##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2007
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 000-51179
 TD BANKNORTH INC.
  Delaware
    
    01-0437984(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)Two Portland Square, Portland, Maine
    
    04112(Address of principal executive offices)
    
    (Zip Code)
 (Registrants
telephone number, including area code)
 þ o
  þ o o
 o þ
  Common stock, par value $0.01 per share
    
    (1)(Class)
    
    (Outstanding)
 
 (1)
    
    One hundred percent owned indirectly by The Toronto-Dominion Bank.  Available
on the Web @ www.tdbanknorth.com




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##### 



PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Changes in Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 4. Controls and Procedures
    
    
    38Item 4T. Controls and Procedures
    
    
    38PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    38Item 1A. Risk Factors
    
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    39Item 4. Submission of Matters to a Vote of Security Holders
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    40Signatures
    
    
    41Exhibits
    
    
    42EX-12 Calculation of Ratios of Earnings to Fixed ChargesEX-31.1 Section 302 Certification of C.E.O.EX-31.2 Section 302 Certification of C.F.O.EX-32.1 Section 906 Certification of C.E.O.EX-32.2 Section 906 Certification of C.F.O.
  2




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data) (Unaudited)
 March 31, 2007
    
    
    December 31, 2006AssetsCash and due from banks
    
    $
    789,936
    
    
    $
    906,553Federal funds sold and other short-term investments
    
    
    2,895
    
    
    
    471,028Securities purchased under agreements to resell
    
    
    2,424,893
    
    
    
    1,789,766Securities available for sale, at market value
    
    
    2,198,953
    
    
    
    2,505,888Securities held to maturity (fair value of $46,242 in 2007 and $49,491 in 2006)
    
    
    45,327
    
    
    
    48,457Loans held for sale
    
    
    26,037
    
    
    
    19,112Loans and leases:Residential real estate mortgages
    
    
    2,831,262
    
    
    
    2,667,448Commercial real estate mortgages
    
    
    9,370,537
    
    
    
    8,749,887Commercial business loans and leases
    
    
    6,927,150
    
    
    
    6,534,792Consumer loans and leases
    
    
    7,037,943
    
    
    
    7,046,638Credit card receivables
    
    
    441,459
    
    
    
    462,736Total loans and leases
    
    
    26,608,351
    
    
    
    25,461,501Less: Allowance for loan and lease losses
    
    
    301,409
    
    
    
    279,638Net loans and leases
    
    
    26,306,942
    
    
    
    25,181,863Premises and equipment, net
    
    
    500,888
    
    
    
    486,143Goodwill
    
    
    6,378,992
    
    
    
    6,022,534Identifiable intangible assets
    
    
    736,455
    
    
    
    727,596Bank-owned life insurance
    
    
    828,691
    
    
    
    791,489Other assets
    
    
    988,942
    
    
    
    1,208,656Total assets
    
    $
    41,228,951
    
    
    $
    40,159,085Liabilities and Shareholders EquityDeposits:Savings accounts
    
    $
    3,703,857
    
    
    $
    3,685,872Money market and NOW accounts
    
    
    11,002,519
    
    
    
    9,654,755Certificates of deposit
    
    
    7,859,196
    
    
    
    7,393,218Brokered deposits
    
    
    225,292
    
    
    
    227,545Deposits in foreign office  interest bearing
    
    
    192,317
    
    
    
    153,237Noninterest-bearing deposits
    
    
    5,899,960
    
    
    
    5,890,139Total deposits
    
    
    28,883,141
    
    
    
    27,004,766Short-term borrowings
    
    
    1,581,697
    
    
    
    2,223,512Long-term debt
    
    
    1,437,819
    
    
    
    1,423,581Deferred tax liability on identifiable intangible assets
    
    
    288,617
    
    
    
    286,069Other liabilities
    
    
    290,227
    
    
    
    899,112Total liabilities
    
    
    32,481,501
    
    
    
    31,837,040Commitments and contingenciesShareholders Equity:Preferred stock (par value $0.01 per share, 5,000,000 shares authorized,
none issued)
    
    
    
    
    
    
    Common stock (par value $0.01 per share, 400,000,000 shares authorized,
Issued - 263,910,577 in 2007 and 250,910,577 in 2006)
    
    
    2,639
    
    
    
    2,509Common stock, Class B (par value $0.01 per share, authorized and
issued 1 share in 2006 and 2005)
    
    
    
    
    
    
    Paid-in capital
    
    
    9,148,754
    
    
    
    8,743,938Retained earnings
    
    
    287,055
    
    
    
    290,185Treasury stock, at cost (21,427,975 shares in 2007 and 22,030,878
shares in 2006)
    
    
    (667,298
    )
    
    
    (686,073
    )Accumulated other comprehensive loss
    
    
    (23,700
    )
    
    
    (28,514
    )Total shareholders equity
    
    
    8,747,450
    
    
    
    8,322,045Total liabilities and shareholders equity
    
    $
    41,228,951
    
    
    $
    40,159,085
  3




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
  Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Interest and dividend income:Interest and fees on loans and leases
    
    $
    456,510
    
    
    $
    378,698Interest and dividends on securities
    
    
    58,704
    
    
    
    77,801Total interest and dividend income
    
    
    515,214
    
    
    
    456,499Interest expense:Interest on deposits
    
    
    177,738
    
    
    
    106,682Interest on borrowed funds
    
    
    41,084
    
    
    
    67,373Total interest expense
    
    
    218,822
    
    
    
    174,055Net interest income
    
    
    296,392
    
    
    
    282,444Provision for loan and lease losses
    
    
    30,000
    
    
    
    6,900Net interest income after provision
for loan and lease losses
    
    
    266,392
    
    
    
    275,544Noninterest income:Deposit services
    
    
    44,867
    
    
    
    38,479Insurance agency commissions
    
    
    16,869
    
    
    
    15,839Merchant and electronic banking income, net
    
    
    16,376
    
    
    
    15,636Wealth management services
    
    
    11,380
    
    
    
    11,348Bank-owned life insurance
    
    
    8,839
    
    
    
    7,288Investment planning services
    
    
    5,042
    
    
    
    5,142Net securities gains (losses)
    
    
    92
    
    
    
    (90
    )Other noninterest income
    
    
    30,054
    
    
    
    24,197133,519
    
    
    
    117,839Noninterest expense:Compensation and employee benefits
    
    
    137,044
    
    
    
    125,210Occupancy
    
    
    27,824
    
    
    
    24,296Equipment
    
    
    17,512
    
    
    
    14,884Data processing
    
    
    15,606
    
    
    
    15,233Advertising and marketing
    
    
    7,328
    
    
    
    8,191Amortization of identifiable intangible assets
    
    
    36,781
    
    
    
    37,666Merger and restructuring costs
    
    
    30,594
    
    
    
    19,818Other noninterest expense
    
    
    45,348
    
    
    
    31,738318,037
    
    
    
    277,036Income before income tax expense
    
    
    81,874
    
    
    
    116,347Provision for income taxes
    
    
    26,186
    
    
    
    38,799Income from continuing operations
    
    
    55,688
    
    
    
    77,548Discontinued operationsLoss from discontinued operations
    
    
    (2,006
    )
    
    
    (2,599
    )Income tax benefit
    
    
    1,486
    
    
    
    1,257Loss from discontinued operations, net of tax
    
    
    (520
    )
    
    
    (1,342
    )Net income
    
    $
    55,168
    
    
    $
    76,206
  4




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 (In thousands) (Unaudited)
 AccumulatedCommon
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherShares
    
    Common
    
    Paid-in
    
    Retained
    
    Unearned
    
    Treasury
    
    ComprehensiveOutstanding
    
    Stock
    
    Capital
    
    Earnings
    
    Compensation
    
    Stock
    
    Income (Loss)
    
    TotalBalances at December 31, 2006
    
    
    228,880
    
    
    $
    2,509
    
    
    $
    8,743,938
    
    
    $
    290,185
    
    
    $
    0
    
    
    
    ($686,073
    )
    
    
    ($28,514
    )
    
    $
    8,322,045Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,168Change in unrealized losses on securities, net of
reclassification adjustment net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,634
    
    
    
    2,634Change in unrealized gains on cash flow hedges, net of
reclassification adjustment net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332
    
    
    
    332Defined benefit pension plans : Net gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,848
    
    
    
    1,848Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,982Adjustment to initially apply FIN 48, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,010
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,010
    )Common stock issued to The Toronto-Dominion Bank
for acquisitions
    
    
    13,000
    
    
    
    130
    
    
    
    405,080
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    405,210Treasury stock issued for employee benefit
plans, including tax benefit of $1.4 million
    
    
    603
    
    
    
    
    
    
    
    (1,940
    )
    
    
    
    
    
    
    
    
    
    
    18,775
    
    
    
    
    
    
    
    16,835Stock option compensation expense
    
    
    
    
    
    
    
    
    
    
    1,676
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,676Treasury stock purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    
    
    
    
    0Decrease in unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    0Cash dividends declared ($0.22 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,288
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,288
    )Balances at March 31, 2007
    
    
    242,483
    
    
    $
    2,639
    
    
    $
    9,148,754
    
    
    $
    287,055
    
    
    $
    0
    
    
    
    ($667,298
    )
    
    
    ($23,700
    )
    
    $
    8,747,450Balances at December 31, 2005
    
    
    173,665
    
    
    $
    1,884
    
    
    $
    6,833,677
    
    
    $
    152,494
    
    
    
    ($1,131
    )
    
    
    ($469,010
    )
    
    
    ($34,041
    )
    
