**UNITED STATES SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549****FORM 10-K**   þ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****For the fiscal year ended December 31, 2006**   o **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****For the transition period from                      to                     ****Commission file number:****1-14659** **WILMINGTON TRUST CORPORATION**(Exact name of registrant as specified in its charter)   Delaware 51-0328154 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)   Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890 (Address of principal executive offices) (Zip Code)   Registrant’s telephone number, including area code: (302) 651-1000 Securities registered pursuant toSection 12(b) of the Act:   Title of each class Name of each exchange on which registered:   Common Stock, $1.00 Par Value New York Stock Exchange   (Title of class)  Securities registered pursuant to Section 12 (g) of the Act:None (Title of Class)Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act. Yes þ No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or15(d) of the Act. Yes o No þ     Indicate by check mark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such report(s)), and (2) has beensubject to such filing requirements for the past 90 days. Yes þ No o     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statements incorporated by reference inPart III of this Form 10-K or any amendment to this Form 10-K. o     Indicate by check mark whether the registrant is a large accelerated filer, an acceleratedfiler, or a non-accelerated filer. See definition of “accelerated filer and large acceleratedfiler” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 ofthe Act). Yes o No þState the aggregate market value of the voting and non-voting common equity held by non-affiliates*computed by reference to the price at which the common equity was last sold, or the average bid andasked price of such common equity, as of June 30, 2006, the last business day of the registrant’smost recently completed second fiscal quarter $2,896,101,915.(APPLICABLE ONLY TO CORPORATE REGISTRANTS)     Indicate the number of shares outstanding of each of the registrant’s classes of common stock,as of the latest practicable date. Sixty-eight million four hundred eighty-six-thousand threehundred ninety-seven shares of common stock per value $1 per share, were outstanding on January 31,2007.DOCUMENTS INCORPORATED BY REFERENCE     List hereunder the following documents if incorporated by reference and the Part of the Form10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annualreport to security holders; (2) Any proxy or information statement; and (3) Any prospectus filedpursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should beclearly described for identification purposes (e.g., annual report to security holders for fiscalyear ended December 24, 1980).     Documents Incorporated by Reference Part of Form 10-K in which Incorporated(1) Portions of Proxy Statement for 2007Annual Shareholders’ Meetingof Wilmington Trust Corporation Part III     (2) Portions of Annual Report toShareholders for fiscal year endedDecember 31, 2006 Parts I, II, and IV * For purposes of this calculation, Wilmington Trust’s subsidiaries and its directors andexecutive officers are deemed to be “affiliates.”
 

 
**TABLE OF CONTENTS**     **PART I**         Item 1 Business  1      Item 1A Risk Factors  24      Item 1B Unresolved Staff Comments  27      Item 2 Properties  27      Item 3 Legal Proceedings  28      Item 4 Submission of Matters to a Vote of Security Holders  29      **PART II**         Item 5Market for Registrant’s Common Equity, Related StockholderMatters and Issuer Purchases of Equity Securities  29      Item 6 Selected Financial Data  30      Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operation  32      Item 7A Qualitative and Quantitative Disclosure About Market Risk  32      Item 8 Financial Statements and Supplementary Data  32      Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  33      Item 9A Controls and Procedures  33      Item 9B Other Information  33      **PART III**         Item 10 Directors and Executive Officers of the Registrant  33      Item 11 Executive Compensation  33      Item 12 Security Ownership of Certain Beneficial Owners and Management  33      Item 13 Certain Relationships and Related Transactions  33      Item 14 Principal Accountant Fees and Services  33      **PART IV**         Item 15 Exhibits and Financial Statement Schedules  34 
 

 
**PART I****ITEM 1. BUSINESS**     GeneralWilmington Trust Corporation, a Delaware corporation and a financial holding company under the BankHolding Company Act (“Wilmington Trust”), owns Wilmington Trust Company, a Delaware-chartered bankand trust company and Wilmington Trust’s principal subsidiary (“WTC”). WTC was formed in 1903 andis the largest full-service bank in Delaware, with 47 branch offices at December 31, 2006.Wilmington Trust also owns two other depository institutions, Wilmington Trust of Pennsylvania, aPennsylvania-chartered bank and trust company with four branches (“WTPA”), and Wilmington TrustFSB, a federally-chartered savings bank with one branch and a sales office in Maryland; one branchand four sales offices in Florida; and two trust agency offices in California and one in each ofGeorgia, Nevada, New Jersey, and New York (“WTFSB”). (WTC, WTPA, and WTFSB sometimes are referredto herein as the “Banks”). Wilmington Trust also owns Rodney Square Management Corporation, aregistered investment adviser (“RSMC”); Wilmington Brokerage Services Company, a broker-dealer anda registered investment adviser; WT Investments, Inc., an investment holding company with interestsin five asset management firms (“WTI”); GTBA Holdings, Inc. (“GTBAH”), an investment holdingcompany with interests in three asset management firms; Wilmington Trust Investment Management,LLC, an investment advisory firm (“WTIM”); Wilmington Trust (UK) Limited, an investment holdingcompany with interests in four international firms providing entity management services (“WTUK”);and Wilmington Trust CI Holdings Limited, a holding company with six subsidiaries.Wilmington Trust’s principal place of business is Rodney Square North, 1100 North Market Street,Wilmington, Delaware 19890. Its principal role is to supervise and coordinate the Banks’, RSMC’s,WTI’s, WTIM’s, GTBAH’s, and WTUK’s activities and provide them with capital and services.Virtually all of Wilmington Trust’s income historically has been from dividends from itssubsidiaries. Wilmington Trust’s current staff principally consists of its management, who areexecutive officers generally serving in similar capacities for WTC. Wilmington Trust utilizesWTC’s support staff.As of December 31, 2006, Wilmington Trust had total assets of $11.16 billion and totalshareholders’ equity of $1.1 billion. On that date, 68,459,514 shares of Wilmington Trust’s commonstock were issued and outstanding, and the company had 7,962 shareholders of record. WilmingtonTrust’s total loans outstanding were approximately $8.09 billion on that date.     Business SegmentsWe have four business segments that we monitor and report on to manage our business operations. Weidentify these segments as Regional Banking, Wealth Advisory Services, Corporate Client Services,and Affiliate Money Managers. The Wealth Advisory Services business serves clients throughout theUnited States and in many foreign countries. The Corporate Client Services business
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also servesclients throughout the United States and in many foreign countries.The Regional Banking business targets commercial clients throughout the Mid-Atlantic region and consumer clients in the State ofDelaware. We use a funds transfer pricing methodology to credit and charge segments for fundsprovided and funds used. We use activity-based costing principles to assign corporate overheadexpenses to each segment. We generally record sales and transfers among segments as if the salesor transfers were to third parties (e.g., at current market prices). We report profit orloss from infrequent events, such as the sale of a business, separately for each segment. Forfinancial information on our four segments, see Note 21 to the Consolidated Financial Statementscontained in our Annual Report to Shareholders for 2006.     Wealth Advisory Services ActivitiesThe Banks’ Wealth Advisory Services activities encompass a variety of sophisticated financialplanning, investment management, fiduciary, and custom lending services for individuals andfamilies. These services include estate, retirement, tax, philanthropic, business succession, andexecutive benefits planning. The Banks also offer trust creation and administration, estatesettlement, and private banking services. The Banks receive fees for providing these services.The Banks specialize in trusts that offer the legal and tax advantages available in Delaware andother favorable jurisdictions. WTC is one of the largest personal trust institutions in the UnitedStates.Wilmington Trust’s investment management capabilities utilize proprietary and nonproprietaryproducts to offer a full spectrum of asset classes and investment styles, including fixed-incomeinstruments, mutual funds, domestic and international equities, real estate investment trusts, andalternative investments such as private equity and hedge funds.Investment management services are provided to institutional as well as individual clients,including endowment and foundation funds, tax-qualified defined benefit and defined contributionplans, and taxable and tax-exempt cash portfolios.Wilmington Trust also offers business management and family office services to high net worthindividuals. These services include financial advice, bookkeeping, tax return preparation,investment management, and courier services.     Corporate Client Services ActivitiesWilmington Trust’s Corporate Client Services business provides a variety of trustee, agency, andadministrative services in jurisdictions in the United States, the Caribbean, and Europe withadvantageous legal, tax, and creditor protections. The business is focused on three areas: 1)services for clients who use a variety of capital markets financing structures; 2) services forclients who seek to establish and maintain legal residency requirements for specialpurpose/variable interest entities; and 3) services for clients who use an independent trustee tohold retirement plan assets.Wilmington Trust serves as owner trustee, indenture trustee, and specialized service provider for avariety of capital markets transactions, including those secured by mortgage-backed collateral,residential and commercial mortgage loans, leases, credit card receivables, corporate loans,
