TD Banknorth Reports Third Quarter Results
(Third Quarter Earnings Conference Call at 10:30 a.m. Eastern Time today, October 24, 2005. Dial-in number for USA and Canada is 800-638-5439. International dial-in number is 617-614-3945. Passcode for both numbers is 47614076. Replay number for USA and Canada is 888-286-8010. International replay dial-in number is 617-801-6888. Replay passcode for both is 81244819. Live webcast and webcast replay available at www.tdbanknorth.com, Investor Relations.)
Highlights for the third quarter include:
-- On a per diluted share basis, earnings, excluding the amortization of identifiable intangible assets, merger and consolidation costs and the change in unrealized loss on derivatives, were up 7% in the third quarter of 2005 as compared to the third quarter of 2004.
-- Solid noninterest income growth - noninterest income increased 11% during the third quarter as compared to the third quarter a year ago;
-- Net interest margin remained above 4% - net interest margin was 4.09% during the third quarter of 2005 up from 3.68% during the third quarter of 2004;
-- Asset quality remained strong - the percentage of nonperforming loans to total loans was 0.32% at September 30, 2005;
-- Capital ratios improved - the Company's total risk-based capital increased to 11.72% at September 30, 2005 from 10.43% at June 30, 2005.
TD Banknorth Inc. ("TD Banknorth" or the "Company") (NYSE: BNK) today announced net income of $88.7 million for the third quarter ended September 30, 2005 as compared to net income of $97.8 million for the third quarter ended September 30, 2004. On a per diluted share basis, net income was 51 cents for the third quarter of 2005 as compared to 55 cents for the same quarter a year ago.
Earnings for the nine months ended September 30, 2005 were $218.4 million as compared to $283.9 million for the same period in 2004. On a per diluted share basis, earnings for the nine months ended September 30, 2005 were $1.23 as compared to $1.65 for the same period a year ago.
GAAP earnings were impacted by three items in the third quarter of 2005. First, as a result of the use of purchase accounting to account for the acquisition of a majority interest in TD Banknorth by TD Bank Financial Group, the after-tax impact of the amortization of identifiable intangible assets amounted to $19.5 million for the quarter or 11 cents per diluted share. Second, the after-tax effects of merger and consolidation costs for the quarter of $755,000 and third, the after-tax effect of the change in unrealized loss on derivatives of $462,000, together amounted to 1 cent per diluted share.
Excluding the above items, earnings for the quarter ended September 30, 2005 were $109.5 million, up 6% from $103.7 million for the third quarter of 2004. On a per diluted share basis excluding the above items, earnings for the third quarter of 2005 were 63 cents, up 7% from 59 cents for the same quarter a year ago.
For the nine month period ended September 30, 2005, earnings excluding the after-tax impact of the amortization of identifiable intangible assets, the after-tax effects of merger and consolidation costs, the after-tax effect of the change in unrealized loss on derivatives and charges related to the Company's deleveraging strategies, were $330.4 million, up 12% from $296.2 million for the same period in 2004. On a per diluted share basis excluding the above items, earnings for the nine months ended September 30, 2005 were $1.86, up 8% from $1.72 for the same period a year ago.
"Given the current interest rate environment, I am pleased with our results." said William J. Ryan, TD Banknorth Chairman, President and Chief Executive Officer. "Asset quality remained strong, our capital ratios improved and we saw strong gains in noninterest income."
Average loans and leases increased 10% during the quarter ended September 30, 2005 compared to the same quarter a year ago, including increases of 9% for average commercial real estate mortgages, 9% for average commercial business loans and leases 14% for average consumer loans and leases, and 4% for average residential real estate mortgages. Total average loans and leases increased 15% during the nine months ended September 30, 2005 as compared to the same period in 2004. Excluding the impact of acquisitions and the impact of purchase accounting, commercial real estate mortgages, commercial and consumer business loans and leases increased 7.5% for the quarter ended September 30, 2005 as compared to the same period a year ago.
Securities available for sale at September 30, 2005 increased slightly to $4.4 billion from $4.1 billion at June 30, 2005 and represented 14% of total assets. As compared to the same period one year ago, securities available for sale decreased by $2.8 billion due, in large part, to the Company's deleveraging strategies implemented in the fourth quarter of 2004 and the first quarter of 2005.
Average deposits increased 4% during the quarter ended September 30, 2005 as compared to the quarter ended September 30, 2004. During the three months ended September 30, 2005 average noninterest bearing deposits increased 7%, average retail money market and NOW accounts increased 4% and average regular savings accounts were essentially flat as compared to the three months ended September 30, 2004. Total average deposits increased 7% for the nine months ended September 30, 2005 as compared to the same period in 2004, with average noninterest bearing deposits increasing 13% for the nine months ended September 30, 2005. Excluding acquisitions and the impact of purchase accounting, for the quarter ended September 30, 2005, average demand deposits increased 5% and average core deposits (noninterest bearing deposits, retail money market and NOW accounts and regular savings accounts) were consistent with the level in the same period for the prior year.
Net interest income was $249.0 million for the third quarter of 2005, a 5% increase as compared to $238.0 million for the third quarter of 2004. For the nine months ended September 30, 2005, the Company's net interest income was $754.4 million, up 10% from $683.1 million for the nine months ended September 30, 2004.
The Company's net interest margin for the quarter ended September 30, 2005 was 4.09% as compared to 3.68% for the quarter ended September 30, 2004 and 4.12% for the quarter ended June 30, 2005. The Company's net interest margin was negatively impacted as compared to the second quarter of 2005 in part by a continued flattening of the yield curve in the third quarter of 2005.
The Company's provision for loan and lease losses amounted to $5.5 million for the quarter ended September 30, 2005, as compared to $10.7 million for the quarter ended September 30, 2004 and $3.6 million for the quarter ended June 30, 2005. The ratio of reserve for credit losses to nonperforming loans increased to 369% at September 30, 2005 from 335% at June 30, 2005.
Asset quality remained strong during the third quarter. As a percentage of total loans and leases, nonperforming loans amounted to 0.32% at September 30, 2005, as compared to 0.36% at September 30, 2004 and 0.35% at June 30, 2005. Total net chargeoffs for the quarter ended September 30, 2005 amounted to $6.3 million as compared to $8.8 million for the same period a year ago and $3.6 million for the quarter ended June 30, 2005.
Noninterest income increased by 11% in the third quarter of 2005 as compared to the third quarter of 2004, led by increases in noninterest income from deposit services of 25%, merchant and electronic banking income of 15%, loan fee income of 37% and other noninterest income of 15%. For the nine months ended September 30, 2005, excluding net securities gains/losses, adjustments on loans held for sale and changes in unrealized losses on derivatives, noninterest income increased 12% as compared to the same period in 2004.
Noninterest expense increased $37.5 million in the third quarter of 2005 versus the same period a year ago, largely due to a $28.7 million increase in the amortization of identifiable intangible assets. Excluding the amortization of identifiable intangible assets, merger and consolidation costs and prepayment penalties on borrowings associated with the Company's deleveraging strategies, noninterest expense increased 8% in the third quarter of 2005 as compared to the same period in 2004. For the nine months ended September 30, 2005, excluding the same items, noninterest expense increased by 12% as compared to the same period in 2004 due, in large part, to expenses associated with the acquisition of BostonFed Bancorp in January 2005.
The Company's capital ratios continued to improve. At September 30, 2005, the Company's ratio of tangible equity to tangible assets improved to 5.6% from 5.5% at June 30, 2005, its tier 1 leverage capital ratio increased to 7.0% from 6.6% at June 30, 2005 and its total risk based capital ratio increased to 11.7% from 10.4% at June 30, 2005.
