiliate
	Regional			Advisory			Client			Money
(in millions)	Banking			Services			Services			Managers			Totals

Net interest income/(loss)	$	48.0		$	4.4		$	1.1		$	(1.3	)	$	52.2
Provision for loan losses		(36.6	)		(4.7	)		—			—			(41.3	)

Net interest income/(loss) after provision		11.4			(0.3	)		1.1			(1.3	)		10.9
Advisory fees:
Wealth Advisory Services		—			41.4			—			—			41.4
Corporate Client Services		0.1			—			50.4			—			50.5
Affiliate Money Managers		—			—			—			5.3			5.3

Total advisory fees		0.1			41.4			50.4			5.3			97.2
Amortization of other intangibles		—			(0.6	)		(0.7	)		(0.2	)		(1.5	)

Total advisory fees after amortization of other intangibles		0.1			40.8			49.7			5.1			95.7
Other noninterest income		11.4			—			0.4			—			11.8

Net interest and noninterest income		22.9			40.5			51.2			3.8			118.4
Noninterest expense		49.3			49.6			43.6			—			142.5

Segment (loss)/profit before income taxes		(26.4	)		(9.1	)		7.6			3.8			(24.1	)
Income tax expense		—			—			0.6			—			0.6

Segment operating (loss)/income	$	(26.4	)	$	(9.1	)	$	7.0		$	3.8		$	(24.7	)
Investment securities impairment charge														(5.0	)
Merger-related costs														(3.8	)

Reported net loss													$	(33.5	)

Depreciation and amortization	$	2.6		$	2.1		$	2.1		$	0.2		$	7.0
Investment in equity method investees	$	—		$	—		$	—		$	140.6		$	140.6
Segment average assets	$	8,266.8		$	1,425.7		$	671.9		$	129.2		$	10,493.6

For the three months ended March 31, 2010


				Wealth			Corporate			Affiliate
	Regional			Advisory			Client			Money
(in millions)	Banking			Services			Services			Managers			Totals

Net interest income/(loss)	$	67.1		$	6.4		$	2.5		$	(1.3	)	$	74.7
Provision for loan losses		(69.2	)		(8.2	)		—			—			(77.4	)

Net interest (loss)/income after provision		(2.1	)		(1.8	)		2.5			(1.3	)		(2.7	)
Advisory fees:
Wealth Advisory Services		—			44.1			—			—			44.1
Corporate Client Services		0.2			—			47.8			—			48.0
Affiliate Money Managers		—			—			—			4.8			4.8

Total advisory fees		0.2			44.1			47.8			4.8			96.9
Amortization of other intangibles		—			(0.8	)		(0.9	)		(0.2	)		(1.9	)

Total advisory fees after amortization of other intangibles		0.2			43.3			46.9			4.6			95.0
Other noninterest income		11.6			0.3			0.4			—			12.3
Securities gains		0.2			—			—			—			0.2

Net interest and noninterest income		9.9			41.8			49.8			3.3			104.8
Noninterest expense		47.9			44.7			38.9			—			131.5

Segment (loss)/profit before income taxes		(38.0	)		(2.9	)		10.9			3.3			(26.7	)
Income tax (benefit)/expense and noncontrolling interest		(14.7	)		(0.5	)		3.8			2.3			(9.1	)

Segment operating (loss)/income	$	(23.3	)	$	(2.4	)	$	7.1		$	1.0		$	(17.6	)
Investment securities impairment charge														(18.0	)
Income tax benefit not allocated to segments														6.4

Reported net loss													$	(29.2	)

Depreciation and amortization	$	2.6		$	2.4		$	2.2		$	0.2		$	7.4
Investment in equity method investees	$	—		$	—		$	—		$	159.9		$	159.9
Segment average assets	$	8,847.0		$	1,503.1		$	535.9		$	158.4		$	11,044.4

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

17. Accounting pronouncements

The following recent accounting pronouncements may affect our financial condition and results of operations.

SFAS No. 167 and ASU 2010-10. In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(revised),” which was incorporated into ASC 810, “Consolidation.” SFAS No. 167 amends the consolidation guidance for variable interest entities (VIEs) under FIN 46(revised), “Consolidation of Variable Interest Entities,” to, among other things, remove the consolidation exception for qualifying special purpose entities; revise certain guidance for determining whether an entity is a VIE; introduce a new consolidation approach that considers qualitative factors for determining who should consolidate a VIE; and change when it is necessary to reconsider both an entity’s status as a VIE and who should consolidate a VIE. SFAS No. 167 also introduces additional disclosure and presentation requirements related to an entity’s involvement in VIEs.

In February 2010, the FASB issued ASU 2010-10, “Amendments for Certain Investment Funds,” which indefinitely defers the effective date of SFAS No. 167 for an asset manager’s interests in entities that have attributes of investment companies (e.g., mutual funds, hedge funds, private equity funds, and venture capital funds), provided that the asset manager does not have an explicit or implicit obligation to fund actual losses that potentially could be significant to the investment company. The ASU also clarifies certain conditions under which fees paid to a decision maker or service provider are considered variable interests in a variable interest entity. Under the provisions of SFAS No. 167, we may have been required to consolidate certain entities to which we provide asset management services. In accordance with the provisions of ASU 2010-10, we deferred adoption of SFAS No. 167 for those entities. We have not yet completed our assessment of the effect, if any, that the lapsing of the deferral period will have on our financial statements.

SFAS No. 167 and ASU 2010-10 were effective for us on January 1, 2010. Their adoption did not have a material effect on our financial statements.

ASU 2010-20, ASU 2011-01, and ASU 2011-02. In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU 2010-20 introduces expanded disclosure requirements that focus on the nature of an entity’s credit risk associated with its financing receivables (e.g., loans), and the entity’s assessment of that risk in estimating its allowance for credit losses, as well as changes in the allowance and the reasons for those changes. The ASU requires entities to disaggregate the new and existing disclosures based on how they develop their allowance for credit losses and how they manage their credit exposures. New disclosure requirements introduced by the ASU that relate to information as of the end of a reporting period were effective for us on December 31, 2010. The disclosure requirements that relate to activity that occurs during a reporting period were effective for us on January 1, 2011.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In January 2011, the FASB issued ASU 2011-01, “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.” ASU 2011-01 temporarily delays the effective date of the disclosures about troubled debt restructurings that were included in ASU 2010-20 and was effective upon issuance.

