Exhibit 99.1
TD Banknorth Reports Solid Second Quarter Results
PORTLAND, Maine—(BUSINESS WIRE)—July 21, 2005—(Second Quarter Earnings Conference Call at 10:30 a.m. Eastern Time today, July 21, 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 71260014. Live webcast and webcast replay available atwww.tdbanknorth.com, Investor Relations.)
| | • | | Solid loan growth — Average loans increased 15% in the second quarter of 2005 over the same period in the prior year; |
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| | • | | Asset quality remained strong — the percentage of nonperforming loans to total loans was 0.35% at June 30, 2005; |
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| | • | | Net interest margin increased to 4.12% during the second quarter of 2005 from 3.96% during the first quarter of 2005; |
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| | • | | Capital ratios improved — the ratio of tangible equity to tangible assets increased to 5.53% at June 30, 2005 from 4.92% at March 31, 2005. |
TD Banknorth Inc. (“TD Banknorth” or the “Company”) (NYSE: BNK) today announced net income of $95.6 million for the second quarter ended June 30, 2005 as compared to net income of $95.8 million for the second quarter ended June 30, 2004. On a per diluted share basis, net income was 55 cents for the second quarter of 2005, on par with 55 cents for the same quarter a year ago.
Earnings for the six months ended June 30, 2005 were $129.7 million as compared to $186.2 million for the same period in 2004. On a per diluted share basis, earnings for the six months ended June 30, 2005 were $0.72 as compared to $1.10 for the same period a year ago.
GAAP earnings were significantly impacted by three events in the second 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 $19.8 million or 11 cents per diluted share. Second, the after-tax effects of merger and consolidation costs amounted to $3.5 million or 2 cents per diluted share. Third, the after-tax effect of the change in fair value of derivatives as a result of the application of purchase accounting resulted in a gain of $9.6 million or 5 cents per diluted share.
Excluding the above items, earnings for the quarter ended June 30, 2005 were $109.1 million, up 9% from $99.9 million for the second quarter of 2004. On a per diluted share basis excluding the above items, earnings for the second quarter of 2005 were 63 cents, up 9% from 58 cents for the same quarter a year ago.
Excluding the above items and the charges related to the Company’s deleveraging strategies, earnings for the six months ended June 30, 2005 were $220.9 million, up 15% from $192.5 million for the same period in 2004. On a per diluted share basis excluding the same items, earnings for the six months ended June 30, 2005 were $1.23, up 9% from $1.13 for the same period a year ago.
“It was another solid quarter characterized by strong loan growth, solid asset quality and strong fee income growth.” said William J. Ryan, TD Banknorth Chairman, President and Chief Executive Officer. “We are well positioned to execute our growth strategy going forward.”
Average loans and leases increased by 15% for the quarter ended June 30, 2005 compared to the same quarter a year ago, including increases of 23% for average residential real estate mortgages (largely due to the acquisition of BostonFed Bancorp), 13% for average commercial real estate mortgages, 13% for average commercial business loans and leases and 14% for average consumer loans and leases. Excluding the impact of acquisitions, average loans and leases for commercial real estate, commercial and consumer increased 10% for the quarter ended June 30, 2005 as compared to the same period a year ago.
Securities available for sale at June 30, 2005 declined to $4.1 billion, down 46% from June 30, 2004, due largely to the sale of securities associated with the Company’s balance sheet deleveraging strategies, and down 11% from the quarter ended March 31, 2005.
Average deposits increased by 6% for the quarter ended June 30, 2005 as compared to the quarter ended June 30, 2004. During the three months ended June 30, 2005 average noninterest bearing deposits increased by 12%, average retail money market and NOW accounts increased by 5% and average regular savings accounts increased by 3% as compared to the three months ended June 30, 2004. Excluding acquisitions, average demand deposits increased 6% and average core deposits (noninterest bearing deposits, retail money market and NOW accounts and regular savings accounts) for the quarter ended June 30, 2005 were consistent with the level in the same period for the prior year.
Net interest income was $252.6 million for the second quarter of 2005, a 10% increase as compared to $228.6 million of net interest income for the second quarter of 2004. The Company’s net interest margin for the quarter ended June 30, 2005 was 4.12% as compared to 3.66% for the quarter ended June 30, 2004 and 3.96% for the quarter ended March 31, 2005.
The Company’s provision for loan and lease losses amounted to $3.6 million for the quarter ended June 30, 2005, as compared to $9.5 million for the quarter ended June 30, 2004 and $2.1 million for the quarter ended March 31, 2005. Asset quality remained strong during the second quarter. As a percentage of total loans, nonperforming loans amounted to 0.35% at June 30, 2005, as compared to 0.36% at June 30, 2004 and 0.32% at March 31, 2005. Total net chargeoffs for the quarter ended June 30, 2005 declined to
$3.6 million down from $8.8 million for the same period a year ago and down from $10.1 million for the quarter ended March 31, 2005.
Noninterest income experienced strong growth in the second quarter of 2005 as compared to the second quarter of 2004 led by increases in noninterest income from deposit services of 16%, merchant and electronic banking income of 13%, and insurance brokerage commissions of 11%. Other income increased $4.6 million including a $2 million increase in mortgage banking income.
Noninterest expense increased $57 million in the second quarter of 2005 versus the same period a year ago, largely due to a $30 million increase in the amortization of identifiable intangible assets.
The Company and its banking subsidiary continue to qualify as “well capitalized” institutions under applicable laws and regulations. At June 30, 2005, the Company’s ratio of tangible equity to tangible assets improved to 5.53% from 4.92% at March 31, 2005, its tier 1 leverage capital increased to 6.64% from 6.29% at March 31, 2005 and its total risk-based capital ratio increased to 10.43% from 10.13% at March 31, 2005.
As detailed in the accompanying financial statements, the Company’s cash return on average tangible assets for the period ended June 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 second quarter of 2005 was 31.32% as compared to 26.39% for the same period a year ago. For the six months ended June 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 six months ended June 30, 2005 was 29.13% as compared to 26.26% for the same period a year ago.
At June 30, 2005, the Company’s tangible book value per share was $8.45, up from $7.63 at March 31, 2005. Tangible equity was $1.5 billion at June 30, 2005 up from $1.4 billion at March 31, 2005.
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 June 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. TD Banknorth common stock trades on the New York Stock Exchange under the symbol “BNK”. For more information, visithttp://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 security gains 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 will be 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.
CONTACT: TD Banknorth Inc.