The improvement in total risk-based capital was attributable, in large part, to the issuance by TD Banknorth, N.A., the Company's primary operating subsidiary, of approximately $229 million in subordinated debt during the third quarter of 2005 which qualifies as Tier 2 regulatory capital. As announced by the Company on September 13, 2005, the subordinated debt was issued in Canadian dollars in a private placement in Canada through TD Securities, as agent, and was unconditionally guaranteed by The Toronto-Dominion Bank ("TD"). The structure of the subordinated debt offering and the guarantee by TD allowed TD Banknorth to lower its overall borrowing and transaction costs associated with the offering by approximately $425,000 per year annualized over the expected life of the offering. Related to the offering, the Company recorded a one-time expense of $685,000 to cancel a rate lock agreement tied to the 10-year U.S. Treasury rate which was previously entered into in contemplation of a domestic subordinated debt offering.
As detailed in the accompanying financial information, the Company's cash return on average tangible assets for the three months ended September 30, 2005 was 1.64% as compared to 1.49% for the same period a year ago and the Company's cash return on average tangible equity for the third quarter of 2005 was 29.39% as compared to 26.87% for the same period a year ago. For the nine months ended September 30, 2005, the Company's cash return on average tangible assets was 1.63% as compared to 1.48% for the same period in 2004 while the Company's cash return on average tangible equity for the nine months ended September 30, 2005 was 29.20% as compared to 26.55% for the same period a year ago.
On July 12, 2005, the Company announced it had entered into a definitive agreement to acquire Hudson United Bancorp. (NYSE: HU) for approximately $1.9 billion in stock and cash. The acquisition, subject to both Hudson United and TD Banknorth shareholder approval, as well as customary regulatory approvals, is anticipated to close in the first quarter of 2006.
About TD Banknorth Inc.
TD Banknorth Inc. is a leading banking and financial services company headquartered in Portland, Maine and a majority-owned subsidiary of TD Bank Financial Group. At September 30, 2005, TD Banknorth had $31.8 billion of total consolidated assets and provided financial services to over 1.3 million households in the Northeast. TD Banknorth's banking subsidiary, TD Banknorth, N.A., operates banking divisions in Maine, New Hampshire, Massachusetts, Connecticut, Vermont and upstate New York. TD Banknorth and TD Banknorth, N.A. also operate subsidiaries and divisions in insurance, wealth management, merchant services, mortgage banking, government banking and other financial services and offer investment products in association with PrimeVest Financial Services, Inc. The TD Banknorth common stock trades on the New York Stock Exchange under the symbol "BNK". For more information, visit http://www.tdbanknorth.com.
Notes: On May 16, 2005, the Company announced that it had adopted purchase accounting to account for TD Bank Financial Group's acquisition of a majority interest in the Company on March 1, 2005. To most accurately reflect the application of purchase accounting, the accompanying financial statements use the term "predecessor" to refer to the results of Banknorth Group, Inc., the predecessor entity to TD Banknorth Inc., at the dates and for the periods ending on or prior to February 28, 2005, which are based on historical accounting, and the term "successor" to refer to the results of TD Banknorth Inc. at the dates and for the periods beginning on or after March 1, 2005, which are based on the application of purchase accounting. To assist in the comparability of the Company's financial results and to make it easier to discuss and understand these results, the financial information discussed herein and presented in the accompanying financial statements combine the "predecessor period" January 1, 2005 to February 28, 2005 with the applicable "successor period" thereafter. Due to the application of purchase accounting as of March 1, 2005, results for the combined periods may not be comparable to the results for the respective predecessor periods. For a detailed discussion of the impact of purchase accounting on the Company's balance sheet and income statement, reference is made to the Company's first quarter 2005 earnings release dated May 16, 2005.
This news release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these non-GAAP measures in its analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of charges and expenses related to the consummation of mergers and acquisitions and costs related to the integration of merged entities, as well as the amortization of intangible assets in the case of "cash basis" performance measures. These non-GAAP measures also may exclude other significant gains or losses that are unusual in nature, such as securities gains and losses and prepayment penalties incurred in connection with deleveraging strategies. Because these items and their impact on the Company's performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.
This news release contains certain forward-looking statements with respect to the financial condition, results of operations and business of TD Banknorth. Words such as "expect", "feel", "believe", "will", "may", "anticipate", "plan", "estimate", "intend", "should" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited, to, changes in general economic conditions, interest rates, deposit flows, loan demand, competition, legislation or regulation and accounting principles, policies or guidelines, as well as other economic, competitive, governmental, regulatory and accounting and technological factors affecting TD Banknorth's operations. In addition, acquisitions may result in large one-time charges to income, may not produce revenue enhancements or cost savings at levels or within time frames originally anticipated and may result in unforeseen integration difficulties. Investors are encouraged to access TD Banknorth's periodic reports filed with the Securities and Exchange Commission for financial and business information regarding TD Banknorth, including information which could affect TD Banknorth's forward-looking statements. TD Banknorth does not undertake any obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
This news release may be deemed to be solicitation material in respect of the proposed merger of TD Banknorth and Hudson United. In connection with the proposed transaction, a registration statement on Form S-4 has been filed with the SEC. Shareholders of TD Banknorth and shareholders of Hudson United are encouraged to read the registration statement and any other relevant documents filed with the SEC, including the joint proxy statement/prospectus that will be part of the registration statement, because they will contain important information about the proposed merger. The final joint proxy statement/prospectus will be mailed to shareholders of TD Banknorth and shareholders of Hudson United. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov, from TD Banknorth, Two Portland Square, P.O. Box 9540, Portland, Maine 04112-9540, Attention: Investor Relations, or from Hudson United, 1000 MacArthur Boulevard, Mahwah, New Jersey 07430, Attention: Investor Relations.
TD Banknorth, Hudson United and their respective directors and executive officers and other members of management and employees may be deemed to participate in the solicitation of proxies in respect of the proposed transaction. Information regarding TD Banknorth's directors and executive officers is available in TD Banknorth's proxy statement for its 2005 annual meeting of shareholders, which was filed with the SEC on April 20, 2005, and information regarding Hudson United's directors and executive officers is available in Hudson United's proxy statement for its 2005 annual meeting of shareholders, which was filed with the SEC on March 23, 2005. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (Unaudited)
Successor Predecessor Successor
------------ ------------ -----------
September 30, September 30, % June 30, %
(In thousands) 2005 2004 Change 2005 Change
------------ ------------ ------ ----------- ------
Cash and due from
banks $741,983 $575,840 29% $793,345 -6%
Federal funds sold