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municipal securities, and other assets. Wilmington Trust provides owner trustee, indenturetrustee, and specialized services for equipment financing transactions that involve aircraft, powergenerating facilities, vessels, and other capital equipment. It also serves as indenture,successor, collateral, or liquidating trustee in corporate debt issuances, reorganizations, debtrestructurings, mergers, and bankruptcies.To establish and maintain legal residency requirements for special purpose/variable interestentities, Wilmington Trust provides administrative services that demonstrate “nexus,” or substance.These services typically include providing a physical location and independent directors for theentity, and other administrative functions.As trustee for retirement plan assets, Wilmington Trust provides administrative and custodialservices for pension, 401(k), and other retirement plans for clients who elect to use differentproviders for the investment management, recordkeeping, and trustee services.Wilmington Trust also provides fixed income investment and cash management services to CorporateClient Services clients. These clients may use these services to manage residual cash or fundsheld in escrow accounts, debt service reserve accounts, and other accounts associated with trustsand special purpose entities. Some of Wilmington Trust’s retirement services clients also usethese services to manage retirement plan assets.     Regional Banking ActivitiesThe Banks historically have concentrated the lending, deposit-taking, and other banking activitiesdescribed below in Delaware, Maryland, New Jersey, and Pennsylvania. Commercial banking activitiesare conducted primarily in Delaware, Maryland, New Jersey, and Pennsylvania, and retail bankingactivities are conducted primarily in Delaware. Banking activities conducted in other statesrelate primarily to the Banks’ wealth advisory business.The Banks’ commercial lending activities are targeted to owners of privately held businesses withannual sales up to $250 million. The Banks seek to work with business owners who need wealthadvisory as well as lending services. The Banks generally do not pursue syndicated lendingopportunities.The Banks generally receive fees for originating loans and for taking applications and committingto originate loans. In addition, they receive fees for issuing letters of credit and lines ofcredit, as well as for late charges and other fees in connection with lending activities.          Commercial LoansThe Banks also originate loans secured by mortgages on commercial real estate and multi-familyresidential real estate. The Banks seek to minimize risks of this lending in a number of ways,including: **•** Limiting the size of their individual commercial and multi-family real estate loans;
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 **•** Monitoring the aggregate size of their commercial and multi-family housing loan portfolios;  **•** Generally requiring equity in the property securing the loan equal to a certain percentage of the appraised value or selling price;  **•** Requiring in most instances that the financed project generate cash flow adequate to meet required debt service payments; and  **•** Requiring that the Banks have recourse to the borrower and guarantees from the borrower’s principals in most instances.The Banks also make other types of commercial loans to businesses located in their market areas.The Banks offer lines of credit, term loans, and demand loans to finance working capital, accountsreceivable, inventory, and equipment purchases. Typically, these loans have terms of up to sevenyears, and bear interest either at fixed rates or at rates fluctuating with a designated interestrate. These loans frequently are secured by the borrower’s assets. In many cases, they also arecollateralized by guarantees of the borrower’s owners and their principal officers.          Construction LoansThe Banks make loans and participate in financing to construct residences and commercial buildings.The Banks also originate loans for the purchase of unimproved property for residential andcommercial purposes. In these cases, the Banks frequently provide the construction funds toimprove the properties.The Banks’ residential and commercial construction loans generally have terms of up to 24 months,and interest rates that adjust from time to time in accordance with changes in a designatedinterest rate. The Banks disburse loan proceeds in increments as construction progresses andinspections warrant. The Banksfinance the construction of individual, owner-occupied houses only if qualified professionalcontractors are involved and only on the basis of the Banks’ underwriting and construction loanmanagement guidelines. The Banks may underwrite and structure construction loans to convert topermanent loans at the end of the construction period. Analyzing prospective construction loanprojects requires greater expertise than that required for residential mortgage lending oncompleted structures. Accordingly, the Banks engage several staff members experienced inunderwriting in connection with their construction lending. Residential and commercialconstruction loans afford the Banks the opportunity to increase the interest rate sensitivity oftheir loan portfolios and receive yields higher than those obtainable on permanent residentialmortgage loans.          Residential Mortgage LoansThe Banks directly originate or purchase conventional residential first mortgage loans. The Bankssell all new residential fixed-rate mortgage production into the secondary market. Existingresidential mortgage loans are serviced by a third-party provider. The Banks provide financing forjumbo residential first mortgage loans through a third-party lender. The Banks may purchaseresidential mortgage loans in support of Community Reinvestment Act activities.
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The Banks foster public awareness of their residential mortgage loan products through newspaperadvertising and direct mail. The Banks offer both fixed and adjustable interest rates onresidential mortgage loans, with terms ranging up to 30 years.          Loans to IndividualsThe Banks offer both secured and unsecured personal lines of credit, installment loans, homeimprovement loans, direct and indirect automobile loans, and credit card facilities. The Banksdevelop public awareness of their consumer loan products primarily through newspaper advertisingand direct mail. Consumer loans generally have shorter terms and higher interest rates thanresidential first mortgage loans. Through their consumer lending, the Banks attempt to enhance thespread between their average loan yields and their cost of funds, and their matching of assets andliabilities expected to mature or reprice in the same periods.          Underwriting StandardsIn determining whether to originate or purchase a residential mortgage loan, the Banks assess boththe borrower’s ability to repay the loan and the adequacy of the proposed information concerningthe applicant’s income, financial condition, employment, and credit history. The Banks requiretitle insurance insuring the priority of their liens on most loans secured by first mortgages onreal estate, as well as fire and extended coverage casualty insurance protecting the mortgagedproperties. Loans are approved by various levels of management depending on the amount of theloan.The Banks’ underwriting standards relating to commercial real estate and multi-family residentialloans are designed to ensure that the property securing the loan will generate sufficient cash flowto cover operating expenses and debt service. The Banks review the property’s operating historyand projections, comparable properties, and the borrower’s financial condition and reputation. TheBanks’ general underwriting standards with respect to these loans include: **•** Inspecting each property before issuing a loan commitment and before each disbursement;  **•** Requiring an appraisal of the property;  **•** Requiring recourse to the borrower; and  **•** Requiring the personal guaranty of the borrower’s principal(s).The Banks monitor the performance of these loans by inspecting the property securing eachloan.The Banks limit commercial loans secured by real estate to individuals and organizationswith a demonstrated capacity to generate cash flow sufficient to repay indebtedness under variedeconomic conditions. The Banks monitor the performance of these loans and other loans on acontinuous basis.The Banks require first or junior mortgages to secure home equity loans. Although this securityinfluences the Banks’ underwriting decisions, their primary focus in underwriting these loans, aswell as their other loans to individuals, is on the borrower’s financial ability to repay. In theunderwriting process, the Banks obtain credit bureau reports and verify the borrower’s employment
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and credit information. On home equity loans above a certain level, the Banks require an appraisalof the property securing the loan and, in certain instances, title insurance insuring the priorityof their liens.     Deposit ActivitiesDeposit accounts are the primary source of the Banks’ funds for use in lending and investmentactivities and general business purposes. The Banks also obtain funds from borrowings, theamortization and repayment of outstanding loans, earnings, and maturities of investment securities.The Banks’ deposit accounts include demand checking accounts, term certificates of deposit, moneymarket deposit accounts, negotiable order of withdrawal accounts, and regular savings accounts.The Banks also offer retirement plan accounts (including individual retirement accounts, Keoghaccounts, and simplified employee pension plans) for investment in the Banks’ various depositaccounts. The Banks attract consumer deposits principally from their primary market areas.See also Item 1A – “Risk Factors.”     Other ActivitiesInterest and dividends on investments provide the Banks with a significant source of revenue. AtDecember 31, 2006, the Banks’ investment securities, including securities purchased underagreements to resell, totaled $2.17 billion, or 19% of their total assets. The Banks’ investmentsecurities are used to meet federal liquidity requirements, among other purposes. Designatedmembers of the Bank’s management make investment decisions. The Banks have established limits onthe types and amounts of investments they may make.     SubsidiariesWTC has 19 wholly owned subsidiaries, formed for various purposes. Those subsidiaries’ results ofoperations are consolidated with Wilmington Trust for financial reporting purposes. They provideadditional services to Wilmington Trust’s customers, and include: **•** Brandywine Finance Corporation, a finance company;  **•** Wilmington Trust SP Services, Inc. and Wilmington Trust SP Services (Delaware),Inc., which provide services for special purpose entities using Delaware’s favorabletax and legal environment;  **•** Wilmington Trust SP Services (Nevada), Inc., which provides services for specialpurpose entities using Nevada’s favorable tax and legal environment;  **•** Wilmington Brokerage Services Company, a registered broker-dealer and a registered investment adviser;  **•** Wilmington Trust (Cayman), Ltd., a trust company;  **•** Wilmington Trust (Channel Islands), Ltd., a trust company; and  **•** Wilmington Trust SP Services (South Carolina), Inc., and Wilmington Trust SPServices (Vermont), Inc., captive insurance management companies.