    $
    6,483,873Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,206Change in unrealized losses on securities, net of
reclassification adjustment net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,947
    )
    
    
    (14,947
    )Change in unrealized gains on cash flow hedges, net of
reclassification adjustment net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,274
    
    
    
    4,274Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,533Common stock issued for acquisitions
    
    
    32,859
    
    
    
    329
    
    
    
    965,065
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    965,394Common stock issued to The Toronto-Dominion Bank
for acquisitions
    
    
    29,625
    
    
    
    296
    
    
    
    941,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    941,790Treasury stock issued for employee benefit
plans, including tax benefit of $0.4 million
    
    
    301
    
    
    
    
    
    
    
    (1,827
    )
    
    
    
    
    
    
    
    
    
    
    9,471
    
    
    
    
    
    
    
    7,644Stock option compensation expense
    
    
    
    
    
    
    
    
    
    
    1,917
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,917Treasury stock purchased
    
    
    (8,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255,470
    )
    
    
    
    
    
    
    (255,470
    )Decrease in unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    375
    
    
    
    
    
    
    
    
    
    
    
    375Cash dividends declared ($0.22 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,833
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,833
    )Balances at March 31, 2006
    
    
    227,950
    
    
    $
    2,509
    
    
    $
    8,740,326
    
    
    $
    177,867
    
    
    
    ($756
    )
    
    
    ($715,009
    )
    
    
    ($44,714
    )
    
    $
    8,160,223
  5




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##### Table of Contents



TD BANKNORTH INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended(In thousands)
    
    March 31, 2007
    
    
    March 31, 2006Cash flows from operating activities:Net income
    
    $
    55,168
    
    
    $
    76,206Loss from discontinued operations, net of tax
    
    
    520
    
    
    
    1,342Income from continuing operations
    
    
    55,688
    
    
    
    77,548Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan and lease losses
    
    
    30,000
    
    
    
    6,900Depreciation of banking premises and equipment
    
    
    17,497
    
    
    
    14,451Net amortization of premium and discounts
    
    
    2,449
    
    
    
    (1,710
    )Amortization of intangible assets
    
    
    36,781
    
    
    
    37,666Deferred tax (benefit) provision
    
    
    (4,369
    )
    
    
    4,800Unearned compensation/stock option expense
    
    
    
    
    
    
    375Stock-based compensation expense
    
    
    1,676
    
    
    
    1,917Net losses (gains) realized from sales of securities and loans
    
    
    (92
    )
    
    
    73Increase in cash surrender value of bank owned life insurance
    
    
    (8,839
    )
    
    
    (7,288
    )Pension plan contributions
    
    
    (1,195
    )
    
    
    Proceeds from sales of loans held for sale
    
    
    147,963
    
    
    
    84,953Residential loans originated and purchased for sale
    
    
    (154,888
    )
    
    
    (78,591
    )Change in fair value of derivatives
    
    
    (121
    )
    
    
    Change in net deferred tax liability
    
    
    2,930
    
    
    
    (37,875
    )Net (increase) decrease in other assets
    
    
    67,718
    
    
    
    19,983Net (decrease) increase in other liabilities
    
    
    (54,326
    )
    
    
    (9,991
    )Net cash provided by operating activities
    
    
    138,872
    
    
    
    113,211Cash flows from investing activities:Proceeds from sales of securities available for sale
    
    
    631,083
    
    
    
    2,942,035Proceeds from sale of securities as part of the deleveraging program
    
    
    
    
    
    
    2,528,541Proceeds from maturities and principal repayments of securities available for sale
    
    
    149,389
    
    
    
    275,756Purchases of securities available for sale
    
    
    (216,144
    )
    
    
    (899,363
    )Net (increase) in securities purchased under reverse repurchase agreements
    
    
    (635,234
    )
    
    
    (3,200,000
    )Proceeds from maturities and principal repayments of securities held to maturity
    
    
    3,130
    
    
    
    4,100Net increase in loans and leases
    
    
    (52,622
    )
    
    
    (309,188
    )Proceeds from sales of portfolio loans
    
    
    
    
    
    
    925Net additions to premises and equipment
    
    
    (19,661
    )
    
    
    (21,128
    )Proceeds from policy coverage on bank owned life insurance
    
    
    636
    
    
    
    19Proceeds from sale of other real estate owned
    
    
    1,188
    
    
    
    Cash used in business acquisitions
    
    
    (468,069
    )
    
    
    (941,874
    )Cash acquired from acquisitions
    
    
    39,234
    
    
    
    238,562Net cash (used in) provided by investing activities
    
    
    (567,070
    )
    
    
    618,385Cash flows from financing activities:Net increase (decrease) in deposits
    
    
    636,781
    
    
    
    (294,472
    )Net decrease in short-term borrowings
    
    
    (641,815
    )
    
    
    (587,245
    )Payments on long-term debt
    
    
    (113,059
    )
    
    
    (412,401
    )Excess tax benefits (expense) from stock-based compensation
    
    
    1,218
    
    
    
    (448
    )Treasury stock issued for employee benefit plans
    
    
    15,617
    
    
    
    7,644Issuance of stock to The Toronto-Dominion Bank
    
    
    
    
    
    
    941,790Purchase of treasury stock
    
    
    
    
    
    
    (255,470
    )Cash dividends paid to shareholders
    
    
    (53,288
    )
    
    
    (50,833
    )Net cash (used in) financing activities
    
    
    (154,546
    )
    
    
    (651,435
    )Cash flows from discontinued operations:Operating activities
    
    
    (2,006
    )
    
    
    (2,599
    )Net cash used in discontinued operations
    
    
    (2,006
    )
    
    
    (2,599
    )(Decrease) increase in cash and cash equivalents
    
    
    (584,750
    )
    
    
    77,562Cash and cash equivalents at beginning of year
    
    
    1,377,581
    
    
    
    769,258Cash and cash equivalents at end of period
    
    $
    792,831
    
    
    $
    846,820In conjunction with the purchase acquisitions, assets were acquired and liabilities were assumed as follows:Fair value of assets acquired
    
    $
    1,871,461
    
    
    $
    10,301,998Less liabilities assumed
    
    
    1,403,392
    
    
    
    8,394,729Supplemental cash flow disclosuresCash paid for interest
    
    $
    209,173
    
    
    $
    157,569Cash paid for income taxes
    
    
    4,646
    
    
    
    11,172
  6




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
 March 31, 2007
 (In thousands, except per share data and as noted) (Unaudited)
 Note 1  Basis of Presentation
    Note 2  Accounting Changes
  Fair Value Option for Financial Assets and Financial Liabilities
  Fair Value Measurement
  7




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##### Table of Contents



Accounting for Uncertainty in Income Taxes
  Note 3  Acquisitions
  Transaction-Related ItemsBalance at
    
    
    
    
    
    Identifiable
    
    
    
    
    
    
    
    
    
    TotalAcquisition
    
    Acquisition Date
    
    
    
    
    
    Intangible
    
    Cash
    
    Shares
    
    Purchase(Dollars and shares in millions)
    
    Date
    
    Assets
    
    Equity
    
    Goodwill
    
    Assets
    
    Paid
    
    Issued
    
    PriceInterchange Financial Services
Corporation
    
    
    1/1/2007
    
    
    $
    1,567.0
    
    
    $
    176.5
    
    
    $
    366.6
    
    
    $
    26.4
    
    
    $
    468.1
    
    
    
    
    (1)
    
    $
    468.1Hudson United Bancorp
    
    
    1/31/2006
    
    
    $
    8,771.0
    
    
    $
    518.3
    
    
    $
    1,463.6
    
    
    $
    222.5
    
    
    $
    941.8
    
    
    
    32.9
    (2)
    
    $
    1,907.3
 
 (1)
    
    13.0 million shares of common stock were sold by us to The Toronto-Dominion Bank to fund
the cash paid by us in connection with the acquisition of Interchange Financial Services Corporation.(2)
    
    Shares issued does not include the 29.6 million shares of common stock sold by us to The Toronto-Dominion Bank to fund
the cash paid by us in connection with the acquisition of Hudson United Bancorp. Note 4  Discontinued Operations
    8




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##### Table of Contents



Note 5
 Stock Compensation Plans
 General
   Restricted Stock and Restricted Stock Units
   WeightedRestricted Stock
    
    
    Averageand Restricted
    
    
    Grant-DateRestricted Stock and Restricted Stock Units
    
    Stock Units
    
    
    Fair ValueNonvested at January 1, 2007
    
    
    1,360,837
    
    
    $
    30.02Granted
    
    
    672,514
    
    
    
    32.28Vested
    
    
    (12,367
    )
    
    
    30.11Forfeited
    
    
    (70,767
    )
    
    
    30.75Nonvested at March 31, 2007
    
    
    1,950,217
    
    
    
    30.77Vested at March 31, 2007
    
    
    33,320
    
    
    
    30.22
   9




---



##### Table of Contents



Note 6
 Securities Purchased under Agreements to Resell
  Note 7
 Securities Available for Sale
  Less than 1 year
    
    More than 1 year
    
    TotalNumber of
    
    Fair
    
    Unrealized
    
    Number of
    
    Fair
    
    Unrealized
    
    Number of
    
    Fair
    
    UnrealizedAvailable for Sale:
    
    Investments
    
    Value
    
    Losses
    
    Investments
    
    Value
    
    Losses
    
    Investments
    
    Value
    
    LossesU. S. Government obligations and
obligations of U.S. Government
agencies and Government
sponsored enterprises
    
    
    
    
    
    $
    0
    
    
    $
    0
    
    
    
    1
    
    
    $
    971
    
    
    $
    14
    
    
    