Jeff Nathanson, 207-761-8517
TD Banknorth Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | Successor | | | Predecessor | | | | | | | Successor | | | | |
| | | June 30, | | | June 30, | | | % | | | March 31, | | | % | |
| (In thousands) | | 2005 | | | 2004 | | | Change | | | 2005 | | | Change | |
| Cash and due from banks | | $ | 793,345 | | | $ | 613,675 | | | | 29 | % | | $ | 540,812 | | | | 47 | % |
| Federal funds sold and other short-term investments | | | 6,393 | | | | 10,917 | | | | -41 | % | | | 3,247 | | | | 97 | % |
| Securities available for sale (1) | | | 4,143,013 | | | | 7,720,312 | | | | -46 | % | | | 4,656,122 | | | | -11 | % |
| Securities held to maturity | | | 74,856 | | | | 103,792 | | | | -28 | % | | | 80,259 | | | | -7 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Loans and leases held for sale | | | 53,318 | | | | 67,207 | | | | -21 | % | | | 558,137 | | | | -90 | % |
| Loans and leases: | | | | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | | 3,259,283 | | | | 3,092,269 | | | | 5 | % | | | 3,388,907 | | | | -4 | % |
| Commercial real estate mortgages | | | 6,698,632 | | | | 6,086,800 | | | | 10 | % | | | 6,559,459 | | | | 2 | % |
| Commercial business loans and leases | | | 4,272,272 | | | | 3,825,003 | | | | 12 | % | | | 4,094,627 | | | | 4 | % |
| Consumer loans and leases | | | 5,798,475 | | | | 5,106,240 | | | | 14 | % | | | 5,606,950 | | | | 3 | % |
| | | | | | | | | | | | | | | | | | |
| Total loans and leases | | | 20,028,662 | | | | 18,110,312 | | | | 11 | % | | | 19,649,943 | | | | 2 | % |
| Less: Allowance for loan and lease losses | | | 228,168 | | | | 247,620 | | | | -8 | % | | | 228,165 | | | | 0 | % |
| | | | | | | | | | | | | | | | | | |
| Loans and leases, net | | | 19,800,494 | | | | 17,862,692 | | | | 11 | % | | | 19,421,778 | | | | 2 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Premises and equipment | | | 308,018 | | | | 288,362 | | | | 7 | % | | | 308,109 | | | | 0 | % |
| Goodwill | | | 4,550,679 | | | | 1,364,716 | | | NM | | | 4,537,623 | | | | 0 | % |
| Identifiable intangible assets | | | 727,442 | | | | 53,972 | | | NM | | | 757,504 | | | | -4 | % |
| Bank-owned life insurance | | | 560,942 | | | | 500,132 | | | | 12 | % | | | 556,265 | | | | 1 | % |
| Other assets (1) | | | 765,835 | | | | 690,013 | | | | 11 | % | | | 714,965 | | | | 7 | % |
| | | | | | | | | | | | | | | | | | |
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| | | $ | 31,784,335 | | | $ | 29,275,790 | | | | 9 | % | | $ | 32,134,821 | | | | -1 | % |
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Liabilities & Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
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| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Regular savings | | $ | 2,661,337 | | | $ | 2,624,256 | | | | 1 | % | | $ | 2,703,160 | | | | -2 | % |
| Retail money market and NOW accounts | | | 7,977,996 | | | | 7,872,310 | | | | 1 | % | | | 8,168,207 | | | | -2 | % |
| Retail certificates of deposit | | | 4,681,623 | | | | 4,701,046 | | | | 0 | % | | | 4,753,407 | | | | -2 | % |
| Brokered deposits | | | 73,489 | | | | — | | | NM | | | 80,951 | | | | -9 | % |
| Noninterest bearing deposits | | | 4,570,156 | | | | 4,139,017 | | | | 10 | % | | | 4,215,574 | | | | 8 | % |
| | | | | | | | | | | | | | | | | | |
| Total deposits | | | 19,964,601 | | | | 19,336,629 | | | | 3 | % | | | 19,921,299 | | | | 0 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Borrowings from the Federal Home Loan Bank | | | 1,607,869 | | | | 1,476,626 | | | | 9 | % | | | 2,334,098 | | | | -31 | % |
| Federal funds purchased and securities sold under repurchase agreements | | | 2,344,006 | | | | 4,625,277 | | | | -49 | % | | | 2,240,947 | | | | 5 | % |
| Subordinated debt and senior notes | | | 376,291 | | | | 340,002 | | | | 11 | % | | | 377,349 | | | | 0 | % |
| Other borrowings | | | 59,153 | | | | 157,872 | | | | -63 | % | | | 26,799 | | | NM |
| Junior subordinated debentures | | | 371,355 | | | | 311,648 | | | | 19 | % | | | 374,700 | | | | -1 | % |
| Deferred tax liability related to other identifiable intangible assets | | | 269,517 | | | | 18,890 | | | NM | | | 268,303 | | | | 0 | % |
| Other liabilities | | | 318,047 | | | | 142,154 | | | NM | | | 242,833 | | | | 31 | % |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 25,310,839 | | | | 26,409,098 | | | | -4 | % | | | 25,786,328 | | | | -2 | % |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | | | 6,473,496 | | | | 2,866,692 | | | NM | | | 6,348,493 | | | | 2 | % |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 31,784,335 | | | $ | 29,275,790 | | | | 9 | % | | $ | 32,134,821 | | | | -1 | % |
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(1) Effective June 2005, and consistent with the quarterly reporting requirements of the U.S. banking regulators, investments in the restricted stock of the Federal Reserve Bank and Federal Home Loan Bank of Boston have been reclassified to other assets. All prior periods presented have been restated to conform with current period presentation.
NM — Calculated % change is not meaningful.
5
TD Banknorth Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Combined | | | Predecessor | | | | | | | Successor | | | Predecessor | | | | |
| | | Six Months | | | Six Months | | | | | | | Three Months | | | Three Months | | | | |
| | | Ended June 30, | | | Ended June 30, | | | % | | | Ended June 30, | | | Ended June 30, | | | % | |
| | | 2005 | | | 2004 | | | Change | | | 2005 | | | 2004 | | | Change | |
| Interest and dividend income (1) | | $ | 686,095 | | | $ | 599,271 | | | | 14 | % | | $ | 342,447 | | | $ | 307,742 | | | | 11 | % |
| Interest expense | | | 180,729 | | | | 154,139 | | | | 17 | % | | | 89,819 | | | | 79,096 | | | | 14 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | 505,366 | | | | 445,132 | | | | 14 | % | | | 252,628 | | | | 228,646 | | | | 10 | % |
| Provision for loan and lease losses | | | 5,666 | | | | 19,000 | | | | -70 | % | | | 3,597 | | | | 9,500 | | | | -62 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income after provision for loan and lease losses | | | 499,700 | | | | 426,132 | | | | 17 | % | | | 249,031 | | | | 219,146 | | | | 14 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest income: | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposit services | | | 59,935 | | | | 53,412 | | | | 12 | % | | | 31,751 | | | | 27,260 | | | | 16 | % |
| Insurance brokerage commissions | | | 27,496 | | | | 26,014 | | | | 6 | % | | | 13,604 | | | | 12,278 | | | | 11 | % |
| Merchant and electronic banking income, net | | | 27,841 | | | | 23,474 | | | | 19 | % | | | 14,727 | | | | 13,069 | | | | 13 | % |
| Wealth management services | | | 20,899 | | | | 19,019 | | | | 10 | % | | | 10,395 | | | | 9,870 | | | | 5 | % |
| Loan fee income | | | 15,811 | | | | 13,686 | | | | 16 | % | | | 8,892 | | | | 8,516 | | | | 4 | % |
| Bank-owned life insurance | | | 12,203 | | | | 11,771 | | | | 4 | % | | | 6,107 | | | | 6,275 | | | | -3 | % |
| Investment planning services | | | 10,150 | | | | 9,985 | | | | 2 | % | | | 5,462 | | | | 5,146 | | | | 6 | % |
| Net securities gains/(losses) | | | (49,036 | ) | | | 6,936 | | | NM | | | 1,439 | | | | 3,355 | | | | -57 | % |
| Loans held for sale — lower of cost or market adjustment | | | (7,114 | ) | | | — | | | NM | | | 386 | | | | — | | | NM |
| Change in unrealized loss on certain derivatives | | | 6,664 | | | | — | | | NM | | | 14,840 | | | | — | | | NM |
| Other noninterest income (1) | | | 18,042 | | | | 15,924 | | | | 13 | % | | | 9,669 | | | | 5,111 | | | | 89 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 142,891 | | | | 180,221 | | | | -21 | % | | | 117,272 | | | | 90,880 | | | | 29 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest expense: | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 205,964 | | | | 174,538 | | | | 18 | % | | | 105,096 | | | | 87,005 | | | | 21 | % |
| Occupancy and equipment | | | 61,787 | | | | 55,111 | | | | 12 | % | | | 31,048 | | | | 27,512 | | | | 13 | % |
| Data processing | | | 22,652 | | | | 20,455 | | | | 11 | % | | | 11,618 | | | | 10,018 | | | | 16 | % |
| Advertising and marketing | | | 14,781 | | | | 13,827 | | | | 7 | % | | | 8,087 | | | | 6,303 | | | | 28 | % |
| Amortization of identifiable intangible assets | | | 43,152 | | | | 3,988 | | | NM | | | 31,656 | | | | 2,084 | | | NM |
| Merger and consolidation costs (2) | | | 36,559 | | | | 5,748 | | | NM | | | 5,368 | | | | 4,135 | | | | 30 | % |
| Prepayment penalties on borrowings | | | 6,303 | | | | — | | | NM | | | — | | | | — | | | NM |
| Other noninterest expense | | | 52,244 | | | | 49,877 | | | | 5 | % | | | 27,460 | | | | 26,769 | | | | 3 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 443,442 | | | | 323,544 | | | | 37 | % | | | 220,333 | | | | 163,826 | | | | 34 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income before income tax expense | | | 199,149 | | | | 282,809 | | | | -30 | % | | | 145,970 | | | | 146,200 | | | | 0 | % |
| Income tax expense | | | 69,478 | | | | 96,636 | | | | -28 | % | | | 50,375 | | | | 50,353 | | | | 0 | % |
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| Net Income | | $ | 129,671 | | | $ | 186,173 | | | | -30 | % | | $ | 95,595 | | | $ | 95,847 | | | | 0 | % |
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| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 178,417 | | | | 166,318 | | | | 7 | % | | | 173,428 | | | | 169,637 | | | | 2 | % |
| Diluted | | | 179,616 | | | | 169,903 | | | | 6 | % | | | 174,261 | | | | 173,109 | | | | 1 | % |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.73 | | | $ | 1.12 | | | | -35 | % | | $ | 0.55 | | | $ | 0.57 | | | | -4 | % |
| Diluted | | | 0.72 | | | | 1.10 | | | | -35 | % | | | 0.55 | | | | 0.55 | | | | 0 | % |
(1) Effective June 2005, and consistent with the quarterly reporting requirements of the U.S. banking regulators, income from investments in the restricted stock of the Federal Reserve Bank and Federal Home Loan Bank of Boston have been reclassified to other noninterest income. All prior periods presented have been restated to conform with the current period presentation.