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     AffiliatesThrough its subsidiaries, Wilmington Trust also has interests in the following asset managementfirms whose results of operations are not consolidated with Wilmington Trust for financialreporting purposes: **•** An 81.73% interest in Cramer Rosenthal McGlynn, LLC, an investment advisory firmspecializing in equity investments in small- to middle-capitalization value-stylestocks;  **•** A preferred profits interest equal to 30% of the revenues of, and 41.23% of thecommon interests in, Roxbury Capital Management, LLC, an investment management firmspecializing in growth-style stocks for institutional and individual clients; and  **•** A 28.125% interest in Camden Partners Holdings, LLC, a Baltimore-based private equity firm.     Staff MembersOn January 31, 2007, Wilmington Trust and its subsidiaries had 2,562 full-time equivalent staffmembers. Wilmington Trust considers its and its subsidiaries’ relationships with these staffmembers to be good based on its ability to attract and retain high quality staff. Wilmington Trustand the Banks provide a variety of benefit programs for these staff members, including pension,incentive compensation, thrift savings, stock purchase, and group life, health, and accident plans.
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                            Industry Guide 3 Tables 2006/2005  2005/2004 The following table presents a rate/volume analysis Increase (Decrease)  Increase (Decrease)  of net interest income: due to change in  due to change in (in millions) Volume1  Rate2  Total  Volume1  Rate2  Total  Interest income:                        Timedeposits in other banks $—  $—  $—  $—  $—  $— Federal funds sold and securitiespurchased under agreements to resell  0.7   0.9   1.6   0.2   0.5   0.7  Totalshort-term investments  0.7   0.9   1.6   0.2   0.5   0.7                             U.S. Treasury  1.0   1.1   2.1   (1.8)  0.1   (1.7)Government agencies  4.6   1.7   6.3   4.2   (0.3)  3.9 State and municipal *  (0.1)  —   (0.1)  (0.2)  0.1   (0.1)Preferred stock *  (0.2)  0.2   —   (2.2)  —   (2.2)Mortgage-backed securities  (6.1)  0.6   (5.5)  (1.6)  0.2   (1.4)Other  1.8   5.5   7.3   1.5   5.7   7.2  Totalinvestment securities  1.0   9.1   10.1   (0.1)  5.8   5.7                             Commercial, financial and agricultural *  (1.5)  38.9   37.4   4.0   40.3   44.3 Real estate-construction  36.7   24.4   61.1   12.2   19.5   31.7 Mortgage - commercial *  0.8   17.5   18.3   3.0   17.4   20.4  Total commercial loans  36.0   80.8   116.8   19.2   77.2   96.4    Mortgage - residential  3.3   (0.5)  2.8   (0.9)  (0.6)  (1.5)Consumer  8.2   11.6   19.8   11.7   5.4   17.1 Loans secured by liquid collateral  (2.6)  10.1   7.5   (0.1)  11.2   11.1  Total retail loans  8.9   21.2   30.1   10.7   16.0   26.7    Total loans net of unearned income  44.9   102.0   146.9   29.9   93.2   123.1  Total interest income $46.6  $112.0  $158.6  $30.0  $99.5         $129.5                             Interest expense:                        Savings $(0.1) $0.5  $0.4  $—  $0.2  $0.2 Interest-bearing demand  0.4   5.2   5.6   —   8.3   8.3 Certificates under $100,000  4.0   11.4   15.4   1.1   4.4   5.5 Local certificates $100,000 and over  3.7   7.5   11.2   3.8   5.3   9.1  Total core interest-bearing deposits  8.0   24.6   32.6   4.9   18.2   23.1 Nationalmoney market deposit accounts  1.0   —   1.0   —   —   — National certificates $100,000 and over  16.9   49.4   66.3   3.9   44.2   48.1  Total interest-bearing deposits  25.9   74.0   99.9   8.8   62.4   71.2                             Federal funds purchased and securitiessold under agreements to repurchase  0.9   17.7   18.6   (0.2)  17.2   17.0 U.S. Treasury demand  —   0.2   0.2   —   0.2   0.2  Totalshort-term borrowings  0.9   17.9   18.8   (0.2)  17.4   17.2    Long-term debt  (0.6)  5.9   5.3   (0.1)  7.3   7.2  Totalinterest expense $26.2  $97.8  $124.0  $8.5  $87.1  $95.6                             Changes in net interest income $20.4  $14.2  $34.6  $21.5  $12.4  $33.9     * Variances are calculated on a fully tax-equivalent basis, which includes the effects of anydisallowed interest expense deduction. 1 Changes attributable to volume are defined as a change in average balance multiplied by the prior year’s rate. 2 Changes attributable to rate are defined as a change in rate multiplied by the average balance in the applicable period for the prior year.        A change in rate/volume (change in rate multiplied by change in volume) has been allocated to thechange in rate.
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The maturity distribution of Wilmington Trust’s investment securities held to maturityfollows:                  Market  Amortized  Weighted December 31, 2006 (in millions) value  cost  average yield  State and municipals:            Within 1 year $0.3  $0.3   5.81%After 1 but within 5 years  1.2   1.1   6.20  Total  1.5   1.4   6.11  Mortgage-backed securities:            After 10 years  0.2   0.2   6.71  Total  0.2   0.2   6.71  Other:            Within 1 year  0.1   0.1   4.01  Total  0.1   0.1   4.01               Total investment securitiesheld to maturity $1.8  $1.7   6.05% Note: Weighted average yields are not on a tax-equivalent basis.Time categories not shown above indicate there are no investment securitiesmaturing in that respective timeframe.
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Thematurity distribution of Wilmington Trust’s Investment securities available for sale follows:                December 31 Market  Amortized  Weighted (in millions) value  cost  average yield  U.S. Treasury:            Within 1 year $73.8  $74.4   3.93%After 1 but within 5 years  51.4   52.2   4.00  Total  125.2   126.6   3.96  Government Agencies:            Within 1 year  261.2   262.6   4.22 After 1 but within 5 years  424.2   427.1   4.75 After 5 but within 10 years  121.7   120.9   5.70  Total  807.1   810.6   4.72  State and municipals:            After 1 but within 5 years  0.4   0.3   13.57 After 10 years  7.7   7.4   5.60  Total  8.1   7.7   10.67  Preferred stock:            Within 1 year  56.4   56.6   6.55 After 1 but within 5 years  34.1   33.8   7.97  Total  90.5   90.4   7.08  Mortgage-backed securities:            Within 1 year  0.3   0.3   7.25 After 1 but within 5 years  2.5   2.5   6.00 After 5 but within 10 years  53.0   54.3   4.32 After 10 years  633.5   654.4   4.23  Total  689.3   711.5   4.25  Corporate securities:            After 10 years  356.8   356.7   6.41  Total  356.8   356.7   6.41  Foreign corporate securities            Within 1 year  0.5   0.5   7.45  Total  0.5   0.5   7.45  Other:            Within 1 year  22.3   21.8   3.41 After 10 years  13.1   13.0   6.94  Total  35.4   34.8   4.73  Total investmentsecurities availablefor sale $2,112.9  $2,138.8   4.92% Note: Weighted average yields are not on a tax-equivalent basis.Time categories not shown above indicate there are no investment securities maturing inthat respective timeframe.
