Exhibit 99
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. |
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| | • | | Solid noninterest income growth — noninterest income increased 11% during the third quarter as compared to the third quarter a year ago; |
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| | • | | 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; |
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| | • | | Asset quality remained strong — the percentage of nonperforming loans to total loans was 0.32% at September 30, 2005; |
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| | • | | 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. |
PORTLAND, Maine—(BUSINESS WIRE)—October 24, 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, 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 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.
CONTACT: TD Banknorth Inc.
Jeff Nathanson, 207-761-8517
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 | % |
| | | | | | | | | | | | | | | | | | |
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| | | $ | 31,815,246 | | | $ | 28,986,084 | | | | 10 | % | | $ | 31,784,335 | | | | 0 | % |
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Liabilities & Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
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| 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 | | | | | | | Successor | | | Predecessor | | | | |
| | | Nine Months | | | Nine Months | | | | | | | Three Months | | | Three Months | | | | |
| | | Ended | | | Ended | | | | | | | Ended | | | Ended | | | | |
| | | September 30, | | | September 30, | | | % | | | September 30, | | | September 30, | | | % | |
| | | 2005 | | | 2004 | | | Change | | | 2005 | | | 2004 | | | Change | |
| Interest and dividend income | | $ | 1,036,775 | | | $ | 922,948 | | | | 12 | % | | $ | 350,679 | | | $ | 323,677 | | | | 8 | % |
| Interest expense | | | 282,412 | | | | 239,840 | | | | 18 | % | | | 101,682 | | | | 85,701 | | | | 19 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | 754,363 | | | | 683,108 | | | | 10 | % | | | 248,997 | | | | 237,976 | | | | 5 | % |
| Provision for loan and lease losses | | | 11,166 | | | | 29,670 | | | | -62 | % | | | 5,500 | | | | 10,670 | | | | -48 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income after provision for loan and lease losses | | | 743,197 | | | | 653,438 | | | | 14 | % | | | 243,497 | | | | 227,306 | | | | 7 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest income: | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposit services | | | 94,493 | | | | 80,995 | | | | 17 | % | | | 34,558 | | | | 27,583 | | | | 25 | % |
| Insurance brokerage commissions | | | 39,712 | | | | 38,431 | | | | 3 | % | | | 12,216 | | | | 12,417 | | | | -2 | % |
| Merchant and electronic banking income, net | | | 43,665 | | | | 37,196 | | | | 17 | % | | | 15,824 | | | | 13,723 | | | | 15 | % |
| Wealth management services | | | 31,561 | | | | 29,300 | | | | 8 | % | | | 10,662 | | | | 10,280 | | | | 4 | % |
| Loan fee income | | | 23,843 | | | | 19,529 | | | | 22 | % | | | 8,031 | | | | 5,842 | | | | 37 | % |
| Bank-owned life insurance | | | 18,198 | | | | 17,503 | | | | 4 | % | | | 5,994 | | | | 5,732 | | | | 5 | % |
| Investment planning services | | | 14,859 | | | | 14,619 | | | | 2 | % | | | 4,708 | | | | 4,634 | | | | 2 | % |
| Net securities gains/(losses) | | | (48,022 | ) | | | 10,060 | | | | -577 | % | | | 1,014 | | | | 3,124 | | | | -68 | % |
| Loans held for sale — lower of cost or market adjustment | | | (7,114 | ) | | | — | | | NM | | | | — | | | | — | | | NM | |