In April 2011, the FASB issued ASU 2011-02, “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” ASU 2011-02 provides clarifying guidance on a creditor’s evaluation of whether it has granted a concession and whether the debtor is experiencing financial difficulties. The clarifying guidance on determining whether a concession was granted discusses the debtor’s access to funds at a market rate for debt with similar characteristics as the restructured debt, that an increase in the contractual interest rate does not preclude the restructuring from being a concession, and that an insignificant delay in payment under the restructuring is not a concession. The clarifying guidance on determining whether the debtor is experiencing financial difficulties indicates that a creditor can determine that the debtor is experiencing financial difficulties even if the debtor is not currently in payment default. Also, ASU 2011-02 clarifies that creditors may not use the effective interest rate test when evaluating whether a restructuring is a troubled debt restructuring. The issuance of this ASU supersedes the temporary delay for the disclosure requirements for troubled debt restructurings that was provided by ASU 2011-01. ASU 2011-02 and the disclosure requirements for troubled debt restructurings in ASU 2010-20 will be effective for interim or annual periods beginning on or after June 15, 2011. We have not completed our assessment of the effect, if any, that ASU 2011-02 will have on our financial statements.

18. Subsequent events

ASC 855, “Subsequent Events,” requires us to evaluate whether any changes in our financial condition since March 31, 2011, warrant additional disclosure as a subsequent event.

As of May 13, 2011, the filing date of this report, we determined that, other than the matter discussed in Note 1 in this report, “Proposed Merger with M&T Bank Corporation,” there were no recognized or unrecognized subsequent events to report under ASC 855.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

COMPANY OVERVIEW

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

We offer diversified financial services through three businesses:

•

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

•

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

•

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

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

More detail about each of our businesses is available in the summaries that follow and in our 2010 Annual Report on Form 10-K.

RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2011

This report discusses:

•

Changes in our financial condition (balance sheet) since December 31, 2010. All balances cited are period-end balances unless otherwise noted. In some cases, we present amounts as of March 31, 2010, for historical reference.

•

The results of our operations (income statement) for the three months ended March 31, 2011, compared with the corresponding period in 2010. In some cases, we provide amounts for other periods to provide historical context. Throughout this report, we use “net (loss)/income” to mean “net (loss)/income attributable to Wilmington Trust Corporation.” Our comments in this report reflect our best estimates of the trends we know about, anticipate, and believe are relevant to future operations. In the future, however, actual results may differ from our estimates.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

We reported a net loss of $33.5 million for the 2011 first quarter. The main causes of this loss were:

•

A $41.3 million provision for loan losses.

•

Lower net interest income, due to declining loan balances and higher nonperforming asset balances.

•

The establishment of additional deferred tax asset valuation allowance offsetting the potential current tax benefit of pretax losses.

After adjusting for dividends and accretion on shares of Wilmington Trust Series A preferred stock issued in conjunction with our participation in the U.S. Department of the Treasury’s Capital Purchase Program (CPP), the net loss available to common shareholders was $38.1 million, or $0.42 per common share.

Loan balances declined from year-end 2010 mainly because of charge-offs, paydowns, and weak demand for new loans. Loan balances at March 31, 2011, were $7.11 billion. Core deposit balances increased from year-end to $7.26 billion at March 31, 2011, mainly because of an increase in CCS deposits, while total deposits declined because of maturities of national brokered certificates.

Because of our net loss for the 2011 first quarter, our stockholders’ equity declined from year-end 2010. At the direction of our regulators, our Board of Directors did not declare a dividend on our common stock for the 2011 first quarter.

During 2010, because of our loan credit quality problems and the resulting net loss, erosion of capital, and adverse financial condition, management and the Board of Directors carefully studied the company’s strategic options. In the process, we reviewed a wide range of alternatives. Based on discussions we had with our regulators, we believed that, without a change-of-control transaction acceptable to them, we likely would face imminent significant regulatory actions, which likely would result in a dramatic worsening of our business prospects.

Ultimately, the Board determined that the best option for our stockholders, as well as our clients and staff members, was a merger with M&T Bank Corporation. On November 1, 2010, we announced that we signed a definitive merger agreement with M&T. The closing of the merger is subject to certain conditions, including approval by our stockholders and regulators. Our stockholders approved the merger on March 22, 2011 and we have obtained all necessary approvals to close the merger from our regulators. Subject to the terms and conditions of the merger agreement, we expect to close the merger on May 16, 2011, at which point we will become a wholly-owned subsidiary of MT&T.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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

We discuss each of these factors in greater detail in other sections of this report. For more information about the merger, read Note 1, “Proposed merger with M&T Bank Corporation,” in the consolidated financial statements in this report.

Effective February 17, 2011, Wilmington Trust FSB entered into a supervisory agreement with the OTS. For information about restrictions to which Wilmington Trust FSB is subject under that agreement, read the Form 8-K we filed with the SEC on February 23, 2011.

CHANGES IN FINANCIAL CONDITION FOR THE THREE MONTHS ENDED MARCH 31, 2011

At March 31, 2011, our total assets were $10.73 billion, a $204.4 million decrease from year-end 2010. This decline was caused primarily by:

•

A $415.4 million, or 6%, decline in loan balances. Decreases occurred throughout the portfolio, due to charge-offs, loan paydowns, and weak demand for new loans. Loan balances at March 31, 2011 were $7.11 billion, compared to $7.53 billion at December 31, 2010.

•

A $91.1 million decline in investment securities balances.

The declines in loan and investment securities balances were partially offset by a $331.5 million increase in interest-bearing deposits in other banks. This increase reflected our continued efforts to enhance our liquidity in accordance with our contingency funding plan because of our loan credit quality problems and our net losses in 2010 and 2011. At March 31, 2011, the balance of interest-bearing deposits in other banks was $2.42 billion, compared to $2.09 billion at December 31, 2010.

Total deposit balances were $8.84 billion at March 31, 2011, a decrease of $135.5 million, or 2%, from year-end. Most of the decline was in national brokered certificates, which declined $250.6 million from year-end. This decline was partially offset by a $115.1 million increase in core deposits.

Stockholders’ equity declined from December 31, 2010, mainly because of the net loss that we experienced for the first three months of 2011.