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The following is a summary of period-end loan balances by loan category:                     December 31 (in millions) 2006  2005  2004  2003  2002  Commercial,financial, andagricultural $2,533.5  $2,461.3  $2,505.2  $2,275.3  $2,137.5 Real estate-construction  1,663.9   1,233.9   735.4   699.8   591.9 Mortgage-commercial  1,296.1   1,223.9   1,246.8   1,078.2   1,065.9 Mortage-residential  536.9   455.5   431.3   489.6   677.2 Consumer  1,517.0   1,438.3   1,239.6   1,077.1   1,046.7 Secured by liquid collateral  547.5   584.8   604.7   605.4   506.3  Total loans, gross  8,094.9   7,397.7   6,763.0   6,225.4   6,025.5 Less: unearned income  **—**   **—**   —   (0.1)  (0.4) Total loans $8,094.9  $7,397.7  $6,763.0  $6,225.3  $6,025.1  
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The following table sets forth the allocation of Wilmington Trust’s reserve for loan lossesfor the last five years.                                               2006  2005  2004  2003  2002       % of      % of      % of      % of      % of       loans      loans      loans      loans      loans       in each      in each      in each      in each      in each       category      category      category      category      category       of      of      of      of      of       net      net      net      net      net DECEMBER 31 (IN MILLIONS) Amount  loans  Amount  loans  Amount  loans  Amount  loans  Amount  loans  Commercial,financial, andagricultural $36.3   31% $38.5   33% $43.4   37% $45.2   37% $43.9   36%Realestate-construction  19.2   20   12.7   17   7.8   11   7.2   11   5.3   10 Mortgage-commercial  14.5   16   15.4   17   14.8   19   14.3   17   13.5   18 Mortage-residential  1.3   7   1.3   6   1.2   6   1.2   8   1.5   11 Consumer  11.3   19   11.2   19   10.4   18   9.8   17   9.8   17 Secured by liquidcollateral  5.5   7   6.2   8   6.0   9   6.1   10   5.1   8 Unallocated  6.1   —   6.1   —   6.1   —   6.1   —   6.1   —  Total $94.2   100% $91.4   100% $89.7   100% $89.9   100% $85.2   100% 
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An analysis of loan maturities and interest rate sensitivity of Wilmington Trust’scommercial and real estate construction loan portfolios follows:                          One             through         Less than  five  Over  Total December 31 (in millions) one year  years  five years  gross loans  Commercial, financial, and agricultural $1,105.1  $809.7  $618.7  $2,533.5 Real estate-construction  108.9   1,313.9   241.1   1,663.9  Total $1,214.0  $2,123.6  $859.8  $4,197.4  Loans with predetermined rate $11.5  $89.0  $102.3  $202.8 Loans with variable rate  1,202.5   2,034.6   757.5   3,994.6  Total $1,214.0  $2,123.6  $859.8  $4,197.4  The following table presents a comparative analysis of the risk elements in WilmingtonTrust’s loan portfolio at year-end(1)                         December 31 (in millions) 2006  2005  2004  2003  2002  Nonaccruing $31.0  $39.3  $56.4  $45.4  $42.4 Restructured  —   4.7*  5.2*  —   — Past due 90 days or more  5.8   4.1   5.5   5.6   12.5  Total $36.8  $48.1  $67.1  $51.0  $54.9  Percent of total loans at year-end  0.45%  0.65%  0.99%  0.82%  0.91% Other real estate owned $4.8  $0.2  $0.2  $1.4  $3.1  (1) The Corporation’s policy for placing loans in nonaccrual status is discussed in footnote 2 to theConsolidated Financial Statements contained in the Corporation’s AnnualReport to Stockholders for the fiscal year ended December 31, 2006, which is incorporated by reference herein. * Restructured as nonaccrual.
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The following table sets forth an analysis of Wilmington Trust’s provision for loan losses,together with chargeoffs and reserves for the major portfolio classifications included in itsstatement of condition (1)                        For the year ended December 31 (in millions) 2006  2005  2004  2003  2002  Reserve for loan losses at beginning of period $91.4  $89.7  $89.9  $85.2  $80.8                       Loanscharged off:                    Commercial, financial, and agricultural  10.8   4.9   11.0   10.9   12.3 Real estate-construction  —   —   —   —   — Mortgage-commercial  0.3   —   —   —   0.1 Mortgage-residential  —   0.1   0.1   0.1   — Consumer  13.5   12.2   10.0   10.0   10.0 Secured with liquid collateral  —   —   —   —   —  Total loans charged off  24.6   17.2   21.1   21.0   22.4                         Recoveries on amounts previously charged off:                    Commercial, financial, and agricultural  0.6   3.3   1.4   1.1   0.7 Real estate-construction  —   —   —   —   — Mortgage-commercial  —   —   0.8   —   1.5 Mortgage-residential  0.1   —   —   0.1   0.1 Consumer  5.4   3.8   3.1   2.9   2.5 Secured withliquid collateral  —   —   —   —   —  Totalrecoveries  6.1   7.1   5.3   4.1   4.8    Net loans charged off  18.5   10.1   15.8   16.9   17.6  Current year’s provision for loan losses  21.3   11.8   15.6   21.6   22.0  Reserve for loan losses at end of period $94.2  $91.4  $89.7  $89.9  $85.2  Ratio of net loans charged-off to average loans  0.24%  0.14%  0.24%  0.28%  0.31% (1) The factors the Corporation considers in determining the amount of additions to itsallowance for loan losses are discussed in footnote 2 to theConsolidated Financial Statements contained in theCorporation’s Annual Report to Stockholders for the fiscal year ended December 31, 2006, which isincorporated by reference herein.
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                              2006  2005  2004   Average  Average  Average  Average  Average  Average For the year ended December 31 (in millions) amount  rate  amount  rate  amount  rate  Noninterest-bearing demand $759.1   —  $992.0   —  $927.5   — Interest-bearing deposits:                        Savings  311.4   0.41%  344.9   0.27%  369.1   0.18%Interest-bearing demand  2,347.5   1.09   2,303.8   0.86   2,311.1   0.50 Certificates under $100,000  979.4   3.73   824.4   2.56   768.3   2.03 Local certificates $100,000 and over  521.7   4.48   401.5   3.01   177.7   1.69 National money market deposit accounts  17.6   5.39   —   —   —   — National certificates $100,000 and over  2,803.9   5.12   2,306.6   3.36   2,039.5   1.44  Total $7,740.6      $7,173.2      $6,593.2      The maturity of Wilmington Trust’s time deposits of $100,000 or more is as follows:              Certificates  All other interest- December 31, 2006 (in millions) of deposit  bearing deposits  Three months or less $1,937.9  $— Over three through six months  1,465.6   — Over six through 12 months  98.7   — Over twelve months  26.3   —  Total $3,528.5  $—  
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A summary of short-term borrowings at December 31, is as follows (in millions):                        Securities sold         Federal funds  under agreements  U.S. treasury      purchases  to repurchase  demand notes  Lines of credit  2006                                 Balance at December 31 $224.1  $906.7  $13.0  $15.0 Weighted average interest rate at balance sheet date  5.3%  4.8%  5.2%  5.8%Maximum amount outstanding at any month-end $699.9  $906.7  $73.3  $15.0 Approximate average amount outstanding during the period $481.6  $634.6  $11.1  $8.5 Weighted average interest rate for average amountsoutstanding during the period  5.0%  4.6%  4.8%  6.0% 2005                                 Balance at December 31 $780.2  $575.4  $18.1  $— Weighted average interest rate at balance sheet date  4.1%  3.8%  4.2%  —%Maximum amount outstanding at any month-end $810.4  $575.4  $42.3  $— Approximate average amount outstanding during the period $643.7  $452.6  $11.5  $— Weighted average interest rate for average amountsoutstanding during the period  3.4%  2.9%  3.0%  —% 2004                                 Balance at December 31 $713.6  $406.6  $37.1  $— Weighted average interest rate at balance sheet date  2.5%  1.8%  2.2%  —%Maximum amount outstanding at any month-end $1,110.7  $416.0  $78.6  $8.0 Approximate average amount outstanding during the period $755.2  $350.7  $9.5  $0.9 Weighted average interest rate for average amountsoutstanding during the period  2.0%  1.0%  1.1%  1.5% Federalfunds purchased and securities sold under agreements to repurchase generally mature within365 days. U.S. Treasury demand notes mature overnight.