| Change in unrealized loss on certain derivatives | | | 5,954 | | | | — | | | NM | | | | (711 | ) | | | — | | | NM | |
| Other noninterest income | | | 29,352 | | | | 25,785 | | | | 14 | % | | | 11,311 | | | | 9,862 | | | | 15 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 246,501 | | | | 273,418 | | | | -10 | % | | | 103,607 | | | | 93,197 | | | | 11 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest expense: | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 308,023 | | | | 266,473 | | | | 16 | % | | | 102,059 | | | | 91,935 | | | | 11 | % |
| Occupancy and equipment | | | 91,731 | | | | 83,051 | | | | 10 | % | | | 29,945 | | | | 27,940 | | | | 7 | % |
| Data processing | | | 34,327 | | | | 31,573 | | | | 9 | % | | | 11,675 | | | | 11,118 | | | | 5 | % |
| Advertising and marketing | | | 22,284 | | | | 20,105 | | | | 11 | % | | | 7,503 | | | | 6,278 | | | | 20 | % |
| Amortization of identifiable intangible assets | | | 74,193 | | | | 6,367 | | | NM | | | | 31,041 | | | | 2,379 | | | NM | |
| Merger and consolidation costs (1) | | | 37,722 | | | | 11,351 | | | | 232 | % | | | 1,163 | | | | 5,603 | | | | -79 | % |
| Prepayment penalties on borrowings | | | 6,303 | | | | — | | | NM | | | | — | | | | — | | | NM | |
| Other noninterest expense | | | 80,588 | | | | 78,822 | | | | 2 | % | | | 28,343 | | | | 28,945 | | | | -2 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 655,171 | | | | 497,742 | | | | 32 | % | | | 211,729 | | | | 174,198 | | | | 22 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income before income tax expense | | | 334,527 | | | | 429,114 | | | | -22 | % | | | 135,375 | | | | 146,305 | | | | -7 | % |
| Income tax expense | | | 116,113 | | | | 145,169 | | | | -20 | % | | | 46,634 | | | | 48,534 | | | | -4 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 218,414 | | | $ | 283,945 | | | | -23 | % | | $ | 88,741 | | | $ | 97,771 | | | | -9 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 176,822 | | | | 168,646 | | | | 5 | % | | | 173,661 | | | | 173,271 | | | | 0 | % |
| Diluted | | | 177,858 | | | | 172,201 | | | | 3 | % | | | 174,398 | | | | 176,756 | | | | -1 | % |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 1.24 | | | $ | 1.68 | | | | -26 | % | | $ | 0.51 | | | $ | 0.56 | | | | -9 | % |
| Diluted | | | 1.23 | | | | 1.65 | | | | -25 | % | | | 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 | | | | | | | Successor | | | Predecessor | | | | |
| | | Nine Months | | | Nine Months | | | | | | | Three Months | | | Three Months | | | | |
| | | Ended | | | Ended | | | | | | | Ended | | | Ended | | | | |
| | | September 30, | | | September 30, | | | % | | | September 30, | | | September 30, | | | % | |
| | | 2005 | | | 2004 | | | Change | | | 2005 | | | 2004 | | | Change | |
| Net interest income | | $ | 754,363 | | | $ | 683,108 | | | | 10 | % | | $ | 248,997 | | | $ | 237,976 | | | | 5 | % |
| Net income | | $ | 218,414 | | | $ | 283,945 | | | | -23 | % | | $ | 88,741 | | | $ | 97,771 | | | | -9 | % |
| Shares outstanding (end of period) | | | 173,615 | | | | 174,023 | | | | 0 | % | | | 173,615 | | | | 174,023 | | | | 0 | % |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 176,822 | | | | 168,646 | | | | 5 | % | | | 173,661 | | | | 173,271 | | | | 0 | % |
| Diluted | | | 177,858 | | | | 172,201 | | | | 3 | % | | | 174,398 | | | | 176,756 | | | | -1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 1.24 | | | $ | 1.68 | | | | -26 | % | | $ | 0.51 | | | $ | 0.56 | | | | -9 | % |
| Diluted | | $ | 1.23 | | | $ | 1.65 | | | | -25 | % | | $ | 0.51 | | | $ | 0.55 | | | | -7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity (end of period) | | $ | 6,463,623 | | | $ | 3,046,242 | | | NM | | $ | 6,463,623 | | | $ | 3,046,242 | | | NM |