For more information about loan and core deposit balances, read the Regional Banking discussion in this report. For more information about our capital and stockholders’ equity, read the capital resources discussion in this report.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Investment securities portfolio

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

At March 31, 2011, the investment securities portfolio was $497.6 million, a decline of $91.1 million from year-end 2010. This decrease was caused primarily by:

•

Maturities of U.S. Treasury securities.

•

Calls of government agency securities.

•

Amortization of mortgage-backed securities and collateralized mortgage obligations.

These changes caused the mix of investment securities, on a percentage basis, to shift.

Investment securities portfolio composition


	At 3/31/11					At 12/31/10
			Percent of					Percent of
(dollars in millions)	Amount		Portfolio			Amount		portfolio
U.S. Treasury securities	$	31.8		6	%	$	48.9		8	%
Government agency securities ¹		190.9		38			245.9		42
Obligations of state and political subdivisions		9.4		2			9.5		1
Collateralized mortgage obligations		21.9		4			27.2		5
Mortgage-backed debt securities		133.0		27			145.4		25
Trust-preferred securities:
Single-issue trust-preferred securities		58.6		12			58.5		10
Pooled trust-preferred securities		42.7		9			41.8		7

Total trust-preferred securities		101.3		21			100.3		17
Preferred stock		4.5		1			4.5		1
Other marketable equity securities		4.8		1			7.0		1

Total investment securities	$	497.6		100	%	$	588.7		100	%

Amount invested in fixed rate instruments	$	384.1		77	%	$	476.2		81	%


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

The negative duration of the portfolio in total at December 31, 2010, was caused by the lower TruPS valuations and historically low market interest rates.

Average life and duration in the investment securities portfolio (in years)


	At 3/31/11		At 12/31/10
Average life		8.46		7.67
Duration		0.03		(3.36	)

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Excluding TruPS, duration would have been 1.33 years at March 31, 2011 and 1.28 years at December 31, 2010.

For additional information about our investment securities, their valuations, and related write-downs, read the Consolidated Statements of Cash Flows, Note 6, “Fair value measurement of assets and liabilities,” and Note 12, “Investment securities,” in this report.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011

We reported a net loss of $33.5 million for the 2011 first quarter. After adjusting for the dividends and accretion on the shares of Wilmington Trust Series A preferred stock issued in conjunction with our participation in the CPP, the net loss available to common shareholders was $38.1 million, or $0.42 per common share.

In comparison, the net loss for the 2010 first quarter was $29.2 million, and the net loss available to common shareholders was $0.44 per common share, after adjusting for the dividends and accretion on the shares of Wilmington Trust Series A preferred stock.

The net loss for the 2011 first quarter was caused by:

•

A $41.3 million provision for loan losses.

•

Lower net interest income, due to declining loan balances and higher nonperforming asset balances.

•

Continued mutual fund fee waivers, which reduced WAS revenue.

•

$5.0 million of OTTI securities charges.

•

Higher noninterest expense.

•

The establishment of additional deferred tax asset valuation allowance offsetting the potential current tax benefit of pretax losses.

Weighted average shares outstanding for the 2011 first quarter were 14.5 million higher than the 2010 first quarter because of the 21.7 million share issuance on March 1, 2010.

Weighted average common shares outstanding


	Three months ended
	March 31,
(in thousands)	2011		2010
Common shares outstanding (diluted)		90,976		76,465

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE REGIONAL BANKING BUSINESS

The Regional Banking business continued to experience charge-offs and weak demand for new loans during the 2011 first quarter, which caused loan balances to decline.

Regional Banking operating net loss for the 2011 first quarter was greater than for the 2010 first quarter, primarily because in 2010 the income tax benefit reduced the 2010 operating loss. Operating net loss before income taxes for the Regional Banking segment was less than for the 2011 first quarter, primarily because of a lower provision for loan losses, which was offset partially by lower net interest income.

Regional Banking operating net loss


(in millions)	2011 Q1			2010 Q1
Segment operating net loss	$	(26.4	)	$	(23.3	)

For more information about Regional Banking operating loss, please read Note 16, “Segment reporting,” in this report.

Although this report discusses changes in loan and deposit balances on a period-end basis, we consider average balances, rather than period-end balances, to be a better indicator of trends in the Regional Banking business. This is because average balances represent client activity over the longer term. This is especially true of core deposit balances, which often can be skewed by movements of transactional deposits made by CCS clients. Information about changes in our average balances appears in the quarterly analyses of net interest income, which appear between the net interest margin and the noninterest income discussions in this report.

LOANS

Total loan balances declined $415.4 million or 6% during the first three months of 2011, mainly because of loan paydowns, continued loan charge-offs, and weak demand for new loans.

Total loans outstanding


(dollars in millions)	At 3/31/11		At 12/31/10		% change
Commercial	$	5,245.8	$	5,567.2		(6	)%
Retail ¹		1,864.7		1,958.7		(5	)%

Total loans outstanding	$	7,110.5	$	7,525.9		(6	)%


¹		Includes consumer loans, residential mortgage loans, and loans secured with investments.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The mix of loans by geographic market remained relatively unchanged from year-end 2010, with the Delaware market continuing to account for 52% of total loans outstanding at March 31, 2011.

At March 31, 2011, the loan portfolio composition, on a percentage basis, was similar to year-end 2010.

Approximately 79% of total loans outstanding at March 31, 2011, were floating rate loans.

Commercial loans

Commercial loans were $5.25 billion at March 31, 2011, a decline of $321.4 million, or 6% from year-end. Decreases occurred in all categories of commercial loans, most notably in the CF&A and commercial construction loan categories. The mix of commercial loans by geographic market was unchanged from year-end 2010, with approximately 51% of commercial loans in the Delaware market.

Commercial loan balances


	At		At
	March 31,		December 31,
(in millions)	2011		2010
Commercial loans:
Commercial, financial, and agricultural	$	2,027.2	$	2,178.6
Commercial real estate — construction		1,300.5		1,429.1
Commercial mortgage — owner occupied		1,023.8		1,041.8
Commercial mortgage — non-owner occupied		894.3		917.7

Total commercial loans	$	5,245.8	$	5,567.2

Consumer loans

Consumer loan balances were $1.06 billion at March 31, 2011, a decline of $72.6 million from year-end 2010. Decreases occurred in the indirect, home equity and other consumer loan categories, with the largest decline in the indirect lending category, where paydowns on indirect automobile loan balances exceeded new volume. In addition, $5.5 million of charge-offs contributed to the decline in total consumer loans. While consumer loan balances decreased, the mix of consumer loans by geographic market was unchanged from year-end 2010, with approximately 57% of consumer loans in the Delaware market.