and other short-
term investments 7,576 4,031 88% 6,393 19%
Securities
available for
sale 4,410,425 7,189,720 -39% 4,143,013 6%
Securities held to
maturity 69,021 94,026 -27% 74,856 -8%
Loans and leases
held for sale 45,989 47,487 -3% 53,318 -14%
Loans and leases:
Residential
real estate
mortgages 3,048,411 3,096,739 -2% 3,259,283 -6%
Commercial real
estate
mortgages 6,716,035 6,182,835 9% 6,698,632 0%
Commercial
business loans
and leases 4,178,327 3,856,296 8% 4,272,272 -2%
Consumer loans
and leases 6,028,411 5,274,921 14% 5,798,475 4%
------------ ------------ ------------
Total loans
and leases 19,971,184 18,410,791 8% 20,028,662 0%
Less: Allowance
for loan and
lease losses 228,334 242,885 -6% 228,168 0%
------------ ------------ ------------
Loans and
leases, net 19,742,850 18,167,906 9% 19,800,494 0%
Premises and
equipment 313,151 285,940 10% 308,018 2%
Goodwill 4,549,355 1,369,112 232% 4,550,679 0%
Identifiable
intangible assets 696,401 52,593 NM 727,442 -4%
Bank-owned life
insurance 566,836 517,359 10% 560,942 1%
Other assets 671,659 682,070 -2% 765,835 -12%
------------ ------------ ------------
$31,815,246 $28,986,084 10% $31,784,335 0%
============ ============ ============
------------------------------- --------------------------------------
Liabilities & Shareholders' Equity
Deposits:
Regular savings $2,630,947 $2,572,473 2% $2,661,337 -1%
Retail money
market and NOW
accounts 8,398,406 7,924,839 6% 7,977,996 5%
Retail
certificates
of deposit 4,863,471 4,646,725 5% 4,681,623 4%
Brokered
deposits 61,576 575 NM 73,489 -16%
Noninterest
bearing
deposits 4,668,178 4,225,861 10% 4,570,156 2%
------------ ------------ ------------
Total
deposits 20,622,578 19,370,473 6% 19,964,601 3%
Borrowings from the
Federal Home Loan
Bank 558,112 1,479,160 -62% 1,607,869 -65%
Federal funds
purchased and
securities sold
under repurchase
agreements 2,651,338 3,453,476 -23% 2,344,006 13%
Subordinated debt
and senior notes 607,414 354,684 71% 376,291 61%
Other borrowings 40,688 758,479 -95% 59,153 -31%
Junior
subordinated
debentures 368,796 311,636 18% 371,355 -1%
Deferred tax
liability related
to other
identifiable
intangible assets 258,017 18,408 NM 269,517 -4%
Other liabilities 244,680 193,526 26% 318,047 -23%
------------ ------------ ------------
Total
liabilities 25,351,623 25,939,842 -2% 25,310,839 0%
------------ ------------ ------------
Shareholders'
equity 6,463,623 3,046,242 112% 6,473,496 0%
------------ ------------ ------------
$31,815,246 $28,986,084 10% $31,784,335 0%
============ ============ ============
----------------------------------------------------------------------
NM - Calculated % change is not meaningful.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands, except per share data)
Combined Predecessor
----------- -----------
Nine Months Nine Months
Ended Ended
September September
30, 30, %
2005 2004 Change
----------- ----------- ------
Interest and dividend income $1,036,775 $922,948 12%
Interest expense 282,412 239,840 18%
----------- -----------
Net interest income 754,363 683,108 10%
Provision for loan and lease losses 11,166 29,670 -62%
----------- -----------
Net interest income after
provision for loan and lease
losses 743,197 653,438 14%
----------- -----------
Noninterest income:
Deposit services 94,493 80,995 17%
Insurance brokerage commissions 39,712 38,431 3%
Merchant and electronic banking
income, net 43,665 37,196 17%
Wealth management services 31,561 29,300 8%
Loan fee income 23,843 19,529 22%
Bank-owned life insurance 18,198 17,503 4%
Investment planning services 14,859 14,619 2%
Net securities gains/(losses) (48,022) 10,060 -577%
Loans held for sale - lower of cost
or market adjustment (7,114) - NM
Change in unrealized loss on certain
derivatives 5,954 - NM
Other noninterest income 29,352 25,785 14%
----------- -----------
246,501 273,418 -10%
----------- -----------
Noninterest expense:
Salaries and employee benefits 308,023 266,473 16%
Occupancy and equipment 91,731 83,051 10%
Data processing 34,327 31,573 9%
Advertising and marketing 22,284 20,105 11%
Amortization of identifiable
intangible assets 74,193 6,367 NM
Merger and consolidation costs (1) 37,722 11,351 232%
Prepayment penalties on borrowings 6,303 - NM
Other noninterest expense 80,588 78,822 2%
----------- -----------
655,171 497,742 32%
----------- -----------
Income before income tax expense 334,527 429,114 -22%
Income tax expense 116,113 145,169 -20%
----------- -----------
Net Income $218,414 $283,945 -23%
=========== ===========
Weighted average shares outstanding:
Basic 176,822 168,646 5%
Diluted 177,858 172,201 3%
Earnings per share:
Basic $1.24 $1.68 -26%
Diluted 1.23 1.65 -25%
Successor Predecessor
---------- -----------
Three Three
Months Months
Ended Ended
September September
30, 30, %
2005 2004 Change
---------- ---------- ------
Interest and dividend income $350,679 $323,677 8%
Interest expense 101,682 85,701 19%
---------- ----------
Net interest income 248,997 237,976 5%
Provision for loan and lease losses 5,500 10,670 -48%
--------- ----------
Net interest income after provision
for loan and lease losses 243,497 227,306 7%
---------- ----------
Noninterest income:
Deposit services 34,558 27,583 25%
Insurance brokerage commissions 12,216 12,417 -2%
Merchant and electronic banking
income, net 15,824 13,723 15%
Wealth management services 10,662 10,280 4%
Loan fee income 8,031 5,842 37%
Bank-owned life insurance 5,994 5,732 5%
Investment planning services 4,708 4,634 2%
Net securities gains/(losses) 1,014 3,124 -68%
Loans held for sale - lower of cost or
market adjustment - - NM
Change in unrealized loss on certain
derivatives (711) - NM
Other noninterest income 11,311 9,862 15%
---------- ----------
103,607 93,197 11%
---------- ----------
Noninterest expense:
Salaries and employee benefits 102,059 91,935 11%
Occupancy and equipment 29,945 27,940 7%
Data processing 11,675 11,118 5%
Advertising and marketing 7,503 6,278 20%
Amortization of identifiable intangible
assets 31,041 2,379 NM
Merger and consolidation costs (1) 1,163 5,603 -79%
Prepayment penalties on borrowings - - NM
Other noninterest expense 28,343 28,945 -2%
---------- ----------
211,729 174,198 22%
---------- ----------
Income before income tax expense 135,375 146,305 -7%
Income tax expense 46,634 48,534 -4%
---------- ----------
Net Income $88,741 $97,771 -9%
========== ==========
Weighted average shares outstanding:
Basic 173,661 173,271 0%
Diluted 174,398 176,756 -1%
Earnings per share:
Basic $0.51 $0.56 -9%
Diluted 0.51 0.55 -7%
----------------------------------------------------------------------
(1) Merger and consolidation costs consist of merger charges and
certain asset write-downs.
NM - calculated % change is not meaningful
TD Banknorth Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
----------------------------------------------------------------------
(In thousands, except per share data)
Combined Predecessor
----------- -----------
Nine Months Nine Months
Ended Ended
September September
30, 30, %
2005 2004 Change
----------- ----------- ---------
Net interest income $754,363 $683,108 10%
Net income $218,414 $283,945 -23%
Shares outstanding (end of period) 173,615 174,023 0%
Weighted average shares outstanding:
Basic 176,822 168,646 5%
Diluted 177,858 172,201 3%
Earnings per share:
Basic $1.24 $1.68 -26%
Diluted $1.23 $1.65 -25%
Shareholders' equity (end of period) $6,463,623 $3,046,242 NM
Book value per share (end of period) $37.23 $17.50 NM
Tangible book value per share (end
of period) 8.50 9.44 -10%
Nominal
RATIOS & OTHER INFORMATION: Inc/(Dec)
---------
Net interest margin, fully-taxable
equivalent basis 4.06% 3.67% 0.39%
Return on average assets 0.93% 1.35% -0.42%
Return on average equity 5.04% 13.61% -8.57%
At period end:
------------------------------------
Tangible equity/tangible assets 5.55% 5.96% -0.41%
Tier 1 leverage capital ratio 6.99% 6.95% 0.04%
Tier 1 risk based capital ratio 8.54% 9.42% -0.88%
Total risk based capital ratio 11.72% 11.62% 0.10%
Nonperforming loans (1) $63,960 $65,923 (1,963)
Total nonperforming assets (1) $66,888 $67,979 (1,090)
Nonperforming loans as a % of total
loans 0.32% 0.36% -0.04%
Nonperforming assets as a % of total
assets 0.21% 0.23% -0.02%
Full service banking offices 397 387
FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP
Financial Information):
See pages 13 and 14 for a reconciliation table of non-GAAP financial
information.