    1
    
    
    $
    971
    
    
    $
    14Tax-exempt bonds and notes
    
    
    17
    
    
    
    12,083
    
    
    
    53
    
    
    
    80
    
    
    
    43,725
    
    
    
    381
    
    
    
    97
    
    
    
    55,808
    
    
    
    434Other bonds and notes
    
    
    13
    
    
    
    26,944
    
    
    
    212
    
    
    
    42
    
    
    
    36,169
    
    
    
    433
    
    
    
    55
    
    
    
    63,113
    
    
    
    645Mortgage-backed securities
    
    
    170
    
    
    
    402,877
    
    
    
    2,142
    
    
    
    673
    
    
    
    983,687
    
    
    
    16,964
    
    
    
    843
    
    
    
    1,386,564
    
    
    
    19,106Collateralized mortgage
obligations
    
    
    1
    
    
    
    371
    
    
    
    5
    
    
    
    12
    
    
    
    47,234
    
    
    
    635
    
    
    
    13
    
    
    
    47,605
    
    
    
    640Equity securities
    
    
    2
    
    
    
    89
    
    
    
    10
    
    
    
    1
    
    
    
    114
    
    
    
    27
    
    
    
    3
    
    
    
    203
    
    
    
    37203
    
    
    $
    442,364
    
    
    $
    2,422
    
    
    
    809
    
    
    $
    1,111,900
    
    
    $
    18,454
    
    
    
    1,012
    
    
    $
    1,554,264
    
    
    $
    20,876
   10




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##### Table of Contents



Note 8
 Goodwill and Other Intangible Assets
  Other
    
    
    TotalCore Deposit
    
    
    Identifiable
    
    
    IdentifiableGoodwill
    
    
    Intangibles
    
    
    Intangibles
    
    
    IntangiblesBalance, December 31, 2006
    
    $
    6,022,534
    
    
    $
    516,200
    
    
    $
    211,396
    
    
    $
    727,596Recorded during the year
    
    
    366,736
    
    
    
    26,350
    
    
    
    
    
    
    
    26,350Amortization expense
    
    
    
    
    
    
    (32,318
    )
    
    
    (4,463
    )
    
    
    (36,781
    )Adjustment of purchase accounting estimates
    
    
    (10,278
    )
    
    
    19,290
    
    
    
    
    
    
    
    19,290Balance, March 31, 2007
    
    $
    6,378,992
    
    
    $
    529,522
    
    
    $
    206,933
    
    
    $
    736,455Estimated Annual Amortization Expense:Remaining 2007
    
    
    
    
    
    $
    85,260
    
    
    $
    13,388
    
    
    $
    98,6482008
    
    
    
    
    
    
    93,801
    
    
    
    16,809
    
    
    
    110,6102009
    
    
    
    
    
    
    76,497
    
    
    
    16,186
    
    
    
    92,6832010
    
    
    
    
    
    
    62,024
    
    
    
    15,440
    
    
    
    77,4642011
    
    
    
    
    
    
    49,691
    
    
    
    14,870
    
    
    
    64,561Thereafter
    
    
    
    
    
    
    162,249
    
    
    
    130,240
    
    
    
    292,489
  March 31, 2007Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    AmountIdentifiable intangible assets:Core deposit intangibles
    
    $
    788,741
    
    
    $
    259,219
    
    
    $
    529,522Other identifiable intangibles:Loan relationship
intangibles
    
    
    133,535
    
    
    
    14,018
    
    
    
    119,517Other identifiable
intangibles
    
    
    110,629
    
    
    
    23,213
    
    
    
    87,416244,164
    
    
    
    37,231
    
    
    
    206,933Total
    
    $
    1,032,905
    
    
    $
    296,450
    
    
    $
    736,455
 Note 9
 Deposits
  Note
10  Short-term Borrowings
  11




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##### Table of Contents



March 31, 2007
    
    
    December 31, 2006Securities sold under agreements to repurchase  retail
    
    $
    1,311,824
    
    
    $
    1,517,591Federal funds purchased
    
    
    269,700
    
    
    
    689,000Treasury, tax and loan notes
    
    
    173
    
    
    
    16,921$
    1,581,697
    
    
    $
    2,223,512
  Note
11  Long-term Debt
  March 31, 2007
    
    
    December 31, 2006Federal Home Loan Bank advances
    
    $
    67,306
    
    
    $
    68,610Securities sold under agreements to repurchase  retail
    
    
    8,636
    
    
    
    10,415Junior subordinated debentures issued to affiliated trusts
    
    
    534,781
    
    
    
    517,390Subordinated debt 7.625% due 2011
    
    
    219,094
    
    
    
    220,313Subordinated debt 7.00% due 2012
    
    
    218,513
    
    
    
    219,881Subordinated debt 5.05% due 2022
    
    
    233,847
    
    
    
    231,680Senior notes 3.75%, due 2008
    
    
    149,535
    
    
    
    149,411Other long-term debt
    
    
    6,107
    
    
    
    5,881Total
    
    $
    1,437,819
    
    
    $
    1,423,581
  Note
12  Changes in Accumulated Other Comprehensive Income
  Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Pre-tax
    
    
    Tax
    
    
    Net of
    
    
    Pre-tax
    
    
    Tax
    
    
    Net ofAmount
    
    
    Effect
    
    
    Tax
    
    
    Amount
    
    
    Effect
    
    
    TaxChange in:Change in unrealized gain (loss) on
securities available for sale
    
    $
    4,105
    
    
    
    ($1,411
    )
    
    $
    2,694
    
    
    
    ($23,085
    )
    
    $
    8,080
    
    
    
    ($15,005
    )Change in unrealized gain (loss) on
cash flow hedges
    
    
    2,912
    
    
    
    (1,019
    )
    
    
    1,893
    
    
    
    2,869
    
    
    
    (1,004
    )
    
    
    1,865Defined benefit plans: net gains
    
    
    2,843
    
    
    
    (995
    )
    
    
    1,848Reclassification adjustment for
losses (gains) realized in net income
    
    
    (2,493
    )
    
    
    872
    
    
    
    (1,621
    )
    
    
    3,796
    
    
    
    (1,329
    )
    
    
    2,467Net change in unrealized gains (losses)
    
    $
    7,367
    
    
    
    ($2,553
    )
    
    $
    4,814
    
    
    
    ($16,420
    )
    
    $
    5,747
    
    
    
    ($10,673
    )
 12




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##### Table of Contents



Note 13   Other Noninterest Income
  Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Loan fee income
    
    $
    16,920
    
    
    $
    12,392Income on restricted stock
    
    
    5,275
    
    
    
    4,583Mortgage banking services
income
    
    
    2,191
    
    
    
    1,235Venture capital (write-downs) gains
    
    
    (15
    )
    
    
    508Covered call premiums
    
    
    
    
    
    
    922Miscellaneous income
    
    
    5,683
    
    
    
    4,557Total
    
    $
    30,054
    
    
    $
    24,197
 Note 14   Other Noninterest Expense
  Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Other noninterest expense:Professional fees
    
    $
    6,647
    
    
    $
    5,509Telephone
    
    
    4,391
    
    
    
    3,932Office supplies
    
    
    3,117
    
    
    
    3,061Postage and freight
    
    
    4,110
    
    
    
    3,671Corporate contributions (1)
    
    
    8,264
    
    
    
    31Courier
    
    
    2,728
    
    
    
    2,404Miscellaneous loan costs
    
    
    1,916
    
    
    
    1,205Collection and carrying costs
of non-performing assets
    
    
    384
    
    
    
    525Deposits and other assessments
    
    
    1,375
    
    
    
    1,241Miscellaneous
    
    
    12,416
    
    
    
    10,159Total other noninterest expense
    
    $
    45,348
    
    
    $
    31,738
 
 (1)
    
    Includes an $8 million special contribution to the TD Banknorth Charitable
Foundation. Note
15  Pension and Other Postretirement Plans
  13




---



##### Table of Contents



Components of net periodic benefit cost:
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Qualified PensionService cost
    
    $
    4,443
    
    
    $
    4,475Interest cost
    
    
    4,106
    
    
    
    4,270Expected (gain) on plan assets
    
    
    (7,592
    )
    
    
    (7,185
    )Net periodic benefit cost
    
    $
    957
    
    
    $
    1,560Nonqualified PensionService cost
    
    $
    190
    
    
    $
    236Interest cost
    
    
    935
    
    
    
    669Amortization of prior service costs
    
    
    264
    
    
    
    312Recognized actuarial (gain)
    
    
    (2
    )
    
    
    Net periodic benefit cost
    
    $
    1,387
    
    
    $
    1,217Other Postretirement BenefitsService cost
    
    $
    48
    
    
    $
    50Interest cost
    
    
    279
    
    
    
    339Recognized actuarial (gain)
    
    
    (102
    )
    
    
    (64
    )Net periodic benefit cost
    
    $
    225
    
    
    $
    325
  Note
16  Merger and Restructuring Costs
   14




---



##### Table of Contents



Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Interchange Financial Services Corporation
Merger ChargesPersonnel costs
    
    $
    2,970
    
    
    $
    Systems conversion and integration/customer
communications
    
    
    1,664
    
    
    
    Other costs
    
    
    958
    
    
    
    5,592
    
    
    
    Hudson United Bancorp Merger ChargesPersonnel costs
    
    
    271
    
    
    
    69Systems conversion and integration/customer
communications
    
    
    48
    
    
    
    5,441Other costs
    
    
    632
    
    
    
    1,786951
    
    
    
    7,296Restructuring CostsPersonnel costs
    
    
    7,638
    
    
    
