##### 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 September 30, 2005
 or
 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 þ
  Common stock, par value $.01 per share
    
    173,625,374(Class)
    
    (Outstanding)
 Available on the Web @ www.tdbanknorth.com




---



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
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    53Item 4.
    
    Controls and Procedures
    
    
    54PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    54Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    54Item 3.
    
    Defaults Upon Senior Securities
    
    
    54Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    54Item 5.
    
    Other Information
    
    
    54Item 6.
    
    Exhibits
    
    
    55Signatures
    
    
    
    
    55Exhibits
    
    
    
    
    56EX-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)
 Successor
    
    
    PredecessorSeptember 30, 2005
    
    
    December 31, 2004AssetsCash and due from banks
    
    $
    741,983
    
    
    $
    541,994Federal funds sold and other short-term investments
    
    
    7,576
    
    
    
    2,312Securities available for sale
    
    
    4,410,425
    
    
    
    6,728,523Securities held to maturity (fair value of $69,358 and $87,507 at
September 30, 2005 and December 31, 2004, respectively)
    
    
    69,021
    
    
    
    87,013Loans held for sale
    
    
    45,989
    
    
    
    51,693Loans and leases:Residential real estate mortgages
    
    
    3,048,411
    
    
    
    3,081,217Commercial real estate mortgages
    
    
    6,716,035
    
    
    
    6,249,513Commercial business loans and leases
    
    
    4,178,327
    
    
    
    3,928,594Consumer loans and leases
    
    
    6,028,411
    
    
    
    5,333,670Total loans and leases
    
    
    19,971,184
    
    
    
    18,592,994Less: Allowance for loan and lease losses
    
    
    228,334
    
    
    
    243,152Net loans and leases
    
    
    19,742,850
    
    
    
    18,349,842Premises and equipment, net
    
    
    313,151
    
    
    
    300,120Goodwill
    
    
    4,549,355
    
    
    
    1,365,780Identifiable intangible assets
    
    
    696,401
    
    
    
    50,376Bank-owned life insurance
    
    
    566,836
    
    
    
    523,129Other assets
    
    
    671,659
    
    
    
    687,028Total assets
    
    $
    31,815,246
    
    
    $
    28,687,810Liabilities and Shareholders EquityDeposits:Savings accounts
    
    $
    2,630,947
    
    
    $
    2,546,018Money market and NOW accounts
    
    
    8,398,406
    
    
    
    7,907,513Certificates of deposit
    
    
    4,863,471
    
    
    
    4,484,370Brokered deposits
    
    
    61,576
    
    
    
    576Noninterest-bearing deposits
    
    
    4,668,178
    
    
    
    4,289,104Total deposits
    
    
    20,622,578
    
    
    
    19,227,581Short-term borrowings
    
    
    2,953,151
    
    
    
    3,729,252Long-term debt
    
    
    1,273,197
    
    
    
    2,261,453Deferred tax liability on identifiable intangible assets
    
    
    258,017
    
    
    
    17,632Other liabilities
    
    
    244,680
    
    
    
    275,778Total liabilities
    
    
    25,351,623
    
    
    
    25,511,696Commitments 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 - 188,426,630 in 2005 and 191,672,502 in 2004)
    
    
    1,884
    
    
    
    1,917Common stock, Class B (par value $0.01 per share, authorized and
issued 1 share in 2005)
    
    
    
    
    
    
    Paid-in capital
    
    
    6,833,956
    
    
    
    1,763,572Retained earnings
    
    
    135,128
    
    
    
    1,677,802Unearned compensation
    
    
    (1,506
    )
    
    
    Treasury stock, at cost (14,811,269 shares in 2005 and 12,374,515
shares in 2004)
    
    
    (470,592
    )
    
    
    (265,020
    )Accumulated other comprehensive loss
    
    
    (35,247
    )
    
    
    (2,157
    )Total shareholders equity
    
    
    6,463,623
    
    
    
    3,176,114Total liabilities and shareholders equity
    
    $
    31,815,246
    
    
    $
    28,687,810
  3




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except
per share data) (Unaudited)
 Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Predecessor
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    March 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Interest and dividend income:Interest and fees on loans and leases
    
    $
    299,148
    
    
    $
    240,776
    
    
    $
    683,631
    
    
    $
    176,949
    
    
    $
    682,085Interest and dividends on securities
    
    
    51,531
    
    
    
    82,902
    
    
    
    125,012
    
    
    
    51,183
    
    
    
    240,863Total interest and dividend
income
    
    
    350,679
    
    
    
    323,678
    
    
    
    808,643
    
    
    
    228,132
    
    
    
    922,948Interest expense:Interest on deposits
    
    
    61,453
    
    
    
    40,122
    
    
    
    124,328
    
    
    
    30,694
    
    
    
    118,454Interest on borrowed funds
    
    
    40,229
    
    
    
    45,579
    
    
    
    94,736
    
    
    
    32,654
    
    
    
    121,386Total interest expense
    
    
    101,682
    
    
    
    85,701
    
    
    
    219,064
    
    
    
    63,348
    
    
    
    239,840Net interest income
    
    
    248,997
    
    
    
    237,977
    
    
    
    589,579
    
    
    
    164,784
    
    
    
    683,108Provision for loan and lease losses
    
    
    5,500
    
    
    
    10,670
    
    
    
    10,097
    
    
    
    1,069
    
    
    
    29,670Net interest income after
provision
for loan and lease losses
    
    
    243,497
    
    
    
    227,307
    
    
    
    579,482
    
    
    
    163,715
    
    
    
    653,438Noninterest income:Deposit services
    
    
    34,558
    
    
    
    27,583
    
    
    
    76,134
    
    
    
    18,359
    
    
    
    80,995Insurance agency commissions
    
    
    12,216
    
    
    
    12,417
    
    
    
    31,460
    
    
    
    8,252
    
    
    
    38,431Merchant and electronic banking
income, net
    
    
    15,824
    
    
    
    13,723
    
    
    
    35,914
    
    
    
    7,751
    
    
    
    37,196Wealth management services
    
    
    10,662
    
    
    
    10,280
    
    
    
    24,602
    
    
    
    6,959
    
    
    
    29,300Bank-owned life insurance
    
    
    5,994
    
    
    
    5,732
    
    
    
    14,029
    
    
    
    4,169
    
    
    
    17,503Investment planning services
    
    
    4,708
    
    
    
    4,634
    
    
    
    12,044
    
    
    
    2,815
    
    
    
    14,619Net securities gains (losses)
    
    
    1,014
    
    
    
    3,124
    
    
    
    (1,474
    )
    
    
    (46,548
    )
    
    
    10,060Loans held for sale  Lower of cost
or market adjustment
    
    
    
    
    
    
    
    
    
    
    386
    
    
    
    (7,500
    )
    
    
    Change in unrealized loss on
derivatives
    
    
    (711
    )
    
    
    
    
    
    
    5,954
    
    
    
    
    
    
    
    Other noninterest income
    
    
    19,342
    
    
    
    15,703
    
    
    
    44,091
    
    
    
    9,104
    
    
    
    45,314103,607
    
    
    
    93,196
    
    
    
    243,140
    
    
    
    3,361
    
    
    
    273,418Noninterest expense:Compensation and employee benefits
    
    
    102,059
    
    
    
    91,935
    
    
    
    240,046
    
    
    
    67,977
    
    
    
    266,473Occupancy
    
    
    17,114
    
    
    
    15,866
    
    
    
    41,670
    
    
    
    11,411
    
    
    
    47,274Equipment
    
    
    12,831
    
    
    
    12,074
    
    
    
    30,210
    
    
    
    8,440
    
    
    
    35,777Data processing
    
    
    11,675
    
    
    
    11,118
    
    
    
    27,094
    
    
    
    7,233
    
    
    
    31,573Advertising and marketing
    
    
    7,503
    
    
    
    6,278
    
    
    
    17,911
    
    
    
    4,373
    
    
    
    20,105Amortization of identifiable
intangible assets
    
    
    31,041
    
    
    
    2,379
    
    
    
    72,632
    
    
    
    1,561
    
    
    
    6,367Merger and consolidation costs
    
    
    1,163
    
    
    
    5,603
    
    
    
    10,458
    
    
    
    27,264
    
    
    
    11,351Prepayment penalties on borrowings
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    6,300
    
    
    
    Other noninterest expense
    
    
    28,343
    
    
    
    28,945
    
    
    
    64,701
    
    
    
    15,887
    
    
    
    78,822211,729
    
    
    
    174,198
    
    
    
    504,725
    
    
    
    150,446
    
    
    
    497,742Income before income tax expense
    
    
    135,375
    
    
    
    146,305
    
    
    
    317,897
    
    
    
    16,630
    
    
    
    429,114Provision for income taxes
    
    
    46,634
    
    
    
    48,534
    
    
    
    109,931
    
    
    
    6,182
    
    
    
    145,169Net income
    
    $
    88,741
    
    
    $
    97,771
    
    
    $
    207,966
    
    
    $
    10,448
    
    
    $
    283,945Basic earnings per share
    
    $
    0.51
    
    
    $
    0.56
    
    
    $
    1.18
    
    
    $
    0.06
    
    
    $
    1.68Diluted earnings per share
    
    $
    0.51
    
    
    $
    0.55
    
    
    $
    1.17
    
    
    $
    0.06
    
    
    $
    1.65Weighted average shares outstanding:Basic
    
    
    173,661
    
    
    
    173,271
    
    
    
    176,822
    
    
    
    184,964
    
    
    
    168,646Dilutive effect of stock options
    
    
    737
    
    
    
    3,485
    
    
    
    1,036
    
    
    
    1,783
    
    
    
    3,555Diluted
    
    
    174,398
    
    
    
    176,756
    
    
    
    177,858
    
    
    
    186,747
    
    
    
    172,201
  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, 2004 (Predecessor)
    