(2) Merger and consolidation costs consist of merger charges and certain asset write-downs.
NM — calculated % change is not meaningful
6
TD Banknorth Inc. and SubsidiariesSELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(In thousands, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Combined | | | Predecessor | | | | | | | Successor | | | Predecessor | | | | |
| | | Six Months Ended | | | Six Months | | | | | | | Three Months | | | Three Months | | | | |
| | | June 30, | | | Ended June 30, | | | % | | | Ended June 30, | | | Ended June 30, | | | % | |
| | | 2005 | | | 2004 | | | Change | | | 2005 | | | 2004 | | | Change | |
| Net interest income | | $ | 505,366 | | | $ | 445,132 | | | | 14 | % | | $ | 252,628 | | | $ | 228,646 | | | | 10 | % |
| Net income | | $ | 129,671 | | | $ | 186,173 | | | | -30 | % | | $ | 95,595 | | | $ | 95,847 | | | | 0 | % |
| Shares outstanding (end of period) | | | 173,406 | | | | 172,546 | | | | 0 | % | | | 173,406 | | | | 172,546 | | | | 0 | % |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 178,417 | | | | 166,318 | | | | 7 | % | | | 173,428 | | | | 169,637 | | | | 2 | % |
| Diluted | | | 179,616 | | | | 169,903 | | | | 6 | % | | | 174,261 | | | | 173,109 | | | | 1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.73 | | | $ | 1.12 | | | | -35 | % | | $ | 0.55 | | | $ | 0.57 | | | | -4 | % |
| Diluted | | $ | 0.72 | | | $ | 1.10 | | | | -35 | % | | $ | 0.55 | | | $ | 0.55 | | | | 0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity (end of period) | | $ | 6,473,496 | | | $ | 2,866,692 | | | NM | | $ | 6,473,496 | | | $ | 2,866,692 | | | NM |
| Book value per share (end of period) | | $ | 37.33 | | | $ | 16.61 | | | NM | | $ | 37.33 | | | $ | 16.61 | | | NM |
| Tangible book value per share (end of period) | | | 8.45 | | | | 8.50 | | | | -1 | % | | | 8.45 | | | | 8.50 | | | | -1 | % |
| | | | | | | | | | | Nominal | | | | | | | | | | Nominal |
| | | | | | | | | | | Inc/(Dec) | | | | | | | | | | Inc/(Dec) |
| RATIOS & OTHER INFORMATION: | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest margin, fully-taxable equivalent basis | | | 4.04 | % | | | 3.67 | % | | | 0.37 | % | | | 4.12 | % | | | 3.66 | % | | | 0.46 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.83 | % | | | 1.36 | % | | | -0.53 | % | | | 1.20 | % | | | 1.36 | % | | | -0.16 | % |
| Return on average equity | | | 4.80 | % | | | 13.82 | % | | | -9.02 | % | | | 5.98 | % | | | 13.54 | % | | | -7.56 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| At period end: | | | | | | | | | | | | | | | | | | | | | | | | |
| Tangible equity/tangible assets | | | 5.53 | % | | | 5.27 | % | | | 0.26 | % | | | 5.53 | % | | | 5.27 | % | | | 0.26 | % |
| Tier 1 leverage capital ratio | | | 6.64 | % | | | 6.80 | % | | | -0.16 | % | | | 6.64 | % | | | 6.80 | % | | | -0.16 | % |
| Tier 1 risk based capital ratio | | | 8.29 | % | | | 8.97 | % | | | -0.68 | % | | | 8.29 | % | | | 8.97 | % | | | -0.68 | % |
| Total risk based capital ratio | | | 10.43 | % | | | 11.15 | % | | | -0.72 | % | | | 10.43 | % | | | 11.15 | % | | | -0.72 | % |
| | | | | | �� | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans (1) | | $ | 70,110 | | | $ | 65,142 | | | | 8 | % | | $ | 70,110 | | | $ | 65,142 | | | | 8 | % |
| Total nonperforming assets (1) | | $ | 73,906 | | | $ | 67,167 | | | | 10 | % | | $ | 73,906 | | | $ | 67,167 | | | | 10 | % |
| Nonperforming loans as a % of total loans | | | 0.35 | % | | | 0.36 | % | | | -0.01 | % | | | 0.35 | % | | | 0.36 | % | | | -0.01 | % |
| Nonperforming assets as a % of total assets | | | 0.23 | % | | | 0.23 | % | | | 0.00 | % | | | 0.23 | % | | | 0.23 | % | | | 0.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Full service banking offices | | | 396 | | | | 389 | | | | | | | | 396 | | | | 389 | | | | | |
| |
| FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP Financial Information): |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest income as a percent of total income (2) | | | 27.57 | % | | | 28.02 | % | | | -0.45 | % | | | 28.48 | % | | | 27.68 | % | | | 0.80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Merger and consolidation costs, net of tax (3) | | $ | 26,865 | | | $ | 3,737 | | | NM | | $ | 3,489 | | | $ | 2,687 | | | NM |
| Per diluted share: | | | 0.15 | | | | 0.02 | | | NM | | | 0.02 | | | | 0.02 | | | NM |
| Change in unrealized loss on certain derivatives, net of tax | | ($ | 4,332 | ) | | | — | | | NM | | ($ | 9,646 | ) | | | — | | | NM |
| Per diluted share: | | | (0.02 | ) | | | — | | | NM | | | (0.05 | ) | | | — | | | NM |
| Deleveraging losses/(gains), net of tax (4) | | $ | 41,453 | | | | — | | | NM | | ($ | 109 | ) | | | — | | | NM |
| Per diluted share: | | | 0.23 | | | | — | | | NM | | | — | | | | — | | | NM |
| Amortization of intangibles, net of tax | | $ | 27,241 | | | $ | 2,592 | | | NM | | $ | 19,769 | | | $ | 1,354 | | | NM |
| Per diluted share: | | | 0.15 | | | | 0.01 | | | NM | | | 0.11 | | | | 0.01 | | | NM |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest income (5) | | $ | 192,377 | | | $ | 173,285 | | | | 11 | % | | $ | 100,607 | | | $ | 87,525 | | | | 15 | % |
| Noninterest expense (6) | | $ | 357,428 | | | $ | 313,808 | | | | 14 | % | | $ | 183,309 | | | $ | 157,607 | | | | 16 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (7) | | | 1.25 | % | | | 1.39 | % | | | -0.14 | % | | | 1.12 | % | | | 1.40 | % | | | -0.28 | % |
| Cash return on average tangible assets (7) (8) | | | 1.63 | % | | | 1.48 | % | | | 0.15 | % | | | 1.64 | % | | | 1.49 | % | | | 0.15 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average equity (7) | | | 7.16 | % | | | 14.09 | % | | | -6.93 | % | | | 5.58 | % | | | 13.92 | % | | | -8.34 | % |
| Cash return on average tangible equity (7) (8) | | | 29.13 | % | | | 26.26 | % | | | 2.87 | % | | | 31.32 | % | | | 26.39 | % | | | 4.93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Efficiency ratio (9) | | | 57.41 | % | | | 51.39 | % | | | 6.02 | % | | | 60.86 | % | | | 50.51 | % | | | 10.35 | % |
| Cash efficiency ratio (10) | | | 51.23 | % | | | 50.74 | % | | | 0.49 | % | | | 51.89 | % | | | 49.85 | % | | | 2.04 | % |
| | |
| (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) | | Excludes securities gains/(losses), lower of cost or market adjustments, and gains on certain derivatives. |
| |
| (3) | | Merger and consolidation costs consist of merger related charges and certain asset write-downs. |
| |
| (4) | | 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. |
| |
| (5) | | Excludes securities gains/(losses), lower of cost or market adjustments, and gains on certain derivatives. |
| |
| (6) | | Excludes pre-tax merger and consolidation costs, prepayment penalties on borrowings, and amortization of intangible assets. |
| |
| (7) | | Excludes merger and consolidation costs, changes in unrealized loss on certain derivatives, and deleveraging losses/(gains), net of related tax benefits. |
| |
| (8) | | Cash ratios reflect adjustments to exclude the effects of intangible assets, net of related taxes. |
| |
| (9) | | Excludes securities gains/(losses), lower of cost or market adjustments, prepayment penalties on borrowings, and gains on certain derivatives, and merger and consolidation costs. |
| |
| (10) | | Excludes securities gains/(losses), lower of cost or market adjustments, prepayment penalties on borrowings, merger and consolidation costs, gains on certain derivatives, and amortization of intangible assets. |
Ratios are annualized where appropriate.