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The following table presents the percentage of Wilmington Trust’s funding sources by deposittype:                (Based on daily average balances) 2006  2005  2004  Savings  3.51%  4.16%  4.79%Interest-bearing demand  26.64   27.82   29.98 Certificates of deposit  48.50   42.66   38.72 Short-term borrowings  12.80   13.38   14.48 Demand deposits  8.55   11.98   12.03  Total  100.00%  100.00%  100.00% The following table presents an analysis of Wilmington Trust’s return on average and returnon average equity over the last three years:                  2006  2005  2004  Return onaverage assets  1.37%  1.70%  1.50%Return onaverage stockholders’ equity  13.58   17.59   16.02 Dividendpayout  59.18   48.02   54.78 Averageequity to average assets  10.09   9.68   9.36  
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          Regulatory MattersThe following is a summary of laws and regulations applicable to Wilmington Trust and the Banks.It does not purport to be complete, and is qualified by reference to those laws and regulations.          GeneralWilmington Trust is a bank holding company and a thrift holding company, as well as a financialholding company under the Bank Holding Company Act (the “BHCA”). The Banks are deposit-takinginstitutions whose deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”).Federal statutes that apply to Wilmington Trust and/or the Banks include the BHCA, the FederalReserve Act, the Federal Deposit Insurance Act, and the Home Owners’ Loan Act. Wilmington Trust isregulated by the Delaware Department of Banking and the Federal Reserve Board (the “FRB”).Wilmington Trust’s Delaware bank subsidiary, WTC, is regulated by the Delaware Department ofBanking and the FDIC; its Pennsylvania bank subsidiary, WTPA, is regulated by the PennsylvaniaDepartment of Banking and the FRB; and its federal savings bank subsidiary with branches inMaryland and Florida, WTFSB, is regulated by the Office of Thrift Supervision (the “OTS”). Inaddition, certain other of Wilmington Trust’s subsidiaries are regulated by federal and stateauthorities as well as regulatory authorities of other countries in which those subsidiariesconduct business.          BHCAUnder the BHCA and FRB regulations adopted under the BHCA, the FRB’s approval is required before abank holding company may acquire “control” of a bank or before any company may acquire “control” ofa bank holding company. The BHCA defines “control” of a bank to include ownership or the power tovote 25% or more of any class of a bank’s voting stock, the ability to otherwise control theelection of a majority of a bank’s directors, or the power to exercise a controlling influence overa bank’s management or policies. In addition, the FRB’s prior approval is required for: **•** The acquisition by a bank holding company of ownership or control of morethan five percent of the outstanding shares of any class of voting securitiesof a bank or a bank holding company;  **•** The acquisition by a bank holding company, or any nonbanking subsidiary of abank holding company, of all or substantially all of a bank’s assets; or  **•** The merger or consolidation of bank holding companies.Accordingly, before obtaining “control” of Wilmington Trust, a bank holding company or othercompany would need to obtain the FRB’s prior approval. Since Wilmington Trust is a thrift holdingcompany, the entity also would need to obtain the OTS’s approval.A bank holding company and its subsidiaries generally may not, with certain exceptions, engage in,acquire, or control voting securities or assets of a company engaged in any activity other than (1)banking or managing or controlling banks and other subsidiaries that are engaged in activitiesauthorized under the BHCA and (2) any activity the FRB determines to be so closely related tobanking or managing or controlling banks as to be a proper incident thereto. These include anyincidental activities necessary to carry on those activities. The FRB has approved a lengthy listof activities permissible for bank holding companies and their non-banking subsidiaries.
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In addition, under the BHCA, a bank holding company that meets certain qualifications can elect tobecome a financial holding company. A financial holding company can engage in the activitiespermitted generally for bank holding companies withoutobtaining the FRB’s approval that would otherwise be required. A financial holding company alsomay engage in additional activities not otherwise permitted for a bank holding company, generallywithout obtaining the FRB’s prior approval. These additional permitted activities include engagingin, acquiring, or controlling a company engaged in securities underwriting and distribution,merchant banking, certain insurance agency, brokerage, and underwriting activities, and otheractivities the FRB determines are financial in nature, incidental to a financial activity, orcomplementary to a financial activity and do not pose a substantial risk to the company’s or thefinancial system’s safety and soundness.To qualify to become a financial holding company, a bank holding company’s subsidiary depositoryinstitutions must all be “well-managed” and “well-capitalized” and have at least a “satisfactory”rating under the Community Reinvestment Act (the “CRA”). In 2000, Wilmington Trust became afinancial holding company. Its status as a financial holding company provides flexibility in thefuture growth of its fee businesses. If Wilmington Trust or one of the Banks fails to meetapplicable capital and management requirements, the FRB may impose limitations or conditions onWilmington Trust or its subsidiaries, and Wilmington Trust could not commence any additionalfinancial holding company activities without the FRB’s approval. If the problem were not correctedwithin 180 days after notice from the FRB or such additional time as the FRB permits, WilmingtonTrust could be required to cease engaging in the financial holding company activity or divestownership of one or more of the Banks.          Interstate Banking ActUnder the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “InterstateBanking Act”), adequately capitalized and managed bank holding companies are permitted to acquire abank in any state, subject to regulatory approval and certain limitations, and regardless ofcertain state law restrictions such as reciprocity requirements and regional compacts. Statescannot “opt out” of these interstate acquisition provisions.In addition, under the Interstate Banking Act, banks located in different states are allowed tomerge, subject to regulatory approval and certain limitations, as long as neither bank isheadquartered in a state that “opted out” of those provisions.Under the Interstate Banking Act, states may permit out-of-state banks to establish new brancheswithin their borders or acquire existing branches within their borders. Delaware exercised itsauthority under the Interstate Banking Act to allow mergers between Delaware banks and out-of-statebanks, as well as the opening of new Delaware offices by the resulting institutions. However,Delaware did not permit out-of-state banks to establish new branches in Delaware or acquireDelaware branches of other institutions without merging with them.          Safety and Soundness LimitationsAs a bank holding company, Wilmington Trust is required to conduct its operations in a safe andsound manner. If the FRB believes an activity of a bank holding company or control of a nonbanksubsidiary, other than a nonbank subsidiary of a bank, presents a serious risk to the financialsafety, soundness, or stability of a subsidiary bank of the bank holding company and isinconsistent with sound banking practices or the purposes of the BHCA or certain other federalbanking statutes, the