Consumer loan portfolio


(dollars in millions)	At 3/31/11		At 12/31/10		% change
Indirect	$	362.4	$	411.6		(12	)%
Home equity		523.1		539.0		(3	)%
Credit card		68.0		65.1		4	%
Other consumer		108.2		118.6		(9	)%

Total consumer loans	$	1,061.7	$	1,134.3		(6	)%

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Residential mortgage loans

We focus our residential mortgage lending activities in the state of Delaware, where most of the residential mortgages we originate are traditional fixed rate conforming loans. We sell most of the fixed rate residential mortgages we originate into the secondary market, instead of retaining them in our portfolio. We do not engage in subprime residential mortgage lending.

Residential mortgage loan balances were $425.6 million at March 31, 2011, a $9.0 million decrease from year-end 2010. This balance decreased because sales of residential mortgages and principal paydowns during the first quarter of 2011 offset newly originated mortgages that we chose to retain in our loan portfolio. We sold $25.8 million of fixed rate residential mortgages into the secondary market during the first quarter of 2011 and realized a gain of approximately $0.3 million on these sales, which we recorded in the “other noninterest income” line of our statement of income.

Residential mortgage originations


(dollars in millions)	2011 Q1			2010 Q1
Dollar amount of originations	$	36.6		$	38.5
Number of loans originated		159			161
Percentage for home purchase		18	%		32	%
Percentage for refinancing		82	%		68	%
Percentage of fixed rate originations		95	%		90	%

DEPOSITS

We record two types of deposits:

•

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

•

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

We discuss core deposits in this section. For more information about our use of national brokered CDs, read the liquidity, funding, and interest rate risk management discussions in this report.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

At March 31, 2011, core deposit balances were $115.1 million higher than at year-end 2010, primarily because of a $384.1 million increase in noninterest-bearing demand deposit balances. This increase resulted mainly from CCS client activity. It is not unusual for CCS client deposit levels to fluctuate significantly from period to period, as CCS clients commonly make short-term transactional deposits. Partially offsetting this increase was a $247.5 million decline in interest-bearing demand deposits, which was mainly attributable to declines in money market balances from year-end 2010.

Core deposits


(dollars in millions)	At 3/31/11			At 12/31/10			% change
Noninterest-bearing demand	$	1,476.7		$	1,092.6			35	%
Savings		923.4			914.0			1	%
Interest-bearing demand		3,830.8			4,078.3			(6	)%
CDs < $100,000		930.7			961.7			(3	)%
Local CDs ≥ $100,000		96.6			96.5			—	%

Total core deposits	$	7,258.2		$	7,143.1			2	%

Percent from Delaware clients		74	%		78	%
Percent from Pennsylvania clients		5	%		7	%
Percent from Maryland clients		11	%		11	%
Percent from New Jersey clients		1	%		1	%
Percent from clients in other markets		9	%		3	%

We generally consider average core deposit balances to be a better indicator of trends in the Regional Banking business than period-end balances. On average, core deposits were lower for the first quarter of 2011, compared to the same period in 2010, mainly because average noninterest-bearing demand deposits decreased. The primary reason for this was a decline in average CCS client deposit balances. On average, interest-bearing demand and CD balances were also lower for 2011 than for the same period in 2010, primarily due to lower Regional Banking and WAS client balances. For more detail on average core deposit balances, read the quarterly analysis of net interest income that appears between the net interest margin and the noninterest income discussions in this report.

Core deposit balances, on average


(dollars in millions)	2011 Q1		2010 Q4		2010 Q1

Noninterest-bearing demand	$	1,128.7	$	1,343.3	$	1,307.5
Savings		922.7		892.5		925.1
Interest-bearing demand		3,740.1		3,760.8		3,872.1
CDs < $100,000		943.8		978.5		1,002.3
Local CDs ≥ $100,000		99.4		102.1		132.4

Total core deposits	$	6,834.7	$	7,077.2	$	7,239.4

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

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

NET INTEREST INCOME

Interest income for the first quarter of 2011 was lower than for the 2010 first quarter because we had:

•

Higher levels of nonaccruing loans.

•

Lower average loan and investment securities balances.

While interest income declined by $23.1 million, interest expense for the 2011 first quarter was down by a nominal $0.6 million from the 2010 first quarter. This was because as loan and investment securities declined, interest-bearing liability balances increased from the 2010 first quarter, as we increased liquidity and short-term investments. The average balances of investment securities and total loans declined $1.74 billion between the 2011 and 2010 first quarters. Between the same periods, the average balance of interest-bearing liabilities increased $122.9 million. The result was an increase in the average short-term investments balance, which is lower-yielding than loans and investment securities.

Net interest income


(dollars in millions)	2011 Q1			2010 Q1
Interest income	$	74.4		$	97.5
Interest expense		22.2			22.8

Net interest income	$	52.2		$	74.7

Percent generated by Regional Banking		92	%		90	%

Most of our net interest income comes from the Regional Banking business. The WAS and CCS businesses also generate net interest income, because they have clients who use our banking services. For more information about the allocation of net interest income among the three businesses, read Note 16, “Segment reporting,” in this report.

NET INTEREST MARGIN


Net interest margin	2011 Q1			2010 Q4			2010 Q3			2010 Q2			2010 Q1
Quarterly margin		2.17	%		2.33	%		2.78	%		3.15	%		3.03	%

During the 2011 first quarter, our net interest margin declined primarily because we had higher levels of nonaccruing loans and lower-yielding short-term investments.