See pages 13 and 14 for a reconciliation table of non-GAAP financial information.
7
TD Banknorth Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | Successor | | | | Predecessor | |
| | | | |
| | | Three Months Ended June 30, | | | | Three Months Ended June 30, | |
| | | 2005 | | | | 2004 | |
| | | | |
| | | Average | | | Yield/ | | | | Average | | | Yield/ | |
| (Dollars in thousands) | | Balance | | | Rate | | | | Balance | | | Rate | |
| | | | |
Assets | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Loans and leases (1) | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | $ | 3,665,306 | | | | 5.43 | % | | | $ | 2,987,625 | | | | 5.00 | % |
| Commercial real estate mortgages | | | 6,658,257 | | | | 5.87 | % | | | | 5,883,659 | | | | 5.74 | % |
| Commercial loans and leases | | | 4,162,669 | | | | 5.74 | % | | | | 3,675,217 | | | | 4.71 | % |
| Consumer loans and leases | | | 5,686,240 | | | | 5.90 | % | | | | 4,981,924 | | | | 5.02 | % |
| | | | | | | | | | | | | | | | |
| | | | 20,172,472 | | | | 5.77 | % | | | | 17,528,425 | | | | 5.19 | % |
| Securities | | | 4,578,749 | | | | 4.72 | % | | | | 7,714,985 | | | | 4.29 | % |
| Federal funds sold and other short-term investments | | | 12,574 | | | | 2.44 | % | | | | 3,683 | | | | 1.74 | % |
| | | | | | | | | | | | | | | | |
| Total earning assets | | | 24,763,795 | | | | 5.57 | % | | | | 25,247,093 | | | | 4.91 | % |
| | | | | | | | | | | | | | | | | | |
| Bank-owned life insurance | | | 557,665 | | | | | | | | | 497,250 | | | | | |
| Goodwill | | | 4,536,952 | | | | | | | | | 1,295,806 | | | | | |
| Identifiable intangible assets | | | 746,331 | | | | | | | | | 44,164 | | | | | |
| Noninterest-earning assets | | | 1,403,735 | | | | | | | | | 1,298,436 | | | | | |
| | | | | | | | | | | | | | | | |
| Total assets | | $ | 32,008,478 | | | | | | | | $ | 28,382,749 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Liabilities & Shareholders’ Equity | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | | | | | | | |
| Regular savings | | $ | 2,696,236 | | | | 0.29 | % | | | $ | 2,614,679 | | | | 0.30 | % |
| Retail money market and NOW accounts | | | 8,031,408 | | | | 1.22 | % | | | | 7,646,403 | | | | 0.79 | % |
| Retail certificates of deposit | | | 4,786,696 | | | | 1.76 | % | | | | 4,719,524 | | | | 1.93 | % |
| Brokered deposits | | | 76,441 | | | | 3.84 | % | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| Total interest-bearing deposits | | | 15,590,781 | | | | 1.24 | % | | | | 14,980,606 | | | | 1.06 | % |
| Borrowed funds | | | 5,140,876 | | | | 3.25 | % | | | | 6,467,964 | | | | 2.46 | % |
| | | | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | | 20,731,657 | | | | 1.73 | % | | | | 21,448,570 | | | | 1.48 | % |
| Noninterest bearing deposits | | | 4,351,905 | | | | | | | | | 3,898,967 | | | | | |
| Deferred tax liability related to other identifiable intangible assets | | | 264,676 | | | | | | | | | 15,457 | | | | | |
| Other liabilities | | | 244,650 | | | | | | | | | 173,139 | | | | | |
| Shareholders’ equity | | | 6,415,590 | | | | | | | | | 2,846,616 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 32,008,478 | | | | | | | | $ | 28,382,749 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net earning assets | | $ | 4,032,138 | | | | | | | | $ | 3,798,523 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net interest income (fully-taxable equivalent) | | $ | 254,615 | | | | | | | | $ | 230,190 | | | | | |
| Less: fully-taxable equivalent adjustments | | | (1,987 | ) | | | | | | | | (1,544 | ) | | | | |
| | | | | | | | | | | | | | | | |
| Net interest income | | $ | 252,628 | | | | | | | | $ | 228,646 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net interest rate spread (fully-taxable equivalent) | | | | | | | 3.84 | % | | | | | | | | 3.43 | % |
| Net interest margin (fully-taxable equivalent) | | | | | | | 4.12 | % | | | | | | | | 3.66 | % |
| | |
| (1) | | Loans and leases include portfolio loans and leases, loans held for sale and nonperforming loans. |
8
TD Banknorth Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | Combined (1) | | | | Predecessor | |
| | | | |
| | | Six Months Ended June 30, | | | | Six Months Ended June 30, | |
| | | 2005 | | | | 2004 | |
| | | | |
| | | Average | | | Yield/ | | | | Average | | | Yield/ | |
| (Dollars in thousands) | | Balance | | | Rate | | | | Balance | | | Rate | |
| | | | |
Assets | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Loans and leases (2) | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | $ | 3,735,498 | | | | 5.28 | % | | | $ | 2,856,423 | | | | 5.09 | % |
| Commercial real estate mortgages | | | 6,553,657 | | | | 5.91 | % | | | | 5,712,075 | | | | 5.72 | % |
| Commercial loans and leases | | | 4,091,063 | | | | 5.70 | % | | | | 3,531,263 | | | | 4.76 | % |
| Consumer loans and leases | | | 5,594,277 | | | | 5.69 | % | | | | 4,932,477 | | | | 5.07 | % |
| | | | | | | | | | | | | | | | |
| | | | 19,974,495 | | | | 5.69 | % | | | | 17,032,238 | | | | 5.23 | % |
| Securities | | | 5,338,825 | | | | 4.70 | % | | | | 7,456,034 | | | | 4.26 | % |
| Federal funds sold and other short-term investments | | | 12,003 | | | | 2.69 | % | | | | 5,605 | | | | 1.12 | % |
| | | | | | | | | | | | | | | | |
| Total earning assets | | | 25,325,323 | | | | 5.48 | % | | | | 24,493,877 | | | | 4.93 | % |
| | | | | | | | | | | | | | | | | | |
| Bank-owned life insurance | | | 551,842 | | | | | | | | | 493,839 | | | | | |
| Goodwill | | | 3,532,889 | | | | | | | | | 1,211,738 | | | | | |
| Identifiable intangible assets | | | 524,947 | | | | | | | | | 39,644 | | | | | |
| Noninterest-earning assets | | | 1,424,746 | | | | | | | | | 1,215,773 | | | | | |
| | | | | | | | | | | | | | | | |
| Total assets | | $ | 31,359,747 | | | | | | | | $ | 27,454,871 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Liabilities & Shareholders’ Equity | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | | | | | | | |
| Regular savings | | $ | 2,669,867 | | | | 0.29 | % | | | $ | 2,541,547 | | | | 0.30 | % |
| Retail money market and NOW accounts | | | 8,059,616 | | | | 1.14 | % | | | | 7,382,671 | | | | 0.79 | % |
| Retail certificates of deposit | | | 4,742,817 | | | | 1.83 | % | | | | 4,689,767 | | | | 1.95 | % |
| Brokered deposits | | | 71,179 | | | | 3.87 | % | | | | — | | | | 0.00 | % |
| | | | | | | | | | | | | | | | |
| Total interest-bearing deposits | | | 15,543,479 | | | | 1.21 | % | | | | 14,613,985 | | | | 1.08 | % |
| Borrowed funds | | | 5,644,617 | | | | 3.11 | % | | | | 6,257,627 | | | | 2.43 | % |
| | | | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | | 21,188,096 | | | | 1.72 | % | | | | 20,871,612 | | | | 1.48 | % |
| Noninterest bearing deposits | | | 4,287,179 | | | | | | | | | 3,693,342 | | | | | |
| Deferred tax liability related to other identifiable intangible assets | | | 134,551 | | | | | | | | | 13,875 | | | | | |
| Other liabilities | | | 297,194 | | | | | | | | | 166,079 | | | | | |
| Shareholders’ equity | | | 5,452,727 | | | | | | | | | 2,709,963 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 31,359,747 | | | | | | | | $ | 27,454,871 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net earning assets | | $ | 4,137,227 | | | | | | | | $ | 3,622,265 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net interest income (fully-taxable equivalent) | | $ | 509,203 | | | | | | | | $ | 448,167 | | | | | |