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FRB may require the bank holding company to terminate the activity or theholding company’s control of the subsidiary.Under Regulation W promulgated under the Federal Reserve Act (“Regulation W”), each of the Banksmay engage in transactions with its non-bank affiliates only on an arms’-length basis. UnderRegulation W, each of the Banks is subject to dollar amount and collateral requirements withrespect to loans to and asset purchases from its non-bank affiliates. For these purposes,Wilmington Trust and most of the companies it controls, including the Banks, are “affiliates” ofthe Banks. In addition to their restrictions on transactions with affiliates, the Federal ReserveAct and FRB regulations impose dollar amount, credit quality, and other limitations on loans by theBanks to directors, officers, and principal shareholders of the Banks and their subsidiaries and torelated interests of those persons.          Capital StandardsThe FRB and the other federal banking agencies have adopted “risk-based” capital standards toassist in assessing the capital adequacy of bank holding companies and banks under those agencies’jurisdiction. Those risk-based capital standards include both a definition of capital and aframework for calculating “risk-weighted” assets. For this purpose, a bank’s risk-weighted assetsinclude both its assets and off-balance sheet items, such as loan commitments and standby lettersof credit, and each asset and off-balance sheet item is assigned a risk weight. An institution’srisk-based capital ratio is calculated by dividing its qualifying capital by its risk-weightedassets. At least one-half of risk-based capital must consist of Tier 1 capital (generallyincluding common stockholders’ equity, qualifying cumulative and noncumulative perpetual preferredstock, and minority interests in consolidated subsidiaries). The FRB also adopted minimum leverageratios of “Tier 1” capital to total assets. At December 31, 2006, Wilmington Trust and the Bankswere all well-capitalized, with capital levels in excess of applicable risk-based and leveragethresholds.          FDIC Insurance and Bank RegulationThe FDIC insures deposits in the Banks up to applicable limits. None of the Banks is currentlyrequired to pay premiums for FDIC insurance coverage.The FDIC and the other federal banking agencies may impose a variety of sanctions if WilmingtonTrust or one of the Banks does not operate in accordance with applicable laws, regulations,policies, or directives. These include instituting cease-and-desist proceedings, assessing civilmonetary penalties, and removing officers. In addition, the FDIC has the authority to terminatedeposit insurance coverage, after notice and hearing, if it determines that an insureddeposit-taking institution is engaged in an unsafe or unsound practice that has not been corrected,is in an unsafe or unsound condition to continue operation, or has violated any law, regulation,rule, or order of, or condition imposed by, the FDIC. Wilmington Trust is not aware of any past orcurrent practice, condition, or violation that might lead to termination of the deposit insurancecoverage of any of the Banks.The Federal Deposit Insurance Corporation Improvement Act of 1991 (the “Improvement Act”) requiresannual on-site examinations of insured depository institutions, and authorizes the appropriatefederal banking agency to take prompt corrective action to resolve an institution’s problems. Thenature and extent of the corrective action depends primarily on the institution’s capital level.While the Banks are all well-capitalized, if any of them became undercapitalized, remediesavailable to the appropriate federal banking agency would include:
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 **•** Requiring recapitalization or a capital restoration plan;  **•** Restricting transactions with affiliates;  **•** Restricting interest rates, asset growth, activities, and investments insubsidiaries; and  **•** Ordering a new election of directors, dismissing directors or seniorexecutive officers, and requiring the employment of qualified senior executiveofficers.In any such event, Wilmington Trust could be required to guarantee compliance with the Bank’scapital restoration plan and provide assurance of performance under the plan.          Dividend LimitationsThe FRB’s policy generally is that banks and bank holding companies should not pay dividends unlessthe institution’s prospective earnings retention rate is consistent with its capital needs, assetquality, and overall financial condition. FRB policy also is that bank holding companies should bea source of managerial and financial strength to their subsidiary banks. Accordingly, the FRBbelieves that those subsidiary banks should not be compromised by a level of cash dividends thatplaces undue pressure on their capital.The FDIC can prohibit a bank from paying dividends if it believes the dividend payment wouldconstitute an unsafe or unsound practice. Federal law also prohibits dividend payments that wouldresult in a bank failing to meet its applicable capital requirements. Delaware law restricts WTCfrom declaring dividends that would impair its stated capital.OTS regulations limit capital distributions by WTFSB. WTFSB must give notice to the OTS at least30 days before a proposed capital distribution. If WTFSB has capital in excess of all of itsregulatory capital requirements before and after a proposed capital distribution and is nototherwise restricted in making capital distributions, it may, after that prior notice but withoutthe OTS’s approval, make capital distributions during a calendar year equal to the greater of (1)100% of its net income to date during the calendar year plus an amount that would reduce byone-half its “surplus capital ratio” (i.e., its excess capital over its capitalrequirements) at the beginning of the calendar year or (2) 75% of its net income for the previousfour quarters. Any additional capital distributions require prior OTS approval.          Securities RegulationWilmington Trust’s broker-dealer subsidiary, Wilmington Brokerage Services Company (“WBSC”), isregistered as a broker-dealer with the Securities and Exchange Commission (“SEC”) and in the statesin which it does business. WBSC also is a member of the National Association of SecuritiesDealers, Inc. (“NASD”). WBSC is subject to regulation by the SEC, the NASD, and the securitiesadministrators of the states in which it is registered. WBSC is a member of the SecuritiesInvestor Protection Corporation (“SIPC”), which, in the event of the liquidation of abroker-dealer, provides protection for customers’ securities accounts held by WBSC of up to$500,000 for each eligible customer, subject to a limitation of $100,000 for claims for cashbalances. Several Wilmington Trust subsidiaries, including WBSC, also are registered as investmentadvisers with the SEC and in some states.
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          Bank Secrecy ActUnder the Bank Secrecy Act, the USA Patriot Act, and regulations issued by the Office ofForeign Assets Control (collectively, the “BSA Laws”), United States financial institutions andforeign financial institutions operating in the United States are required to establish policies,procedures, and controls reasonably designed to detect and report money laundering and terroristfinancing activities. Significant criminal and civil penalties can be imposed if a financialinstitution fails to comply with the BSA Laws. In addition, if a financial institution isdetermined to have engaged in money laundering or violated the BSA Laws, its charter, license,and/or deposit insurance can be revoked.          Privacy and Information SecurityFederal laws and regulations require Wilmington Trust to respect the privacy of its customers andto protect the security and confidentiality of those customers’ nonpublic personal information.These laws and regulations limit the instances in which a financial institution may disclosenon-public customer information about a consumer to nonaffiliated third parties, and require afinancial institution to disclose to all of its customers its privacy policies and practices withrespect to information-sharing with affiliates and unaffiliated third parties. Financialinstitutions also are required to have an information security program to safeguard theconfidentiality and security of customer information and ensure its proper disposal. In addition,federal and various state laws require customers and regulators to be notified if there is anunauthorized disclosure of sensitive customer information that may be misused.          Other Laws and RegulationsThe lending and deposit-taking activities of the Banks are subject to a variety of federal andstate consumer protection laws, including: **•** The Truth-in-Lending Act (which principally mandates certain disclosures inconnection with loans made for personal, family, or household purposes andimposes substantive restrictions with respect to home equity lines of credit);  **•** The Truth-in-Savings Act (which principally mandates certain disclosures inconnection with deposit-taking activities);  **•** The Equal Credit Opportunity Act (which prohibits discrimination in allaspects of credit-granting and requires notice of adverse action to personsdenied credit);  **•** The Fair Credit Reporting Act (which requires a lender to disclose the nameand address of a credit bureau that has provided a report that resulted in adenial of credit and imposes requirements in connection with pre-screenedoffers of credit and the sharing of information with affiliates and thirdparties);  **•** The Real Estate Settlement Procedures Act (which requires residentialmortgage lenders to provide loan applicants with closing cost information andprohibits referral fees in connection with loans and other real estatesettlement services);  **•** The Electronic Funds Transfer Act (which requires certain disclosures inconnection with electronic funds transactions); and  **•** The Expedited Funds Availability Act (which requires that deposited funds bemade available for withdrawal in accordance with a prescribed schedule thatmust be disclosed to customers).