    10,623Contract terminations
    
    
    1,741Branch closings
    
    
    3,469
    
    
    
    Other
    
    
    21113,059
    
    
    
    10,623The Toronto-Dominion Bank Merger Charges (1)Personnel costs
    
    
    4,113
    
    
    
    1,424Transaction costs
    
    
    6,680
    
    
    
    35Name change
    
    
    
    
    
    
    29310,793
    
    
    
    1,752Other Merger ChargesBostonFed Bancorp, Inc. Merger Charges
    
    
    8
    
    
    
    24American Financial Holdings, Inc. Merger Charges
    
    
    
    
    
    
    7CCBT Financial Companies, Inc. Merger Charges
    
    
    (25
    )
    
    
    116Acquisition of deposits from TD Bank USA
    
    
    216
    
    
    
    199
    
    
    
    147Total Merger and Restructuring Costs
    
    $
    30,594
    
    
    $
    19,818
 
 (1)
    
    Charges in 2006 relate to The Toronto-Dominion Banks initial acquisition of a majority
interest in us on March 1, 2005 and charges in 2007 relate to The Toronto-Dominion Banks
acquisition of the remaining outstanding shares of TD Banknorth common stock not owned by it
on April 20, 2007.  Purchase
    
    
    
    
    
    
    
    
    
    
    Non-cashAccounting
    
    
    Merger and
    
    
    
    
    
    
    Write DownsBalance
    
    
    Adjustments
    
    
    Restructuring
    
    
    Cash
    
    
    and Other
    
    
    Balance12/31/06
    
    
    at Acquisition
    
    
    Costs
    
    
    Payments
    
    
    Adjustments
    
    
    3/31/07Interchange Merger
    
    $
    
    
    
    $
    13,336
    
    
    $
    5,592
    
    
    
    ($15,288
    )
    
    $
    
    
    
    $
    3,640Hudson United Bancorp Merger
    
    
    3,729
    
    
    
    
    
    
    
    951
    
    
    
    (1,323
    )
    
    
    
    
    
    
    3,357Restructuring costs
    
    
    
    
    
    
    
    
    
    
    13,059
    
    
    
    (236
    )
    
    
    
    
    
    
    12,823The Toronto-Dominion Bank Mergers
    
    
    
    
    
    
    
    
    
    
    10,793
    
    
    
    (2,508
    )
    
    
    
    
    
    
    8,285BostonFed Bancorp, Inc. Merger
    
    
    1,547
    
    
    
    
    
    
    
    8
    
    
    
    (40
    )
    
    
    
    
    
    
    1,515CCBT Financial Companies, Inc.
Merger
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    25
    
    
    
    
    
    
    
    Acquisition of deposits from TD
Bank USA
    
    
    
    
    
    
    
    
    
    
    216
    
    
    
    (216
    )
    
    
    
    
    
    
    Total
    
    $
    5,276
    
    
    $
    13,336
    
    
    $
    30,594
    
    
    
    ($19,586
    )
    
    $
    0
    
    
    $
    29,620
  15




---



##### Table of Contents



Note
17  Income Taxes
    Note
18  Related Party Transactions
   16




---



##### Table of Contents



March 31, 2007
    
    December 31, 2006Cash and due from banks
    
    $
    360
    
    
    $
    3,823Other assets:Positive fair value marks on derivatives
    
    
    15,399
    
    
    
    16,514Deferred tax asset
    
    
    1,132
    
    
    
    878Deferred debt issuance costs
    
    
    991
    
    
    
    1,014Other
    
    
    865
    
    
    
    516Interest-bearing deposits from The Toronto-Dominion Bank
    
    
    15,725
    
    
    
    15,544Other liabilities:Negative fair value marks on derivatives
    
    
    18,739
    
    
    
    14,398Funds received for sale of stock on January 1, 2007
    
    
    
    
    
    
    405,210Shareholders EquityAccumulated other comprehensive income
    
    
    (3,233
    )
    
    
    (1,631
    )Broker commissions paid to TD Securities
for common stock repurchases
    
    
    (476
    )
    
    
    (476
    )Off-balance sheet transactions (notional amounts):Interest rate swaps, caps and floors
    
    
    3,101,750
    
    
    
    2,988,244Foreign exchange contracts
    
    
    126,706
    
    
    
    126,531
      Note 19  Subsequent Events
  17




---



##### Table of Contents



Item 2.
 TD BANKNORTH INC. AND SUBSIDIARIES
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 General
   th
 Executive Overview
 
    
    In March 2007, we announced various expense reductions and operational initiatives
which are intended to improve our future operating performance. These initiatives are
being taken in light of our recent financial results, the intensely competitive
environment for banking services, current economic conditions and the recently-completed
going-private transaction and are intended to reduce our annual operating expenses by 5%
to 8% ($50 to $80 million, respectively) by 2008.
    
    Net income for the quarter ended March 31, 2007 amounted to $55.2 million compared to
$76.2 million for the same period last year. This decrease was primarily attributable to
increased merger and restructuring charges ($10.8 million pre-tax) and increased
provisions for loan and lease losses ($23.1 million pre-tax) due to increases in
nonperforming assets and net charge-offs, which reflect the
 18




---



##### Table of Contents



deterioration in new
construction residential real estate loans, particularly in the Mid-Atlantic and southern
New England regions.
    
    We completed the acquisition of Interchange Financial Services Corporation
(Interchange) on January 1, 2007. Interchange had $1.6 billion in assets at the
acquisition date.
    
    Noninterest income increased by $15.7 million or 13% as compared to the quarter ended
March 31, 2006 due to the acquisition of Interchange on January 1, 2007 and a full quarter
of income from the acquisition of Hudson on January 31, 2006.
    
    Noninterest expense increased by $41.0 million or 15% due primarily to a $10.8 million
increase in merger and restructuring costs, increased operating expenses related to
Interchange and Hudson and an $8 million contribution to our charitable foundation in
March 2007.
    
    Nonperforming assets increased from $132.4 million at December 31, 2006 to $225.2
million at March 31, 2007 primarily as a result of increases in nonaccrual commercial real
estate loans. At March 31, 2007, nonperforming assets as a percentage of total assets
amounted to 0.55% compared to 0.33% at December 31, 2006. These increases resulted from
the deterioration in the residential real estate construction markets in our lending
areas.
  
    
    using the definition of federal banking regulators, we continue to be well-capitalized;
    
    In March 2007, Moodys raised our long-term debt rating to Aa3; and
    
    our liquidity measures at March 31, 2007 met our policy guidelines.
 Outlook
  
    
    Increase our focus on organic loan and deposit growth;
    
    Focus on process improvements and branch consolidations to reduce operating costs;
    
    Grow/develop deposit relationships by providing quality services, simplifying fee
structures and eliminating certain fees;
    
    Continue to review the performance characteristics of our branch network; and
    
    Review our pricing on loans and deposits in certain market areas.
  Acquisition by The Toronto-Dominion Bank
  19




---



##### Table of Contents



Acquisitions
   Table 1  Acquistions
 Transaction-Related ItemsBalance at
    
    
    
    
    
    Identifiable
    
    
    
    
    
    
    
    
    
    TotalAcquisition
    
    Acquisition Date
    
    
    
    
    
    Intangible
    
    Cash
    
    Shares
    
    Purchase(Dollars and shares in millions)
    
    Date
    
    Assets
    
    Equity
    
    Goodwill
    
    Assets
    
    Paid
    
    Issued
    
    PriceInterchange Financial Services
Corporation
    
    
    1/1/2007
    
    
    $
    1,567.0
    
    
    $
    176.5
    
    
    $
    366.6
    
    
    $
    26.4
    
    
    $
    468.1
    
    
    
    
    (1)
    
    $
    468.1Hudson United Bancorp
    
    
    1/31/2006
    
    
    $
    8,771.0
    
    
    $
    518.3
    
    
    $
    1,463.6
    
    
    $
    222.5
    
    
    $
    941.8
    
    
    
    32.9
    (2)
    
    $
    1,907.3
 
 (1)
    
    13.0 million shares of common stock were sold by us to The Toronto-Dominion Bank to fund
the cash paid by us in connection with the acquisition of Interchange Financial Services Corporation.(2)
    
    Shares issued does not include the 29.6 million shares of common stock sold by us to The Toronto-Dominion Bank to fund
the cash paid by us in connection with the acquisition of Hudson United Bancorp. 
 Net Interest Income and Margin
  
    
    a full quarter of income from the acquisition of Hudson on January 31, 2006 compared to
two months last year;
    
    an increase in net earning assets as a result of the acquisition of Interchange on
January 1, 2007;
    
    a change in the mix of average earning assets resulting from the deleveraging program
late in the first quarter of 2006 (loans comprised 85% of average earning assets during the
three months ended March 31, 2007 compared to 79% for the same period last year); and
    
    changes in the composition of interest-bearing liabilities resulting from the
deleveraging program late in the first quarter of 2006 (deposits comprised 87% of
interest-bearing liabilities during 2007 compared to 76% during 2006).
   20




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21




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##### Table of Contents



Table 2  Average Balances, Yields and Rates
 2007 First Quarter
    
    
    2006 First QuarterYield/
    
    
    
    
    
    
    
    
    
    
    Yield/Average Balance
    
    
    Interest
    
    
    Rate (1)
    
    
    Average Balance
    
    
    Interest
    
    
    Rate (1)Loans and leases (2):Residential real estate mortgages
    
    $
    2,783,915
    
    
    $
    39,753
    
    
    
    5.71
    %
    
    $
    2,916,912
    
    
    $
    40,270
    
    
    