    
    179,298
    
    
    $
    1,917
    
    
    $
    1,763,572
    
    
    $
    1,677,802
    
    
    $
    
    
    
    $
    (265,020
    )
    
    $
    (2,157
    )
    
    $
    3,176,114Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,448
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,448Unrealized gains (losses) on securities, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,463
    
    
    
    2,463Unrealized gains (losses) on cash flow hedges, net
of reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,714
    )
    
    
    (7,714
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,197Common stock issued for acquisitions
    
    
    6,152
    
    
    
    61
    
    
    
    199,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199,825Treasury stock issued for employee benefit
plans, including tax benefit of $16.0 million
    
    
    2,978
    
    
    
    
    
    
    
    7,489
    
    
    
    
    
    
    
    
    
    
    
    63,879
    
    
    
    
    
    
    
    71,368Cash dividends declared ($0.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,383
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,383
    )Balances at February 28, 2005 (Predecessor)
    
    
    188,428
    
    
    $
    1,978
    
    
    $
    1,970,825
    
    
    $
    1,650,867
    
    
    $
    
    
    
    $
    (201,141
    )
    
    $
    (7,408
    )
    
    $
    3,415,121Balances at March 1, 2005 (Successor)
    
    
    188,428
    
    
    $
    1,884
    
    
    $
    6,836,487
    
    
    $
    
    
    
    $
    (2,256
    )
    
    $
    
    
    
    $
    
    
    
    $
    6,836,115Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207,966Unrealized gains (losses) on securities, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,680
    )
    
    
    (25,680
    )Unrealized gains (losses)on cash flow hedges, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,567
    )
    
    
    (9,567
    )Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172,719Treasury stock issued for employee benefit
plans, including tax benefit of $0.9 million
    
    
    487
    
    
    
    
    
    
    
    (2,531
    )
    
    
    
    
    
    
    
    
    
    
    15,816
    
    
    
    
    
    
    
    13,285Treasury stock purchased
    
    
    (15,300
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (486,408
    )
    
    
    
    
    
    
    (486,408
    )Decrease in unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750
    
    
    
    
    
    
    
    
    
    
    
    750Cash dividends declared ($0.42 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72,838
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72,838
    )Balances at September 30, 2005 (Successor)
    
    
    173,615
    
    
    $
    1,884
    
    
    $
    6,833,956
    
    
    $
    135,128
    
    
    $
    (1,506
    )
    
    $
    (470,592
    )
    
    $
    (35,247
    )
    
    $
    6,463,623Balances at December 31, 2003 (Predecessor)
    
    
    162,188
    
    
    $
    1,823
    
    
    $
    1,435,005
    
    
    $
    1,508,292
    
    
    $
    
    
    
    $
    (430,608
    )
    
    $
    6,007
    
    
    $
    2,520,519Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283,945
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283,945Unrealized gains (losses) on securities, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,030
    )
    
    
    (18,030
    )Unrealized gains on cash flow hedges, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (72
    )
    
    
    (72
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265,843Common stock issued for acquisitions
    
    
    9,381
    
    
    
    94
    
    
    
    304,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304,250Treasury stock issued for employee benefit
plans, including tax benefit of $11.7 million
    
    
    2,454
    
    
    
    
    
    
    
    2,924
    
    
    
    
    
    
    
    
    
    
    
    52,599
    
    
    
    
    
    
    
    55,523Cash dividends declared ($0.59 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99,893
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99,893
    )Balances at September 30, 2004 (Predecessor)
    
    
    174,023
    
    
    $
    1,917
    
    
    $
    1,742,085
    
    
    $
    1,692,344
    
    
    $
    
    
    
    $
    (378,009
    )
    
    $
    (12,095
    )
    
    $
    3,046,242
  5




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##### Table of Contents



TD BANKNORTH INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited)
 Successor
    
    
    Predecessor
    
    
    PredecessorMarch 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Cash flows from operating activities:Net income
    
    $
    207,966
    
    
    $
    10,448
    
    
    $
    283,945Adjustments to reconcile net income to net cash provided by
operating activities:Provision for loan and lease losses
    
    
    10,097
    
    
    
    1,069
    
    
    
    29,670Depreciation of banking premises and equipment
    
    
    28,284
    
    
    
    7,807
    
    
    
    32,845Net amortization of premium and discounts
    
    
    6,835
    
    
    
    3,703
    
    
    
    19,027Amortization of intangible assets
    
    
    72,632
    
    
    
    1,561
    
    
    
    6,367(Benefit from) provision for deferred tax expense
    
    
    (10,500
    )
    
    
    2,000
    
    
    
    9,600Unearned compensation
    
    
    750
    
    
    
    
    
    
    
    Net losses (gains) realized from sales of securities and loans
    
    
    44
    
    
    
    46,548
    
    
    
    (11,576
    )Lower of cost or market adjustment on loans held for sale
    
    
    
    
    
    
    7,500
    
    
    
    Prepayment penalties on borrowings
    
    
    
    
    
    
    6,300
    
    
    
    Net losses (gains) realized from sales of loans held for sale
    
    
    7,113
    
    
    
    (616
    )
    
    
    (2,682
    )Increase in cash surrender value of bank owned life insurance
    
    
    (12,186
    )
    
    
    (4,169
    )
    
    
    (17,503
    )Proceeds from sales of loans held for sale
    
    
    805,649
    
    
    
    72,258
    
    
    
    373,211Residential loans originated and purchased for sale
    
    
    (304,297
    )
    
    
    (58,800
    )
    
    
    (368,672
    )Change in fair value on derivatives
    
    
    (4,788
    )
    
    
    
    
    
    
    Net decrease (increase) in other assets
    
    
    31,092
    
    
    
    47,443
    
    
    
    (25,393
    )Net increase (decrease) in other liabilities
    
    
    23,133
    
    
    
    (42,559
    )
    
    
    37,004Net cash provided by operating activities
    
    
    861,824
    
    
    
    100,493
    
    
    
    365,843Cash flows from investing activities:Proceeds from sales of securities available for sale
    
    
    662,100
    
    
    
    83,271
    
    
    
    2,164,935Proceeds from sales of securities as part of deleveraging program
    
    
    377,907
    
    
    
    2,461,701
    
    
    
    Proceeds from maturities and principal repayments of securities
available for sale
    
    
    602,520
    
    
    
    190,117
    
    
    
    1,025,960Purchases of securities available for sale
    
    
    (1,301,788
    )
    
    
    (969,979
    )
    
    
    (3,133,987
    )Proceeds from maturities and principal repayments of securities
held to maturity
    
    
    13,322
    
    
    
    4,670
    
    
    
    30,214Net increase in loans and leases
    
    
    (570,931
    )
    
    
    (222,430
    )
    
    
    (1,103,017
    )Proceeds from sales of portfolio loans
    
    
    167,297
    
    
    
    
    
    
    
    37,097Net (additions) decrease to premises and equipment
    
    
    (31,167
    )
    
    
    798
    
    
    
    (22,271
    )Proceeds from policy coverage on bank-owned life insurance
    
    
    
    
    
    
    141
    
    
    
    Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    130,685
    
    
    
    49,061Net cash (used in) provided by investing activities
    
    
    (80,740
    )
    
    
    1,678,974
    
    
    
    (952,008
    )Cash flows from financing activities:Net increase (decrease) in deposits
    
    
    477,639
    
    
    
    (160,662
    )
    
    
    289,186Net (decrease) increase in short-term borrowings
    
    
    (360,889
    )
    
    
    2,102,739
    
    
    
    904,380Payments on short-term borrowings as part of deleveraging program
    
    
    (374,491
    )
    
    
    (1,461,701
    )
    
    
    Proceeds from long-term debt
    
    
    230,637
    
    
    
    8,467
    
    
    
    1,692Payments on long-term debt
    
    
    (206,097
    )
    
    
    (474,664
    )
    
    
    (301,183
    )Payments on long-term debt as part of deleveraging program
    
    
    
    
    
    
    (1,006,300
    )
    
    
    Treasury stock issued for employee benefit plans
    
    
    13,285
    
    
    
    71,368
    
    
    
    55,523Purchase of treasury stock
    
    
    (486,408
    )
    
    
    
    
    
    
    Cash dividends paid to shareholders
    
    
    (72,838
    )
    
    
    (37,383
    )
    
    
    (99,893
    )Net cash (used in) provided by financing activities
    
    
    (779,162
    )
    
    
    (958,136
    )
    
    
    849,705Increase in cash and cash equivalents
    
    
    1,922
    
    
    
    821,331
    
    
    
    263,540Cash and cash equivalents at beginning of period
    
    
    747,637
    
    
    
    (73,694
    )
    
    
    316,331Cash and cash equivalents at end of period
    
    $
    749,559
    
    
    $
    747,637
    
    
    $
    579,871In conjunction with the purchase acquisitions detailed in Note 3 to the
Consolidated Financial Statements, assets were
acquired and liabilities were assumed as follows:Fair value of assets acquired
    
    $
    27,924,518
    
    
    $
    1,469,630
    
    
    $
    1,804,566Fair value of liabilities assumed
    
    
    25,626,026
    
    
    
    1,422,658
    
    
    
    1,417,562Interest paid
    
    $
    213,372
    
    
    $
    68,238
    
    
    $
    233,017Income taxes paid (received)
    
    
    62,767
    
    
    
    (779
    )
    
    
    102,118
  6




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
 September 30, 2005
 (In thousands, except per share data and as noted) (Unaudited)
 Note 1  Basis of Presentation
  
    
    cash paid by TD,
    
    the value of TD common shares issued and
    
    the value of TD Banknorth Inc. shares issued.
    7




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##### Table of Contents



Note 2  Accounting for the Transaction with The Toronto-Dominion Bank
  Implied Purchase PriceValue of TD common shares exchanged (1)
    
    $
    1,806,535Cash consideration (including cash in lieu of fractional shares)
    
    
    2,306,947Value of 49% of TD Banknorth shares exchanged (2)
    
    
    2,686,802Fair value of TD Banknorth stock options
    
    
    35,831Total implied purchase price
    
    
    6,836,115Allocation of the Implied Purchase PricePredecessor stockholders equity as of March 1, 2005
    
    
    3,415,121Predecessor goodwill and intangible assets
    
    
    (1,565,293
    )Adjustments to reflect assets acquired and liabilities assumed at fair value:Loans
    
    
    109,630Loan relationship intangibles
    
    
    95,826Core deposit intangibles
    
    
    566,000Other identifiable intangibles
    
    
    105,612Deferred income taxes on identifiable intangible assets
    
    
    (272,056
    )Other assets
    
    
    12,172Fixed maturity deposits
    
    
    (46,790
    )Borrowings
    
    
    (59,731
    )Pension and post-employment benefit plans
    
    
    (93,546
    )Other liabilities
    
    
    31,547Fair value of net assets acquired
    
    
    2,298,492Estimated goodwill from the transaction at March 1, 2005
    
    
    4,537,623Adjustments recorded subsequent to March 1, 2005.
    
