Wilmington Trust is being bought by the Buffalo-based bank while reporting a third quarter loss of $365 million.
Wilmington Trust chairman and CEO Donald Foley says the company had been in talks with numerous companies about a possible merger, and finally agreed to combine with M&T Bank in an all stock deal. Foley says, “Ultimately the board determined that the best option for our shareholders as well as a our clients and employees of Wilmington Trust, was a merger with M&T.” As part of the agreement which still requires shareholder and regulatory approval, Wilmington Trust shareholders will recieve .051372 shares of M&T for every share of Wilmington Trust common stock they own.
The troubles have been mounting for Wilmington Trust over the past year and a half. The most recent quarter’s loss marks the sixth quarter in a row the bank has recorded a loss. A major reason for the loss is the bank’s is due to the decline in the real estate market, especially in southern Delaware. After evaluating the majority of the bank’s commercial real estate, construction and mortgage loans, Foley says the outlook for a rebound is not good. “It appears to us that their is no significant economic or real estate recovery on the horizon. This gives us little assurance that our loan portfolio will strengthen significantly in the near term.”
M&T Bank is in a much strong position. The bank, which has a major presence in Maryland, has not reported a loss in the past 137 quarters. M&T Bank’s chairman and CEO Robert Wilmers says the merger is a good fit. “We believe the two banks share a common set of values. These include respect for our experienced and long-tenured employees and our common commitment to being the best corporate citizen in the markets where we operate.” Wilmers says Foley will join the M&T board.
Wilmington Mayor James Baker (D) issued a statement on the planned merger, saying “It is certainly sad to lose an institution that we have known and trusted for over a century in the city of Wilmington.” Baker says, “Obviously, I have some concerns about what this transition will mean for our city and the current workforce at the bank, but I remain confident that the changeover will be one that is extremely positive for our city with minimal displacement of people and their jobs.”
2010 has been a year of changes for Wilmington Trust. In June, CEO Ted Cecala announced his retirement after 31 years with the company. Foley was immediately named as his replacement. At that time,in response to speculation that the company might be up for sale, Foley said, “Wilmington Trust is committed to remaining independent.”