Earnings per diluted share, GAAP
basis $1.23 $1.65 -0.42
Merger & consolidation costs, per
diluted share, net of tax (2) 0.15 0.05 0.10
Change in unrealized loss on certain
derivatives, per diluted share, net
of tax (0.02) - -0.02
Deleveraging losses, per diluted
share, net of tax (3) 0.23 - 0.23
----------- ----------- ---------
Earnings per diluted share, as
adjusted 1.59 1.70 -0.11
Amortization of intangibles, per
diluted share, net of tax 0.27 0.02 0.25
----------- ----------- ---------
Earnings per diluted share, as
adjusted $1.86 $1.72 0.14
=========== =========== =========
Noninterest income as a percent of
total income (4) 28.16% 27.83% 0.33%
Noninterest income (4) $295,682 $263,358 $32,324
Return on average assets (5) 1.20% 1.39% -0.19%
Cash return on average tangible
assets (5) (6) 1.63% 1.48% 0.15%
Return on average equity (5) 6.54% 14.00% -7.46%
Cash return on average tangible
equity (5) (6) 29.20% 26.55% 2.65%
Noninterest expense (7) $536,954 $480,025 $56,929
Efficiency ratio (8) 57.87% 51.39% 6.48%
Cash efficiency ratio (9) 51.14% 50.72% 0.42%
(In thousands, except per share data)
Successor Predecessor
---------- -----------
Three Three
Months Months
Ended Ended
September September
30, 30, %
2005 2004 Change
---------- ----------- ---------
Net interest income $248,997 $237,976 5%
Net income $88,742 $97,771 -9%
Shares outstanding (end of period) 173,615 174,023 0%
Weighted average shares outstanding:
Basic 173,661 173,271 0%
Diluted 174,398 176,756 -1%
Earnings per share:
Basic $0.51 $0.56 -9%
Diluted $0.51 $0.55 -7%
Shareholders' equity (end of period) $6,463,623 $3,046,242 NM
Book value per share (end of period) $37.23 $17.50 NM
Tangible book value per share (end of
period) 8.50 9.44 -10%
Nominal
RATIOS & OTHER INFORMATION: Inc/(Dec)
---------
Net interest margin, fully-taxable
equivalent basis 4.09% 3.68% 0.41%
Return on average assets 1.11% 1.33% -0.22%
Return on average equity 5.44% 13.24% -7.80%
At period end:
-------------------------------------
Tangible equity/tangible assets 5.55% 5.96% -0.41%
Tier 1 leverage capital ratio 6.99% 6.95% 0.04%
Tier 1 risk based capital ratio 8.54% 9.42% -0.88%
Total risk based capital ratio 11.72% 11.62% 0.10%
Nonperforming loans (1) $63,960 $65,923 (1,963)
Total nonperforming assets (1) $66,888 $67,979 (1,090)
Nonperforming loans as a % of total
loans 0.32% 0.36% -0.04%
Nonperforming assets as a % of total
assets 0.21% 0.23% -0.02%
Full service banking offices 397 387
FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP
Financial Information):
See pages 13 and 14 for a reconciliation table of non-GAAP financial
information.
Earnings per diluted share, GAAP
basis $0.51 $0.55 -0.04
Merger & consolidation costs, per
diluted share, net of tax (2) - 0.03 -0.03
Change in unrealized loss on certain
derivatives, per diluted share, net
of tax 0.01 - 0.01
Deleveraging losses, per diluted
share, net of tax (3) - - -
----------- ----------- ---------
Earnings per diluted share, as
adjusted 0.52 0.58 -0.06
Amortization of intangibles, per
diluted share, net of tax 0.11 0.01 0.10
----------- ----------- ---------
Earnings per diluted share, as
adjusted 0.63 0.59 0.04
=========== =========== =========
Noninterest income as a percent of
total income (4) 29.32% 27.46% 1.86%
Noninterest income (4) $103,305 $90,073 $13,232
Return on average assets (5) 1.12% 1.39% -0.27%
Cash return on average tangible
assets (5) (6) 1.64% 1.49% 0.15%
Return on average equity (5) 5.51% 13.82% -8.31%
Cash return on average tangible
equity (5) (6) 29.39% 26.87% 2.52%
Noninterest expense (7) $179,527 $166,216 $13,311
Efficiency ratio (8) 59.77% 51.39% 8.38%
Cash efficiency ratio (9) 50.96% 50.67% 0.29%
----------------------------------------------------------------------
(1) During the three months ended March 31, 2005, in connection with
the use of purchase accounting for the transaction with TD on
March 1, 2005, nonperforming loans and nonperforming assets were
reduced by $21.4 million of specific reserves on impaired loans
which were applied to reduce the loan balance under SOP 03-3
"Accounting for Certain Loans or Debt Securities Acquired in a
Transfer".
(2) Merger and consolidation costs consist of merger related charges
and certain asset write-downs.
(3) Deleveraging losses/(gains) consist of losses on securities sales,
lower of cost or market adjustments and prepayment penalties on
borrowings incurred in connection with a balance sheet
restructuring in the first quarter of 2005.
(4) Excludes securities gains/(losses), lower of cost or market
adjustments, and gains/(losses) on certain derivatives.
(5) Excludes merger and consolidation costs, changes in unrealized
loss on certain derivatives, and deleveraging losses/(gains), net
of related tax benefits.
(6) Cash ratios reflect adjustments to exclude the effects of
intangible assets, net of related taxes.
(7) Excludes pre-tax merger and consolidation costs, prepayment
penalties on borrowings, and amortization of intangible assets.
(8) Excludes securities gains/(losses), lower of cost or market
adjustments, prepayment penalties on borrowings, and
gains/(losses) on certain derivatives, and merger and
consolidation costs.
(9) Excludes securities gains/(losses), lower of cost or market
adjustments, prepayment penalties on borrowings, merger and
consolidation costs, gains/(losses) on certain derivatives, and
amortization of intangible assets.
Ratios are annualized where appropriate.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
Successor Predecessor
----------------------------------------------------------------------
Three Months Ended Three Months Ended
September 30, September 30,
----------------------------------------------------------------------
2005 2004
----------------------------------------------------------------------
Average Yield/ Average Yield/
(Dollars in thousands) Balance Rate Balance Rate
----------------------------------------------------------------------
Assets
Loans and leases (1)
Residential real estate
mortgages $3,246,891 5.52% $3,135,400 4.95%
Commercial real estate
mortgages 6,719,570 6.11% 6,158,271 5.76%
Commercial loans and leases 4,180,982 6.04% 3,827,919 4.93%
Consumer loans and leases 5,918,342 5.94% 5,185,483 5.10%
------------ ------------
20,065,785 5.95% 18,307,073 5.26%
Securities 4,341,490 4.80% 7,651,673 4.36%
Federal funds sold and other
short-term investments 15,611 1.66% 5,609 1.55%
------------ ------------
Total earning assets 24,422,886 5.74% 25,964,355 4.98%
Bank-owned life insurance 563,040 508,425
Goodwill 4,549,680 1,369,166
Identifiable intangible assets 715,078 53,568
Noninterest-earning assets 1,484,288 1,280,594
------------ ------------
Total assets $31,734,972 $29,176,108
============ ============
Liabilities & Shareholders' Equity
Interest-bearing deposits:
Regular savings $2,605,428 0.33% $2,603,474 0.29%
Retail money market and NOW
accounts 8,187,345 1.54% 7,884,927 0.80%
Retail certificates of
deposit 4,841,020 2.21% 4,672,879 1.91%
Brokered deposits 62,505 3.82% 506 1.63%
------------ ------------
Total interest-bearing
deposits 15,696,298 1.55% 15,161,786 1.05%
Borrowed funds 4,411,042 3.62% 6,652,815 2.73%
------------ ------------
Total interest-bearing
liabilities 20,107,340 2.01% 21,814,601 1.56%
Noninterest bearing deposits 4,546,766 4,236,569
Deferred tax liability related
to other identifiable
intangible assets 265,588 18,749
Other liabilities 338,178 167,454
Shareholders' equity 6,477,100 2,938,735
------------ ------------
Total liabilities and