    
    11,732Goodwill at September 30, 2005
    
    $
    4,549,355
 
 (1)
    
    Based on 188,428,501 Banknorth shares times exchange ratio of 0.2351 times
$40.78, the closing price of the TD common shares on March 1, 2005.(2)
    
    Based on 188,428,501 Banknorth shares times 49% times $29.10, the opening
price of the TD Banknorth common stock on March 2, 2005.  8




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##### Table of Contents



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
    
    
    PriceBostonFed Bancorp, Inc.
    
    
    1/21/2005
    
    
    $
    1,467.8
    
    
    $
    102.7
    
    
    $
    138.2
    
    
    $
    13.2
    
    
    $
    0.3
    
    
    
    6.2
    
    
    $
    200.2CCBT Financial Companies, Inc.
    
    
    4/30/2004
    
    
    
    1,292.9
    
    
    
    108.5
    
    
    
    175.5
    
    
    
    19.4
    
    
    
    
    
    
    
    9.2
    
    
    
    298.1Foxborough Savings Bank
    
    
    4/30/2004
    
    
    
    241.8
    
    
    
    22.8
    
    
    
    61.6
    
    
    
    2.2
    
    
    
    88.9
    
    
    
    
    
    
    
    88.9
   Note 4  Stock Compensation Plans
  9




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##### Table of Contents



Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Predecessor
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    March 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Net income, as reported
    
    $
    88,741
    
    
    $
    97,771
    
    
    $
    207,966
    
    
    $
    10,448
    
    
    $
    283,945Deduct total stock-based employee
compensation expense determined under fair
value based method, net of related tax
effects:Effect of accelerated vesting of stock options
in connection with the TD transaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,293
    )
    
    
    All other
    
    
    (815
    )
    
    
    (4,141
    )
    
    
    (1,847
    )
    
    
    (2,159
    )
    
    
    (12,670
    )Proforma net income (loss)
    
    $
    87,926
    
    
    $
    93,630
    
    
    $
    206,119
    
    
    $
    (1,004
    )
    
    $
    271,275Earnings per shareBasic   As reported
    
    $
    0.51
    
    
    $
    0.56
    
    
    $
    1.18
    
    
    $
    0.06
    
    
    $
    1.68Proforma
    
    $
    0.51
    
    
    $
    0.54
    
    
    $
    1.17
    
    
    $
    (0.01
    )
    
    $
    1.61Diluted  As reported
    
    $
    0.51
    
    
    $
    0.55
    
    
    $
    1.17
    
    
    $
    0.06
    
    
    $
    1.65Proforma
    
    $
    0.50
    
    
    $
    0.53
    
    
    $
    1.16
    
    
    $
    (0.01
    )
    
    $
    1.57
   Note 5  Securities Available for Sale
  SuccessorLess than one year
    
    
    More than one year
    
    
    TotalNumber of
    
    
    Fair
    
    
    Unrealized
    
    
    Number of
    
    
    Fair
    
    
    Unrealized
    
    
    Number of
    
    
    Fair
    
    
    UnrealizedInvestments
    
    
    Value
    
    
    Losses
    
    
    Investments
    
    
    Value
    
    
    Losses
    
    
    Investments
    
    
    Value
    
    
    LossesU. S. Government obligations and
obligations of U.S.Government
agencies and corporations
    
    
    5
    
    
    $
    2,222
    
    
    $
    (15
    )
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    5
    
    
    $
    2,222
    
    
    $
    (15
    )Tax exempt bonds and notes
    
    
    161
    
    
    
    129,588
    
    
    
    (697
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    129,588
    
    
    
    (697
    )Other bonds and notes
    
    
    75
    
    
    
    120,297
    
    
    
    (914
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    120,297
    
    
    
    (914
    )Mortgage-backed securities
    
    
    851
    
    
    
    3,650,562
    
    
    
    (37,444
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851
    
    
    
    3,650,562
    
    
    
    (37,444
    )Collateralized mortgage
obligations
    
    
    27
    
    
    
    256,487
    
    
    
    (1,836
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    256,487
    
    
    
    (1,836
    )Equity securities
    
    
    12
    
    
    
    347
    
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    347
    
    
    
    (51
    )1,131
    
    
    $
    4,159,503
    
    
    $
    (40,957
    )
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    1,131
    
    
    $
    4,159,503
    
    
    $
    (40,957
    )
  10




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##### Table of Contents



Note 6  Goodwill and Other Intangible Assets
  Identifiable IntangiblesCore DepositGoodwill
    
    
    Intangibles
    
    
    Other
    
    
    TotalBalance, December 31, 2004 (Predecessor)
    
    $
    1,365,780
    
    
    $
    43,723
    
    
    $
    6,653
    
    
    $
    50,376Recorded during the period
    
    
    140,006
    
    
    
    13,172
    
    
    
    
    
    
    
    13,172Amortization expense
    
    
    
    
    
    
    (1,237
    )
    
    
    (324
    )
    
    
    (1,561
    )Adjustments of purchase accounting estimates
    
    
    (2,479
    )
    
    
    
    
    
    
    
    
    
    
    Balance, February 28, 2005 (Predecessor)
    
    
    1,503,307
    
    
    
    55,658
    
    
    
    6,329
    
    
    
    61,987Reversal of prior intangibles in connection with
the TD transaction
    
    
    (1,503,307
    )
    
    
    (55,658
    )
    
    
    (6,329
    )
    
    
    (61,987
    )Recorded in connection with the TD transaction
    
    
    4,537,623
    
    
    
    566,000
    
    
    
    201,438
    
    
    
    767,438Balance, March 1, 2005 (Successor)
    
    
    4,537,623
    
    
    
    566,000
    
    
    
    201,438
    
    
    
    767,438Amortization expense
    
    
    
    
    
    
    (62,412
    )
    
    
    (10,220
    )
    
    
    (72,632
    )Change in deferred tax rate on intangible assets
    
    
    11,859
    
    
    
    
    
    
    
    
    
    
    
    Adjustments of purchase accounting estimates
    
    
    (127
    )
    
    
    
    
    
    
    1,595
    
    
    
    1,595Balance, September 30, 2005 (Successor)
    
    $
    4,549,355
    
    
    $
    503,588
    
    
    $
    192,813
    
    
    $
    696,401Estimated Annual Amortization Expense:Remaining 2005
    
    
    
    
    
    $
    26,745
    
    
    $
    4,144
    
    
    $
    30,8892006
    
    
    
    
    
    
    96,167
    
    
    
    16,134
    
    
    
    112,3012007
    
    
    
    
    
    
    74,833
    
    
    
    15,403
    
    
    
    90,2362008
    
    
    
    
    
    
    61,833
    
    
    
    14,354
    
    
    
    76,1872009
    
    
    
    
    
    
    51,667
    
    
    
    13,723
    
    
    
    65,390thereafter
    
    
    
    
    
    
    192,343
    
    
    
    129,055
    
    
    
    321,398
  SuccessorSeptember 30, 2005Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    AmountIdentifiable intangible assets:Core deposit intangibles
    
    $
    566,000
    
    
    $
    62,412
    
    
    $
    503,588Loan relationship intangibles
    
    
    95,826
    
    
    
    3,192
    
    
    
    92,634Other identifiable intangibles
    
    
    107,207
    
    
    
    7,028
    
    
    
    100,179Total
    
    $
    769,033
    
    
    $
    72,632
    
    
    $
    696,401
 11




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##### Table of Contents



Note 7  Short-term Borrowings
  Successor
    
    
    PredecessorSeptember 30, 2005
    
    
    December 31, 2004Securities sold under agreements to repurchase  retail
    
    $
    1,454,087
    
    
    $
    1,165,905Federal funds purchased
    
    
    1,064,920
    
    
    
    618,000Treasury, tax and loan notes
    
    
    34,144
    
    
    
    375,347Federal Home Loan Bank advances
    
    
    400,000
    
    
    
    1,570,000$
    2,953,151
    
    
    $
    3,729,252
 Note 8  Long-term Debt
  Successor
    
    
    PredecessorSeptember 30, 2005
    
    
    December 31, 2004Federal Home Loan Bank advances
    
    $
    158,112
    
    
    $
    428,825Securities sold under agreements to repurchase  wholesale
    
    
    
    
    
    
    1,100,000Securities sold under agreements to repurchase  retail
    
    
    132,331
    
    
    
    68,571Junior subordinated debentures issued to affiliated trusts
    
    
    368,796
    
    
    
    310,746Subordinated debt due 2011
    
    
    226,406
    
    
    
    200,000Subordinated debt due 2022
    
    
    232,218
    
    
    
    Senior notes 3.75%, due 2008
    
    
    148,790
    
    
    
    149,810Hedge-related basis adjustments on long-term debt
    
    
    
    
    
    
    (4,420
    )Other long-term debt
    
    
    6,544
    
    
    