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

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

QUARTERLY ANALYSIS OF NET INTEREST INCOME


	2011 first quarter								2010 first quarter
	Average			Income/		Average			Average			Income/		Average
(dollar amounts in millions; rates on a tax-equivalent basis)	balance			expense		rate			balance			expense		rate
Earning assets:

Interest-bearing deposits in other banks	$	1,882.7		$	1.2		0.25	%	$	380.2		$	0.2		0.22	%
Federal funds sold and securities purchased under agreements to resell		1.7			—		0.49			3.3			—		0.25

Total short-term investments		1,884.4			1.2		0.25			383.5			0.2		0.22

U.S. Treasury securities		38.6			—		0.48			230.4			0.1		0.22
Government agency securities		227.4			0.5		0.87			192.1			0.7		1.44
Obligations of state and political subdivisions ¹		9.3			0.2		7.37			5.4			0.1		8.91
Preferred stock ¹		4.1			0.1		6.92			20.6			0.5		8.98
Mortgage-backed securities		152.4			1.7		4.45			234.3			2.5		4.30
Other securities ¹		124.4			1.9		6.22			144.4			2.1		6.01

Total investment securities		556.2			4.4		3.18			827.2			6.0		2.94

FHLB and FRB stock, at cost		40.3			—		0.08			26.8			—		0.05

Commercial, financial, and agricultural loans		2,125.1			19.4		3.71			2,567.4			26.1		4.13
Real estate — construction loans		1,379.0			8.6		2.54			1,912.9			16.5		3.50
Commercial mortgage loans		1,940.8			19.0		3.97			2,124.3			22.0		4.20

Total commercial loans		5,444.9			47.0		3.50			6,604.6			64.6		3.97

Residential mortgage loans		429.1			5.2		4.94			426.8			5.4		5.13
Consumer loans		1,096.6			14.6		5.39			1,365.4			18.6		5.53
Loans secured with investments		384.3			2.4		2.53			431.5			3.1		2.86

Total retail loans		1,910.0			22.2		4.72			2,223.7			27.1		4.94

Total loans ^1,2		7,354.9			69.2		3.82			8,828.3			91.7		4.21


Total earning assets at historical cost	$	9,835.8		$	74.8		3.08	%	$	10,065.8		$	97.9		3.95	%


Fair value adjustment on investment securities available for sale		(8.4	)							(12.1	)


Total earning assets	$	9,827.4							$	10,053.7

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

QUARTERLY ANALYSIS OF NET INTEREST INCOME (CONTINUED)


	2011 first quarter								2010 first quarter
	Average		Income/			Average			Average		Income/			Average
(dollar amounts in millions; rates on a tax-equivalent basis)	balance		expense			rate			balance		expense			rate
Funds supporting earning assets:

Savings deposits	$	922.7	$	1.9			0.81	%	$	925.1	$	2.1			0.94	%
Interest-bearing demand deposits		3,740.1		2.5			0.27			3,872.1		2.9			0.30
Certificates under $100,000		943.8		4.6			1.98			1,002.3		5.6			2.28
Local certificates $100,000 and over		99.4		0.5			2.21			132.4		0.7			2.01

Total core interest-bearing deposits		5,706.0		9.5			0.67			5,931.9		11.3			0.77
National brokered certificates		1,676.8		4.4			1.08			1,255.0		2.9			0.95

Total interest-bearing deposits		7,382.8		13.9			0.76			7,186.9		14.2			0.80

Federal funds purchased and securities sold under agreements to repurchase		115.5		0.1			0.17			312.5		0.2			0.20
U.S. Treasury demand deposits		—		—			—			—		—			—
Line of credit and other debt		0.8		—			5.01			28.9		0.5			6.68

Total short-term borrowings		116.3		0.1			0.21			341.4		0.7			0.75

Long-term debt		595.3		8.2			5.59			443.2		7.9			7.23


Total interest-bearing liabilities		8,094.4		22.2			1.11			7,971.5		22.8			1.16

Other noninterest funds		1,741.4		—			—			2,094.3		—			—


Total funds used to support earning assets	$	9,835.8	$	22.2			0.91	%	$	10,065.8	$	22.8			0.92	%


Net interest income/margin ³				52.6			2.17	%				75.1			3.03	%

Tax-equivalent adjustment ¹				(0.4	)							(0.4	)


Net interest income			$	52.2							$	74.7


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

²		Loan balances include nonaccruing loans. Interest income includes amortization of deferred loan fees.

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

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

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE DUE TO VOLUME AND RATE


	For the three months ended
	March 31,
	2011 vs. 2010
	Increase/(decrease) due to changes in
(in millions)	Volume ²			Rate ³			Total
Interest income:
Interest-bearing deposits in other banks	$	0.8		$	0.2		$	1.0
Federal funds sold and securities purchased under agreements to resell		—			—			—

Total short-term investments		0.8			0.2			1.0

U.S. Treasury securities		(0.1	)		—			(0.1	)
Government agency securities		0.1			(0.3	)		(0.2	)
Obligations of state and political subdivisions ¹		0.1			—			0.1
Preferred stock ¹		(0.4	)		—			(0.4	)
Mortgage-backed securities		(0.9	)		0.1			(0.8	)
Other securities ¹		(0.3	)		0.1			(0.2	)

Total investment securities		(1.5	)		(0.1	)		(1.6	)

FHLB and FRB stock, at cost		—			—			—
Commercial, financial, and agricultural loans		(4.5	)		(2.2	)		(6.7	)
Real estate — construction loans		(4.6	)		(3.3	)		(7.9	)
Commercial mortgage loans		(1.9	)		(1.1	)		(3.0	)

Total commercial loans		(11.0	)		(6.6	)		(17.6	)
Residential mortgage loans		—			(0.2	)		(0.2	)
Consumer loans		(3.7	)		(0.3	)		(4.0	)
Loans secured with investments		(0.3	)		(0.4	)		(0.7	)

Total retail loans		(4.0	)		(0.9	)		(4.9	)

Total loans net of unearned income		(15.0	)		(7.5	)		(22.5	)

Total interest income	$	(15.7	)	$	(7.4	)	$	(23.1	)

Interest expense:
Savings deposits	$	—		$	(0.2	)	$	(0.2	)
Interest-bearing demand deposits		(0.1	)		(0.3	)		(0.4	)
Certificates under $100,000		(0.3	)		(0.7	)		(1.0	)
Local certificates $100,000 and over		(0.2	)		—			(0.2	)

Total core interest-bearing deposits		(0.6	)		(1.2	)		(1.8	)
National brokered certificates		1.0			0.5			1.5

Total interest-bearing deposits		0.4			(0.7	)		(0.3	)
Federal funds purchased and securities sold under agreements to repurchase		(0.1	)		—			(0.1	)
Line of credit and other debt		(0.5	)		—			(0.5	)

Total short-term borrowings		(0.6	)		—			(0.6	)
Long-term debt		2.7			(2.4	)		0.3

Total interest expense		2.5			(3.1	)		(0.6	)
Change in net interest income	$	(18.2	)	$	(4.3	)	$	(22.5	)


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

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

³		We define changes attributable to rate as changes in rate multiplied by the average balances in the applicable period of the prior year. A change in rate/volume (change in rate multiplied by change in volume) has been allocated to the change in rate.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

NONINTEREST INCOME

Total noninterest income for the 2011 first quarter was $13.0 million higher than the 2010 first quarter, mainly because OTTI securities charges were lower for 2011. Net other-than-temporary impairment losses that were recognized in income for the 2011 first quarter were $5.0 million, compared to $18.0 million for the first quarter of 2010.