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Under the CRA and the Fair Housing Act, depository institutions are prohibited from certaindiscriminatory practices that limit or withhold services to individuals residing in economicallydepressed areas. In addition, the CRA imposes certain affirmative obligations to provide lendingand other financial services to those individuals. CRA performance is considered by all of thefederalbanking agencies in reviewing applications to relocate an office, merge, acquire a financialinstitution, or establish new branch or deposit facilities.Federal legislation has permanently pre-empted all state usury laws on residential first mortgageloans made by insured depository institutions in any state that did not override that preemption.Although some states overrode that preemption, Delaware, Maryland, and Pennsylvania did not.Accordingly, there is currently no limit on the interest rate the Banks can charge on such loansgoverned by the laws of those states. In addition, the usury limitations of the Banks’ respectivehome states apply to all other loans the Banks offer nationwide. In today’s interest rateenvironment, those usury laws do not materially affect the Banks’ lending programs.          Delaware LawThe state of Delaware is generally regarded as a premier jurisdiction in the United States forcorporate and trust matters. This reputation stems from the favorable legal and tax environmentestablished by the Delaware legislature and the 210-year case law history of the state’s ChanceryCourt system, which has jurisdiction over corporate and trust matters. While in recent yearsseveral states have implemented advantageous legal and tax provisions similar to those available inDelaware, in general, trusts governed by Delaware law can be administered more flexibly, moreeconomically, for longer periods of time, with a greater degree of protection from creditors, andwith a greater degree of confidentiality than is available in many other states.Many Fortune 500 companies are headquartered in Delaware, especially those in the pharmaceutical,life sciences, chemical, and financial services industries. The presence of these companies andthe favorable environment historically have contributed to Wilmington Trust’s and WTC’s operatingresults.Informationabout Wilmington Trust’s reporting segments is contained in Note21 of its ConsolidatedFinancial Statements in its Annual Report to Shareholders for 2006, which is incorporated byreference herein.          Available InformationWilmington Trust’s Website is www.wilmingtontrust.com. Wilmington Trust makes availablefree of charge on its website under “About Us” its annual report on Form 10-K, quarterly reports onForm 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonablypracticable after those materials are electronically filed with or furnished to the Securities andExchange Commission. Wilmington Trust’s Corporate Governance Guidelines, Code of Conduct andEthics, and the charters of its Audit, Compensation, and Nominating and Corporate GovernanceCommittees also are posted on www.wilmingtontrust.com under “About Us.” In addition, anyamendments to or waivers from the Code of Conduct and Ethics that apply to any of its directors orexecutive officers also will be posted on that Website. Wilmington Trust will make available acopy of any of its Code of Conduct and Ethics, Corporate Governance Guidelines, or the charter(s)of its Audit, Compensation, or Nominating and Corporate Governance Committees in print to anyshareholder who requests one.
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**ITEM 1A. RISK FACTORS****There are certain interest rate and credit risks associated with consumer and commerciallending.**A certain degree of credit risk is inherent in the Banks’ various lending activities. The Banksoffer fixed and adjustable interest rates on loans, with terms of up to 30 years. Although themajority of residential mortgage loans the Banks originate are fixed-rate, adjustable rate mortgage(“ARM”) loans increase the responsiveness of the Banks’ loan portfolios to changes in marketinterest rates. However, ARM loans generally carry lower initial interest rates than fixed-rateloans. Accordingly, they may be less profitable than fixed-rate loans during the initial interestrate period. In addition, since they are more responsive to changes in market interest rates thanfixed-rate loans, ARM loans can increase the possibility of delinquencies in periods of highinterest rates.The Banks also originate loans secured by mortgages on commercial real estate and multi-familyresidential real estate. Since these loans usually are larger than one-to-four family residentialmortgage loans, they generally involve greater risks than one-to-four family residential mortgageloans. In addition, since customers’ ability to repay those loans often is dependent on operatingand managing those properties successfully, adverse conditions in the real estate market or theeconomy generally can impact repayment more severely than loans secured by one-to-four familyresidential properties. Moreover, the commercial real estate business is subject to downturns,overbuilding and local economic conditions.The Banks also make construction loans for residences and commercial buildings, as well as onunimproved property. While these loans also enable the Banks to increase the interest ratesensitivity of their loan portfolios and receive higher yields than those obtainable on permanentresidential mortgage loans, the higher yields correspond to the higher risks perceived to beassociated with construction lending. Those include risks associated generally with loans on thetype of property securing the loan. Consistent with industry practice, the Banks sometimes fundthe interest on a construction loan by including the interest as part of the total loan. Moreover,commercial construction lending often involves disbursing substantial funds with repaymentdependent largely on the success of the ultimate project instead of the borrower’s or guarantor’sability to repay. Again, adverse conditions in the real estate market or the economy generally canimpact repayment more severely than loans secured by one-to-four family residential properties.**General economic conditions and real estate values can affect our earnings.**In the event of slow economic conditions or deterioration in commercial and real estate markets, wewould expect increased nonperforming assets, credit losses, and provisions for loan losses.Conditions such as inflation, recession, unemployment, changes in interest rates, money supply, andother factors beyond our control may adversely affect our asset quality, deposit levels, and loandemand and, therefore, our earnings. Since we have a significant amount of real estate loans,decreases in real estate values could adversely affect the value of property used as collateral forloans. Adverse changes in the economy may also have a negative effect on our borrowers’ ability tomake timely repayment of their loans, which would have an adverse impact on our earnings. Inaddition, the majority of our loans are to individuals and businesses in Delaware and Pennsylvania.Consequently, any decline in the economy of this market area could have an adverse effect on ourearnings. See the “Asset Quality” section of “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” in our Annual Report to Shareholders for 2006 for further
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discussion related to our process for determining the appropriate level of the allowance for loanlosses.**We face increasing competition for deposits, loans, and assets under management.**The Banks compete for deposits, loans, and assets under management. Many of the Banks’ competitorsare larger and have greater financial resources and larger lending limits than the Banks. Thesedisparities have been accelerated with increasing consolidation in the financial services industry.Savings banks, savings and loan associations, and commercial banks located in the Banks’ principalmarket areas historically have provided the most direct competition for deposits. Dealers ingovernment securities, deposit brokers, and credit card, direct, and internet-based financialinstitutions outside of the Banks’ principal market areas also provide competition for deposits.Savings banks, savings and loan associations, commercial banks, mortgage banking companies,insurance companies, and other institutional lenders provide the principal competition for loans.This competition can increase the rates the Banks pay to attract deposits and reduce the interestrates they can charge on loans, and impact the Banks’ ability to retain existing customers andattract new customers.Banks, trust companies, investment advisers, mutual fund companies, multi-family offices, andinsurance companies provide the Banks’ principal competition for trust and asset managementbusiness.Our ability to compete effectively is attributable in part to the responsive, personalized, andcustomized services we provide and our reputation resulting from our management’s knowledge andawareness of our clients and market areas. We believe this relationship approach and knowledgeprovide a business advantage in achieving high client satisfaction in serving the small tomid-sized businesses, entrepreneurs, professionals, and other individuals that comprise ourCompany’s customer base. Our ability to compete also is due in part to the competitive rates weoffer on our loan and deposit products, the breadth of services we provide, and our ability tocontinue to attract and retain our highly qualified staff.Our ability to compete for business also depends in part on our ability to develop and market newand innovative products and services, and to adopt or develop new technologies that differentiateour products and services or provide cost efficiencies. Rapid technological change in thefinancial services industry, together with competitive pressures, require us to make ongoinginvestments to bring new products and services to market in a timely fashion and at competitiveprices.**A portion of our income is subject to market valuation risks.**A significant portion of the fee income we earn in our wealth advisory, corporate retirementservices, and asset management businesses is based upon market valuations of securities we hold forclients. Accordingly, downturns in these valuations can adversely affect that fee income.**If our goodwill or amortizable intangible assets become impaired, we may be required to record asignificant charge to earnings**.Under generally accepted accounting principles, we review our amortizable intangible assets forimpairment when events or changes in circumstances indicate that the carrying value of those assetsmay not be recoverable. Goodwill is required to be tested for impairment at least annually. Wemay be required to record a significant charge to earnings in our financial statements during theperiod in