    7,921Total
    
    $
    1,273,197
    
    
    $
    2,261,453
   12




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##### Table of Contents



Note 9  Comprehensive Income
  Successor
    
    
    PredecessorThree Months Ended
    
    
    Three Months EndedSeptember 30, 2005
    
    
    September 30, 2004Pre-tax
    
    
    Tax
    
    
    Net of
    
    
    Pre-tax
    
    
    Tax
    
    
    Net ofAmount
    
    
    Effect
    
    
    Tax
    
    
    Amount
    
    
    Effect
    
    
    TaxChange in:Unrealized gain (loss) on
securities available for sale
    
    
    ($64,609
    )
    
    $
    22,613
    
    
    
    ($41,996
    )
    
    $
    126,350
    
    
    
    ($44,224
    )
    
    $
    82,126Unrealized gain (loss) on
cash flow hedges
    
    
    (3,801
    )
    
    
    2,626
    
    
    
    (1,175
    )
    
    
    (1,391
    )
    
    
    487
    
    
    
    (904
    )Reclassification adjustment for
losses (gains) realized in net income
    
    
    (35,609
    )
    
    
    12,463
    
    
    
    (23,146
    )
    
    
    (1,949
    )
    
    
    682
    
    
    
    (1,267
    )Net change in unrealized gains (losses)
    
    
    ($104,019
    )
    
    $
    37,702
    
    
    
    ($66,317
    )
    
    $
    123,010
    
    
    
    ($43,055
    )
    
    $
    79,955
 Successor
    
    
    Predecessor
    
    
    PredecessorMarch 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Pre-tax
    
    
    Tax
    
    
    Net of
    
    
    Pre-tax
    
    
    Tax
    
    
    Net of
    
    
    Pre-tax
    
    
    Tax
    
    
    Net ofAmount
    
    
    Effect
    
    
    Tax
    
    
    Amount
    
    
    Effect
    
    
    Tax
    
    
    Amount
    
    
    Effect
    
    
    TaxChange in:Unrealized gain (loss) on
securities available for sale
    
    
    ($40,983
    )
    
    $
    14,344
    
    
    
    ($26,639
    )
    
    
    ($42,769
    )
    
    $
    14,975
    
    
    
    ($27,794
    )
    
    
    ($17,681
    )
    
    $
    6,189
    
    
    
    ($11,492
    )Unrealized gain (loss) on
cash flow hedges
    
    
    49,378
    
    
    
    (17,282
    )
    
    
    32,096
    
    
    
    (7,851
    )
    
    
    (48
    )
    
    
    (7,899
    )
    
    
    (1,243
    )
    
    
    435
    
    
    
    (808
    )Reclassification adjustment for
losses (gains) realized in net income
    
    
    (62,621
    )
    
    
    21,917
    
    
    
    (40,704
    )
    
    
    46,834
    
    
    
    (16,392
    )
    
    
    30,442
    
    
    
    (8,926
    )
    
    
    3,124
    
    
    
    (5,802
    )Net change in unrealized gains (losses)
    
    
    ($54,226
    )
    
    $
    18,979
    
    
    
    ($35,247
    )
    
    
    ($3,786
    )
    
    
    ($1,465
    )
    
    
    ($5,251
    )
    
    
    ($27,850
    )
    
    $
    9,748
    
    
    
    ($18,102
    )
 Note 10   Allowance for Loan and Lease Losses
    Contractually required principal payments receivable at March 1, 2005
    
    $
    84,078Cash flows expected to be collected at March 1, 2005
    
    
    42,925Basis in acquired loans at March 1, 2005
    
    
    42,925Carrying value of loans at September 30, 2005
    
    
    15,829
 13




---



##### Table of Contents



Note 11   Balance Sheet Deleveraging
   Note 12   Other Noninterest Income
  Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Predecessor
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    March 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Loan fee income
    
    $
    8,031
    
    
    $
    5,841
    
    
    $
    19,294
    
    
    $
    4,549
    
    
    $
    19,529Covered call premiums
    
    
    1,951
    
    
    
    5,661
    
    
    
    4,668
    
    
    
    1,412
    
    
    
    14,039Mortgage banking services income
    
    
    2,910
    
    
    
    1,913
    
    
    
    5,644
    
    
    
    923
    
    
    
    5,249Venture capital gains
(write-downs)
    
    
    (840
    )
    
    
    (1,664
    )
    
    
    (936
    )
    
    
    (297
    )
    
    
    (2,189
    )Miscellaneous income
    
    
    7,290
    
    
    
    3,952
    
    
    
    15,421
    
    
    
    2,517
    
    
    
    8,686Total
    
    $
    19,342
    
    
    $
    15,703
    
    
    $
    44,091
    
    
    $
    9,104
    
    
    $
    45,314
  Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Predecessor
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    March 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Mortgage banking services incomeGains on sales and fee income
    
    $
    3,105
    
    
    $
    1,034
    
    
    $
    5,298
    
    
    $
    460
    
    
    $
    4,098Net effect of derivatives
    
    
    52
    
    
    
    491
    
    
    
    (113
    )
    
    
    159
    
    
    
    2863,157
    
    
    
    1,525
    
    
    
    5,185
    
    
    
    619
    
    
    
    4,384Residential mortgage servicing income(loss)
    
    
    (247
    )(1)
    
    
    388
    
    
    
    459
    (1)
    
    
    304
    
    
    
    865$
    2,910
    
    
    $
    1,913
    
    
    $
    5,644
    
    
    $
    923
    
    
    $
    5,249
 
  14




---



##### Table of Contents



Note 13  Pension and Other Postretirement Plans
  Components of net periodic
    
    Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Predecessor
    
    
    Predecessorbenefit cost

    
    Three Months Ended
    
    
    Three Months Ended
    
    
    March 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004Qualified PensionService cost
    
    $
    3,643
    
    
    $
    3,379
    
    
    $
    8,379
    
    
    $
    2,369
    
    
    $
    8,947Interest cost
    
    
    3,500
    
    
    
    2,988
    
    
    
    8,004
    
    
    
    2,253
    
    
    
    9,650Expected return on plan assets
    
    
    (5,527
    )
    
    
    (5,083
    )
    
    
    (12,871
    )
    
    
    (3,671
    )
    
    
    (14,739
    )Amortization of prior service cost
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    6Amortization of transition obligation
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    (39
    )
    
    
    (193
    )Amortization of net loss
    
    
    
    
    
    
    686
    
    
    
    
    
    
    
    809
    
    
    
    2,818Net periodic benefit cost
    
    
    1,616
    
    
    
    1,907
    
    
    
    3,512
    
    
    
    1,722
    
    
    
    6,489Nonqualified PensionService cost
    
    
    227
    
    
    
    189
    
    
    
    514
    
    
    
    106
    
    
    
    387Interest cost
    
    
    539
    
    
    
    504
    
    
    
    1,290
    
    
    
    305
    
    
    
    1,314Amortization of prior service cost
    
    
    282
    
    
    
    76
    
    
    
    712
    
    
    
    39
    
    
    
    162Amortization of transition obligation
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    2
    
    
    
    9Amortization of net loss
    
    
    
    
    
    
    179
    
    
    
    
    
    
    
    84
    
    
    
    279Net periodic benefit cost
    
    
    1,048
    
    
    
    951
    
    
    
    2,516
    
    
    
    536
    
    
    
    2,151Total net periodic benefit
cost  pensions plans
    
    $
    2,664
    
    
    $
    2,858
    
    
    $
    6,028
    
    
    $
    2,258
    
    
    $
    8,640Other Postretirement BenefitsService cost
    
    $
    57
    
    
    $
    40
    
    
    $
    133
    
    
    $
    37
    
    
    $
    120Interest cost
    
    
    321
    
    
    
    353
    
    
    
    749
    
    
    
    215
    
    
    
    1,059Amortization of prior service cost
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    23
    
    
    
    105Amortization of transition obligation
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    65
    
    
    
    294Amortization of net loss
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    35
    
    
    
    297Net periodic benefit cost  other
postretirement benefit plans
    
    $
    378
    
    
    $
    625
    
    
    $
    882
    
    
    $
    375
    
    
    $
    1,875
    15




---



##### Table of Contents



Note 14  Merger and Consolidation Costs
  Successor
    
    
    Predecessor
    
    
    Successor
    
    
    Predecessor
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    March 1, 2005 to
    
    
    January 1, 2005 to
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    February 28, 2005
    
    
    September 30, 2004The Toronto-Dominion Bank Merger ChargesTransaction costs
    
    $
    (1,500
    )
    
    $
    3,190
    
    
    $
    3
    
    
    $
    18,148
    
    
    $
    3,190Personnel costs
    
    
    398
    
    
    
    
    
    
    
    3,052
    
    
    
    2,285
    
    
    
    Name change
    
    
    1,013
    
    
    
    
    
    
    
    3,214
    
    
    
    2,061
    
    
    
    Other costs
    
    
    35
    
    
    
    
    
    
    
    94
    
    
    
    2,941
    
    
    
    (54
    )
    
    
    3,190
    
    
    
    6,363
    
    
    
    25,435
    
    
    
    3,190BostonFed Bancorp, Inc. Merger ChargesPersonnel costs
    
    
    39
    
    
    
    
    
    
    
    774
    
    
    
    673
    
    
    
    Systems conversion and integration/customer
communications
    
    
    11
    
    
    
    169
    
    
    
    642
    
    
    
    987
    
    
    
    169Other costs
    
    
    70
    
    
    
    44
    
    
    
    1,028
    
    
    
    211
    
    
    
    46120
    
    
    
    213
    
    
    
    2,444
    
    
    
    1,871
    
    
    
    215Hudson United BancorpPersonnel costs
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Systems conversion and integration/customer
communications
    
    
    580
    
    
    
    
    
    
    
    580
    
    
    
    
    
    
    
    Other costs
    
    
    112
    
    
    
    
    
    
    
    112
    
    
    
    
    
    
    