| Book value per share (end of period) | | $ | 37.23 | | | $ | 17.50 | | | NM | | $ | 37.23 | | | $ | 17.50 | | | NM |
| Tangible book value per share (end of period) | | | 8.50 | | | | 9.44 | | | | -10 | % | | | 8.50 | | | | 9.44 | | | | -10 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Nominal | | | | | | | | | | Nominal |
| | | | | | | | | | | Inc/(Dec) | | | | | | | | | | Inc/(Dec) |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS & OTHER INFORMATION: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest margin, fully-taxable equivalent basis | | | 4.06 | % | | | 3.67 | % | | | 0.39 | % | | | 4.09 | % | | | 3.68 | % | | | 0.41 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.93 | % | | | 1.35 | % | | | -0.42 | % | | | 1.11 | % | | | 1.33 | % | | | -0.22 | % |
| Return on average equity | | | 5.04 | % | | | 13.61 | % | | | -8.57 | % | | | 5.44 | % | | | 13.24 | % | | | -7.80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
At period end: | | | | | | | | | | | | | | | | | | | | | | | | |
| Tangible equity/tangible assets | | | 5.55 | % | | | 5.96 | % | | | -0.41 | % | | | 5.55 | % | | | 5.96 | % | | | -0.41 | % |
| Tier 1 leverage capital ratio | | | 6.99 | % | | | 6.95 | % | | | 0.04 | % | | | 6.99 | % | | | 6.95 | % | | | 0.04 | % |
| Tier 1 risk based capital ratio | | | 8.54 | % | | | 9.42 | % | | | -0.88 | % | | | 8.54 | % | | | 9.42 | % | | | -0.88 | % |
| Total risk based capital ratio | | | 11.72 | % | | | 11.62 | % | | | 0.10 | % | | | 11.72 | % | | | 11.62 | % | | | 0.10 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans (1) | | $ | 63,960 | | | $ | 65,923 | | | ($ | 1,963 | ) | | $ | 63,960 | | | $ | 65,923 | | | ($ | 1,963 | ) |
| Total nonperforming assets (1) | | $ | 66,889 | | | $ | 67,979 | | | ($ | 1,090 | ) | | $ | 66,889 | | | $ | 67,979 | | | ($ | 1,090 | ) |
| Nonperforming loans as a % of total loans | | | 0.32 | % | | | 0.36 | % | | | -0.04 | % | | | 0.32 | % | | | 0.36 | % | | | -0.04 | % |
| Nonperforming assets as a % of total assets | | | 0.21 | % | | | 0.23 | % | | | -0.02 | % | | | 0.21 | % | | | 0.23 | % | | | -0.02 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Full service banking offices | | | 397 | | | | 387 | | | | | | | | 397 | | | | 387 | | | | | |
| FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP Financial Information): | | | | |
| See pages 15 and 16 for a reconciliation table of non-GAAP financial information. | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per diluted share, GAAP basis | | $ | 1.23 | | | $ | 1.65 | | | | -0.42 | | | $ | 0.51 | | | $ | 0.55 | | | | -0.04 | |
| Merger & consolidation costs, per diluted share, net of tax (2) | | | 0.15 | | | | 0.05 | | | | 0.10 | | | | — | | | | 0.03 | | | | -0.03 | |
| Change in unrealized loss on certain derivatives, per diluted share, net of tax | | | (0.02 | ) | | | — | | | | -0.02 | | | | 0.01 | | | | — | | | | 0.01 | |
| 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 | | | | 0.52 | | | | 0.58 | | | | -0.06 | |
| Amortization of intangibles, per diluted share, net of tax | | | 0.27 | | | | 0.02 | | | | 0.25 | | | | 0.11 | | | | 0.01 | | | | 0.10 | |
| | | | | | | | | | | | | | | | | | | |
| Earnings per diluted share, as adjusted | | $ | 1.86 | | | $ | 1.72 | | | | 0.14 | | | | 0.63 | | | | 0.59 | | | | 0.04 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest income as a percent of total income (4) | | | 28.16 | % | | | 27.83 | % | | | 0.33 | % | | | 29.32 | % | | | 27.46 | % | | | 1.86 | % |