    5.52
    %Commercial real estate mortgages
    
    
    9,480,830
    
    
    
    163,378
    
    
    
    6.99
    %
    
    
    7,996,632
    
    
    
    132,202
    
    
    
    6.70
    %Commercial business loans and leases
    
    
    6,754,580
    
    
    
    124,314
    
    
    
    7.46
    %
    
    
    5,722,504
    
    
    
    94,361
    
    
    
    6.71
    %Consumer loans and leases
    
    
    7,121,969
    
    
    
    118,421
    
    
    
    6.74
    %
    
    
    6,908,585
    
    
    
    105,468
    
    
    
    6.19
    %Credit card receivables
    
    
    440,651
    
    
    
    13,222
    
    
    
    12.17
    %
    
    
    243,287
    
    
    
    7,843
    
    
    
    13.07
    %Total loans and leases
    
    
    26,581,945
    
    
    
    459,088
    
    
    
    6.99
    %
    
    
    23,787,920
    
    
    
    380,144
    
    
    
    6.48
    %Investment securities (3)
    
    
    2,417,714
    
    
    
    32,268
    
    
    
    5.34
    %
    
    
    5,634,703
    
    
    
    71,306
    
    
    
    5.06
    %Securities purchased under agreements to resell
    
    
    2,195,356
    
    
    
    28,121
    
    
    
    5.12
    %
    
    
    585,556
    
    
    
    7,197
    
    
    
    4.92
    %Federal funds sold and other short-term investments
    
    
    5,643
    
    
    
    48
    
    
    
    3.43
    %
    
    
    23,813
    
    
    
    140
    
    
    
    2.39
    %Total earning assets
    
    
    31,200,658
    
    
    
    519,525
    
    
    
    6.74
    %
    
    
    30,031,992
    
    
    
    458,787
    
    
    
    6.18
    %Bank-owned life insurance
    
    
    823,502
    
    
    
    
    
    
    
    
    
    
    
    697,668Goodwill
    
    
    6,382,995
    
    
    
    
    
    
    
    
    
    
    
    5,509,988Indentifiable intangible assets
    
    
    750,764
    
    
    
    
    
    
    
    
    
    
    
    801,665Other noninterest-earning assets
    
    
    2,254,577
    
    
    
    
    
    
    
    
    
    
    
    1,944,528Total assets
    
    $
    41,412,496
    
    
    
    
    
    
    
    
    
    
    $
    38,985,841Interest-bearing deposits:Regular savings
    
    $
    3,747,434
    
    
    
    10,858
    
    
    
    1.18
    %
    
    $
    3,708,031
    
    
    
    9,266
    
    
    
    1.01
    %NOW and money market accounts
    
    
    10,649,016
    
    
    
    79,014
    
    
    
    3.01
    %
    
    
    9,172,611
    
    
    
    48,613
    
    
    
    2.15
    %Certificates of deposit
    
    
    7,891,421
    
    
    
    83,214
    
    
    
    4.28
    %
    
    
    6,226,033
    
    
    
    46,456
    
    
    
    3.03
    %Brokered deposits
    
    
    224,970
    
    
    
    2,997
    
    
    
    5.40
    %
    
    
    211,689
    
    
    
    2,347
    
    
    
    4.50
    %Deposits in foreign office
    
    
    163,420
    
    
    
    1,655
    
    
    
    4.11
    %
    
    
    
    
    
    
    
    
    
    
    Total interest-bearing deposits
    
    
    22,676,261
    
    
    
    177,738
    
    
    
    3.18
    %
    
    
    19,318,364
    
    
    
    106,682
    
    
    
    2.24
    %Borrowed funds
    
    
    3,418,646
    
    
    
    41,084
    
    
    
    4.84
    %
    
    
    6,250,112
    
    
    
    67,373
    
    
    
    4.36
    %Total interest-bearing liabilities
    
    
    26,094,907
    
    
    
    218,822
    
    
    
    3.40
    %
    
    
    25,568,476
    
    
    
    174,055
    
    
    
    2.76
    %Non-interest bearing deposits
    
    
    5,766,859
    
    
    
    
    
    
    
    
    
    
    
    5,166,252Deferred tax liability related to
identifiable intangible assets
    
    
    296,209
    
    
    
    
    
    
    
    
    
    
    
    315,498Other liabilities
    
    
    512,954
    
    
    
    
    
    
    
    
    
    
    
    334,445Shareholders equity
    
    
    8,741,567
    
    
    
    
    
    
    
    
    
    
    
    7,601,170Total liabilities and shareholders equity
    
    $
    41,412,496
    
    
    
    
    
    
    
    
    
    
    $
    38,985,841Net earning assets
    
    $
    5,105,751
    
    
    
    
    
    
    
    
    
    
    $
    4,463,516Net interest income (fully-taxable equivalent)
    
    
    
    
    
    
    300,703
    
    
    
    
    
    
    
    
    
    
    
    284,732Less: fully-taxable equivalent adjustments
    
    
    
    
    
    
    (4,311
    )
    
    
    
    
    
    
    
    
    
    
    (2,288
    )Net interest income
    
    
    
    
    
    $
    296,392
    
    
    
    
    
    
    
    
    
    
    $
    282,444Net interest rate spread (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    3.34
    %
    
    
    
    
    
    
    
    
    
    
    3.42
    %Net interest margin (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    3.89
    %
    
    
    
    
    
    
    
    
    
    
    3.83
    %
 
 (1)
    
    Annualized.(2)
    
    Loans and leases include loans held for sale.(3)
    
    Includes securities available for sale and held to maturity.  22




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##### Table of Contents



Table 3   Rate /Volume Analysis
 Three Months EndedMarch 31, 2007 vs. March 31, 2006Increase (decrease) due toTotalVolume (1)
    
    Rate
    
    ChangeInterest income:Loans and leases
    
    $
    47,270
    
    
    $
    31,674
    
    
    $
    78,944Investment securities
    
    
    (43,228
    )
    
    
    4,190
    
    
    
    (39,038
    )Securities purchased under agreements to
resell
    
    
    20,619
    
    
    
    305
    
    
    
    20,924Federal funds sold and
other short-term investements
    
    
    (214
    )
    
    
    122
    
    
    
    (92
    )Total interest income
    
    
    24,447
    
    
    
    36,291
    
    
    
    60,738Interest expense:Interest-bearing deposits:Regular savings
    
    
    95
    
    
    
    1,497
    
    
    
    1,592NOW and money market accounts
    
    
    8,723
    
    
    
    21,678
    
    
    
    30,401Certificates of deposit
    
    
    14,459
    
    
    
    22,299
    
    
    
    36,758Brokered deposits
    
    
    155
    
    
    
    495
    
    
    
    650Foreign branch deposits
    
    
    1,655
    
    
    
    
    
    
    
    1,655Total interest-bearing deposits
    
    
    25,087
    
    
    
    45,969
    
    
    
    71,056Borrowed funds
    
    
    (34,729
    )
    
    
    8,440
    
    
    
    (26,289
    )Total interest expense
    
    
    (9,642
    )
    
    
    54,409
    
    
    
    44,767Net interest income (fully taxable equivalent)
    
    $
    34,089
    
    
    $
    (18,118)
    
    
    $
    15,971
 
 (1)
    
    Volume increases include the effects of the acquisition of Interchange Financial Services
Corporation on January 1, 2007. Provision and Allowance for Loan and Lease Losses
   23




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##### Table of Contents



Noninterest Income
   Table 4  Noninterest Income
 Three Months Ended March 31,
    
    
    Change2007
    
    
    2006
    
    
    Amount
    
    
    PercentNoninterest income:Deposit services
    
    $
    44,867
    
    
    $
    38,479
    
    
    $
    6,388
    
    
    
    17
    %Insurance agency commissions
    
    
    16,869
    
    
    
    15,839
    
    
    
    1,030
    
    
    
    7
    %Merchant and electronic banking
income, net
    
    
    16,376
    
    
    
    15,636
    
    
    
    740
    
    
    
    5
    %Wealth management services
    
    
    11,380
    
    
    
    11,348
    
    
    
    32
    
    
    
    0
    %Bank-owned life insurance
    
    
    8,839
    
    
    
    7,288
    
    
    
    1,551
    
    
    
    21
    %Investment planning services
    
    
    5,042
    
    
    
    5,142
    
    
    
    (100
    )
    
    
    (2
    %)Net securities gains (losses)
    
    
    92
    
    
    
    (90
    )
    
    
    182
    
    
    
    N/MOther noninterest income:Loan fee income
    
    
    16,920
    
    
    
    12,392
    
    
    
    4,528
    
    
    
    37
    %Income on restricted stock
    
    
    5,275
    
    
    
    4,583
    
    
    
    692
    
    
    
    15
    %Mortgage banking services income
    
    
    2,191
    
    
    
    1,235
    
    
    
    956
    
    
    
    77
    %Venture capital income (write-downs)
    
    
    (15
    )
    
    
    508
    
    
    
    (523
    )
    
    
    N/MCovered call option premiums
    
    
    
    
    
    
    922
    
    
    
    (922
    )
    
    
    N/MMiscellaneous income
    
    
    5,683
    
    
    
    4,557
    
    
    
    1,126
    
    
    
    25
    %Total other noninterest income
    
    
    30,054
    
    
    
    24,197
    
    
    
    5,857
    
    
    
    24
    %Total noninterest income
    
    $
    133,519
    
    
    $
    117,839
    
    
    $
    15,680
    
    
    