    694
    
    
    
    
    
    
    
    694
    
    
    
    
    
    
    
    Foxborough Savings Bank Merger ChargesPersonnel costs
    
    
    
    
    
    
    275
    
    
    
    1
    
    
    
    1
    
    
    
    492Systems conversion and integration/customer
communications
    
    
    
    
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    1,227Other costs
    
    
    
    
    
    
    223
    
    
    
    8
    
    
    
    10
    
    
    
    301
    
    
    
    1,186
    
    
    
    9
    
    
    
    11
    
    
    
    2,020CCBT Financial Companies, Inc. Merger ChargesPersonnel costs
    
    
    1
    
    
    
    393
    
    
    
    3
    
    
    
    (219
    )
    
    
    1,296Systems conversion and integration/customer
communications
    
    
    
    
    
    
    247
    
    
    
    
    
    
    
    12
    
    
    
    2,426Other costs
    
    
    95
    
    
    
    271
    
    
    
    405
    
    
    
    36
    
    
    
    1,23396
    
    
    
    911
    
    
    
    408
    
    
    
    (171
    )
    
    
    4,955Other CostsAmerican Financial Holdings, Inc. Merger Charges
    
    
    306
    
    
    
    70
    
    
    
    495
    
    
    
    117
    
    
    
    257First & Ocean Bancorp Merger Charges
    
    
    
    
    
    
    30
    
    
    
    19
    
    
    
    1
    
    
    
    1,142Warren Bancorp, Inc. Merger Charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Reverse auto lease reserves (Banknorth-Vermont)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (470
    )Other costs
    
    
    1
    
    
    
    3
    
    
    
    26
    
    
    
    
    
    
    
    13307
    
    
    
    103
    
    
    
    540
    
    
    
    118
    
    
    
    971Total merger and consolidation costs
    
    $
    1,163
    
    
    $
    5,603
    
    
    $
    10,458
    
    
    $
    27,264
    
    
    $
    11,351
  Purchase
    
    
    
    
    
    
    
    
    
    
    Non-cashAccounting
    
    
    Merger and
    
    
    
    
    
    
    Write DownsBalance
    
    
    Adjustments
    
    
    Consolidation
    
    
    Cash
    
    
    and Other
    
    
    Balance12/31/04
    
    
    at Acquisition
    
    
    Costs
    
    
    Payments
    
    
    Adjustments
    
    
    2/28/05The Toronto-Dominion Bank Merger
    
    $
    432
    
    
    $
    
    
    
    $
    25,435
    
    
    $
    (2,976
    )
    
    $
    
    
    
    $
    22,891BostonFed Bancorp, Inc. Merger
    
    
    
    
    
    
    25,764
    
    
    
    1,871
    
    
    
    (18,855
    )
    
    
    27
    
    
    
    8,807Foxborough Savings Bank Merger
    
    
    461
    
    
    
    
    
    
    
    11
    
    
    
    (14
    )
    
    
    
    
    
    
    458CCBT Financial Companies, Inc. Merger
    
    
    1,966
    
    
    
    
    
    
    
    (171
    )
    
    
    (124
    )
    
    
    
    
    
    
    1,671First & Ocean Bancorp Merger
    
    
    206
    
    
    
    
    
    
    
    1
    
    
    
    (3
    )
    
    
    
    
    
    
    204American
Financial Holdings, Inc. Merger
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    (117
    )
    
    
    
    
    
    
    Andover / MetroWest Mergers
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78
    )
    
    
    Total
    
    $
    3,143
    
    
    $
    25,764
    
    
    $
    27,264
    
    
    $
    (22,089
    )
    
    $
    (51
    )
    
    $
    34,031
 Purchase
    
    
    
    
    
    
    
    
    
    
    Non-cashAccounting
    
    
    Merger and
    
    
    
    
    
    
    Write DownsBalance
    
    
    Adjustments
    
    
    Consolidation
    
    
    Cash
    
    
    and Other
    
    
    Balance02/28/05
    
    
    at Acquisition
    
    
    Costs
    
    
    Payments
    
    
    Adjustments
    
    
    9/30/05The Toronto-Dominion Bank Merger
    
    $
    22,891
    
    
    $
    
    
    
    $
    6,363
    
    
    $
    (26,501
    )
    
    $
    
    
    
    $
    2,753BostonFed Bancorp, Inc. Merger
    
    
    8,807
    
    
    
    
    
    
    
    2,444
    
    
    
    (6,829
    )
    
    
    (2,229
    )
    
    
    2,193Foxborough Savings Bank Merger
    
    
    458
    
    
    
    
    
    
    
    9
    
    
    
    (10
    )
    
    
    (457
    )
    
    
    CCBT Financial Companies, Inc. Merger
    
    
    1,671
    
    
    
    
    
    
    
    408
    
    
    
    (645
    )
    
    
    (769
    )
    
    
    665Hudson United Bancorp
    
    
    
    
    
    
    
    
    
    
    694
    
    
    
    (694
    )
    
    
    
    
    
    
    First & Ocean Bancorp Merger
    
    
    204
    
    
    
    
    
    
    
    19
    
    
    
    (19
    )
    
    
    (204
    )
    
    
    American Financial Holdings, Inc. Merger
    
    
    
    
    
    
    
    
    
    
    495
    
    
    
    (495
    )
    
    
    
    
    
    
    Other merger and consolidation costs
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    (45
    )
    
    
    19
    
    
    
    Total
    
    $
    34,031
    
    
    $
    
    
    
    $
    10,458
    
    
    $
    (35,238
    )
    
    $
    (3,640
    )
    
    $
    5,611
 16




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##### Table of Contents



Note 15  Earnings Per Share
  Successor
    
    Predecessor
    
    Successor
    
    Predecessor
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    March 1, 2005 to
    
    January 1, 2005 to
    
    Nine Months EndedSeptember 30, 2005
    
    September 30, 2004
    
    September 30, 2005
    
    February 28, 2005
    
    September 30, 2004Antidilutive effect of
options outstanding
    
    
    2,132
    
    
    
    
    
    
    
    1,831
    
    
    
    
    
    
    
    
 Note 16  Related Party Transactions
  September 30, 2005Cash and due from banks
    
    $
    2,581Other assets:Positive fair value marks on derivatives
    
    
    6,558Accounts receivable
    
    
    1,295Deferred tax asset
    
    
    2,058Deferred issuance costs
    
    
    1,079Other liabilities:Negative fair value marks on derivatives
    
    
    6,236Accumulated other comprehensive income
    
    
    (2,718
    )Off-balance sheet transactions (notional amounts):Interest rate swaps
    
    
    1,553,480Foreign exchange forward contracts
    
    
    39,852
    17




---



##### Table of Contents



Note 17  Accounting Changes
  Accounting for Share-Based Payments
  Accounting for Certain Loan or Debt Securities Acquired in a Transfer
  18




---



##### Table of Contents



Accounting Changes and Error Corrections
  Other-Than-Temporary Impairments of Certain Investments
  Note 18  Subsequent Event
    19




---



##### Table of Contents



Item 2.
 TD BANKNORTH INC. AND SUBSIDIARIES
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 EXECUTIVE OVERVIEW
 Method of Accounting
  
    
    cash paid by TD,
    
    the value of TD common shares issued and
    
    the value of TD Banknorth Inc. shares issued.
    20




---



##### Table of Contents



Table 1  Selected Income Data
 Predecessor
    
    
    Successor
    
    
    Combined
    
    
    PredecessorJanuary 1, 2005 to
    
    
    March 1, 2005 to
    
    
    Nine Months Ended
    
    
    Nine Months EndedFebruary 28, 2005
    
    
    September 30, 2005
    
    
    September 30, 2005
    
    
    September 30, 2004Interest and dividend income:Interest and fees on loans and leases
    
    $
    176,949
    
    
    $
    683,631
    
    
    $
    860,580
    
    
    $
    682,085Interest and dividends on securities
    
    
    51,183
    
    
    
    125,012
    
    
    
    176,195
    
    
    
    240,863Total interest and dividend income
    
    
    228,132
    
    
    
    808,643
    
    
    
    1,036,775
    
    
    
    922,948Interest expense:Interest on deposits
    
    
    30,694
    
    
    
    124,328
    
    
    
    155,022
    
    
    
    118,454Interest on borrowed funds
    
    
    32,654
    
    
    
    94,736
    
    
    
    127,390
    
    
    
    121,386Total interest expense
    
    
    63,348
    
    
    
    219,064
    
    
    
    282,412
    
    
    
    239,840Net interest income
    
    
    164,784
    
    
    
    589,579
    
    
    
    754,363
    
    
    
    683,108Provision for loan and lease losses
    
    
    1,069
    
    
    
    10,097
    
    
    
    11,166
    
    
    
    29,670Net interest income after provision
for loan and lease losses
    
    
    163,715
    
    
    
    579,482
    
    
    
    743,197
    
    
    
    653,438Noninterest income:Deposit services
    
    
    18,359
    
    
    
    76,134
    
    
    
    94,493
    
    
    
    80,995Insurance agency commissions
    
    
    8,252
    
    
    
    31,460
    
    
    
    39,712
    
    
    
    38,431Merchant and electronic banking income, net
    
    
    7,751
    
    
    
    35,914
    
    
    
    43,665
    
    
    
    37,196Wealth management services
    
    
    6,959
    
    
    
    24,602
    
    
    
    31,561
    
    
    
    29,300Bank-owned life insurance
    
    
    4,169
    
    
    
    14,029
    
    
    
    18,198
    
    
    
    17,503Investment planning services
    
    
    2,815
    
    
    
    12,044
    
    
    
    14,859
    
    
    
    14,619Net securities (losses) gains
    
    
    (46,548
    )
    
    
    (1,474
    )
    
    
    (48,022
    )
    
    
    10,060Loans held for sale  Lower of cost or market
adjustment
    
    
    (7,500
    )
    
    
    386
    
    
    