shareholders' equity $31,734,972 $29,176,108
============ ============
Net earning assets $4,315,546 $4,149,754
============ ============
Net interest income (fully-
taxable equivalent) $251,087 $239,655
Less: fully-taxable equivalent
adjustments (2,090) (1,679)
------------ ------------
Net interest income $248,997 $237,976
============ ============
Net interest rate spread
(fully-taxable equivalent) 3.73% 3.42%
Net interest margin
(fully-taxable equivalent) 4.09% 3.68%
----------------------------------------------------------------------
(1) Loans and leases include portfolio loans and leases, loans held
for sale and nonperforming loans.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
Combined (1) Predecessor
----------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------------------------------------
2005 2004
----------------------------------------------------------------------
Average Yield/ Average Yield/
(Dollars in thousands) Balance Rate Balance Rate
----------------------------------------------------------------------
Assets
Loans and leases (2)
Residential real estate
mortgages $3,570,839 5.35% $2,950,094 5.04%
Commercial real estate
mortgages 6,609,568 5.98% 5,861,892 5.74%
Commercial loans and leases 4,121,366 5.82% 3,630,870 4.82%
Consumer loans and leases 5,703,486 5.78% 5,017,428 5.08%
------------ ------------
20,005,259 5.78% 17,460,284 5.24%
Securities 5,002,727 4.73% 7,523,082 4.30%
Federal funds sold and other
short-term investments 14,434 2.09% 5,562 1.27%
------------ ------------
Total earning assets 25,022,420 5.57% 24,988,928 4.95%
Bank-owned life insurance 555,616 498,736
Goodwill 3,875,544 1,267,703
Identifiable intangible assets 588,958 44,905
Noninterest-earning assets 1,444,605 1,237,075
------------ ------------
Total assets $31,487,143 $28,037,347
============ ============
Liabilities & Shareholders' Equity
Interest-bearing deposits:
Regular savings $2,648,151 0.30% $2,562,340 0.29%
Retail money market and NOW
accounts 8,102,660 1.27% 7,551,311 0.79%
Retail certificates of
deposit 4,775,911 1.96% 4,684,097 1.94%
Brokered deposits 68,256 3.85% 170 1.63%
------------ ------------
Total interest-bearing
deposits 15,594,978 1.33% 14,797,918 1.07%
Borrowed funds 5,228,368 3.25% 6,394,319 2.53%
------------ ------------
Total interest-bearing
liabilities 20,823,346 1.81% 21,192,237 1.51%
Noninterest bearing deposits 4,374,659 3,875,740
Deferred tax liability related
to other identifiable
intangible assets 178,710 15,717
Other liabilities 311,701 166,492
Shareholders' equity 5,798,727 2,787,161
------------ ------------
Total liabilities and
shareholders' equity $31,487,143 $28,037,347
============ ============
Net earning assets $4,199,074 $3,796,691
============ ============
Net interest income (fully-
taxable equivalent) $760,397 $687,822
Less: fully-taxable equivalent
adjustments (6,034) (4,714)
------------ ------------
Net interest income $754,363 $683,108
============ ============
Net interest rate spread
(fully-taxable equivalent) 3.76% 3.44%
Net interest margin
(fully-taxable equivalent) 4.06% 3.67%
----------------------------------------------------------------------
(1) Includes two months of average balances based on historical cost
and seven months of average balances including purchase accounting
and fair value adjustments. Had TD's acquisition of a majority
interest in TD Banknorth occurred at the beginning of the first
quarter, noninterest-earning assets, total assets, shareholders'
equity, and total liabilities and shareholders' equity would have
been approximately $1.0 billion higher than the amounts in the
above table, primarily related to intangible assets.
(2) Loans and leases include portfolio loans and leases, loans held
for sale and nonperforming loans.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
Asset Quality (unaudited)
(Dollars in thousands)
Successor Successor Successor
--------------------- ----------
9/30/2005 6/30/2005 3/31/2005
---------- ---------- ----------
Nonperforming assets:
Residential real estate
mortgages $6,531 $6,165 $8,614
Commercial real estate
mortgages 29,224 30,353 23,553 (1)
Commercial business loans and
leases 21,306 26,776 24,520 (1)
Consumer loans and leases 6,899 6,816 6,229
---------- ---------- ----------
Total nonperforming loans and
leases 63,960 70,110 62,916
Other nonperforming assets, net 2,929 3,796 6,012
---------- ---------- ----------
Total nonperforming assets $66,889 $73,906 $68,928 (1)
========== ========== ==========
Allowance for loan and lease
losses $228,334 $228,168 $228,165
Liability for unfunded credit
commitments 7,607(2) 6,807 6,707
---------- ---------- ----------
Total reserve for credit losses $235,941 $234,975 $234,872
========== ========== ==========
Net loan charge-offs
(recoveries):
Residential real estate
mortgages ($125) $89 $57
Commercial real estate
mortgages 1,717 (391) 4,032
-----------------------------------
Total real estate mortgages 1,592 (302) 4,089
Commercial business loans and
leases 3 (230) 545
Consumer loans and leases 4,739 4,126 5,481
---------- ---------- ----------
Total net charge-offs $6,334 $3,594 $10,115
========== ========== ==========
Ratios:
Reserve for credit losses to
total loans and leases 1.18% 1.17% 1.20%(1)
Reserve for credit losses to
nonperforming loans 368.89% 335.15% 373.31%
Nonperforming loans to total
loans and leases 0.32% 0.35% 0.32%
Nonperforming assets to total
assets 0.21% 0.23% 0.21%
Net charge-offs to average loans
- QTD (3) 0.13% 0.07% 0.21%
Predecessor Predecessor
-----------------------
12/31/2004 9/30/2004
----------- -----------
Nonperforming assets:
Residential real estate mortgages $7,846 $7,274
Commercial real estate mortgages 29,948 33,249
Commercial business loans and leases 32,421 18,573
Consumer loans and leases 7,344 6,827
----------- -----------
Total nonperforming loans and leases 77,559 65,923
Other nonperforming assets, net 3,544 2,056
----------- -----------
Total nonperforming assets $81,103 $67,979
=========== ===========
Allowance for loan and lease losses $243,152 $242,885
Liability for unfunded credit commitments 6,600 6,600
----------- -----------
Total reserve for credit losses $249,752 $249,485
=========== ===========
Net loan charge-offs (recoveries):
Residential real estate mortgages ($9) $86
Commercial real estate mortgages (486) (530)
-----------------------
Total real estate mortgages (495) (444)
Commercial business loans and leases 5,594 2,939
Consumer loans and leases 5,305 6,310
----------- -----------
Total net charge-offs $10,404 $8,805
=========== ===========
Ratios:
Reserve for credit losses to total loans and
leases 1.34% 1.36%
Reserve for credit losses to nonperforming
loans 322.02% 378.45%
Nonperforming loans to total loans and
leases 0.42% 0.36%
Nonperforming assets to total assets 0.28% 0.23%
Net charge-offs to average loans - QTD (3) 0.22% 0.19%
----------------------------------------------------------------------
(1) The decreases in nonperforming assets and total reserve for credit
losses reflect the application of specific reserves against
certain nonperforming loans and leases to the carrying value of
such assets in connection with the use of purchase accounting to
account for TD's acquisition of a majority interest in TD
Banknorth on March 1, 2005. Specific reserves of $6.9 million and
$14.5 million were applied to reduce the individual loan balances
on impaired commercial real estate loans and impaired commercial
business loans and leases, respectively.
(2) Includes provision of $800 thousand during the quarter.