| Less: fully-taxable equivalent adjustments | | | (3,837 | ) | | | | | | | | (3,035 | ) | | | | |
| | | | | | | | | | | | | | | | |
| Net interest income | | $ | 505,366 | | | | | | | | $ | 445,132 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net interest rate spread (fully-taxable equivalent) | | | | | | | 3.76 | % | | | | | | | | 3.45 | % |
| Net interest margin (fully-taxable equivalent) | | | | | | | 4.04 | % | | | | | | | | 3.67 | % |
| | |
| (1) | | Includes two months of average balances based on historical cost and four 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 $1.1 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. |
9
TD Banknorth Inc. and Subsidiaries
Asset Quality (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Successor | | | Successor | | | Predecessor | | | Predecessor | | | Predecessor | |
| | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | | | 6/30/2004 | |
Nonperforming assets: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | $ | 6,165 | | | $ | 8,614 | | | $ | 7,846 | | | $ | 7,274 | | | $ | 7,870 | |
| Commercial real estate mortgages | | | 30,353 | | | | 23,553 | (1) | | | 29,948 | | | | 33,249 | | | | 27,951 | |
| Commercial business loans and leases | | | 26,776 | | | | 24,520 | (1) | | | 32,421 | | | | 18,573 | | | | 23,636 | |
| Consumer loans and leases | | | 6,816 | | | | 6,229 | | | | 7,344 | | | | 6,827 | | | | 5,685 | |
| | | | | | | | | | | | | | | | |
| Total nonperforming loans and leases | | | 70,110 | | | | 62,916 | | | | 77,559 | | | | 65,923 | | | | 65,142 | |
| | | | | | | | | | | | | | | | | | | | | |
| Other nonperforming assets, net | | | 3,796 | | | | 6,012 | | | | 3,544 | | | | 2,056 | | | | 2,025 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total nonperforming assets | | $ | 73,906 | | | $ | 68,928 | (1) | | $ | 81,103 | | | $ | 67,979 | | | $ | 67,167 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses | | $ | 228,168 | | | $ | 228,165 | | | $ | 243,152 | | | $ | 242,885 | | | $ | 247,620 | |
| Liability for unfunded credit commitments | | | 6,807 | | | | 6,707 | | | | 6,600 | | | | 6,600 | | | | — | |
| | | | | | | | | | | | | | | | |
Total reserve for credit losses | | $ | 234,975 | | | $ | 234,872 | | | $ | 249,752 | | | $ | 249,485 | (2) | | $ | 247,620 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Net loan charge-offs (recoveries): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | $ | 89 | | | $ | 57 | | | $ | (9 | ) | | $ | 86 | | | $ | (42 | ) |
| Commercial real estate mortgages | | | (391 | ) | | | 4,032 | | | | (486 | ) | | | (530 | ) | | | (663 | ) |
| | | | | | | | | | | | | | | | |
| Total real estate mortgages | | | (302 | ) | | | 4,089 | | | | (495 | ) | | | (444 | ) | | | (705 | ) |
| Commercial business loans and leases | | | (230 | ) | | | 545 | | | | 5,594 | | | | 2,939 | | | | 3,387 | |
| Consumer loans and leases | | | 4,126 | | | | 5,481 | | | | 5,305 | | | | 6,310 | | | | 6,160 | |
| |
| | | | | | | | | | | | | | | | |
| Total net charge-offs | | $ | 3,594 | | | $ | 10,115 | | | $ | 10,404 | | | $ | 8,805 | | | $ | 8,842 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Ratios: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Reserve for credit losses to total loans and leases | | | 1.17 | % | | | 1.20 | % (1) | | | 1.34 | % | | | 1.36 | % | | | 1.37 | % |
| Reserve for credit losses to nonperforming loans | | | 335.15 | % | | | 373.31 | % | | | 322.02 | % | | | 378.45 | % | | | 380.12 | % |
| Nonperforming loans to total loans and leases | | | 0.35 | % | | | 0.32 | % | | | 0.42 | % | | | 0.36 | % | | | 0.36 | % |
| Nonperforming assets to total assets | | | 0.23 | % | | | 0.21 | % | | | 0.28 | % | | | 0.23 | % | | | 0.23 | % |
| Net charge-offs to average loans - QTD (3) | | | 0.07 | % | | | 0.21 | % | | | 0.22 | % | | | 0.19 | % | | | 0.20 | % |
| | |
| (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) | | Commencing in the third quarter 2004, amounts have been transferred from the allowance for loan and lease losses to a liability account related to reserves for off-balance sheet loan commitments. |
| |
| (3) | | Annualized. |
10
| | | | | |
TD Banknorth Inc. and Subsidiaries | | | | |
| | | |
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Successor | | | Combined | | | Predecessor | |
| (In thousands, except per share data) | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | | | 6/30/2004 | |
| Interest and dividend income (1) | | $ | 342,447 | | | $ | 343,645 | | | $ | 327,900 | | | $ | 323,677 | | | $ | 307,742 | |
| Interest expense | | | 89,819 | | | | 90,912 | | | | 83,783 | | | | 85,701 | | | | 79,096 | |
| | | | | | | | | | | | | | | | |
| Net interest income | | | 252,628 | | | | 252,733 | | | | 244,117 | | | | 237,976 | | | | 228,646 | |
| Provision for loan and lease losses | | | 3,597 | | | | 2,069 | | | | 10,670 | | | | 10,670 | | | | 9,500 | |
| | | | | | | | | | | | | | | | |
| Net interest income after provision for loan and lease losses | | | 249,031 | | | | 250,664 | | | | 233,447 | | | | 227,306 | | | | 219,146 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income: | | | | | | | | | | | | | | | | | | | | |
| Deposit services | | | 31,751 | | | | 28,182 | | | | 28,326 | | | | 27,583 | | | | 27,260 | |
| Insurance brokerage commissions | | | 13,604 | | | | 13,892 | | | | 11,880 | | | | 12,417 | | | | 12,278 | |
| Merchant and electronic banking income, net | | | 14,727 | | | | 13,114 | | | | 13,368 | | | | 13,723 | | | | 13,069 | |
| Wealth management services | | | 10,395 | | | | 10,504 | | | | 10,489 | | | | 10,280 | | | | 9,870 | |
| Loan fee income | | | 8,892 | | | | 6,921 | | | | 6,926 | | | | 5,841 | | | | 8,516 | |
| Bank-owned life insurance | | | 6,107 | | | | 6,098 | | | | 5,779 | | | | 5,732 | | | | 6,275 | |
| Investment planning services | | | 5,462 | | | | 4,689 | | | | 4,799 | | | | 4,634 | | | | 5,146 | |
| Net securities gains/(losses) | | | 1,439 | | | | (50,476 | ) | | | (17,761 | ) | | | 3,124 | | | | 3,355 | |
| Loans held for sale — lower of cost or market adjustment | | | 386 | | | | (7,500 | ) | | | — | | | | — | | | | — | |
| Change in unrealized loss on derivatives | | | 14,840 | | | | (8,175 | ) | | | — | | | | — | | | | — | |
| Other noninterest income | | | 9,669 | | | | 8,372 | | | | 8,731 | | | | 9,862 | | | | 5,111 | |
| | | | | | | | | | | | | | | | |
| | | | 117,272 | | | | 25,621 | | | | 72,537 | | | | 93,196 | | | | 90,880 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest expense: | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 105,096 | | | | 100,868 | | | | 90,138 | | | | 91,935 | | | | 87,005 | |
| Occupancy and equipment | | | 31,048 | | | | 30,738 | | | | 29,320 | | | | 27,940 | | | | 27,512 | |
| Data processing | | | 11,618 | | | | 11,033 | | | | 11,568 | | | | 11,118 | | | | 10,018 | |
| Advertising and marketing | | | 8,087 | | | | 6,695 | | | | 5,445 | | | | 6,278 | | | | 6,303 | |
| Amortization of identifiable intangible assets | | | 31,656 | | | | 11,495 | | | | 2,260 | | | | 2,379 | | | | 2,084 | |
| Merger and consolidation costs (2) | | | 5,368 | | | | 31,191 | | | | 38,286 | | | | 5,603 | | | | 4,135 | |