    13
    %
 
 N/M   not meaningful   24




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##### Table of Contents



Noninterest Expense
   Table 5  Noninterest Expense
 Three Months Ended March 31,
    
    
    Change2007
    
    
    2006
    
    
    Amount
    
    
    PercentNoninterest expense:Compensation and employee benefits
    
    $
    137,044
    
    
    $
    125,210
    
    
    $
    11,834
    
    
    
    9
    %Occupancy
    
    
    27,824
    
    
    
    24,296
    
    
    
    3,528
    
    
    
    15
    %Equipment
    
    
    17,512
    
    
    
    14,884
    
    
    
    2,628
    
    
    
    18
    %Data processing
    
    
    15,606
    
    
    
    15,233
    
    
    
    373
    
    
    
    2
    %Advertising and marketing
    
    
    7,328
    
    
    
    8,191
    
    
    
    (863
    )
    
    
    (11
    %)Amortization of identifiable
intangible assets
    
    
    36,781
    
    
    
    37,666
    
    
    
    (885
    )
    
    
    (2
    %)Merger and restructuring costs
    
    
    30,594
    
    
    
    19,818
    
    
    
    10,776
    
    
    
    54
    %Other noninterest expense:Professional fees
    
    
    6,647
    
    
    
    5,509
    
    
    
    1,138
    
    
    
    21
    %Telephone
    
    
    4,391
    
    
    
    3,932
    
    
    
    459
    
    
    
    12
    %Office supplies
    
    
    3,117
    
    
    
    3,061
    
    
    
    56
    
    
    
    2
    %Corporate contributions
    
    
    8,264
    
    
    
    31
    
    
    
    8,233
    
    
    
    N/MPostage and freight
    
    
    4,110
    
    
    
    3,671
    
    
    
    439
    
    
    
    12
    %Courier
    
    
    2,728
    
    
    
    2,404
    
    
    
    324
    
    
    
    13
    %Miscellaneous loan costs
    
    
    1,916
    
    
    
    1,205
    
    
    
    711
    
    
    
    59
    %Collection and carrying costs
of non-performing assets
    
    
    384
    
    
    
    525
    
    
    
    (141
    )
    
    
    (27
    %)Deposits and other assessments
    
    
    1,375
    
    
    
    1,241
    
    
    
    134
    
    
    
    11
    %Miscellaneous
    
    
    12,416
    
    
    
    10,159
    
    
    
    2,257
    
    
    NMTotal other noninterest expense
    
    
    45,348
    
    
    
    31,738
    
    
    
    13,610
    
    
    
    43
    %Total noninterest expense
    
    $
    318,037
    
    
    $
    277,036
    
    
    $
    41,001
    
    
    
    15
    %
 
 N/M  not meaningful   25




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##### Table of Contents



Taxes
   Comprehensive Income
  Off-Balance Sheet Arrangements
  26




---



##### Table of Contents



Table 6  Contractual Obligations and Other Commitments
 Payments Due By PeriodLess than
    
    
    1 - 3
    
    
    4 - 5
    
    
    After 5Contractual Obligations (1)
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsLong-term debt
    
    $
    1,431,712
    
    
    $
    26,606
    
    
    $
    178,182
    
    
    $
    246,655
    
    
    $
    980,269Capital lease obligations
    
    
    6,107
    
    
    
    444
    
    
    
    1,336
    
    
    
    1,656
    
    
    
    2,671Total long-term debt
    
    
    1,437,819
    
    
    
    27,050
    
    
    
    179,518
    
    
    
    248,311
    
    
    
    982,940Operating lease obligations
    
    
    234,792
    
    
    
    44,976
    
    
    
    76,338
    
    
    
    45,104
    
    
    
    68,374Pension plan contribution (2)
    
    
    40,000
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    Other benefit plan payments 
estimated
    
    
    175,603
    
    
    
    12,459
    
    
    
    27,530
    
    
    
    31,159
    
    
    
    104,455Other vendor obligations (3)
    
    
    125,775
    
    
    
    9,617
    
    
    
    23,342
    
    
    
    23,666
    
    
    
    69,150Total contractual obligations
    
    $
    2,013,989
    
    
    $
    134,102
    
    
    $
    306,728
    
    
    $
    348,240
    
    
    $
    1,224,919
 
 (1)
    
    Other liabilities which are short term in nature are not included in this table.(2)
    
    Funding requirements for pension benefits after 2006 are excluded due to the significant variability in
the assumptions required to project the timing of future cash contributions.(3)
    
    Includes our commitment for the naming rights for the TD Banknorth Garden. 27




---



##### Table of Contents



Total
    
    
    Amount of Commitment Expiration  Per PeriodAmounts
    
    
    Less than
    
    
    1 - 3
    
    
    4 - 5
    
    
    After 5Other commitments
    
    Committed
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsUnused portions on lines of credit
    
    $
    8,246,107
    
    
    $
    3,218,888
    
    
    $
    944,322
    
    
    $
    498,523
    
    
    $
    3,584,374Standby letters of credit
    
    
    733,917
    
    
    
    165,731
    
    
    
    126,062
    
    
    
    147,555
    
    
    
    294,569Commercial letters of credit
    
    
    62,039
    
    
    
    38,928
    
    
    
    17,076
    
    
    
    3,080
    
    
    
    2,955Commitments to originate loans
    
    
    3,094,334
    
    
    
    1,985,963
    
    
    
    626,581
    
    
    
    131,336
    
    
    
    350,454Other commitments
    
    
    232,089
    
    
    
    22,030
    
    
    
    4,593
    
    
    
    3,370
    
    
    
    202,096Total commitments
    
    $
    12,368,486
    
    
    $
    5,431,540
    
    
    $
    1,718,634
    
    
    $
    783,864
    
    
    $
    4,434,448
 Total
    
    Amount of Commitment Expiration  Per PeriodAmounts
    
    Less than
    
    1 - 3
    
    4 - 5
    
    After 5Derivative Financial Instruments
    
    Committed
    
    1 Year
    
    Years
    
    Years
    
    YearsInterest rate swaps (notional amount):Commercial loan swap program:Interest rate swaps with commercial borrowers (1)
    
    $
    1,778,412
    
    
    $
    23,535
    
    
    $
    214,413
    
    
    $
    230,420
    
    
    $
    1,310,044Interest rate swaps with dealers (2)
    
    
    1,778,412
    
    
    
    23,535
    
    
    
    214,413
    
    
    
    230,420
    
    
    
    1,310,044Interest rate caps with commercial borrowers
    
    
    47,812
    
    
    
    
    
    
    
    24,315
    
    
    
    3,975
    
    
    
    19,522Interest rate caps with dealers
    
    
    47,812
    
    
    
    
    
    
    
    24,315
    
    
    
    3,975
    
    
    
    19,522Cross currency swap (USD) (3)
    
    
    228,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228,620Total return swap (4)
    
    
    20,031
    
    
    
    20,031
    
    
    
    
    
    
    
    
    
    
    
    Interest rate swaps
    
    
    770,000
    
    
    
    550,000
    
    
    
    75,000
    
    
    
    10,000
    
    
    
    135,000Interest rate floors purchased
    
    
    2,000,000
    
    
    
    
    
    
    
    2,000,000Interest rate floors written
    
    
    (2,000,000
    )
    
    
    
    
    
    
    (2,000,000
    )
    
    
    
    
    
    
    Forward commitments to sell loans
    
    
    22,820
    
    
    
    22,820
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency rate contracts: (5)Forward contracts with customers
    
    
    126,706
    
    
    
    80,829
    
    
    
    44,396
    
    
    
    1,481
    
    
    
    Forward contracts with dealers
    
    
    126,706
    
    
    
    80,829
    
    
    
    44,396
    
    
    
    1,481
    
    
    
    Rate-locked loan commitments
    
    
    12,081
    
    
    
    12,081
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Swaps with commercial loan customers (TD Banknorth receives fixed, pays variable).(2)
    
    Swaps with dealers (TD Banknorth pays fixed, receives variable), which offset the interest rate swaps with commercial borrowers.(3)
    
    Swap on subordinated debt issued in Canadian dollars in September 2005.(4)
    
    Swap to hedge restricted stock units tied to the price of The Toronto-Dominion Bank common shares.(5)
    
    Forward contracts for customer accommodations. Shareholders Equity
  RISK MANAGEMENT
  28




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##### Table of Contents



CREDIT RISK MANAGEMENT
 General
   Table 7  Composition of Loans and Leases
 March 31, 2007
    
    
    December 31, 2006Percent
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    PercentAmount
    
    
    of Loans
    
    
    Nonperforming
    
    
    Amount
    
    
    of Loans
    
    
    NonperformingResidential real estate mortgages
    
    $
    2,831,262
    
    
    
    11
    %
    
    
    0.55
    %
    
    $
    2,667,448
    
    
    
    10
    %
    
    
    0.51
    %Commercial real estate mortgages
    
    
    9,370,537
    
    
    
    35
    %
    
    
    1.41
    %
    
    
    8,749,887
    
    
    
    34
    %
    
    
    0.61
    %Commercial business loans and
leases
    
    
    6,927,150
    
    
    
    26
    %
    
    
    0.90
    %
    
    
    6,534,792
    
    
    
    26
    %
    
    
    0.81
    %Consumer loans and leases
    
    
    7,037,943
    
    
    
    26
    %
    
    
    0.16
    %
    
    
    7,046,638
    
    
    
    28
    %
    
    
    0.17
    %Credit card receivables
    
    
    441,459
    
    
    
    2
    %
    
    
    
    
    
    
    462,736.00
    
    
    
    2
    %
    
    
    $
    26,608,351
    
    
    