(3) Annualized
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Successor Combined Predecessor
-------------------- ---------- ---------------------
(In thousands, Three Three Three Three Three
except per share Months Months Months Months Months
data) Ended Ended Ended Ended Ended
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
-------------------- ---------- ---------------------
Interest and
dividend income $350,679 $342,447 $343,645 $327,900 $323,677
Interest expense 101,682 89,819 90,912 83,783 85,701
-------------------- ---------- ---------------------
Net interest
income 248,997 252,628 252,733 244,117 237,976
Provision for
loan and lease
losses 5,500 3,597 2,069 10,670 10,670
-------------------- ---------- ---------------------
Net interest
income after
provision
for loan and
lease losses 243,497 249,031 250,664 233,447 227,306
-------------------- ---------- ---------------------
Noninterest
income:
Deposit
services 34,558 31,751 28,182 28,326 27,583
Insurance
brokerage
commissions 12,216 13,604 13,892 11,880 12,417
Merchant and
electronic
banking
income, net 15,824 14,727 13,114 13,368 13,723
Wealth
management
services 10,662 10,395 10,504 10,489 10,280
Loan fee income 8,031 8,892 6,921 6,926 5,841
Bank-owned life
insurance 5,994 6,107 6,098 5,779 5,732
Investment
planning
services 4,708 5,462 4,689 4,799 4,634
Net securities
gains/(losses) 1,014 1,439 (50,476) (17,761) 3,124
Loans held for
sale - lower
of cost or
market
adjustment - 386 (7,500) - -
Change in
unrealized
loss on
derivatives (711) 14,840 (8,175) - -
Other
noninterest
income 11,311 9,669 8,372 8,731 9,862
-------------------- ---------- ---------------------
103,607 117,272 25,621 72,537 93,196
-------------------- ---------- ---------------------
Noninterest
expense:
Salaries and
employee
benefits 102,059 105,096 100,868 90,138 91,935
Occupancy and
equipment 29,945 31,048 30,738 29,320 27,940
Data processing 11,675 11,618 11,033 11,568 11,118
Advertising and
marketing 7,503 8,087 6,695 5,445 6,278
Amortization of
identifiable
intangible
assets 31,041 31,656 11,495 2,260 2,379
Merger and
consolidation
costs (1) 1,163 5,368 31,191 38,286 5,603
Prepayment
penalties on
borrowings - - 6,303 61,546 -
Other
noninterest
expense 28,343 27,460 24,786 28,796 28,945
-------------------- ---------- ---------------------
211,729 220,333 223,109 267,359 174,198
-------------------- ---------- ---------------------
Income before
income tax
expense 135,375 145,970 53,176 38,625 146,304
Income tax
expense 46,634 50,375 19,101 17,927 48,534
-------------------- ---------- ---------------------
Net Income $88,741 $95,595 $34,075 $20,698 $97,770
==================== ========== =====================
Weighted average shares
outstanding:
Basic 173,661 173,428 183,393 177,071 173,271
Diluted 174,398 174,261 184,890 179,953 176,756
Earnings per
share:
Basic $0.51 $0.55 $0.19 $0.12 $0.56
Diluted 0.51 0.55 0.18 0.12 0.55
----------------------------------------------------------------------
(1) Merger and consolidation costs consist of merger charges and
certain asset write-downs.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
Successor Combined
----------------------- -----------
(In thousands, except per share Three Three Three
data) Months Months Months
Ended Ended Ended
9/30/2005 6/30/2005 3/31/2005
----------- ----------- -----------
Net interest income $248,997 $252,628 $252,733
Net income $88,742 $95,595 $34,075
Shares outstanding (end of period) 173,615 173,406 173,208
Weighted average shares outstanding:
Basic 173,661 173,428 183,393
Diluted 174,398 174,261 184,890
Earnings per share:
Basic $0.51 $0.55 $0.19
Diluted $0.51 $0.55 $0.18
Shareholders' equity (end of
period) $6,463,623 $6,473,496 $6,348,493
Book value per share (end of
period) $37.23 $37.33 $36.65
Tangible book value per share (end
of period) $8.50 $8.45 $7.61
RATIOS & OTHER INFORMATION:
Net interest margin, fully-taxable
equivalent basis 4.09% 4.12% 3.96%
Return on average assets 1.11% 1.20% 0.45%
Return on average equity 5.44% 5.98% 3.09%
At period end:
----------------------------------
Tangible equity/tangible assets 5.55% 5.53% 4.91%
Tier 1 leverage capital ratio 6.99% 6.65% 6.29%
Tier 1 risk based capital ratio 8.54% 8.29% 7.97%
Total risk based capital ratio 11.72% 10.43% 10.13%
Nonperforming loans (1) $63,960 $70,110 $62,916
Total nonperforming assets (1) $66,888 $73,906 $68,928
Nonperforming loans as a % of
total loans 0.32% 0.35% 0.32%
Nonperforming assets as a % of
total assets 0.21% 0.23% 0.21%
Full service banking offices 397 395 396
FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP
Financial Information):
See page 13 for a reconciliation table of non-GAAP financial
information.
Earnings per diluted share, GAAP
basis $0.51 $0.55 $0.18
Merger & consolidation costs, per
diluted share, net of tax (2) - 0.02 0.13
Change in unrealized loss on
certain derivatives, per diluted
diluted share, net of tax 0.01 (0.05) 0.03
Deleveraging losses, per diluted
share, net of tax (3) - - 0.22
----------- ----------- -----------
Earnings per diluted share, as
adjusted 0.52 0.52 0.56
Amortization of intangibles, per
diluted share, net of tax 0.11 0.11 0.04
----------- ----------- -----------
Earnings per diluted share, as
adjusted $0.63 $0.63 $0.60
=========== =========== ===========
Noninterest income as a percent of
total income (4) 29.32% 28.48% 26.64%
Noninterest income (4) $103,305 $100,607 $91,771
Return on average assets (5) 1.12% 1.12% 1.38%
Cash return on average tangible
assets (5) (6) 1.64% 1.64% 1.63%
Return on average equity (5) 5.51% 5.58% 9.45%
Cash return on average tangible
equity (5) (6) 29.39% 31.32% 25.70%
Noninterest expense (7) $179,525 $183,309 $174,120
Efficiency ratio (8) 59.77% 60.86% 53.88%
Cash efficiency ratio (9) 50.96% 51.89% 50.54%
Predecessor
-----------------------
(In thousands, except per share data) Three Three
Months Months
Ended Ended
12/31/2004 9/30/2004
----------- -----------
Net interest income $244,117 $237,976
Net income $20,698 $97,771
Shares outstanding (end of period) 179,298 174,023
Weighted average shares outstanding:
Basic 177,071 173,271
Diluted 179,953 176,756
Earnings per share:
Basic $0.12 $0.56
Diluted $0.12 $0.55
Shareholders' equity (end of period) $3,176,114 $3,046,242
Book value per share (end of period) $17.71 $17.50
Tangible book value per share (end of period) $9.91 $9.44
RATIOS & OTHER INFORMATION:
Net interest margin, fully-taxable equivalent
basis 3.87% 3.68%
Return on average assets 0.29% 1.33%
Return on average equity 2.66% 13.24%
At period end:
----------------------------------------------
Tangible equity/tangible assets 6.52% 5.96%
Tier 1 leverage capital ratio 7.58% 6.95%
Tier 1 risk based capital ratio 9.96% 9.42%
Total risk based capital ratio 12.13% 11.62%
Nonperforming loans (1) $77,559 $65,923
Total nonperforming assets (1) $81,103 $67,979
Nonperforming loans as a % of total loans 0.42% 0.36%
Nonperforming assets as a % of total assets 0.28% 0.23%
Full service banking offices 386 387
FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP
Financial Information):
See page 13 for a reconciliation table of non-GAAP financial
information.
Earnings per diluted share, GAAP basis $0.12 $0.55
Merger & consolidation costs, per diluted
share, net of tax (2) 0.17 0.03
Change in unrealized loss on certain derivatives, per
diluted
diluted share, net of tax - -
Deleveraging losses, per diluted share, net of
tax (3) 0.29 -
----------- -----------
Earnings per diluted share, as adjusted 0.58 0.58
Amortization of intangibles, per diluted
share, net of tax 0.01 0.01
----------- -----------
Earnings per diluted share, as adjusted $0.59 $0.59
=========== ===========
Noninterest income as a percent of total
income (4) 27.00% 27.46%
Noninterest income (4) $90,299 $90,073
Return on average assets (5) 1.46% 1.39%
Cash return on average tangible assets (5) (6) 1.55% 1.49%
Return on average equity (5) 13.43% 13.82%
Cash return on average tangible equity (5) (6) 24.89% 26.87%
Noninterest expense (7) $165,267 $166,216
Efficiency ratio (8) 50.10% 51.39%
Cash efficiency ratio (9) 49.42% 50.67%
----------------------------------------------------------------------
(1) During the three months ended March 31, 2005, in connection with
the use of purchase accounting for the transaction with TD on
March 1, 2005, nonperforming loans and nonperforming assets were
reduced by $21.4 million of specific reserves on impaired loans
which were applied to reduce the loan balance under SOP 03-3
"Accounting for Certain Loans or Debt Securities Acquired in a
Transfer".