| Noninterest income (4) | | $ | 295,682 | | | $ | 263,358 | | | $ | 32,324 | | | $ | 103,305 | | | $ | 90,073 | | | $ | 13,232 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (5) | | | 1.20 | % | | | 1.39 | % | | | -0.19 | % | | | 1.12 | % | | | 1.39 | % | | | -0.27 | % |
| Cash return on average tangible assets (5) (6) | | | 1.63 | % | | | 1.48 | % | | | 0.15 | % | | | 1.64 | % | | | 1.49 | % | | | 0.15 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average equity (5) | | | 6.54 | % | | | 14.00 | % | | | -7.46 | % | | | 5.51 | % | | | 13.82 | % | | | -8.31 | % |
| Cash return on average tangible equity (5) (6) | | | 29.20 | % | | | 26.55 | % | | | 2.65 | % | | | 29.39 | % | | | 26.87 | % | | | 2.52 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest expense (7) | | $ | 536,954 | | | $ | 480,025 | | | $ | 56,929 | | | $ | 179,527 | | | $ | 166,216 | | | $ | 13,311 | |
| Efficiency ratio (8) | | | 57.87 | % | | | 51.39 | % | | | 6.48 | % | | | 59.77 | % | | | 51.39 | % | | | 8.38 | % |
| Cash efficiency ratio (9) | | | 51.14 | % | | | 50.72 | % | | | 0.42 | % | | | 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 September 30, | | | | Three Months Ended 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 September 30, | | | | Nine Months Ended 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 | | | Predecessor | | | Predecessor | |
| | | 9/30/2005 | | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | |
Nonperforming assets: | | | | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | $ | 6,531 | | | $ | 6,165 | | | $ | 8,614 | | | $ | 7,846 | | | $ | 7,274 | |
| Commercial real estate mortgages | | | 29,224 | | | | 30,353 | | | | 23,553 | (1) | | | 29,948 | | | | 33,249 | |
| Commercial business loans and leases | | | 21,306 | | | | 26,776 | | | | 24,520 | (1) | | | 32,421 | | | | 18,573 | |
| Consumer loans and leases | | | 6,899 | | | | 6,816 | | | | 6,229 | | | | 7,344 | | | | 6,827 | |
| | | | | | | | | | | | | | | | |
| Total nonperforming loans and leases | | | 63,960 | | | | 70,110 | | | | 62,916 | | | | 77,559 | | | | 65,923 | |
| | | | | | | | | | | | | | | | | | | | | |
| Other nonperforming assets, net | | | 2,929 | | | | 3,796 | | | | 6,012 | | | | 3,544 | | | | 2,056 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total nonperforming assets | | $ | 66,889 | | | $ | 73,906 | | | $ | 68,928 | (1) | | $ | 81,103 | | | $ | 67,979 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses | | $ | 228,334 | | | $ | 228,168 | | | $ | 228,165 | | | $ | 243,152 | | | $ | 242,885 | |
| Liability for unfunded credit commitments | | | 7,607 | (2) | | | 6,807 | | | | 6,707 | | | | 6,600 | | | | 6,600 | |
| | | | | | | | | | | | | | | | |
Total reserve for credit losses | | $ | 235,941 | | | $ | 234,975 | | | $ | 234,872 | | | $ | 249,752 | | | $ | 249,485 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Net loan charge-offs (recoveries): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate mortgages | | | ($125 | ) | | $ | 89 | | | $ | 57 | | | | ($9 | ) | | $ | 86 | |
| Commercial real estate mortgages | | | 1,717 | | | | (391 | ) | | | 4,032 | | | | (486 | ) | | | (530 | ) |
| | | | | | | | | | | | | | | | |
| Total real estate mortgages | | | 1,592 | | | | (302 | ) | | | 4,089 | | | | (495 | ) | | | (444 | ) |
| Commercial business loans and leases | | | 3 | | | | (230 | ) | | | 545 | | | | 5,594 | | | | 2,939 | |
| Consumer loans and leases | | | 4,739 | | | | 4,126 | | | | 5,481 | | | | 5,305 | | | | 6,310 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total net charge-offs | | $ | 6,334 | | | $ | 3,594 | | | $ | 10,115 | | | $ | 10,404 | | | $ | 8,805 | |
| | | | | | | | | | | | | | | | |
Ratios: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Reserve for credit losses to total loans and leases | | | 1.18 | % | | | 1.17 | % | | | 1.20 | %(1) | | | 1.34 | % | | | 1.36 | % |