Noninterest incomeas a percentage of total revenue


(dollars in millions)	2011 Q1			2010 Q1
Noninterest income ¹	$	107.5		$	107.3
Noninterest income ¹ as a percentage of total revenue ²		67	%		59	%


¹		Excluding securities gains/losses and OTTI securities charges.

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

Noninterest income as a percentage of total revenue increased for the 2011 first quarter, compared to the 2010 first quarter, primarily because net interest income declined.

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

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE CORPORATE CLIENT SERVICES BUSINESS

We report three components of Corporate Client Services revenue:

•

Global corporate trust services revenue. Fees for these services are based primarily on the complexity and duration of the services we provide. Some of these fees may be extraordinary or one-time in nature.

•

Retirement services revenue. A portion of this revenue is based on the market valuations of retirement plan assets and collective funds for which we are trustee. The remainder is based on the level of service we provide.

•

Investment and cash management services revenue. This revenue is based primarily on money market fund balances and the market valuations of investment-grade fixed income instruments.

For more information about the CCS business, read the CCS discussion in our 2010 Annual Report on Form 10-K.

CCS in the first quarter of 2011

Corporate Client Services revenue


(in millions)	2011 Q1		2010 Q1
Global corporate trust services	$	23.0	$	23.0
Retirement services		23.7		21.5
Investment/cash management services		3.8		3.5

Total Corporate Client Services revenue	$	50.5	$	48.0

Total CCS revenue was 5% higher for the 2011 first quarter than for the first quarter of 2010, mainly because of higher retirement services revenue, which was 10% higher than for the 2010 first quarter. The higher revenue reflected new business, additional plan contributions, and the effects of improved market values of retirement plan assets under administration. Much of the new business development was in collective investment fund services and services that support defined contribution plans. Partially offsetting the increase in retirement services revenue was an increase in retirement services subadvisor expense, which we discuss in the noninterest expense section of this report. Retirement services subadvisor expense was $11.8 million for the 2011 first quarter compared to $9.9 million for the first quarter of 2010.

CCS profitability for the first three months of 2011 was consistent with the first three months of 2010.

Corporate Client Services operating income


(in millions)	2011 Q1		2010 Q1
Segment operating net income	$	7.0	$	7.1

For more information about CCS operating net income, please read Note 16, “Segment reporting,” in this report.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE WEALTH ADVISORY SERVICES BUSINESS

We report three components of Wealth Advisory Services revenue:

•

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

•

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

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

•

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

For more information about the WAS business, read the WAS discussion in our 2010 Annual Report on Form 10-K.

WAS in the first quarter of 2011

Wealth Advisory Services revenue


(in millions)	2011 Q1		2010 Q1
Trust and investment advisory revenue	$	34.2	$	34.4
Mutual fund revenue		0.6		0.9
Planning and other services revenue		6.6		8.8

Total Wealth Advisory Services revenue	$	41.4	$	44.1

Total WAS revenue for the 2011 first quarter was 6% lower than for the 2010 first quarter, mainly because of a decline in planning and other services revenue, which was $2.2 million lower than for the 2010 first quarter. This decline was mainly because revenue from business management firm Grant Tani Barash & Altman (GTBA) was lower. Revenue from GTBA declined because we sold 80% of our ownership interests in GTBA to its principals on February 16, 2010. As part of this transaction, future profit distributions to us were limited by the agreement.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Mutual fund revenue remained at a historically low level during the 2011 first quarter, mainly because of mutual fund fee waivers. In order to maximize returns for our clients, we began waiving fees on money market mutual funds in 2009, as low market interest rates caused yields to reach historic lows. These waivers reduced WAS mutual fund revenue by $5.0 million for the 2011 first quarter and by $4.4 million for the 2010 first quarter. We do not expect to begin reinstating these fees until the yields on money market mutual funds improve, which we estimate will require an increase of at least 50 basis points in short-term market interest rates. Decreases in mutual fund balances also contributed to the decline in mutual fund revenue.

WAS loss was higher for the first quarter of 2011 than for the first quarter of 2010, primarily because of lower revenue and higher noninterest expense in 2011.

Wealth Advisory Services operating loss


(in millions)	2011 Q1			2010 Q1
Segment operating net loss	$	(9.1	)	$	(2.4	)

For more information about WAS operating net loss, please read Note 16, “Segment reporting,” in this report.

ASSETS UNDER MANAGEMENT AND ADMINISTRATION

We report two types of client assets:

•

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

•

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

Because we provide a variety of services in addition to asset management and custody, and because most of the assets we manage or administer are held in trusts, changes in amounts of AUM or AUA do not necessarily indicate that we have gained or lost business. Consequently, we believe that changes in revenue, rather than changes in AUM or AUA, are the better indicators of trends in the WAS and CCS businesses. For more information about this, read the AUM and AUA discussion in our 2010 Annual Report on Form 10-K.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Client assets at Wilmington Trust ¹


(in billions)	At 3/31/11		At 12/31/10		At 3/31/10
WAS assets under management	$	26.15	$	26.49	$	26.51
CCS assets under management		18.10		17.15		15.85

Total Wilmington Trust assets under management	$	44.25	$	43.64	$	42.36

WAS assets under administration	$	25.14	$	24.88	$	23.86
CCS assets under administration		84.15		84.35		82.97

Total Wilmington Trust assets under administration	$	109.29	$	109.23	$	106.83

Combined AUM and AUA at Wilmington Trust	$	153.54	$	152.87	$	149.19


¹		Excludes Cramer Rosenthal McGlynn and Roxbury Capital Management. Includes estimates of asset values that are not readily available, such as those held in limited partnerships.

WAS AUM decreased nominally from December 31, 2010 and March 31, 2010, mainly because of lost business.

CCS AUM were higher than at December 31, 2010 and March 31, 2010, mainly because of new business as well as improved market values of managed client assets.