    (7,114
    )
    
    
    Change in unrealized loss on derivatives
    
    
    
    
    
    
    5,954
    
    
    
    5,954
    
    
    
    Other noninterest income
    
    
    9,104
    
    
    
    44,091
    
    
    
    53,195
    
    
    
    45,3143,361
    
    
    
    243,140
    
    
    
    246,501
    
    
    
    273,418Noninterest expense:Compensation and employee benefits
    
    
    67,977
    
    
    
    240,046
    
    
    
    308,023
    
    
    
    266,473Occupancy
    
    
    11,411
    
    
    
    41,670
    
    
    
    53,081
    
    
    
    47,274Equipment
    
    
    8,440
    
    
    
    30,210
    
    
    
    38,650
    
    
    
    35,777Data processing
    
    
    7,233
    
    
    
    27,094
    
    
    
    34,327
    
    
    
    31,573Advertising and marketing
    
    
    4,373
    
    
    
    17,911
    
    
    
    22,284
    
    
    
    20,105Amortization of identifiable intangible assets
    
    
    1,561
    
    
    
    72,632
    
    
    
    74,193
    
    
    
    6,367Merger and consolidation costs
    
    
    27,264
    
    
    
    10,458
    
    
    
    37,722
    
    
    
    11,351Prepayment penalties on borrowings
    
    
    6,300
    
    
    
    3
    
    
    
    6,303
    
    
    
    Other noninterest expense
    
    
    15,887
    
    
    
    64,701
    
    
    
    80,588
    
    
    
    78,822150,446
    
    
    
    504,725
    
    
    
    655,171
    
    
    
    497,742Income before income tax expense
    
    
    16,630
    
    
    
    317,897
    
    
    
    334,527
    
    
    
    429,114Provision for income taxes
    
    
    6,182
    
    
    
    109,931
    
    
    
    116,113
    
    
    
    145,169Net income
    
    $
    10,448
    
    
    $
    207,966
    
    
    $
    218,414
    
    
    $
    283,945Basic earnings per share
    
    
    
    
    
    
    
    
    
    $
    1.24
    
    
    $
    1.68Diluted earnings per share
    
    
    
    
    
    
    
    
    
    $
    1.23
    
    
    $
    1.65Weighted average shares outstanding:Basic
    
    
    
    
    
    
    
    
    
    
    176,822
    
    
    
    168,646Dilutive effect of stock options
    
    
    
    
    
    
    
    
    
    
    1,036
    
    
    
    3,555Diluted
    
    
    
    
    
    
    
    
    
    
    177,858
    
    
    
    172,201
  21




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##### Table of Contents



Acquisitions
  Table 2  Acquisitions
 DateAcquisition
    
    Acquired
    
    Loans
    
    Deposits(in millions)
    
    (in millions)BostonFed Bancorp, Inc.
    
    
    1/21/2005
    
    
    $
    1,227.4
    
    
    $
    1,046.7CCBT Financial Companies, Inc.
    
    
    4/30/2004
    
    
    
    854.8
    
    
    
    975.5Foxborough Savings Bank
    
    
    4/30/2004
    
    
    
    170.0
    
    
    
    211.8
 Operations
  
    
    Net interest income increased by $11.0 million, because
a 31 basis point increase in
net interest rate spread more than offset the effects of a $1.5 billion reduction in
earning assets related to the balance sheet deleveraging programs. Despite a continued
flattening of the yield curve, the net interest margin increased 41 basis points, in large
part due to balance sheet deleveraging programs in the fourth quarter of 2004 and the
first quarter of 2005.
    
    The provision for loan losses was $5.2 million lower, reflecting continued strong asset
quality and lower charge-offs.
    
    Noninterest income increased by $10.4 million due largely to increased transaction
volumes in deposits and merchant and electronic banking.
    
    Amortization of identifiable intangible assets increased by $28.7 million as a result
of the new basis of accounting.
    
    Noninterest expense excluding the amortization of intangible assets increased by $8.9
million as a result of the on-going operating expenses of BostonFed acquired on January
21, 2005, as well as higher expenses related to medical benefit programs and cash-settled
restricted stock awards.
  
    
    In February 2005, we implemented a deleveraging program under which we sold
approximately $2.9 billion of securities with a weighted average yield of 4.03% and
prepaid a similar amount of short-term borrowings, consisting of repurchase agreements and
FHLB advances. In addition, $519 million of single-family residential loans were
reclassified to loans held for sale prior to their sale, and marked down by $7.5 million
in the first quarter to the estimated selling price. A $41.6
 22




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##### Table of Contents



million after-tax loss was incurred in connection with this deleveraging program in the
first quarter of 2005. This deleveraging program helped to increase our net interest
margin.
 
    
    During February and March 2005, a total of $2.2 billion notional amount of interest
rate swap agreements were entered into to convert $2.2 billion of variable-rate loans into
fixed-rate assets. These swap agreements mature ratably over 96 months.
    
    During March 2005, we repurchased 15.3 million shares of our common stock at an average
cost of $31.79 per share.
    
    We completed the acquisition of BostonFed Bancorp Inc. on January 21, 2005.
Acquisitions continue to be an important part of our long-term strategy for growth.
    
    We applied purchase accounting for the transaction with TD, resulting in a new basis of
accounting for our assets and liabilities as of March 1, 2005.
    
    Total average loans and leases for the third quarter of 2005 increased 9.6% compared to
the third quarter of 2004 due to acquisitions and internal growth, which more than offset
the sale of $519 million of residential mortgages in connection with the balance sheet
deleveraging program implemented in the first quarter of 2005.
    
    Total average deposits for the third quarter of 2005 increased by 4.4% compared to the
third quarter of 2004 as increases from acquisitions more than offset declining
certificates of deposit. Excluding the effects of acquisitions and purchase accounting
adjustments, total average deposits declined by 1.7%, as increases in checking deposits
were more than offset by lower savings and certificate of deposit balances. Excluding the
effects of acquisitions, noninterest-bearing accounts increased 5.0% during the third
quarter of 2005 compared to the third quarter of 2004. The average cost of
interest-bearing deposits has increased 50 basis points since the third quarter of 2004.
    
    Our total risk-based capital ratio improved to 11.72% at September 30, 2005 from 10.43%
at June 30, 2005 due in large part to the issuance of approximately $229 million in
subordinated debt during the third quarter of 2005 which qualifies as Tier 2 capital under
regulatory guidelines.
  23




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##### Table of Contents



Table 3  Selected Quarterly Data
 Successor
    
    
    Successor
    
    
    Combined
    
    
    Predecessor
    
    
    Predecessor2005
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2004Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    ThirdCondensed Income StatementInterest income
    
    
    
    
    
    $
    350,679
    
    
    $
    342,447
    
    
    $
    343,645
    
    
    $
    327,900
    
    
    $
    323,678Interest expense
    
    
    
    
    
    
    101,682
    
    
    
    89,819
    
    
    
    90,912
    
    
    
    83,783
    
    
    
    85,701Net interest income
    
    
    (A
    )
    
    
    248,997
    
    
    
    252,628
    
    
    
    252,733
    
    
    
    244,117
    
    
    
    237,977Provision for loan and lease losses
    
    
    
    
    
    
    5,500
    
    
    
    3,597
    
    
    
    2,069
    
    
    
    10,670
    
    
    
    10,670Net interest income after provision
for loan and lease losses
    
    
    
    
    
    
    243,497
    
    
    
    249,031
    
    
    
    250,664
    
    
    
    233,447
    
    
    
    227,307Noninterest income (1)
    
    
    (B
    )
    
    
    103,607
    
    
    
    117,272
    
    
    
    25,621
    
    
    
    72,537
    
    
    
    93,196Noninterest expense, excluding merger and
consolidation costs (2)
    
    
    (C
    )
    
    
    210,566
    
    
    
    214,965
    
    
    
    191,918
    
    
    
    229,073
    
    
    
    168,595Merger and consolidation costs
    
    
    (D
    )
    
    
    1,163
    
    
    
    5,368
    
    
    
    31,191
    
    
    
    38,286
    
    
    
    5,603Income before income taxes
    
    
    
    
    
    
    135,375
    
    
    
    145,970
    
    
    
    53,176
    
    
    
    38,625
    
    
    
    146,305Income tax expense
    
    
    
    
    
    
    46,634
    
    
    
    50,375
    
    
    
    19,101
    
    
    
    17,927
    
    
    
    48,534Net income (1) (2)
    
    
    
    
    
    $
    88,741
    
    
    $
    95,595
    
    
    $
    34,075
    
    
    $
    20,698
    
    
    $
    97,771Weighted average shares outstanding:Basic
    
    
    
    
    
    
    173,661
    
    
    
    173,428
    
    
    
    183,393
    
    
    
    177,071
    
    
    
    173,271Diluted
    
    
    
    
    
    
    174,398
    
    
    
    174,261
    
    
    
    184,890
    
    
    
    179,953
    
    
    
    176,756Basic earnings per share
    
    
    
    
    
    $
    0.51
    
    
    $
    0.55
    
    
    $
    0.19
    
    
    $
    0.12
    
    
    $
    0.56Diluted earnings per share
    
    
    
    
    
    $
    0.51
    
    
    $
    0.55
    
    
    $
    0.18
    
    
    $
    0.12
    
    
    $
    0.55Financial RatiosReturn on average assets (1) (2) (3)
    
    
    
    
    
    
    1.11
    %
    
    
    1.20
    %
    
    
    0.45
    %
    
    
    0.29
    %
    
    
    1.33
    %Return on average equity (1) (2) (3)
    
    
    
    
    
    
    5.44
    %
    
    
    5.98
    %
    
    
    3.09
    %
    
    
    2.66
    %
    
    
    13.24
    %Net interest margin (fully-taxable equivalent) (3)
    
    
    
    
    
    
    4.09
    %
    
    
    4.12
    %
    
    
    3.96
    %
    
    
    3.87
    %
    
    
    3.68
    %Noninterest income as a percent of total income (4)
    