| Reserve for credit losses to nonperforming loans | | | 368.89 | % | | | 335.15 | % | | | 373.31 | % | | | 322.02 | % | | | 378.45 | % |
| Nonperforming loans to total loans and leases | | | 0.32 | % | | | 0.35 | % | | | 0.32 | % | | | 0.42 | % | | | 0.36 | % |
| Nonperforming assets to total assets | | | 0.21 | % | | | 0.23 | % | | | 0.21 | % | | | 0.28 | % | | | 0.23 | % |
| Net charge-offs to average loans — QTD (3) | | | 0.13 | % | | | 0.07 | % | | | 0.21 | % | | | 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 | |
| | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| (In thousands, except per share data) | | 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 | | | | 5,842 | |
| 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 | | | | 93,197 | |
| | | | | | | | | | | | | | | | |
| |
| 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 | | | | 146,305 | |
| Income tax expense | | | 46,634 | | | | 50,375 | | | | 19,101 | | | | 17,927 | | | | 48,534 | |
| | | | | | | | | | | | | | | | |
| Net Income | | $ | 88,741 | | | $ | 95,595 | | | $ | 34,075 | | | $ | 20,698 | | | $ | 97,771 | |
| | | | | | | | | | | | | | | | |
| |
| 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 | | | Predecessor | |
| | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| (In thousands, except per share data) | | 9/30/2005 | | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | |
| Net interest income | | $ | 248,997 | | | $ | 252,628 | | | $ | 252,733 | | | $ | 244,117 | | | $ | 237,976 | |
| Net income | | $ | 88,741 | | | $ | 95,595 | | | $ | 34,075 | | | $ | 20,698 | | | $ | 97,771 | |
| Shares outstanding (end of period) | | | 173,615 | | | | 173,406 | | | | 173,208 | | | | 179,298 | | | | 174,023 | |
| 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 | |
| |
| Shareholders’ equity (end of period) | | $ | 6,463,623 | | | $ | 6,473,496 | | | $ | 6,348,493 | | | $ | 3,176,114 | | | $ | 3,046,242 | |
| Book value per share (end of period) | | $ | 37.23 | | | $ | 37.33 | | | $ | 36.65 | | | $ | 17.71 | | | $ | 17.50 | |
| Tangible book value per share (end of period) | | $ | 8.50 | | | $ | 8.45 | | | $ | 7.61 | | | $ | 9.91 | | | $ | 9.44 | |
| |
| RATIOS & OTHER INFORMATION: | | | | | | | | | | | | | | | | | | | | |
| |
| Net interest margin, fully-taxable equivalent basis | | | 4.09 | % | | | 4.12 | % | | | 3.96 | % | | | 3.87 | % | | | 3.68 | % |
| |
| Return on average assets | | | 1.11 | % | | | 1.20 | % | | | 0.45 | % | | | 0.29 | % | | | 1.33 | % |
| Return on average equity | | | 5.44 | % | | | 5.98 | % | | | 3.09 | % | | | 2.66 | % | | | 13.24 | % |
| |
At period end: | | | | | | | | | | | | | | | | | | | | |
| Tangible equity/tangible assets | | | 5.55 | % | | | 5.53 | % | | | 4.91 | % | | | 6.52 | % | | | 5.96 | % |
| Tier 1 leverage capital ratio | | | 6.99 | % | | | 6.65 | % | | | 6.29 | % | | | 7.58 | % | | | 6.95 | % |
| Tier 1 risk based capital ratio | | | 8.54 | % | | | 8.29 | % | | | 7.97 | % | | | 9.96 | % | | | 9.42 | % |
| Total risk based capital ratio | | | 11.72 | % | | | 10.43 | % | | | 10.13 | % | | | 12.13 | % | | | 11.62 | % |
| |
| Nonperforming loans (1) | | $ | 63,960 | | | $ | 70,110 | | | $ | 62,916 | | | $ | 77,559 | | | $ | 65,923 | |
| Total nonperforming assets (1) | | $ | 66,889 | | | $ | 73,906 | | | $ | 68,928 | | | $ | 81,103 | | | $ | 67,979 | |
| Nonperforming loans as a % of total loans | | | 0.32 | % | | | 0.35 | % | | | 0.32 | % | | | 0.42 | % | | | 0.36 | % |
| Nonperforming assets as a % of total assets | | | 0.21 | % | | | 0.23 | % | | | 0.21 | % | | | 0.28 | % | | | 0.23 | % |