Routine fluctuations in CCS client accounts can cause increases and decreases in AUM. Monetary assets we manage or administer for CCS clients can fluctuate by hundreds of millions of dollars from one reporting period to the next, depending on the cash management needs of these clients.

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


Investment mix of Wilmington Trust AUM¹	At 3/31/11			At 12/31/10			At 3/31/10
Equities		41	%		38	%		41	%
Fixed income		31	%		34	%		33	%
Cash and cash equivalents		19	%		19	%		16	%
Other assets		9	%		9	%		10	%


¹		Excludes Cramer Rosenthal McGlynn and Roxbury Capital Management.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

AFFILIATE MONEY MANAGERS

We have ownership positions in two money management firms:

•

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

•

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

Affiliate money manager revenue


(in millions)	2011 Q1		2010 Q1
Total revenue from affiliate money managers (net of expenses)	$	5.3	$	4.8

An increase in revenue from CRM, primarily from higher CRM AUM, was the main reason why affiliate money manager revenue for the 2011 first quarter was higher than for the 2010 first quarter.

The revenue we record from CRM and RCM is net of their expenses and based on our ownership position in each, which is unchanged from year-end 2010. We do not consolidate CRM or RCM in our financial statements because the principals of these firms retain management controls, including veto powers, over a variety of matters. CRM and RCM are not part of our WAS business, and their managers and staff are not Wilmington Trust employees. For more information about CRM and RCM, read Note 16, “Segment reporting,” in this report, and Note 5, “Affiliates and acquisitions,” in our 2010 Annual Report on Form 10-K.

NONINTEREST EXPENSE

Noninterest expense for the 2011 first quarter was $146.3 million, an increase of $14.8 million from the 2010 first quarter. The factors that contributed to this increase included:

•

Higher staffing-related costs, due mainly to an increase in incentives and bonuses expense related to employee retention incentives. Staffing-related costs continued to comprise the largest concentration of our total noninterest expense. Total staffing-related expense for the 2011 first quarter was $78.2 million, compared to $72.4 million for the 2010 first quarter.

Staffing-related expense


(dollars in millions)	2011 Q1			2010 Q1
Salaries and wages		49.8			49.2
Incentives and bonuses		11.0			7.1
Employment benefits		17.4			16.1

Total staffing-related expenses	$	78.2		$	72.4

Staffing-related expense as a percentage of total noninterest expense		53	%		55	%

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS


	At		At
	March 31, 2011		March 31, 2010
Total full-time-equivalents		2,716		2,821

We had 105 fewer full-time-equivalents at March 31, 2011 than at March 31, 2010. Most of this decline was attributable to voluntary employee terminations.

•

Higher retirement services subadvisor expense, which was a direct result of new business in the CCS retirement services business line. Retirement services subadvisor expense was $11.8 million for the 2011 first quarter, compared to $9.9 million for the 2010 first quarter. We discuss the increase in CCS retirement services revenue in the CCS business discussion.

•

Higher insurance expense. This expense was $3.0 million higher than for the 2010 first quarter, due to a higher Federal Deposit Insurance Corporation (FDIC) insurance premium assessment for the 2011 first quarter. The higher premium was due mainly to a higher assessment rate that resulted from the 3-basis-point increase for all depository institutions and our continued net loss, credit quality problems, and capital erosion. FDIC insurance expense was $8.7 million for the 2011 first quarter, compared to $5.5 million for the 2010 first quarter.

•

Higher legal and auditing fee expense. This expense was $3.1 million higher than for the 2010 first quarter, due mainly to merger costs as well as continued costs related to loan workout and recovery activities.

INCOME TAXES

Income taxes and tax rate


	For the three months
	ended March 31,
(dollars in millions)	2011			2010
Pre-tax loss (less non-controlling interest)	$	(32.9	)	$	(45.6	)
Income tax expense/(benefit)	$	0.6		$	(16.4	)
Effective tax rate		(1.8	)%		36.0	%

For more information about this, read Note 15, “Income taxes,” in this report.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

CAPITAL RESOURCES

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

Our capital levels at March 31, 2011 were lower than the levels at December 31, 2010 because of our 2011 first quarter net loss, which caused our retained earnings to decline. With no significant economic or real estate recovery on the horizon in our markets, we continue to have little assurance that our loan portfolio will strengthen significantly in the near term or that our capital position will not erode further.

During 2010, after carefully studying our strategic alternatives, our Board of Directors determined that the best option for our stockholders, as well as for our clients and staff members, was a merger with M&T. On November 1, 2010, we announced that we signed a definitive merger agreement with M&T. The closing of the merger is subject to certain conditions, including approval by our stockholders and regulators. Our stockholders approved the merger on March 22, 2011 and we have obtained all necessary approvals to close the merger from our regulators. Subject to the terms and conditions of the merger agreement, we expect to close the merger on May 16, 2011, at which point we will become a wholly-owned subsidiary of MT&T. For additional information about this, read Note 1, “Proposed merger with M&T Bank Corporation,” in the consolidated financial statements in this report.

Capital


	Three months ended			Year ended
(dollars in millions)	3/31/11			12/31/10
Common stockholders’ equity (period end)	$	490.9		$	526.7
Common stockholders’ equity (on average)	$	525.8		$	1,048.6
Loss on average common stockholders’ equity (annualized)		(25.84	)%		(68.67	)%
Loss on average assets (annualized)		(1.29	)%		(6.69	)%

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Our capital at March 31, 2011, included $330.0 million of Wilmington Trust Series A preferred stock and warrants, which we sold to the U.S. Department of the Treasury under the CPP in December 2008. We are required to pay a 5% dividend on this preferred stock annually until 2013, and 9% annually thereafter, as long as this stock is outstanding. The Series A preferred stock qualifies as Tier 1 capital, has no maturity date, and ranks senior to our common stock for dividend payments and other matters. Full details of our participation in the CPP and its terms are in a prospectus supplement and amended shelf registration statement dated January 12, 2009, which are available on www.wilmingtontrust.com in the Investor Relations section, under SEC filings. Under the terms of our merger agreement with M&T, the Series A preferred stock will be converted in the merger into preferred stock of M&T with substantially the same rights, powers, and preferences, and M&T will assume all of our obligations relating to the Series A preferred stock. In addition, the warrant we issued to the U.S. Department of the Treasury in connection with the issuance of the Series A preferred stock will be converted automatically in the merger into a warrant to purchase M&T common stock, subject to appropriate adjustments.