(2) Merger and consolidation costs consist of merger related charges
and certain asset write-downs.
(3) Deleveraging losses/(gains) consist of losses on securities sales,
lower of cost or market adjustments and prepayment penalties on
borrowings incurred in connection with a balance sheet
restructuring in the fourth quarter 2004 and the first quarter of
2005.
(4) Excludes securities gains/(losses), lower of cost or market
adjustments, and gains/(losses) on certain derivatives.
(5) Excludes merger and consolidation costs, changes in unrealized
loss on certain derivatives, and deleveraging losses/(gains), net
of related tax benefits.
(6) Cash ratios reflect adjustments to exclude the effects of
intangible assets, net of related taxes.
(7) Excludes pre-tax merger and consolidation costs, prepayment
penalties on borrowings, and amortization of intangible assets.
(8) Excludes securities gains/(losses), lower of cost or market
adjustments, prepayment penalties on borrowings, gains/(losses) on
certain derivatives, and merger and consolidation costs.
(9) Excludes securities gains/(losses), lower of cost or market
adjustments, prepayment penalties on borrowings, merger and
consolidation costs, gains/(losses) on certain derivatives, and
amortization of intangible assets.
Ratios are annualized where appropriate.
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
Reconciliation Table - Non-GAAP Financial Information (Unaudited)
Successor Combined
------------------------- ------------
(In thousands, except per share Three Months Three Months Three Months
data) Ended Ended Ended
9/30/2005 6/30/2005 3/31/2005
------------ ------------ ------------
Net income (GAAP) $88,742 $95,595 $34,075
Add back merger and consolidation costs, change in unrealized loss on
derivatives, deleveraging losses/(gains), and amortization of
intangibles, net of tax
Merger related 755 3,489 23,375
Change in unrealized
loss on derivatives 462 (9,646) 5,314
Revised auto lease
residual charge - - -
Deleveraging
losses/(gains) - (109) 41,562
------------ ------------ ------------
Net income, as adjusted 89,959 89,329 104,326
Amortization of
intangibles 19,540 19,769 7,472
------------ ------------ ------------
Net income, as adjusted $109,499 $109,098 $111,798
============ ============ ============
Diluted earnings per share
(GAAP) $0.51 $0.55 $0.18
Effects of merger and
consolidation costs,
net of tax - 0.02 0.13
Effects of change in
unrealized loss on
derivatives, net of tax 0.01 (0.05) 0.03
Effects of deleveraging
losses/(gains), net of
tax - - 0.22
------------ ------------ ------------
Diluted earnings per share, as
adjusted 0.52 0.52 0.56
Effects of amortization
of intangibles, net of
tax 0.11 0.11 0.04
------------ ------------ ------------
Diluted earnings per share, as
adjusted $0.63 $0.63 $0.60
============ ============ ============
Average Assets (GAAP) $31,734,972 $32,008,478 $30,705,504
Average goodwill (4,549,680) (4,536,952) (2,517,379)
Average identifiable intangible
assets (715,078) (746,331) (301,197)
------------ ------------ ------------
Average tangible assets 26,470,214 26,725,195 27,886,928
============ ============ ============
Average Equity (GAAP) $6,477,100 $6,415,590 $4,477,650
Average goodwill (4,549,680) (4,536,952) (2,517,379)
Average identifiable intangible
assets (715,078) (746,331) (301,197)
Average deferred tax liability
related to other identifiable
intangible assets 265,588 264,676 105,419
------------ ------------ ------------
Average tangible equity 1,477,930 1,396,983 1,764,493
============ ============ ============
Return on average assets (GAAP) 1.11% 1.20% 0.45%
Effects of merger and
consolidation costs, net of
tax 0.01% 0.04% 0.31%
Effects of change in unrealized
loss on derivatives, net of
tax - -0.12% 0.07%
Effects of deleveraging
losses/(gains), net of tax - - 0.55%
Effects of amortization of
intangibles, net of tax 0.52% 0.52% 0.25%
------------ ------------ ------------
Return on average assets, as
adjusted 1.64% 1.64% 1.63%
============ ============ ============
Return on average equity (GAAP) 5.44% 5.98% 3.09%
Effects of merger and
consolidation costs, net of
tax 0.04% 0.21% 2.11%
Effects of change in unrealized
loss on derivatives, net of
tax 0.03% -0.60% 0.48%
Effects of deleveraging
losses/(gains), net of tax - -0.01% 3.77%
Effects of amortization of
intangibles, net of tax 23.88% 25.74% 16.25%
------------ ------------ ------------
Return on average equity, as
adjusted 29.39% 31.32% 25.70%
============ ============ ============
Efficiency ratio 60.05% 59.57% 80.15%
Effects of merger and
consolidation costs -0.16% -1.19% -11.29%
Effects of change in unrealized
loss on derivatives -0.12% 2.45% -1.96%
Effects of deleveraging
losses/(gains) - 0.02% -13.67%
Effects of amortization of
intangibles -8.81% -8.96% -2.69%
------------ ------------ ------------
Efficiency ratio, as adjusted 50.96% 51.89% 50.54%
============ ============ ============
Noninterest Income $103,607 $117,272 $25,621
Net securities (gains) losses (1,014) (1,439) 50,476
Lower of cost or market
adjustments - (386) 7,500
Change in unrealized loss on
derivatives 711 (14,840) 8,175
------------ ------------ ------------
Noninterest Income, as adjusted $103,304 $100,607 $91,772
============ ============ ============
Noninterest Expense $211,729 $220,333 $223,109
Merger and consolidation costs (1,163) (5,368) (31,191)
Prepayment penalties on
borrowings - - (6,303)
------------ ------------ ------------
Excluding merger and
consolidation costs and
prepayment penalties 210,566 214,965 185,615
Amortization of intangibles (31,041) (31,656) (11,495)
------------ ------------ ------------
Noninterest Expense, as
adjusted $179,525 $183,309 $174,120
============ ============ ============
Predecessor
-------------------------
(In thousands, except per share data) Three Months Three Months
Ended Ended
12/31/2004 9/30/2004
------------ ------------
Net income (GAAP) $20,698 $97,771
Add back merger and consolidation costs, change in unrealized loss on
derivatives, deleveraging losses/(gains), and amortization of
intangibles, net of tax
Merger related 32,400 4,342
Change in unrealized loss on
derivatives - -
Revised auto lease residual charge (84) -
Deleveraging losses/(gains) 51,560 -
------------ ------------
Net income, as adjusted 104,574 102,113
Amortization of intangibles 1,470 1,547
------------ ------------
Net income, as adjusted $106,044 $103,660
============ ============
Diluted earnings per share (GAAP) $0.12 $0.55
Effects of merger and consolidation
costs, net of tax 0.17 0.03
Effects of change in unrealized loss
on derivatives, net of tax - -
Effects of deleveraging
losses/(gains), net of tax 0.29 -
------------ ------------
Diluted earnings per share, as adjusted 0.58 0.58
Effects of amortization of
intangibles, net of tax 0.01 0.01
------------ ------------
Diluted earnings per share, as adjusted $0.59 $0.59
============ ============
Average Assets (GAAP) $28,576,401 $29,176,108
Average goodwill (1,368,912) (1,369,166)
Average identifiable intangible assets (50,645) (53,568)
------------ ------------
Average tangible assets 27,156,844 27,753,374
============ ============
Average Equity (GAAP) $3,096,887 $2,938,735
Average goodwill (1,368,912) (1,369,166)
Average identifiable intangible assets (50,645) (53,568)
Average deferred tax liability related to
other identifiable intangible assets 17,726 18,749
------------ ------------