| Prepayment penalties on borrowings | | | — | | | | 6,303 | | | | 61,546 | | | | — | | | | — | |
| Other noninterest expense | | | 27,460 | | | | 24,786 | | | | 28,796 | | | | 28,945 | | | | 26,769 | |
| | | | | | | | | | | | | | | | |
| | | | 220,333 | | | | 223,109 | | | | 267,359 | | | | 174,198 | | | | 163,826 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before income tax expense | | | 145,970 | | | | 53,176 | | | | 38,625 | | | | 146,304 | | | | 146,200 | |
| Income tax expense | | | 50,375 | | | | 19,101 | | | | 17,927 | | | | 48,534 | | | | 50,353 | |
| | | | | | | | | | | | | | | | |
| Net Income | | $ | 95,595 | | | $ | 34,075 | | | $ | 20,698 | | | $ | 97,770 | | | $ | 95,847 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 173,428 | | | | 183,393 | | | | 177,071 | | | | 173,271 | | | | 169,637 | |
| Diluted | | | 174,261 | | | | 184,890 | | | | 179,953 | | | | 176,756 | | | | 173,109 | |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.55 | | | $ | 0.19 | | | $ | 0.12 | | | $ | 0.56 | | | $ | 0.57 | |
| Diluted | | | 0.55 | | | | 0.18 | | | | 0.12 | | | | 0.55 | | | | 0.55 | |
| | |
| (1) | | Effective June 2005, and consistent with the quarterly reporting requirements of the U.S. banking regulators, income from investments in the restricted stock of the Federal Reserve Bank and Federal Home Loan Bank of Boston have been reclassified to other noninterest income. All prior periods presented have been restated to conform with the current period presentation. |
| |
| (2) | | Merger and consolidation costs consist of merger charges and certain asset write-downs. |
11
| | | |
TD Banknorth Inc. and Subsidiaries | | |
|
SELECTED FINANCIAL HIGHLIGHTS (Unaudited) | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Successor | | | Combined | | | Predecessor | |
| (In thousands, except per share data) | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | | | 6/30/2004 | |
| | | |
| Net interest income | | $ | 252,628 | | | $ | 252,733 | | | $ | 244,117 | | | $ | 237,976 | | | $ | 228,646 | |
| Net income | | $ | 95,595 | | | $ | 34,075 | | | $ | 20,698 | | | $ | 97,771 | | | $ | 95,847 | |
| Shares outstanding (end of period) | | | 173,406 | | | | 173,208 | | | | 179,298 | | | | 174,023 | | | | 172,546 | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 173,428 | | | | 183,393 | | | | 177,071 | | | | 173,271 | | | | 169,637 | |
| Diluted | | | 174,261 | | | | 184,890 | | | | 179,953 | | | | 176,756 | | | | 173,109 | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.55 | | | $ | 0.19 | | | $ | 0.12 | | | $ | 0.56 | | | $ | 0.57 | |
| Diluted | | $ | 0.55 | | | $ | 0.18 | | | $ | 0.12 | | | $ | 0.55 | | | $ | 0.55 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity (end of period) | | $ | 6,473,496 | | | $ | 6,348,493 | | | $ | 3,176,114 | | | $ | 3,046,242 | | | $ | 2,866,692 | |
| Book value per share (end of period) | | $ | 37.33 | | | $ | 36.65 | | | $ | 17.71 | | | $ | 17.50 | | | $ | 16.61 | |
| Tangible book value per share (end of period) | | $ | 8.45 | | | $ | 7.63 | | | $ | 9.91 | | | $ | 9.44 | | | $ | 8.50 | |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS & OTHER INFORMATION: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest margin, fully-taxable equivalent basis | | | 4.12 | % | | | 3.96 | % | | | 3.87 | % | | | 3.68 | % | | | 3.66 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 1.20 | % | | | 0.45 | % | | | 0.29 | % | | | 1.33 | % | | | 1.36 | % |
| Return on average equity | | | 5.98 | % | | | 3.09 | % | | | 2.66 | % | | | 13.24 | % | | | 13.54 | % |
| | | | | | | | | | | | | | | | | | | | | |
| At period end: | | | | | | | | | | | | | | | | | | | | |
| Tangible equity/tangible assets | | | 5.53 | % | | | 4.92 | % | | | 6.52 | % | | | 5.96 | % | | | 5.27 | % |
| Tier 1 leverage capital ratio | | | 6.64 | % | | | 6.29 | % | | | 7.58 | % | | | 6.95 | % | | | 6.80 | % |
| Tier 1 risk based capital ratio | | | 8.29 | % | | | 7.97 | % | | | 9.96 | % | | | 9.42 | % | | | 8.97 | % |
| Total risk based capital ratio | | | 10.43 | % | | | 10.13 | % | | | 12.16 | % | | | 11.62 | % | | | 11.15 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans (1) | | $ | 70,110 | | | $ | 62,916 | | | $ | 77,559 | | | $ | 65,923 | | | $ | 65,142 | |
| Total nonperforming assets (1) | | $ | 73,906 | | | $ | 68,928 | | | $ | 81,103 | | | $ | 67,979 | | | $ | 67,167 | |
| Nonperforming loans as a % of total loans | | | 0.35 | % | | | 0.32 | % | | | 0.42 | % | | | 0.36 | % | | | 0.36 | % |
| Nonperforming assets as a % of total assets | | | 0.23 | % | | | 0.21 | % | | | 0.28 | % | | | 0.23 | % | | | 0.23 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Full service banking offices | | | 396 | | | | 396 | | | | 386 | | | | 387 | | | | 389 | |
| | | | | | | | | | | | | | | | | | | | | |
| FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEM (Non-GAAP Financial Information): | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income as a percent of total income (2) | | | 28.48 | % | | | 26.64 | % | | | 27.00 | % | | | 27.46 | % | | | 27.68 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Merger and consolidation costs, net of tax (3) | | $ | 3,489 | | | $ | 28,689 | | | $ | 32,316 | | | $ | 4,342 | | | $ | 2,687 | |
| Per diluted share: | | | 0.02 | | | | 0.16 | | | | 0.17 | | | | 0.03 | | | | 0.02 | |
| Change in unrealized loss on certain derivatives, net of tax | | ($ | 9,646 | ) | | $ | 5,314 | | | | — | | | | — | | | | — | |
| Per diluted share: | | | (0.05 | ) | | | 0.03 | | | | — | | | | — | | | | — | |
| Deleveraging, net of tax basis (4) | | ($ | 109 | ) | | $ | 41,562 | | | | 51,560 | | | | — | | | | — | |
| Per diluted share: | | | — | | | | 0.22 | | | | 0.29 | | | | — | | | | — | |
| Amortization of intangibles, net of tax | | $ | 19,769 | | | $ | 7,472 | | | $ | 1,469 | | | $ | 1,547 | | | $ | 1,354 | |
| Per diluted share: | | | 0.11 | | | | 0.04 | | | | 0.01 | | | | 0.01 | | | | 0.01 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income (5) | | $ | 100,607 | | | $ | 91,771 | | | $ | 90,299 | | | $ | 90,073 | | | $ | 87,525 | |
| Noninterest expense (6) | | $ | 183,309 | | | $ | 174,120 | | | $ | 165,267 | | | $ | 166,216 | | | $ | 157,607 | |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (7) | | | 1.12 | % | | | 1.38 | % | | | 1.46 | % | | | 1.39 | % | | | 1.40 | % |
| Cash return on average tangible assets (7)(8) | | | 1.64 | % | | | 1.63 | % | | | 1.55 | % | | | 1.49 | % | | | 1.49 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average equity (7) | | | 5.58 | % | | | 9.45 | % | | | 13.43 | % | | | 13.82 | % | | | 13.92 | % |
| Cash return on average tangible equity (7)(8) | | | 31.32 | % | | | 25.70 | % | | | 24.89 | % | | | 26.87 | % | | | 26.39 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Efficiency ratio (9) | | | 60.86 | % | | | 53.88 | % | | | 50.10 | % | | | 51.39 | % | | | 50.51 | % |
| Cash efficiency ratio (10) | | | 51.89 | % | | | 50.54 | % | | | 49.42 | % | | | 50.67 | % | | | 49.85 | % |
| |
| | |
| (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) | | Excludes securities gains/(losses), lower of cost or market adjustments, and gains on certain derivatives. |
| |
