Wilmington Trust agrees to be bought by M&T after six losses
Monday, November 1, 2010; 8:37 AM
Wilmington Trust Corp., the Delaware bank founded by the du Pont family and undermined by souring loans, agreed to sell itself to M&T Bank Corp. for $351 million in stock, or about half its market value last week.
The deal is "the best option for our shareholders, as well as our clients and the employees," according to a Business Wire statement today from Wilmington, which is based in the Delaware city of the same name. Investors will get 0.051 share of Buffalo-based M&T for each Wilmington share they own.
The 107-year-old lender has posted losses, driven in part by soured commercial real estate loans and investments in pools of trust-preferred securities. The bank cut its quarterly dividend to one penny last year, and Chief Executive Officer Ted Cecala retired in June after 14 years at the helm.
Wilmington Trust's wealth management unit, focusing on customers across the U.S. with $10 million or more of liquid assets, managed $25 billion as of June 30.
Wilmington Trust said in an August regulatory filing that after a $116 million net loss in the second quarter, "our capital position remained strong at June 30," with a risk-based capital ratio of 16.65 percent, compared with the 10 percent minimum required by the U.S. Federal Reserve to be considered "well capitalized."
The U.S. Treasury, through its Troubled Asset Relief Program, bought $330 million in preferred equity in Wilmington Trust in December 2008.
T. Coleman du Pont, then president of E.I. du Pont Nemours & Co., founded the bank in 1903. It's now widely held.