| |
| Full service banking offices | | | 397 | | | | 395 | | | | 396 | | | | 386 | | | | 387 | |
| |
| FINANCIAL INFORMATION AND RATIOS EXCLUDING CERTAIN ITEMS (Non-GAAP Financial Information): | | | | | | | | | | | | | | | | | | | | |
| See page 15 for a reconciliation table of non-GAAP financial information. | | | | | | | | | | | | | | | | | | | | |
| |
| Earnings per diluted share, GAAP basis | | $ | 0.51 | | | $ | 0.55 | | | $ | 0.18 | | | $ | 0.12 | | | $ | 0.55 | |
| Merger & consolidation costs, per diluted share, net of tax (2) | | | — | | | | 0.02 | | | | 0.13 | | | | 0.17 | | | | 0.03 | |
| 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 | | | | 0.29 | | | | — | |
| | | | | | | | | | | | | | | | |
| Earnings per diluted share, as adjusted | | | 0.52 | | | | 0.52 | | | | 0.56 | | | | 0.58 | | | | 0.58 | |
| Amortization of intangibles, per diluted share, net of tax | | | 0.11 | | | | 0.11 | | | | 0.04 | | | | 0.01 | | | | 0.01 | |
| | | | | | | | | | | | | | | | |
| Earnings per diluted share, as adjusted | | $ | 0.63 | | | $ | 0.63 | | | $ | 0.60 | | | $ | 0.59 | | | $ | 0.59 | |
| | | | | | | | | | | | | | | | |
| |
| Noninterest income as a percent of total income (4) | | | 29.32 | % | | | 28.48 | % | | | 26.64 | % | | | 27.00 | % | | | 27.46 | % |
| Noninterest income (4) | | $ | 103,305 | | | $ | 100,607 | | | $ | 91,771 | | | $ | 90,299 | | | $ | 90,073 | |
| |
| Return on average assets (5) | | | 1.12 | % | | | 1.12 | % | | | 1.38 | % | | | 1.46 | % | | | 1.39 | % |
| Cash return on average tangible assets (5) (6) | | | 1.64 | % | | | 1.64 | % | | | 1.63 | % | | | 1.55 | % | | | 1.49 | % |
| |
| Return on average equity (5) | | | 5.51 | % | | | 5.58 | % | | | 9.45 | % | | | 13.43 | % | | | 13.82 | % |
| Cash return on average tangible equity (5) (6) | | | 29.39 | % | | | 31.32 | % | | | 25.70 | % | | | 24.89 | % | | | 26.87 | % |
| |
| Noninterest expense (7) | | $ | 179,525 | | | $ | 183,309 | | | $ | 174,120 | | | $ | 165,267 | | | $ | 166,216 | |
| Efficiency ratio (8) | | | 59.77 | % | | | 60.86 | % | | | 53.88 | % | | | 50.10 | % | | | 51.39 | % |
| Cash efficiency ratio (9) | | | 50.96 | % | | | 51.89 | % | | | 50.54 | % | | | 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 | | | Predecessor | |
| | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | | | Three Months Ended | |
| (In thousands, except per share data) | | 9/30/2005 | | | 6/30/2005 | | | 3/31/2005 | | | 12/31/2004 | | | 9/30/2004 | |
Net income (GAAP) | | $ | 88,741 | | | $ | 95,595 | | | $ | 34,075 | | | $ | 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 | | | 755 | | | | 3,489 | | | | 23,375 | | | | 32,400 | | | | 4,342 | |
| Change in unrealized loss on derivatives | | | 462 | | | | (9,646 | ) | | | 5,314 | | | | — | | | | — | |
| Revised auto lease residual charge | | | — | | | | — | | | | — | | | | (84 | ) | | | — | |
| Deleveraging losses/(gains) | | | — | | | | (109 | ) | | | 41,562 | | | | 51,560 | | | | — | |
| | | | | | | | | | | | | | | | |
| Net income, as adjusted | | | 89,958 | | | | 89,329 | | | | 104,326 | | | | 104,574 | | | | 102,113 | |
| Amortization of intangibles | | | 19,540 | | | | 19,769 | | | | 7,472 | | | | 1,470 | | | | 1,547 | |
| | | | | | | | | | | | | | | | |
| Net income, as adjusted | | $ | 109,498 | | | $ | 109,098 | | | $ | 111,798 | | | $ | 106,044 | | | $ | 103,660 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Diluted earnings per share (GAAP) | | $ | 0.51 | | | $ | 0.55 | | | $ | 0.18 | | | $ | 0.12 | | | $ | 0.55 | |
| Effects of merger and consolidation costs, net of tax | | | — | | | | 0.02 | | | | 0.13 | | | | 0.17 | | | | 0.03 | |