    100
    %
    
    
    0.83
    %
    
    $
    25,461,501
    
    
    
    100
    %
    
    
    0.52
    %
   29




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##### Table of Contents



Table 8  Composition of Consumer Loans and Leases
 March 31,
    
    
    December 31,2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    ChangeAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    PercentHome equity loans and lines
    
    $
    4,225,929
    
    
    
    60.05
    %
    
    $
    4,181,249
    
    
    
    59.34
    %
    
    $
    44,680
    
    
    
    1.07
    %Automobile
    
    
    2,510,273
    
    
    
    35.67
    %
    
    
    2,555,083
    
    
    
    36.26
    %
    
    
    (44,810
    )
    
    
    (1.75
    %)Education
    
    
    79,484
    
    
    
    1.13
    %
    
    
    77,432
    
    
    
    1.10
    %
    
    
    2,052
    
    
    
    2.65
    %Mobile home
    
    
    80,547
    
    
    
    1.14
    %
    
    
    84,200
    
    
    
    1.19
    %
    
    
    (3,653
    )
    
    
    (4.34
    %)Other (including leases)
    
    
    141,710
    
    
    
    2.01
    %
    
    
    148,674
    
    
    
    2.11
    %
    
    
    (6,964
    )
    
    
    (4.68
    %)Total
    
    $
    7,037,943
    
    
    
    100.00
    %
    
    $
    7,046,638
    
    
    
    100.00
    %
    
    
    ($8,695
    )
    
    
    (0.12
    %)
  Nonperforming Assets
   30




---



##### Table of Contents



Table 9  Nonperforming Assets
 2007
    
    
    2006March 31
    
    
    December 31
    
    
    September 30
    
    
    June 30
    
    
    March 31Nonaccrual loans and leases:Residential real estate loans
    
    $
    16,482
    
    
    $
    13,607
    
    
    $
    9,713
    
    
    $
    10,714
    
    
    $
    9,827Commercial real estate loans
    
    
    132,541
    
    
    
    53,345
    
    
    
    28,520
    
    
    
    35,439
    
    
    
    31,192Commercial business loans and leases
    
    
    62,104
    
    
    
    52,758
    
    
    
    46,051
    
    
    
    35,768
    
    
    
    31,460Consumer loans and leases
    
    
    11,418
    
    
    
    11,667
    
    
    
    7,386
    
    
    
    7,123
    
    
    
    6,090Total nonaccrual loans and leases
    
    
    222,545
    
    
    
    131,377
    
    
    
    91,670
    
    
    
    89,044
    
    
    
    78,569Other nonperforming assets:Other real estate owned, net of related reserves
    
    
    541
    
    
    
    397
    
    
    
    1,098
    
    
    
    1,076
    
    
    
    10,928Repossessions, net of related reserves
    
    
    2,076
    
    
    
    617
    
    
    
    990
    
    
    
    1,083
    
    
    
    1,173Total other nonperforming assets
    
    
    2,617
    
    
    
    1,014
    
    
    
    2,088
    
    
    
    2,159
    
    
    
    12,101Total nonperforming assets
    
    $
    225,162
    
    
    $
    132,391
    
    
    $
    93,758
    
    
    $
    91,203
    
    
    $
    90,670Accruing loans and leases 90 days or more overdue:Credit card receivables
    
    $
    7,643
    
    
    $
    8,486
    
    
    $
    6,949
    
    
    $
    5,900
    
    
    $
    6,351Other loans and leases
    
    
    7,411
    
    
    
    8,211
    
    
    
    7,174
    
    
    
    5,646
    
    
    
    6,583Total accruing loans and leases 90 days or more overdue
    
    $
    15,054
    
    
    $
    16,697
    
    
    $
    14,123
    
    
    $
    11,546
    
    
    $
    12,934Total nonperforming loans as a percentage of total
loans and leases(1)
    
    
    0.84
    %
    
    
    0.52
    %
    
    
    0.36
    %
    
    
    0.34
    %
    
    
    0.31
    %Total nonperforming assets as a percentage of total assets
    
    
    0.55
    %
    
    
    0.33
    %
    
    
    0.23
    %
    
    
    0.23
    %
    
    
    0.22
    %Total nonperforming assets as a percentage of total loans
and leases (1) and total other nonperforming assets
    
    
    0.85
    %
    
    
    0.52
    %
    
    
    0.36
    %
    
    
    0.35
    %
    
    
    0.35
    %
 
 (1)
    
    Total loans and leases exclude residential real estate loans held for sale.   31




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##### Table of Contents



Net Charge-offs
  32




---



##### Table of Contents



Table 10  Allowance for Credit Losses
 2007 First
    
    
    2006 Fourth
    
    
    2006 Third
    
    
    2006 Second
    
    
    2006 FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterAllowance for loan and lease losses at beginning of period
    
    $
    279,638
    
    
    $
    278,568
    
    
    $
    276,361
    
    
    $
    276,342
    
    
    $
    223,030Additions due to acquisitions
    
    
    11,439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,563Charge-offs:Residential real estate mortgages
    
    
    86
    
    
    
    75
    
    
    
    
    
    
    
    42
    
    
    
    128Commercial real estate mortgages
    
    
    2,734
    
    
    
    467
    
    
    
    1,251
    
    
    
    447
    
    
    
    95Commercial business loans and leases
    
    
    9,364
    
    
    
    6,317
    
    
    
    3,124
    
    
    
    3,328
    
    
    
    1,583Consumer loans and leases
    
    
    7,669
    
    
    
    7,527
    
    
    
    7,712
    
    
    
    5,647
    
    
    
    7,081Credit card receivables
    
    
    6,138
    
    
    
    5,040
    
    
    
    4,288
    
    
    
    4,386
    
    
    
    3,305Total loans and leases charged off
    
    
    25,991
    
    
    
    19,426
    
    
    
    16,375
    
    
    
    13,850
    
    
    
    12,192Recoveries:Residential real estate mortgages
    
    
    103
    
    
    
    22
    
    
    
    137
    
    
    
    105
    
    
    
    17Commercial real estate mortgages
    
    
    251
    
    
    
    373
    
    
    
    270
    
    
    
    564
    
    
    
    101Commercial business loans and leases
    
    
    2,862
    
    
    
    1,965
    
    
    
    1,351
    
    
    
    1,227
    
    
    
    3,167Consumer loans and leases
    
    
    2,192
    
    
    
    1,870
    
    
    
    2,185
    
    
    
    2,243
    
    
    
    2,096Credit card receivables
    
    
    915
    
    
    
    1,066
    
    
    
    885
    
    
    
    1,011
    
    
    
    660Total loans and leases recovered
    
    
    6,323
    
    
    
    5,296
    
    
    
    4,828
    
    
    
    5,150
    
    
    
    6,041Net charge-offs
    
    
    19,668
    
    
    
    14,130
    
    
    
    11,547
    
    
    
    8,700
    
    
    
    6,151Provision for loan and lease losses
    
    
    30,000
    
    
    
    15,200
    
    
    
    13,754
    
    
    
    8,719
    
    
    
    6,900Allowance for loan and lease losses at end of period
    
    $
    301,409
    
    
    $
    279,638
    
    
    $
    278,568
    
    
    $
    276,361
    
    
    $
    276,342Total Allowance for Credit Losses:Allowance for loan and lease losses
    
    $
    301,409
    
    
    $
    279,638
    
    
    $
    278,568
    
    
    $
    276,361
    
    
    $
    276,342Liability for unfunded credit commitments
    
    
    10,927
    
    
    
    9,107
    
    
    
    8,807
    
    
    
    8,507
    
    
    
    8,207Total allowance for credit losses
    
    $
    312,336
    
    
    $
    288,745
    
    
    $
    287,375
    
    
    $
    284,868
    
    
    $
    284,549Ratio of net charge-offs to average loans and
leases outstanding during the period, annualized (1)
    
    
    0.30
    %
    
    
    0.22
    %
    
    
    0.18
    %
    
    
    0.14
    %
    
    
    0.10
    %Ratio of allowance for credit losses to total loans and leases
at end of period (1)
    
    
    1.17
    %
    
    
    1.13
    %
    
    
    1.12
    %
    
    
    1.10
    %
    
    
    1.11
    %Ratio of allowance for credit losses to nonperforming loans
and leases at end of period
    
    
    140
    %
    
    
    220
    %
    
    
    313
    %
    
    
    320
    %
    
    
    362
    %Ratio of net charge-offs (recoveries) as a percent of
average outstanding loans and leases, annualized (1):Residential real estate mortgages
    
    
    (0.002
    %)
    
    
    0.008
    %
    
    
    (0.019
    %)
    
    
    (0.009
    %)
    
    
    0.016
    %Commercial real estate mortgages
    
    
    0.106
    %
    
    
    0.004
    %
    
    
    0.044
    %
    
    
    (0.005
    %)
    
    
    0.000
    %Commercial business loans and leases
    
    
    0.390
    %
    
    
    0.266
    %
    
    
    0.108
    %
    
    
    0.131
    %
    
    
    (0.112
    %)Consumer loans and leases
    
    
    0.312
    %
    
    
    0.316
    %
    
    
    0.306
    %
    
    
    0.190
    %
    
    
    0.293
    %Credit card receivables
    
    
    4.807
    %
    
    
    3.576
    %
    
    
    3.119
    %
    
    
    3.358
    %
    
    
    4.409
    %Total portfolio loans and leases at end of period (1)
    
    $
    26,608,351
    
    
    $
    25,461,501
    
    
    $
    25,729,950
    
    
    $
    25,822,787
    
    
    $
    25,620,512Total nonperforming loans and leases at end of period
    
    
    222,545
    
    
    