For accounting purposes, we allocated the $330.0 million we received under the CPP to the preferred stock and stock warrants, based on their relative estimated fair values. In order to record the value of the stock warrants, we recorded a corresponding discount on the preferred stock, which we are accreting over a five-year period that began on December 12, 2008. Along with the dividends on the preferred stock, we deduct the accretion of the discount from net income to arrive at net income available to common shareholders. The accretion of the discount was $0.4 million for the 2011 and 2010 first quarters. For more information about this, read Note 5, “Earnings per share,” in this report.

Capital ratios

All of our regulatory capital levels at March 31, 2011 continued to exceed the minimums required by regulators for banks and bank holding companies to be considered well-capitalized. Banking regulators make qualitative judgments about the components of our capital, risk weightings, and other factors. Their views of our financial condition and circumstances could cause them to adjust their well-capitalized minimum standards. Subsequent to year-end, Wilmington Trust FSB entered into a supervisory agreement with the OTS under which, among other things, Wilmington Trust FSB is deemed adequately capitalized and which sets targets for Wilmington Trust FSB’s future capital ratios. The agreement requires Wilmington Trust FSB to maintain a Tier 1 capital ratio of at least 9% and a risk-based capital ratio of at least 14% by June 30, 2011. At March 31, 2011, Wilmington Trust FSB’s Tier 1 capital and risk-based capital ratios were 12.92% and 14.21%, respectively. For more information about these guidelines, read Note 14, “Capital,” in this report and Note 17, “Capital,” in our 2010 Annual Report on Form 10-K. For further information about these and other regulatory restrictions to which Wilmington Trust FSB is subject under the agreement, read the Form 8-K we filed with the SEC on February 23, 2011. Further declines in our regulatory capital ratios could result in additional formal regulatory actions that could compromise our ability to conduct business.

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Regulatory capital ratios


	At			At			At			Minimum to be
	3/31/11			12/31/10			3/31/10			well-capitalized
Total risk-based capital		12.55	%		12.29	%		17.58	%		10	%
Tier 1 risk-based capital		7.57	%		7.51	%		12.90	%		6	%
Tier 1 leverage capital		5.99	%		6.02	%		12.25	%		5	%

Amounts of regulatory capital


	At 3/31/11				At 12/31/10
			Minimum to				Minimum to
	Wilmington		be well-		Wilmington		be well-
(dollars in millions)	Trust capital		capitalized		Trust capital		capitalized
Total risk-based capital	$	1,021.6	$	814.2	$	1,060.2	$	862.6
Tier 1 risk-based capital	$	616.0	$	488.5	$	648.1	$	517.6
Tier 1 leverage capital	$	616.0	$	514.4	$	648.1	$	538.2

Two of the tools we use to measure the adequacy of our capital are the tangible common equity-to-assets (TCE) ratio and the Tier 1 common equity ratio. These ratios declined from December 31, 2010 because our net loss for the first three months of 2011 caused our equity to decrease.

Tangible common equity


(dollars in millions)	At 3/31/11			At 12/31/10
Total equity	$	816.3		$	851.7
Less:
Preferred stock		325.4			325.0
Noncontrolling interest		—			—
Goodwill		336.8			336.3
Other intangible assets		27.5			29.2

Tangible common equity	$	126.6		$	161.2

Total assets	$	10,728.2		$	10,932.6
Less:
Goodwill		336.8			336.3
Other intangible assets		27.5			29.2

Tangible assets	$	10,363.9		$	10,567.1

TCE ratio		1.22	%		1.53	%

Tier 1 common equity


(dollars in millions)	At 3/31/11			At 12/31/10
Tier 1 capital	$	616.0		$	648.1
Less:
Noncontrolling interest		—			—
Preferred stock		325.4			325.0

Tier 1 common equity	$	290.6		$	323.1

Total risk-weighted assets	$	8,141.9		$	8,626.2

Tier 1 common equity ratio		3.57	%		3.75	%

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

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

The tables above reconcile tangible common equity, Tier 1 common equity, and tangible assets as of March 31, 2011, and December 31, 2010, to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Because the TCE ratio and the Tier 1 common equity ratio are non-GAAP disclosures, some limitations are inherent in their use. They may not offer relevant comparisons to other companies. In addition, other companies might calculate these ratios differently. Consequently, the TCE ratio and the Tier 1 common equity ratio should not be considered in isolation, or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. We calculate our TCE ratio by using a numerator of stockholders’ equity (excluding preferred stock and the noncontrolling interest) minus the sum of goodwill and other intangibles. The denominator we use is total assets minus the sum of goodwill and other intangibles. We calculate our Tier 1 common equity ratio using a numerator of Tier 1 capital minus preferred stock. The denominator we use is total risk-weighted assets.

Share repurchase program

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

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


Current repurchase plan activity	At 3/31/11		At 12/31/10		At 3/31/10
Number of shares repurchased		—		—		—
Average price per share repurchased	$	—	$	—	$	—
Total cost of shares repurchased	$	—	$	—	$	—
Total shares purchased under current plan		3,043,796		3,043,796		3,043,796
Shares available for repurchase		4,956,204		4,956,204		4,956,204

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Amounts in the table above do not match the amounts reported under Part II, Item 2, in this report, because those amounts include shares we receive when recipients of stock-based compensation tender their shares to exercise their options or to cover payroll taxes on restricted stock vesting. We consider those types of share acquisitions to be outside the parameters of our authorized share repurchase plan, because those shares are not trading on the open market when we acquire them.

LIQUIDITY AND FUNDING

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

•

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

•

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

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

•

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

•

National brokered CDs, which we gather through various broker networks and which typically consist of aggregated deposits from individuals, mutual funds, or financial institutions. At March 31, 2011, all of the underlying deposits in our national brokered CDs were from individual depositors.

•

Short-term borrowings.

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

Our non-core funding:

•

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

•

Provides diversity to the funding mix.

•

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

Wilmington Trust Corporation and subsidiaries
Form 10-Q for the three months ended March 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

To manage the risk of having insufficient liquidity, we:

•

Monitor our existing and projected liquidity requirements continually.

•

Follow policies in the liquidity and funding risk management plan approved by our Board of Directors.

•

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

•

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

•

WILMINGTON TRUST CORP 10-Q