| 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 | | | | 0.29 | | | | — | |
| | | | | | | | | | | | | | | | |
| Diluted earnings per share, as adjusted | | | 0.52 | | | | 0.52 | | | | 0.56 | | | | 0.58 | | | | 0.58 | |
| Effects of amortization of intangibles, net of tax | | | 0.11 | | | | 0.11 | | | | 0.04 | | | | 0.01 | | | | 0.01 | |
| | | | | | | | | | | | | | | | |
| Diluted earnings per share, as adjusted | | $ | 0.63 | | | $ | 0.63 | | | $ | 0.60 | | | $ | 0.59 | | | $ | 0.59 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Average Assets (GAAP) | | $ | 31,734,972 | | | $ | 32,008,478 | | | $ | 30,705,504 | | | $ | 28,576,401 | | | $ | 29,176,108 | |
| Average goodwill | | | (4,549,680 | ) | | | (4,536,952 | ) | | | (2,517,379 | ) | | | (1,368,912 | ) | | | (1,369,166 | ) |
| Average identifiable intangible assets | | | (715,078 | ) | | | (746,331 | ) | | | (301,197 | ) | | | (50,645 | ) | | | (53,568 | ) |
| | | | | | | | | | | | | | | | |
| Average tangible assets | | | 26,470,214 | | | | 26,725,195 | | | | 27,886,928 | | | | 27,156,844 | | | | 27,753,374 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Average Equity (GAAP) | | $ | 6,477,100 | | | $ | 6,415,590 | | | $ | 4,477,650 | | | $ | 3,096,887 | | | $ | 2,938,735 | |
| Average goodwill | | | (4,549,680 | ) | | | (4,536,952 | ) | | | (2,517,379 | ) | | | (1,368,912 | ) | | | (1,369,166 | ) |
| Average identifiable intangible assets | | | (715,078 | ) | | | (746,331 | ) | | | (301,197 | ) | | | (50,645 | ) | | | (53,568 | ) |
| Average deferred tax liability related to other identifiable intangible assets | | | 265,588 | | | | 264,676 | | | | 105,419 | | | | 17,726 | | | | 18,749 | |
| | | | | | | | | | | | | | | | |
| Average tangible equity | | | 1,477,930 | | | | 1,396,983 | | | | 1,764,493 | | | | 1,695,056 | | | | 1,534,750 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Return on average assets (GAAP) | | | 1.11 | % | | | 1.20 | % | | | 0.45 | % | | | 0.29 | % | | | 1.33 | % |
| Effects of merger and consolidation costs, net of tax | | | 0.01 | % | | | 0.04 | % | | | 0.31 | % | | | 0.45 | % | | | 0.06 | % |
| 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 | % | | | 0.52 | % | | | 0.25 | % | | | 0.09 | % | | | 0.10 | % |
| | | | | | | | | | | | | | | | |
| Return on average assets, as adjusted | | | 1.64 | % | | | 1.64 | % | | | 1.63 | % | | | 1.55 | % | | | 1.49 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Return on average equity (GAAP) | | | 5.44 | % | | | 5.98 | % | | | 3.09 | % | | | 2.66 | % | | | 13.24 | % |
| Effects of merger and consolidation costs, net of tax | | | 0.04 | % | | | 0.21 | % | | | 2.11 | % | | | 4.15 | % | | | 0.58 | % |
| 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 | % | | | 6.62 | % | | | — | |
| Effects of amortization of intangibles, net of tax | | | 23.88 | % | | | 25.74 | % | | | 16.25 | % | | | 11.46 | % | | | 13.05 | % |
| | | | | | | | | | | | | | | | |
| Return on average equity, as adjusted | | | 29.39 | % | | | 31.32 | % | | | 25.70 | % | | | 24.89 | % | | | 26.87 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Efficiency ratio | | | 60.05 | % | | | 59.57 | % | | | 80.15 | % | | | 84.43 | % | | | 52.60 | % |
| Effects of merger and consolidation costs | | | -0.16 | % | | | -1.19 | % | | | -11.29 | % | | | -12.08 | % | | | -1.21 | % |
| Effects of change in unrealized loss on derivatives | | | -0.12 | % | | | 2.45 | % | | | -1.96 | % | | | — | | | | — | |
| Effects of deleveraging losses/(gains) | | | — | | | | 0.02 | % | | | -13.67 | % | | | -22.25 | % | | | — | |
| Effects of amortization of intangibles | | | -8.81 | % | | | -8.96 | % | | | -2.69 | % | | | -0.68 | % | | | -0.72 | % |
| | | | | | | | | | | | | | | | |