    131,377
    
    
    
    91,670
    
    
    
    89,044
    
    
    
    78,569Average loans and leases outstanding
during the period (1)
    
    
    26,562,636
    
    
    
    25,618,565
    
    
    
    25,777,617
    
    
    
    25,702,904
    
    
    
    23,770,023
 
 (1)
    
    Excludes residential real estate loans held for sale. 33




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##### Table of Contents



Potential Problem Loans
  Analysis and Determination of the Allowance for Loan and Lease Losses
    Derivative Instruments
 Purpose and Benefits
   34




---



##### Table of Contents



Table 11  Derivative Positions
Asset-Liability Management Positions
 Notional Amount Maturing
    
    
    
    
    
    FairMarch 31, 2007
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    ValueCross currency swap agreement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    228,620
    
    
    $
    228,620
    
    
    $
    8,849Total return swap
    
    
    
    
    
    
    20,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,031
    
    
    
    3,314Interest rate swaps
    
    
    550,000
    
    
    
    45,000
    
    
    
    30,000
    
    
    
    
    
    
    
    145,000
    
    
    
    770,000
    
    
    
    (3,835
    )Interest rate floors with commercial brokers
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    2,654Interest rate floors with The
Toronto-Dominion Bank
    
    
    
    
    
    
    
    
    
    
    (2,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (2,000,000
    )
    
    
    (2,654
    )Forward commitments to sell loans
    
    
    22,820
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,820
    
    
    
    
 Customer-related Positions
 Notional Amount Maturing
    
    
    
    
    
    FairMarch 31, 2007
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    ValueInterest rate contractsReceive fixed, pay variable
    
    $
    11,905
    
    
    $
    88,540
    
    
    $
    127,779
    
    
    $
    117,522
    
    
    $
    1,480,479
    
    
    $
    1,826,225
    
    
    $
    11,087Pay fixed, receive variable
    
    
    11,905
    
    
    
    88,540
    
    
    
    127,779
    
    
    
    117,522
    
    
    
    1,480,479
    
    
    
    1,826,225
    
    
    
    (11,087
    )Foreign currency rate contractsForward contracts with customers
    
    
    66,613
    
    
    
    51,119
    
    
    
    7,123
    
    
    
    1,851
    
    
    
    
    
    
    
    126,706
    
    
    
    1,762Forward contracts with dealers
    
    
    66,613
    
    
    
    51,119
    
    
    
    7,123
    
    
    
    1,851
    
    
    
    
    
    
    
    126,706
    
    
    
    (1,762
    )Rate-locked loan commitments (1)
    
    
    12,081
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,081
    
    
    
    4
 
 (1)
    
    No value has been assigned to potential mortagage servicing rights related to rate-locked loan commitments. Customer-related Positions
 .
 Foreign Exchange or Market Risk
   35




---



##### Table of Contents



CAPITAL
   Table 12  Capital Ratios
 Actual
    
    Capital Requirements
    
    ExcessAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2007TD Banknorth Inc.Total capital (to risk-weighted assets)
    
    $
    3,409,672
    
    
    
    11.53
    %
    
    $
    2,365,148
    
    
    
    8.00
    %
    
    $
    1,044,524
    
    
    
    3.53
    %Tier 1 capital (to risk-weighted assets)
    
    
    2,469,530
    
    
    
    8.35
    %
    
    
    1,182,574
    
    
    
    4.00
    %
    
    
    1,286,956
    
    
    
    4.35
    %Tier 1 leverage capital ratio (to
average assets)
    
    
    2,469,530
    
    
    
    7.17
    %
    
    
    1,376,969
    
    
    
    4.00
    %
    
    
    1,092,561
    
    
    
    3.17
    %TD Banknorth, NATotal capital (to risk-weighted assets)
    
    
    3,414,641
    
    
    
    11.57
    %
    
    
    2,361,882
    
    
    
    8.00
    %
    
    
    1,052,759
    
    
    
    3.57
    %Tier 1 capital (to risk-weighted assets)
    
    
    2,473,609
    
    
    
    8.38
    %
    
    
    1,180,941
    
    
    
    4.00
    %
    
    
    1,292,668
    
    
    
    4.38
    %Tier 1 leverage capital ratio (to
average assets)
    
    
    2,473,609
    
    
    
    7.20
    %
    
    
    1,374,535
    
    
    
    4.00
    %
    
    
    1,099,074
    
    
    
    3.20
    %December 31, 2006TD Banknorth Inc.Total capital (to risk-weighted assets)
    
    $
    3,307,963
    
    
    
    11.64
    %
    
    $
    2,273,913
    
    
    
    8.00
    %
    
    $
    1,034,050
    
    
    
    3.64
    %Tier 1 capital (to risk-weighted assets)
    
    
    2,395,074
    
    
    
    8.43
    %
    
    
    1,136,957
    
    
    
    4.00
    %
    
    
    1,258,117
    
    
    
    4.43
    %Tier 1 leverage capital ratio (to
average assets)
    
    
    2,395,074
    
    
    
    7.20
    %
    
    
    1,330,640
    
    
    
    4.00
    %
    
    
    1,064,434
    
    
    
    3.20
    %TD Banknorth, NATotal capital (to risk-weighted assets)
    
    
    3,338,918
    
    
    
    11.79
    %
    
    
    2,266,276
    
    
    
    8.00
    %
    
    
    1,072,642
    
    
    
    3.79
    %Tier 1 capital (to risk-weighted assets)
    
    
    2,433,607
    
    
    
    8.59
    %
    
    
    1,133,138
    
    
    
    4.00
    %
    
    
    1,300,469
    
    
    
    4.59
    %Tier 1 leverage capital ratio (to
average assets)
    
    
    2,433,607
    
    
    
    7.33
    %
    
    
    1,327,835
    
    
    
    4.00
    %
    
    
    1,105,772
    
    
    
    3.33
    %
   36




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  IMPACT OF NEW ACCOUNTING STANDARDS
  FORWARD LOOKING STATEMENTS
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  37




---



##### Table of Contents



Item 4. Controls and Procedures
   
 Item 4T. Controls and Procedures
  
 Part II  Other Information
 
 Item 1. Legal Proceedings
 Ordinary Course Litigation
 Shareholder Litigation regarding Going-Private Transaction
   38




---



##### Table of Contents



In re TD Banknorth
Shareholders Litigation.
 
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    Total Number ofShares Purchased as
    
    Maximum Number ofTotal Number
    
    Average
    
    Part of Publicly
    
    Shares that May Yet Beof Shares
    
    Price Paid
    
    Announced Plans or
    
    Purchased Under thePeriod
    
    Purchased
    
    Per Share
    
    Programs
    
    Plans or Programs (1)January 1  31, 2007
    
    
    13,000,000
    
    
    $
    31.17
    
    
    
    
    
    
    
    February 1  28, 2007
    
    
    933,106
    
    
    $
    32.24
    
    
    
    
    
    
    
    March 1  31, 2007
    
    
    
    
    
    $
    0.00
    
    
    
    
    
    
    
    
 
 Item 3. Default Upon Senior Securities.
  39




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
 (a)
    
    A special meeting of shareholder of TD Banknorth was held on April 18, 2007
(Special Meeting).(b)
    
    Not applicable.(c)
    
    There were 242,419,587 shares of TD Banknorth common stock eligible to be
voted at the Special Meeting and 213,989,200 shares were represented, in person or by
proxy, at the meeting, which constituted a quorum. The only item voted upon at the
Special Meeting was the proposal to approve the Agreement and Plan of Merger, dated
as of November 19, 2006, among TD Banknorth Inc., The Toronto-Dominion Bank and Bonn
Merger Co. The vote was as follows:
 For
    
    Against
    
    Abstain
    
    Broker-Non-votesAll shareholders
    
    
    210,052,626
    
    
    
    3,561,429
    
    
    
    375,145
    
    
    noneShareholders
unaffiliated with The Toronto-Dominion Bank
    
    
    65,158,616
    
    
    
    3,561,429
    
    
    
    375,145
    
    
    none
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
  Exhibit 12
    
    Calculation of Ratios of Earnings to Fixed ChargesExhibit 31.1
    
    Certification of Chief Executive Officer under Rules 13a-14 and 15d-14.Exhibit 31.2
    
    Certification of Chief Financial Officer under Rules 13a-14 and 15d-14.Exhibit 32.1
    
    Certification of Chief Executive Officer under 18 U.S.C. § 1350.Exhibit 32.2
    
    Certification of Chief Financial Officer under 18 U.S.C. § 1350.
 40




---



##### Table of Contents



SIGNATURES
  TD BANKNORTH INC.Date: May 8, 2007
    By:
    /s/ Bharat B. MasraniBharat B. MasraniPresident and Chief Executive Officer
(principal executive officer)Date: May 8, 2007
    By:
    /s/ Stephen J. BoyleStephen J. BoyleExecutive Vice President and
Chief Financial Officer
(principal financial and accounting officer) 41




---



##### Table of Contents



Exhibit 12
    
    Calculation of Ratios of Earnings to Fixed ChargesExhibit 31.1
    
    Certification of Chief Executive Officer under Rules 13a-14 and 15d-14.Exhibit 31.2
    
    Certification of Chief Financial Officer under Rules 13a-14 and 15d-14.Exhibit 32.1
    
    Certification of Chief Executive Officer under 18 U.S.C. § 1350.Exhibit 32.2
    
    Certification of Chief Financial Officer under 18 U.S.C. § 1350.
 42