| (3) | | Merger and consolidation costs consist of merger related charges and certain asset write-downs. |
| |
| (4) | | 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. |
| |
| (5) | | Excludes securities gains/(losses), lower of cost or market adjustments, and gains on certain derivatives. |
| |
| (6) | | Excludes pre-tax merger and consolidation costs, prepayment penalties on borrowings, and amortization of intangible assets. |
| |
| (7) | | Excludes merger and consolidation costs, changes in unrealized loss on certain derivatives, and deleveraging losses/(gains), net of related tax benefits. |
| |
| (8) | | Cash ratios reflect adjustments to exclude the effects of intangible assets, net of related taxes. |
| |
| (9) | | Excludes securities gains/(losses), lower of cost or market adjustments, prepayment penalties on borrowings, gains on certain derivatives, and merger and consolidation costs. |
| |
| (10) | | Excludes securities gains/(losses), lower of cost or market adjustments, prepayment penalties on borrowings, merger and consolidation costs, gains on certain derivatives, and amortization of intangible assets. |
| |
| Ratios are annualized where appropriate. |
| |
| See page 13 for a reconciliation table of non-GAAP financial information. |
12
| | | |
TD Banknorth Inc. and Subsidiaries | | |
|
Reconciliation Table - Non-GAAP Financial Information (Unaudited) | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Successor | | | Combined | | | Predecessor | |
| (In thousands, except per share data) | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | | | 6/30/2004 | |
Net income (GAAP) | | $ | 95,595 | | | $ | 34,075 | | | $ | 20,698 | | | $ | 97,771 | | | $ | 95,847 | |
| Add back merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles, net of tax | | | | | | | | | | | | | | | | | | | | |
| Merger related | | | 3,489 | | | | 23,375 | | | | 32,381 | | | | 4,342 | | | | 2,687 | |
| Change in unrealized loss on derivatives | | | (9,646 | ) | | | 5,314 | | | | — | | | | — | | | | — | |
| Revised auto lease residual charge | | | — | | | | — | | | | (65 | ) | | | — | | | | — | |
| Deleveraging losses/(gains) | | | (109 | ) | | | 41,562 | | | | 51,560 | | | | — | | | | — | |
| Amortization of intangibles | | | 19,769 | | | | 7,472 | | | | 1,470 | | | | 1,547 | | | | 1,355 | |
| | | | | | | | | | | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | $ | 109,098 | | | $ | 111,798 | | | $ | 106,044 | | | $ | 103,660 | | | $ | 99,889 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Diluted earnings per share (GAAP) | | $ | 0.55 | | | $ | 0.18 | | | $ | 0.12 | | | $ | 0.55 | | | $ | 0.55 | |
| Effects of merger and consolidation costs, net of tax | | | 0.02 | | | | 0.13 | | | | 0.17 | | | | 0.03 | | | | 0.02 | |
| Effects of change in unrealized loss on derivatives, net of tax | | | (0.05 | ) | | | 0.03 | | | | — | | | | — | | | | — | |
| Effects of deleveraging losses/(gains), net of tax | | | — | | | | 0.22 | | | | 0.29 | | | | — | | | | — | |
| Effects of amortization of intangibles, net of tax | | | 0.11 | | | | 0.04 | | | | 0.01 | | | | 0.01 | | | | 0.01 | |
| | | | | | | | | | | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | $ | 0.63 | | | $ | 0.60 | | | $ | 0.59 | | | $ | 0.59 | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Average Assets (GAAP) | | $ | 32,008,478 | | | $ | 30,705,504 | | | $ | 28,576,401 | | | $ | 29,176,108 | | | $ | 28,382,749 | |
| Average goodwill | | | (4,536,952 | ) | | | (2,517,379 | ) | | | (1,368,912 | ) | | | (1,369,166 | ) | | | (1,295,806 | ) |
| Average identifiable intangible assets | | | (746,331 | ) | | | (301,197 | ) | | | (50,645 | ) | | | (53,568 | ) | | | (44,164 | ) |
| | | | | | | | | | | | | | | | |
| Average tangible assets | | | 26,725,195 | | | | 27,886,928 | | | | 27,156,844 | | | | 27,753,374 | | | | 27,042,779 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Average Equity (GAAP) | | $ | 6,415,590 | | | $ | 4,477,650 | | | $ | 3,096,887 | | | $ | 2,938,735 | | | $ | 2,846,616 | |
| Average goodwill | | | (4,536,952 | ) | | | (2,517,379 | ) | | | (1,368,912 | ) | | | (1,369,166 | ) | | | (1,295,806 | ) |
| Average identifiable intangible assets | | | (746,331 | ) | | | (301,197 | ) | | | (50,645 | ) | | | (53,568 | ) | | | (44,164 | ) |
| Average deferred tax liability related to other identifiable intangible assets | | | 264,676 | | | | 105,419 | | | | 17,726 | | | | 18,749 | | | | 15,457 | |
| | | | | | | | | | | | | | | | |
| Average tangible equity | | | 1,396,982 | | | | 1,764,493 | | | | 1,695,056 | | | | 1,534,750 | | | | 1,522,103 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Return on average assets (GAAP) | | | 1.20 | % | | | 0.45 | % | | | 0.29 | % | | | 1.33 | % | | | 1.36 | % |
| Effects of merger and consolidation costs, net of tax | | | 0.04 | % | | | 0.31 | % | | | 0.45 | % | | | 0.06 | % | | | 0.04 | % |
| 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 | % | | | 0.72 | % | | | — | | | | — | |
| Effects of amortization of intangibles, net of tax | | | 0.52 | % | | | 0.25 | % | | | 0.09 | % | | | 0.10 | % | | | 0.09 | % |
| | | | | | | | | | | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | | 1.64 | % | | | 1.63 | % | | | 1.55 | % | | | 1.49 | % | | | 1.49 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Return on average equity (GAAP) | | | 5.98 | % | | | 3.09 | % | | | 2.66 | % | | | 13.24 | % | | | 13.54 | % |
| Effects of merger and consolidation costs, net of tax | | | 0.21 | % | | | 2.11 | % | | | 4.15 | % | | | 0.58 | % | | | 0.38 | % |
| Effects of change in unrealized loss on derivatives, net of tax | | | -0.60 | % | | | 0.48 | % | | | — | | | | — | | | | — | |
| Effects of deleveraging losses/(gains), net of tax | | | -0.01 | % | | | 3.77 | % | | | 6.62 | % | | | — | | | | — | |
| Effects of amortization of intangibles, net of tax | | | 25.74 | % | | | 16.25 | % | | | 11.46 | % | | | 13.05 | % | | | 12.47 | % |
| | | | | | | | | | | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | | 31.32 | % | | | 25.70 | % | | | 24.89 | % | | | 26.87 | % | | | 26.39 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Efficiency ratio | | | 59.57 | % | | | 80.15 | % | | | 84.43 | % | | | 52.60 | % | | | 51.27 | % |
| Effects of merger and consolidation costs | | | -1.19 | % | | | -11.29 | % | | | -12.08 | % | | | -1.21 | % | | | -0.76 | % |
| Effects of change in unrealized loss on derivatives | | | 2.45 | % | | | -1.96 | % | | | — | | | | — | | | | — | |
| Effects of deleveraging losses/(gains) | | | 0.02 | % | | | -13.67 | % | | | -22.25 | % | | | — | | | | — | |
| Effects of amortization of intangibles | | | -8.96 | % | | | -2.69 | % | | | -0.68 | % | | | -0.72 | % | | | -0.66 | % |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | | 51.89 | % | | | 50.54 | % | | | 49.42 | % | | | 50.67 | % | | | 49.85 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Noninterest Income | | $ | 117,272 | | | $ | 25,621 | | | $ | 72,537 | | | $ | 93,196 | | | $ | 90,880 | |
| Net securities (gains) losses | | | (1,439 | ) | | | 50,476 | | | | 17,761 | | | | (3,124 | ) | | | (3,355 | ) |
| Lower of cost or market adjustments | | | (386 | ) | | | 7,500 | | | | — | | | | — | | | | — | |