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which any impairment of our goodwill or amortizable intangible assetsis determined. See the “Affiliate Managers” section of the“Management’s Discussion and Analysis of Results of Operations”and Notes 4 and 10 to the Consolidated Financial Statements contained in our Annual Report toShareholders for 2006.**New products and services could subject us to additional risks.**From time to time, we may offer new products or services. There can be significant risks and uncertainties associated withthese efforts. We may invest significant time and resources indeveloping and marketing new products or services. Initialtimetables to introduce and develop new products or services may not be achieved, and our price and profitabilitytargets may not be achieved. External factors, such as compliance with regulations, competitivealternatives, and shifting market preferences also may impact the successful implementation of new products or services. Any new product or service couldimpact our system of internal controls. If we do not manage these risks successfully, ourbusiness, results of operations, and financial condition could be effected adversely.**Our business could be impacted negatively by risks associated with acquisitions.**We acquire other companies from time to time. To the extent we acquire other companies in thefuture, our business could be impacted negatively by certain risks associated with suchacquisitions. These include: **•** The risk that we will incur expenses in pursuing potential acquisitions withoutcompleting them;  **•** The risk that we may lose key clients of the acquired business as a result of thechange of ownership to us;  **•** The risk that we may lose key employees of the acquired business;  **•** The risk that the acquired business will not perform according to our expectations;  **•** The risk that difficulties will arise in connection with integrating the operationsof the acquired business with operations of our existing businesses;  **•** The risk that we will need to make significant investments in infrastructure,controls, staff, emergency backup facilities, and other critical business functions;  **•** The risk that our management’s attention will be diverted from other aspects of ourbusiness;  **•** The risk that unanticipated costs relating to potential acquisitions could reduceour earnings per share;  **•** The risk associated with entering into geographic or product markets in which wehave limited or no direct prior experience; and  **•** The risk that we may assume potential liabilities of the acquired company as aresult of the acquisition.**Negative public opinion could damage our reputation and affect our earnings adversely.**Reputation risk, or the risk to our earnings and capital from negative public opinion, is inherentin our business. Negative public opinion can result from the actual or perceived manner in whichwe conduct our business, including our fiduciary, investment, and private and commercial bankingactivities; our management of actual or potential conflicts of interest and ethical issues; and our
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protection of confidential customer information. Negative public opinion can affect adversely ourability to keep andattract customers, and can expose us to litigation and regulatory action. We strive to minimizereputational risk in the way we conduct our business and deal with our customers and communities.**Changes in accounting may affect our reported earnings and operating income.**Generally accepted accounting principles and accompanying accounting pronouncements, implementationguidelines, and interpretations for many aspects of our business, such as revenue recognition,accounting for financial instruments, and treatment of goodwill or amortizable intangible assets,are highly complex and involve subjective judgments. Changes in these rules or theirinterpretation could significantly affect our earnings.**A failure in internal controls could impact our earnings and damage our reputation.**A failure in our internal controls could have a negative impact on our earnings and on theperception that customers, shareholders, and regulators may have of us. We devote a significantamount of effort, time, and resources to monitoring and improving our internal controls andensuring compliance with complex accounting standards and regulations.**We are subject to regulatory restrictions.**We and our subsidiaries are subject to a variety of regulatory restrictions in conducting businessby federal and state authorities. These include restrictions imposed by the Bank Holding CompanyAct, the Federal Deposit Insurance Act, the Federal Reserve Act, the Home Owners’ Loan Act, and avariety of federal and state consumer protection laws. See “Supervision and Regulation.”**Our certificate of incorporation and bylaws and Delaware law include certain anti-takeoverprovisions.**In addition to the regulations described under “Supervision and Regulation” above, certainprovisions of our certificate of incorporation, bylaws, and Delaware’s General Corporation Lawcould discourage potential acquisition proposals or delay or prevent a change in control of us.Those provisions include a classified Board of Directors, special provisions for notice to us forshareholders to nominate directors, and our ability to issue up to 1 million shares of preferredstock and 150 million shares of common stock. These authorized but unissued shares provide usdesirable flexibility for possible acquisitions and other corporate purposes, but could also delayor hinder an unsolicited acquisition of us.**ITEM 1B. UNRESOLVED STAFF COMMENTS**Not applicable.**ITEM 2. PROPERTIES**Wilmington Trust owns and/or leases buildings that are used in the normal course of business by theBanks and its other subsidiaries. The main office of Wilmington Trust and WTC is located at RodneySquare North, 1100 North Market Street, Wilmington, Delaware 19890. Wilmington Trust and most ofits subsidiaries occupy 265,000 square feet of space at this location, known as the WilmingtonTrust Center. It is owned by Rodney Square Investors, L.P., which is a subsidiary of
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WTC. WTCcarries the mortgage for this facility, which had an outstanding balance of $34,366,945 at December31, 2006.A separate, unencumbered, 300,000-square foot operations facility known as the Wilmington TrustPlaza is owned by a subsidiary of WTC. This facility is located at 301 West Eleventh Street,Wilmington, Delaware 19801.As of December 31, 2006, the Banks had 53 branches in the following locations: **•** Twenty-four are in New Castle County, seven are in Kent County, and 16 are inSussex County, Delaware;  **•** One each is in Bucks, Chester, Delaware, and Philadelphia Counties,Pennsylvania;  **•** One is in Baltimore, Maryland; and  **•** One is in Palm Beach County, Florida.Twenty-nine of these branches are in facilities owned by the Banks or their subsidiaries and theremainder are in leased facilities.Through subsidiaries, Wilmington Trust also operates captive insurance management offices in leasedfacilities in Charleston, South Carolina and Burlington, Vermont and sales offices in leasedfacilities in Dublin, Ireland, and Frankfurt, Germany, and WTC operates trust offices in leasedfacilities in the Cayman Islands and the Channel Islands. WTFSB operates trust agency offices inleased facilities in Los Angeles, California, Palm Beach, Stuart, and Vero Beach, Florida, Atlanta,Georgia, Las Vegas, Nevada, Princeton, New Jersey, and New York, New York, and a loan productionoffice in Bel Air, Maryland.Three of Wilmington Trust’s reporting segments – Regional Banking, Wealth Advisory Services, andCorporate Client Services – operate principally at Wilmington Trust Center; Wealth AdvisoryServices and Corporate Client Services also lease a substantial portion of a facility across thestreet from Wilmington Trust Center. These three segments operate Wilmington Trust’s branches, andits Wealth Advisory Services and Corporate Client Services reporting segments operate its trustagency offices. The Affiliate Managers segment operates leased offices in White Plains and NewYork, New York, and in Santa Monica, California.We believe the owned and leased properties used by each of our reporting segments are suitable andadequate for our needs, and that we could accommodate further growth by utilizing capacity existingin those facilities or by acquiring or renting additional facilities.Financial information about Wilmington Trust’s reporting segments is contained in Note 21 to theConsolidated Financial Statements contained in Wilmington Trust’s Annual Report to Shareholders for2006.**ITEM 3. LEGAL PROCEEDINGS**Wilmington Trust and its subsidiaries are involved in various legal proceedings in the ordinarycourse of business. While it is not feasible to predict the outcome of all pending suits andclaims, management does not believe that the ultimate resolution of any of these matters will havea material adverse effect on Wilmington Trust’s consolidated financial condition.
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**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**No matter was submitted to a vote of security holders by solicitation of proxies or otherwiseduring the fourth quarter of 2006.**PART II****ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES**Certaininformation required by this item is contained on pages 106 and 107 of Wilmington Trust’s AnnualReport to Shareholders for 2006, which is incorporated by reference herein. See also “Item 1 -Business,” including the discussion on limitations on thepayment of dividends on page 21 above.The table set forth below contains information as of December 31, 2006, about the number ofsecurities to be issued upon exercise of outstanding options to purchase Wilmington Trust stock,the weighted average exercise price of those options, and the number of securities remainingavailable for issuance under Wilmington Trust’s 1996 Long-Term Incentive Plan, 1999 Long-TermIncentive Plan, 2001 Non-Employee Director Stock Option Plan, 2002 Long-Term Incentive Plan, 2004Employee Stock Purchase Plan, and 2005 Long-Term Incentive Plan:**EquityCompensation Plan Information**                       **Number of securities**          **remaining available**          **for future issuance**          **under equity**  **Number of securities**     **compensation plans**  **to be issued upon** **Weighted-average** **(excluding**  **exercise of** **exercise price of** **securities**  **outstanding options,** **outstanding options,** **reflected in column**  **warrants and rights** **warrants and rights** **(a))****Plan Category** **(a)** **(b)** **(c)** **Equity compensationplans approved bysecurity holders**  6,255,968  $33.48   3,716,094 **Equity compensationplans not approvedby security holders**  —   —   —  **Total**  6,255,968  $33.48   3,716,094  
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**ISSUER PURCHASES OF EQUITY SECURITIES**The following table shows our repurchases of Wilmington Trust Stock during the fourth quarter.                                *(d) Maximum*              *Number (or*          *(c) Total Number* *Approximate*          *of Shares (or* *Dollar Value) of*          *Units) Purchased* *Shares (or Units)*          *as Part of* *that May Yet Be*  *(a) Total Number* *(b) Average* *Publicly* *Purchased Under*  *of Shares (or* *Price Paid per* *Announced Plans* *the Plans or*        *Period* *Units) Purchased* *Share (or Unit)* *or Programs* *Programs* Month #1