Average tangible equity 1,695,056 1,534,750
============ ============
Return on average assets (GAAP) 0.29% 1.33%
Effects of merger and consolidation costs,
net of tax 0.45% 0.06%
Effects of change in unrealized loss on
derivatives, net of tax - -
Effects of deleveraging losses/(gains), net
of tax 0.72% -
Effects of amortization of intangibles, net
of tax 0.09% 0.10%
------------ ------------
Return on average assets, as adjusted 1.55% 1.49%
============ ============
Return on average equity (GAAP) 2.66% 13.24%
Effects of merger and consolidation costs,
net of tax 4.15% 0.58%
Effects of change in unrealized loss on
derivatives, net of tax - -
Effects of deleveraging losses/(gains), net
of tax 6.62% -
Effects of amortization of intangibles, net
of tax 11.46% 13.05%
------------ ------------
Return on average equity, as adjusted 24.89% 26.87%
============ ============
Efficiency ratio 84.43% 52.60%
Effects of merger and consolidation costs -12.08% -1.21%
Effects of change in unrealized loss on
derivatives - -
Effects of deleveraging losses/(gains) -22.25% -
Effects of amortization of intangibles -0.68% -0.72%
------------ ------------
Efficiency ratio, as adjusted 49.42% 50.67%
============ ============
Noninterest Income $72,537 $93,196
Net securities (gains) losses 17,761 (3,124)
Lower of cost or market adjustments - -
Change in unrealized loss on derivatives - -
------------ ------------
Noninterest Income, as adjusted $90,298 $90,072
============ ============
Noninterest Expense $267,359 $174,198
Merger and consolidation costs (38,286) (5,603)
Prepayment penalties on borrowings (61,546) -
------------ ------------
Excluding merger and consolidation costs and
prepayment penalties 167,527 168,595
Amortization of intangibles (2,260) (2,379)
------------ ------------
Noninterest Expense, as adjusted $165,267 $166,216
============ ============
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
Reconciliation Table - Non-GAAP Financial Information (Unaudited)
Combined Predecessor
------------ ------------
(In thousands, except per share data) Nine Months Nine Months
Ended Ended
9/30/2005 9/30/2004
------------ ------------
Net income (GAAP) $218,414 $283,945
Add back merger and consolidation costs, change in unrealized loss on
derivatives, deleveraging losses/(gains), and amortization of
intangibles, net of tax
Merger related 27,621 8,412
Change in unrealized loss on
derivatives (3,870) -
Revised auto lease residual charge - (334)
Deleveraging losses/(gains) 41,453 -
------------ ------------
Net income, as adjusted 283,618 292,023
Amortization of intangibles 46,781 4,139
------------ ------------
Net income, as adjusted 330,399 296,162
============ ============
Diluted earnings per share (GAAP) $1.23 $1.65
Effects of merger and consolidation
costs, net of tax 0.15 0.05
Effects of change in unrealized loss
on derivatives, net of tax (0.02) -
Effects of deleveraging
losses/(gains), net of tax 0.23 -
------------ ------------
Diluted earnings per share, as adjusted 1.59 1.70
Effects of amortization of
intangibles, net of tax 0.27 0.02
------------ ------------
Diluted earnings per share, as adjusted $1.86 $1.72
============ ============
Average Assets (GAAP) $31,487,143 $28,037,347
Average goodwill (3,875,544) (1,267,703)
Average identifiable intangible assets (588,958) (44,905)
------------ ------------
Average tangible assets 27,022,641 26,724,739
============ ============
Average Equity (GAAP) $5,798,727 $2,787,161
Average goodwill (3,875,544) (1,267,703)
Average identifiable intangible assets (588,958) (44,905)
Average deferred tax liability related to
other identifiable intangible assets 178,710 15,717
------------ ------------
Average tangible equity 1,512,935 1,490,270
============ ============
Return on average assets (GAAP) 0.93% 1.35%
Effects of merger and consolidation costs,
net of tax 0.11% 0.04%
Effects of change in unrealized loss on
derivatives, net of tax -0.01% -
Effects of deleveraging losses, net of tax 0.17% -
Effects of amortization of intangibles, net
of tax 0.43% 0.09%
------------ ------------
Return on average assets, as adjusted 1.63% 1.48%
============ ============
Return on average equity (GAAP) 5.04% 13.61%
Effects of merger and consolidation costs,
net of tax 0.63% 0.39%
Effects of change in unrealized loss on
derivatives, net of tax -0.09% -
Effects of deleveraging losses, net of tax 0.96% -
Effects of amortization of intangibles, net
of tax 22.66% 12.55%
------------ ------------
Return on average equity, as adjusted 29.20% 26.55%
============ ============
Efficiency ratio 65.46% 52.04%
Effects of merger and consolidation costs -3.62% -0.65%
Effects of change in unrealized loss on
derivatives 0.37% -
Effects of deleveraging losses/(gains) -4.01% -
Effects of amortization of intangibles -7.06% -0.67%
------------ ------------
Efficiency ratio, as adjusted 51.14% 50.72%
============ ============
Noninterest Income $246,501 $273,418
Net securities (gains) losses 48,022 (10,060)
Lower of cost or market adjustments 7,114 -
Change in unrealized (gains) losses on
derivatives (5,954) -
------------ ------------
Noninterest Income, as adjusted $295,683 $263,358
============ ============
Noninterest Expense $655,171 $497,742
Merger and consolidation costs (37,722) (11,351)
Prepayment penalties on borrowings (6,303) -
------------ ------------
Excluding merger and consolidation costs and
prepayment penalties 611,146 486,391
Amortization of intangibles (74,193) (6,367)
------------ ------------
Noninterest Expense, as adjusted $536,953 $480,024
============ ============
TD Banknorth Inc. and Subsidiaries
----------------------------------------------------------------------
Identifiable Intangible Assets
Estimated Future Amortization Expense (Unaudited)
Core Deposit Other Identifiable
Intangibles Intangibles
---------------------- ----------------------
Incremental Incremental
Historical at 3/1/05 Historical at 3/1/05
---------- ----------- ---------- -----------
Amortization Expense:
January and February
2005 (Predecessor) $1,237 $0 $324 $0
March 2005 (Successor) 708 7,875 31 1,320
---------- ----------- ---------- -----------
Three months ended March
31, 2005 1,945 7,875 355 1,320
Three months ended June
30, 2005 2,123 24,958 617 3,959
Three months ended
September 30, 2005 2,123 24,625 334 3,959
Estimated Future Amortization Expense:
October 2005 through
December 2005 2,120 24,625 186 3,958
---------- ----------- ---------- -----------
Full Year 2005 8,311 82,083 1,492 13,196
2006 7,383 88,784 745 15,388
2007 6,584 68,249 745 14,656
2008 6,340 55,493 375 13,978
2009 6,340 45,327 375 13,348
thereafter 21,936 170,407 484 128,575
Total Indentifiable Intangibles
-------------------------------
Incremental
Historical at 3/1/05 Total
---------- ----------- --------
Amortization Expense:
January and February 2005
(Predecessor) $1,561 $0 $1,561
March 2005 (Successor) 739 9,195 9,934
---------- ----------- --------
Three months ended March 31, 2005 2,300 9,195 11,495
Three months ended June 30, 2005 2,740 28,917 31,657
Three months ended September 30, 2005 2,457 28,584 31,041
Estimated Future Amortization Expense:
October 2005 through December 2005 2,306 28,583 30,889
---------- ----------- --------
Full Year 2005 9,803 95,279 105,082
2006 8,128 104,172 112,300
2007 7,329 82,905 90,234
2008 6,715 69,471 76,186
2009 6,715 58,675 65,390
thereafter 22,420 298,982 321,402
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