    
    
    
    
    
    29.38
    %
    
    
    31.70
    %
    
    
    9.20
    %
    
    
    22.91
    %
    
    
    28.14
    %Efficiency ratio (1) (2) (5)
    
    
    
    
    
    
    60.05
    %
    
    
    59.57
    %
    
    
    80.15
    %
    
    
    84.43
    %
    
    
    52.60
    %Per Share DataBook value per share
    
    
    
    
    
    $
    37.23
    
    
    $
    37.33
    
    
    $
    36.65
    
    
    $
    17.71
    
    
    $
    17.50Dividends per share
    
    
    
    
    
    $
    0.22
    
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.20
 
 (1)
    
    Noninterest income included net securities losses of $50.0 million and $17.8 million in the
first quarter of 2005 and fourth quarter of 2004, respectively, and lower of cost or market
adjustments of $7.5 million in the first quarter of 2005 relating to the reclassification of $519
million of residential loans from held in portfolio to held for sale. These items were incurred as
part of balance sheet deleveraging programs implemented during these periods. Noninterest income
also included a change in unrealized loss on derivatives of $8.2 million in March 2005.(2)
    
    Noninterest expense included prepayment penalties on borrowings of $6.3 million and $61.5
million in the first quarter of 2005 and fourth quarter of 2004, respectively, which were incurred
as part of balance sheet deleveraging programs implemented during these periods.(3)
    
    Annualized.(4)
    
    Represents noninterest income as a percentage of net interest income plus noninterest income.
Noninterest income as a percent of total income is calculated as (B) divided by (A+B).(5)
    
    Represents noninterest expense as a percentage of net interest income and noninterest income.
Efficiency ratio is calculated as (C+D) divided by (A+B). Net Interest Income
   24




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##### Table of Contents




    
    a 41 basis point increase in net interest margin;
    
    the acquisition of BostonFed in January 2005;
    
    changes in the composition of earning assets resulting from deleveraging programs (loans
comprised 82% of earning assets during the third quarter of 2005 compared to 71% during the
third quarter of 2004);
    
    changes in the composition of interest-bearing liabilities resulting from deleveraging
programs (deposits comprised 78% of interest-bearing liabilities during the third quarter
of 2005 compared to 70% during the third quarter of 2004);
    
    the benefit of interest rate swap agreements with a notional amount of $2.2 billion
which hedge the cash flows on certain variable rate loans, which increased net interest
income by $4.1 million; and
    
    a 7.3% increase in noninterest-bearing deposits.
   25




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##### Table of Contents



Table 4  Average Balances, Yields and Rates
 Successor
    
    
    Predecessor2005 Third Quarter
    
    
    2004 Third QuarterAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yeild/Balance
    
    
    Interest
    
    
    Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Rate(1)Loans and leases (2):Residential real estate mortgages
    
    $
    3,246,891
    
    
    $
    44,806
    
    
    
    5.52
    %
    
    $
    3,135,400
    
    
    $
    38,768
    
    
    
    4.95
    %Commercial real estate mortgages
    
    
    6,719,570
    
    
    
    103,508
    
    
    
    6.11
    %
    
    
    6,158,271
    
    
    
    89,116
    
    
    
    5.76
    %Commercial business loans and leases
    
    
    4,180,982
    
    
    
    63,419
    
    
    
    6.04
    %
    
    
    3,827,919
    
    
    
    47,550
    
    
    
    4.93
    %Consumer loans and leases
    
    
    5,918,342
    
    
    
    88,669
    
    
    
    5.94
    %
    
    
    5,185,483
    
    
    
    66,458
    
    
    
    5.10
    %Total loans and leases
    
    
    20,065,785
    
    
    
    300,402
    
    
    
    5.95
    %
    
    
    18,307,073
    
    
    
    241,892
    
    
    
    5.26
    %Investment securities (3)
    
    
    4,341,490
    
    
    
    52,086
    
    
    
    4.80
    %
    
    
    7,651,673
    
    
    
    83,442
    
    
    
    4.36
    %Federal funds sold and other short-term
investments
    
    
    15,611
    
    
    
    65
    
    
    
    1.66
    %
    
    
    5,609
    
    
    
    22
    
    
    
    1.55
    %Total earning assets
    
    
    24,422,886
    
    
    
    352,553
    
    
    
    5.74
    %
    
    
    25,964,355
    
    
    
    325,356
    
    
    
    4.98
    %Bank-owned life insurance
    
    
    563,040
    
    
    
    
    
    
    
    
    
    
    
    508,425Goodwill
    
    
    4,549,680
    
    
    
    
    
    
    
    
    
    
    
    1,369,166Indentifiable intangible assets
    
    
    715,078
    
    
    
    
    
    
    
    
    
    
    
    53,568Noninterest-earning assets
    
    
    1,484,288
    
    
    
    
    
    
    
    
    
    
    
    1,280,594Total assets
    
    $
    31,734,972
    
    
    
    
    
    
    
    
    
    
    $
    29,176,108Interest-bearing deposits:Regular savings
    
    $
    2,605,428
    
    
    
    2,138
    
    
    
    0.33
    %
    
    $
    2,603,474
    
    
    
    1,887
    
    
    
    0.29
    %NOW and money market accounts
    
    
    8,187,345
    
    
    
    31,708
    
    
    
    1.54
    %
    
    
    7,884,927
    
    
    
    15,758
    
    
    
    0.80
    %Certificates of deposit
    
    
    4,841,020
    
    
    
    27,005
    
    
    
    2.21
    %
    
    
    4,672,879
    
    
    
    22,475
    
    
    
    1.91
    %Brokered deposits
    
    
    62,505
    
    
    
    602
    
    
    
    3.82
    %
    
    
    506
    
    
    
    2
    
    
    
    1.63
    %Total interest-bearing deposits
    
    
    15,696,298
    
    
    
    61,453
    
    
    
    1.55
    %
    
    
    15,161,786
    
    
    
    40,122
    
    
    
    1.05
    %Borrowed funds
    
    
    4,411,042
    
    
    
    40,229
    
    
    
    3.62
    %
    
    
    6,652,815
    
    
    
    45,579
    
    
    
    2.73
    %Total interest-bearing liabilities
    
    
    20,107,340
    
    
    
    101,682
    
    
    
    2.01
    %
    
    
    21,814,601
    
    
    
    85,701
    
    
    
    1.56
    %Non-interest bearing deposits
    
    
    4,546,766
    
    
    
    
    
    
    
    
    
    
    
    4,236,569Deferred tax liability related to
identifiable intangible assets
    
    
    265,588
    
    
    
    
    
    
    
    
    
    
    
    18,749Other liabilities
    
    
    338,178
    
    
    
    
    
    
    
    
    
    
    
    167,454Shareholders equity
    
    
    6,477,100
    
    
    
    
    
    
    
    
    
    
    
    2,938,735Total liabilities and shareholders equity
    
    $
    31,734,972
    
    
    
    
    
    
    
    
    
    
    $
    29,176,108Net earning assets
    
    $
    4,315,546
    
    
    
    
    
    
    
    
    
    
    $
    4,149,754Net interest income (fully-taxable equivalent)
    
    
    
    
    
    
    250,871
    
    
    
    
    
    
    
    
    
    
    
    239,655Less: fully-taxable equivalent adjustments
    
    
    
    
    
    
    (1,874
    )
    
    
    
    
    
    
    
    
    
    
    (1,678
    )Net interest income
    
    
    
    
    
    $
    248,997
    
    
    
    
    
    
    
    
    
    
    $
    237,977Net interest rate spread (fully-taxable
equivalent)
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    3.42
    %Net interest margin (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    4.09
    %
    
    
    
    
    
    
    
    
    
    
    3.68
    %
 
 (1)
    
    Annualized.(2)
    
    Loans and leases include loans held for sale.(3)
    
    Includes securities available for sale and held to maturity. 26




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##### Table of Contents



Table 4  Average Balances, Yields and Rates
 Combined
    
    
    PredecessorNine Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate (1)
    
    
    Balance
    
    
    Interest
    
    
    Rate (1)Loans and leases (2):Residential real estate mortgages
    
    $
    3,570,839
    
    
    $
    143,339
    
    
    
    5.35
    %
    
    $
    2,950,094
    
    
    $
    111,512
    
    
    
    5.04
    %Commercial real estate mortgages
    
    
    6,609,568
    
    
    
    295,675
    
    
    
    5.98
    %
    
    
    5,861,892
    
    
    
    251,689
    
    
    
    5.74
    %Commercial business loans and leases
    
    
    4,121,366
    
    
    
    178,754
    
    
    
    5.82
    %
    
    
    3,630,870
    
    
    
    131,143
    
    
    
    4.82
    %Consumer loans and leases
    
    
    5,703,486
    
    
    
    246,528
    
    
    
    5.78
    %
    
    
    5,017,428
    
    
    
    190,886
    
    
    
    5.08
    %Total loans and leases
    
    
    20,005,259
    
    
    
    864,296
    
    
    
    5.78
    %
    
    
    17,460,284
    
    
    
    685,230
    
    
    
    5.24
    %Investment securities (3)
    
    
    5,002,727
    
    
    
    177,642
    
    
    
    4.73
    %
    
    
    7,523,082
    
    
    
    242,379
    
    
    
    4.30
    %Federal funds sold and other short-term
investments
    
    
    14,434
    
    
    
    225
    
    
    
    2.09
    %
    
    
    5,562
    
    
    
    53
    
    
    
    1.27
    %Total earning assets
    
    
    25,022,420
    
    
    
    1,042,163
    
    
    
    5.57
    %
    
    
    24,988,928
    
    
    
    927,662
    
    
    
    4.95
    %Bank-owned life insurance
    
    
    555,616
    
    
    
    
    
    
    
    
    
    
    
    498,736Goodwill
    
    
    3,875,544
    
    
    