| Efficiency ratio, as adjusted | | | 50.96 | % | | | 51.89 | % | | | 50.54 | % | | | 49.42 | % | | | 50.67 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Noninterest Income | | $ | 103,607 | | | $ | 117,272 | | | $ | 25,621 | | | $ | 72,537 | | | $ | 93,197 | |
| Net securities (gains) losses | | | (1,014 | ) | | | (1,439 | ) | | | 50,476 | | | | 17,761 | | | | (3,124 | ) |
| 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 | | | $ | 90,298 | | | $ | 90,073 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Noninterest Expense | | $ | 211,729 | | | $ | 220,333 | | | $ | 223,109 | | | $ | 267,359 | | | $ | 174,198 | |
| Merger and consolidation costs | | | (1,163 | ) | | | (5,368 | ) | | | (31,191 | ) | | | (38,286 | ) | | | (5,603 | ) |
| Prepayment penalties on borrowings | | | — | | | | — | | | | (6,303 | ) | | | (61,546 | ) | | | — | |
| | | | | | | | | | | | | | | | |
| Excluding merger and consolidation costs and prepayment penalties | | | 210,566 | | | | 214,965 | | | | 185,615 | | | | 167,527 | | | | 168,595 | |
| Amortization of intangibles | | | (31,041 | ) | | | (31,656 | ) | | | (11,495 | ) | | | (2,260 | ) | | | (2,379 | ) |
| | | | | | | | | | | | | | | | |
| Noninterest Expense, as adjusted | | $ | 179,525 | | | $ | 183,309 | | | $ | 174,120 | | | $ | 165,267 | | | $ | 166,216 | |
| | | | | | | | | | | | | | | | |
TD Banknorth Inc. and Subsidiaries
Reconciliation Table — Non-GAAP Financial Information (Unaudited)
| | | | | | | | | |
| | | Combined | | | Predecessor | |
| | | Nine Months Ended | | | Nine Months Ended | |
| (In thousands, except per share data) | | 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 | | | Total Indentifiable Intangibles | |
| | | Incremental | | | Incremental | | | Incremental | |
| | | Historical | | | at 3/1/05 | | | Historical | | | at 3/1/05 | | | Historical | | | at 3/1/05 | | | Total | |
| Amortization Expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January and February 2005 (Predecessor) | | $ | 1,237 | | | $ | 0 | | | $ | 324 | | | $ | 0 | | | $ | 1,561 | | | $ | 0 | | | $ | 1,561 | |
| March 2005 (Successor) | | | 708 | | | | 7,875 | | | | 31 | | | | 1,320 | | | | 739 | | | | 9,195 | | | | 9,934 | |
| | | | | | | | | | |
| Three months ended March 31, 2005 | | | 1,945 | | | | 7,875 | | | | 355 | | | | 1,320 | | | | 2,300 | | | | 9,195 | | | | 11,495 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, 2005 | | | 2,123 | | | | 24,958 | | | | 617 | | | | 3,959 | | | | 2,740 | | | | 28,917 | | | | 31,657 | |
| Three months ended September 30, 2005 | | | 2,123 | | | | 24,625 | | | | 334 | | | | 3,959 | | | | 2,457 | | | | 28,584 | | | | 31,041 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Future Amortization Expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| October 2005 through December 2005 | | | 2,120 | | | | 24,625 | | | | 186 | | | | 3,958 | | | | 2,306 | | | | 28,583 | | | | 30,889 | |
| | | | | | | | | | |
| Full Year 2005 | | | 8,311 | | | | 82,083 | | | | 1,492 | | | | 13,196 | | | | 9,803 | | | | 95,279 | | | | 105,082 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2006 | | | 7,383 | | | | 88,784 | | | | 745 | | | | 15,388 | | | | 8,128 | | | | 104,172 | | | | 112,300 | |
| 2007 | | | 6,584 | | | | 68,249 | | | | 745 | | | | 14,656 | | | | 7,329 | | | | 82,905 | | | | 90,234 | |
| 2008 | | | 6,340 | | | | 55,493 | | | | 375 | | | | 13,978 | | | | 6,715 | | | | 69,471 | | | | 76,186 | |
| 2009 | | | 6,340 | | | | 45,327 | | | | 375 | | | | 13,348 | | | | 6,715 | | | | 58,675 | | | | 65,390 | |
| thereafter | | | 21,936 | | | | 170,407 | | | | 484 | | | | 128,575 | | | | 22,420 | | | | 298,982 | | | | 321,402 | |