| Change in unrealized loss on derivatives | | | (14,840 | ) | | | 8,175 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| Excluding securities (gains) losses, lower of cost or market adjustments, and change in unrealized loss on derivatives | | $ | 100,607 | | | $ | 91,772 | | | $ | 90,298 | | | $ | 90,072 | | | $ | 87,525 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Noninterest Expense | | $ | 220,333 | | | $ | 223,109 | | | $ | 267,359 | | | $ | 174,198 | | | $ | 163,826 | |
| Merger and consolidation costs | | | (5,368 | ) | | | (31,191 | ) | | | (38,286 | ) | | | (5,603 | ) | | | (4,135 | ) |
| Prepayment penalties on borrowings | | | — | | | | (6,303 | ) | | | (61,546 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| Excluding merger and consolidation costs and prepayment penalties | | | 214,965 | | | | 185,615 | | | | 167,527 | | | | 168,595 | | | | 159,691 | |
| Amortization of intangibles | | | (31,656 | ) | | | (11,495 | ) | | | (2,260 | ) | | | (2,379 | ) | | | (2,084 | ) |
| | | | | | | | | | | | | | | | |
| Excluding merger and consolidation costs, prepayment penalties, and amortization of intangibles | | $ | 183,309 | | | $ | 174,120 | | | $ | 165,267 | | | $ | 166,216 | | | $ | 157,607 | |
| | | | | | | | | | | | | | | | |
13
| | |
TD Banknorth Inc. and Subsidiaries | |
| |
Reconciliation Table - Non-GAAP Financial Information (Unaudited) | |
| | | | | | | | | |
| | | Combined | | | Predecessor | |
| (In thousands, except per share data) | | Six Months Ended | | | Six Months Ended | |
| | | 6/30/2005 | | | 6/30/2004 | |
Net income (GAAP) | | $ | 129,671 | | | $ | 186,173 | |
| Add back merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles, net of tax | | | | | | | | |
| Merger related | | | 26,865 | | | | 4,043 | |
| Change in unrealized loss on derivatives | | | (4,332 | ) | | | — | |
| Revised auto lease residual charge | | | — | | | | (306 | ) |
| Deleveraging | | | 41,453 | | | | — | |
| Amortization of intangibles | | | 27,241 | | | | 2,592 | |
| | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | $ | 220,898 | | | $ | 192,502 | |
| | | | | | | |
| | | | | | | | | |
Diluted earnings per share (GAAP) | | $ | 0.72 | | | $ | 1.10 | |
| Effects of merger and consolidation costs, net of tax | | | 0.15 | | | | 0.02 | |
| Effects of change in unrealized loss on derivatives, net of tax | | | (0.02 | ) | | | — | |
| Effects of deleveraging losses, net of tax | | | 0.23 | | | | — | |
| Effects of amortization of intangibles, net of tax | | | 0.15 | | | | 0.01 | |
| | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | $ | 1.23 | | | $ | 1.13 | |
| | | | | | | |
| | | | | | | | | |
Average Assets (GAAP) | | $ | 31,359,747 | | | $ | 27,454,871 | |
| Average goodwill | | | (3,532,889 | ) | | | (1,211,738 | ) |
| Average identifiable intangible assets | | | (524,947 | ) | | | (39,644 | ) |
| | | | | | | |
| Average tangible assets | | | 27,301,911 | | | | 26,203,489 | |
| | | | | | | |
| | | | | | | | | |
Average Equity (GAAP) | | $ | 5,452,727 | | | $ | 2,709,963 | |
| Average goodwill | | | (3,532,889 | ) | | | (1,211,738 | ) |
| Average identifiable intangible assets | | | (524,947 | ) | | | (39,644 | ) |
| Average deferred tax liability related to other identifiable intangible assets | | | 134,551 | | | | 15,457 | |
| | | | | | | |
| Average tangible equity | | | 1,529,443 | | | | 1,474,038 | |
| | | | | | | |
| | | | | | | | | |
Return on average assets (GAAP) | | | 0.83 | % | | | 1.36 | % |
| Effects of merger and consolidation costs, net of tax | | | 0.18 | % | | | 0.03 | % |
| Effects of change in unrealized loss on derivatives, net of tax | | | -0.03 | % | | | — | |
| Effects of deleveraging losses, net of tax | | | 0.27 | % | | | — | |
| Effects of amortization of intangibles, net of tax | | | 0.38 | % | | | 0.09 | % |
| | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | | 1.63 | % | | | 1.48 | % |
| | | | | | | |
| | | | | | | | | |
Return on average equity (GAAP) | | | 4.80 | % | | | 13.82 | % |
| Effects of merger and consolidation costs, net of tax | | | 0.99 | % | | | 0.27 | % |
| Effects of change in unrealized loss on derivatives, net of tax | | | -0.16 | % | | | — | |
| Effects of deleveraging losses, net of tax | | | 1.53 | % | | | — | |
| Effects of amortization of intangibles, net of tax | | | 21.97 | % | | | 12.17 | % |
| | | | | | | |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | | 29.13 | % | | | 26.26 | % |
| | | | | | | |
| | | | | | | | | |
Efficiency ratio | | | 68.41 | % | | | 51.74 | % |
| Effects of merger and consolidation costs | | | -5.52 | % | | | -0.35 | % |
| Effects of change in unrealized loss on derivatives | | | 0.66 | % | | | — | |
| Effects of deleveraging losses/(gains) | | | -6.02 | % | | | — | |
| Effects of amortization of intangibles | | | -6.30 | % | | | -0.65 | % |
| Cash basis, excluding merger and consolidation costs, change in unrealized loss on derivatives, deleveraging losses/(gains), and amortization of intangibles | | | 51.23 | % | | | 50.74 | % |
| | | | | | | |
| | | | | | | | | |
Noninterest Income | | $ | 142,891 | | | $ | 180,221 | |
| Net securities (gains) losses | | | 49,036 | | | | (6,936 | ) |
| Lower of cost or market adjustments | | | 7,114 | | | | — | |
| Change in unrealized (gains) losses on derivatives | | | (6,664 | ) | | | — | |
| | | | | | | |
| Excluding securities (gains) losses, lower of cost or market adjustments, and change in unrealized loss on derivatives | | $ | 192,377 | | | $ | 173,285 | |
| | | | | | | |
| | | | | | | | | |
Noninterest Expense | | $ | 443,442 | | | $ | 323,544 | |
| Merger and consolidation costs | | | (36,559 | ) | | | (5,748 | ) |
| Prepayment penalties on borrowings | | | (6,303 | ) | | | — | |
| | | | | | | |
| Excluding merger and consolidation costs and prepayment penalties | | | 400,580 | | | | 317,796 | |
| Amortization of intangibles | | | (43,152 | ) | | | (3,988 | ) |
| | | | | | | |
| Excluding merger and consolidation costs, prepayment penalties, and amortization of intangibles | | $ | 357,428 | | | $ | 313,808 | |
| | | | | | | |
14
| | | |
TD Banknorth Inc. and Subsidiaries | | |
| |
Identifiable Intangible Assets | | |
Estimated Future Amortization Expense (Unaudited) | | |
| | | | | | | | | | | | | |
| | | | | | | Other | | | Total | |
| | | Core Deposit | | | Identifiable | | | Identifiable | |
| | | Intangibles | | | Intangibles | | | Intangibles | |
| Amortization Expense: | | | | | | | | | | | | |
| January and February 2005 (Predecessor) | | $ | 1,237 | | | $ | 324 | | | $ | 1,561 | |
| March 2005 (Successor) | | | 8,583 | | | | 1,351 | | | | 9,934 | |
| | | | | | | | | | |
| Three months ended March 31, 2005 | | | 9,820 | | | | 1,675 | | | | 11,495 | |
| Three months ended June 30, 2005 | | | 27,081 | | | | 4,575 | | | | 31,656 | |
| | | | | | | | | | | | | |
| Estimated Future Amortization Expense: | | | | | | | | | | | | |
| July 2005 through December 2005 | | | 53,500 | | | | 8,437 | | | | 61,937 | |
| | | | | | | | | | |
| Full Year 2005 | | | 90,401 | | | | 14,687 | | | | 105,088 | |
| 2006 | | | 96,167 | | | | 16,134 | | | | 112,301 | |
| 2007 | | | 74,833 | | | | 15,403 | | | | 90,236 | |
| 2008 | | | 61,833 | | | | 14,354 | | | | 76,187 | |
| 2009 | | | 51,667 | | | | 13,723 | | | | 65,390 | |
| thereafter | | | 192,336 | | | | 129,055 | | | | 321,391 | |