    
    
    
    
    
    
    
    
    1,267,703Indentifiable intangible assets
    
    
    588,958
    
    
    
    
    
    
    
    
    
    
    
    44,905Noninterest-earning assets
    
    
    1,444,605
    
    
    
    
    
    
    
    
    
    
    
    1,237,075Total assets
    
    $
    31,487,143
    
    
    
    
    
    
    
    
    
    
    $
    28,037,347Interest-bearing deposits:Regular savings
    
    $
    2,648,151
    
    
    
    5,992
    
    
    
    0.30
    %
    
    $
    2,562,340
    
    
    
    5,655
    
    
    
    0.29
    %NOW and money market accounts
    
    
    8,102,660
    
    
    
    77,094
    
    
    
    1.27
    %
    
    
    7,551,311
    
    
    
    44,878
    
    
    
    0.79
    %Certificates of deposit
    
    
    4,775,911
    
    
    
    69,969
    
    
    
    1.96
    %
    
    
    4,684,097
    
    
    
    67,919
    
    
    
    1.94
    %Brokered deposits
    
    
    68,256
    
    
    
    1,967
    
    
    
    3.85
    %
    
    
    170
    
    
    
    2
    
    
    
    1.63
    %Total interest-bearing deposits
    
    
    15,594,978
    
    
    
    155,022
    
    
    
    1.33
    %
    
    
    14,797,918
    
    
    
    118,454
    
    
    
    1.07
    %Borrowed funds
    
    
    5,228,368
    
    
    
    127,390
    
    
    
    3.25
    %
    
    
    6,394,319
    
    
    
    121,386
    
    
    
    2.53
    %Total interest-bearing liabilities
    
    
    20,823,346
    
    
    
    282,412
    
    
    
    1.81
    %
    
    
    21,192,237
    
    
    
    239,840
    
    
    
    1.51
    %Non-interest bearing deposits
    
    
    4,374,659
    
    
    
    
    
    
    
    
    
    
    
    3,875,740Deferred tax liability related to
identifiable intangible assets
    
    
    178,710
    
    
    
    
    
    
    
    
    
    
    
    15,717Other liabilities
    
    
    311,701
    
    
    
    
    
    
    
    
    
    
    
    166,492Shareholders equity
    
    
    5,798,727
    
    
    
    
    
    
    
    
    
    
    
    2,787,161Total liabilities and shareholders equity
    
    $
    31,487,143
    
    
    
    
    
    
    
    
    
    
    $
    28,037,347Net earning assets
    
    $
    4,199,074
    
    
    
    
    
    
    
    
    
    
    $
    3,796,691Net interest income (fully-taxable equivalent)
    
    
    
    
    
    
    759,751
    
    
    
    
    
    
    
    
    
    
    
    687,822Less: fully-taxable equivalent adjustments
    
    
    
    
    
    
    (5,388
    )
    
    
    
    
    
    
    
    
    
    
    (4,714
    )Net interest income
    
    
    
    
    
    $
    754,363
    
    
    
    
    
    
    
    
    
    
    $
    683,108Net interest rate spread (fully-taxable
equivalent)
    
    
    
    
    
    
    
    
    
    
    3.76
    %
    
    
    
    
    
    
    
    
    
    
    3.44
    %Net interest margin (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    4.06
    %
    
    
    
    
    
    
    
    
    
    
    3.67
    %
 
 (1)
    
    Annualized.(2)
    
    Loans and leases include loans held for sale.(3)
    
    Includes securities available for sale and held to maturity. 27




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##### Table of Contents



Table 5   Rate /Volume Analysis
 Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005 (Successor) vs. Three Months Ended
    
    
    September 30, 2005 (Combined) vs. Nine Months EndedSeptember 30, 2004 (Predecessor)
    
    
    September 30, 2004 (Predecessor)Increase (decrease) due to
    
    
    Increase (decrease) due toRate and
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    Rate and
    
    
    TotalVolume (1)
    
    
    Rate
    
    
    Volume (2)
    
    
    Change
    
    
    Volume (1)
    
    
    Rate
    
    
    Volume (2)
    
    
    ChangeInterest income:Loans and leases
    
    $
    23,317
    
    
    $
    31,839
    
    
    $
    3,354
    
    
    $
    58,510
    
    
    $
    99,743
    
    
    $
    70,520
    
    
    $
    8,803
    
    
    $
    179,066Investment securities
    
    
    (36,378
    )
    
    
    8,486
    
    
    
    (3,464
    )
    
    
    (31,356
    )
    
    
    (81,059
    )
    
    
    24,195
    
    
    
    (7,873
    )
    
    
    (64,737
    )Federal funds sold and
other short-term
investements
    
    
    39
    
    
    
    2
    
    
    
    2
    
    
    
    43
    
    
    
    84
    
    
    
    34
    
    
    
    54
    
    
    
    172Total interest income
    
    
    (13,022
    )
    
    
    40,327
    
    
    
    (108
    )
    
    
    27,197
    
    
    
    18,768
    
    
    
    94,749
    
    
    
    984
    
    
    
    114,501Interest expense:Interest-bearing deposits:Regular savings
    
    
    1
    
    
    
    262
    
    
    
    (12
    )
    
    
    251
    
    
    
    186
    
    
    
    192
    
    
    
    (41
    )
    
    
    337NOW and money market accounts
    
    
    610
    
    
    
    14,707
    
    
    
    633
    
    
    
    15,950
    
    
    
    3,258
    
    
    
    27,110
    
    
    
    1,848
    
    
    
    32,216Certificates of deposit
    
    
    809
    
    
    
    3,533
    
    
    
    188
    
    
    
    4,530
    
    
    
    1,332
    
    
    
    701
    
    
    
    17
    
    
    
    2,050Brokered deposits
    
    
    255
    
    
    
    3
    
    
    
    342
    
    
    
    600
    
    
    
    830
    
    
    
    3
    
    
    
    1,132
    
    
    
    1,965Total interest-bearing deposits
    
    
    1,675
    
    
    
    18,505
    
    
    
    1,151
    
    
    
    21,331
    
    
    
    5,606
    
    
    
    28,006
    
    
    
    2,956
    
    
    
    36,568Borrowed funds
    
    
    (15,426
    )
    
    
    14,924
    
    
    
    (4,848
    )
    
    
    (5,350
    )
    
    
    (22,063
    )
    
    
    34,435
    
    
    
    (6,368
    )
    
    
    6,004Total interest expense
    
    
    (13,751
    )
    
    
    33,429
    
    
    
    (3,697
    )
    
    
    15,981
    
    
    
    (16,457
    )
    
    
    62,441
    
    
    
    (3,412
    )
    
    
    42,572Net interest income (fully
taxable equivalent)
    
    $
    729
    
    
    $
    6,898
    
    
    $
    3,589
    
    
    $
    11,216
    
    
    $
    35,225
    
    
    $
    32,308
    
    
    $
    4,396
    
    
    $
    71,929
 
 (1)
    
    Volume increases include the effects of the acquisition of BostonFed Bancorp, Inc. on January 21, 2005
and Foxborough Savings Bank and CCBT Financial Companies, Inc. on April 30, 2004.(2)
    
    Includes changes in interest income and expense not due solely to volume or rate changes.  Table 6  Analysis of Net Interest Income
 Successor
    
    
    Predecessor
    
    
    
    
    
    
    Combined
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    
    
    
    
    Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Change
    
    
    September 30, 2005
    
    
    September 30, 2004
    
    
    ChangeComponents of net interest incomeIncome on
earning assets (fully-taxable equivalent)
    
    $
    352,553
    
    
    $
    325,356
    
    
    $
    27,197
    
    
    $
    1,042,163
    
    
    $
    927,662
    
    
    $
    114,501Expense on interest-bearing liabilities
    
    
    101,682
    
    
    
    85,701
    
    
    
    15,981
    
    
    
    282,412
    
    
    
    239,840
    
    
    
    42,572Net interest
income (fully-taxable equivalent)
    
    
    250,871
    
    
    
    239,655
    
    
    
    11,216
    
    
    
    759,751
    
    
    
    687,822
    
    
    
    71,929Less: fully-taxable equivalent adjustments
    
    
    (1,874
    )
    
    
    (1,678
    )
    
    
    (196
    )
    
    
    (5,388
    )
    
    
    (4,714
    )
    
    
    (674
    )Net interest income, as reported
    
    $
    248,997
    
    
    $
    237,977
    
    
    $
    11,020
    
    
    $
    754,363
    
    
    $
    683,108
    
    
    $
    71,255Average yields and rates paidEarning
assets yield (fully-taxable equivalent)
    
    
    5.74
    %
    
    
    4.98
    %
    
    
    0.76
    %
    
    
    5.57
    %
    
    
    4.95
    %
    
    
    0.62
    %Rate paid on interest-bearing liabilities
    
    
    2.01
    %
    
    
    1.56
    %
    
    
    0.45
    %
    
    
    1.81
    %
    
    
    1.51
    %
    
    
    0.30
    %Net interest
rate spread (fully-taxable equivalent)
    
    
    3.73
    %
    
    
    3.42
    %
    
    
    0.31
    %
    
    
    3.76
    %
    
    
    3.44
    %
    
    
    0.32
    %Net interest margin (fully-taxable equivalent)
    
    
    4.09
    %
    
    
    3.68
    %
    
    
    0.41
    %
    
    
    4.06
    %
    
    
    3.67
    %
    
    
    0.39
    %Average balancesLoans and leases
    
    $
    20,065,785
    
    
    $
    18,307,073
    
    
    $
    1,758,712
    
    
    $
    20,005,259
    
    
    $
    17,460,284
    
    
    $
    2,544,975Investment securities
    
    
    4,341,490
    
    
    
    7,651,673
    
    
    
    (3,310,183
    )
    
    
    5,002,727
    
    
    
    7,523,082
    
    
    
    (2,520,355
    )Federal
funds sold and other short-term investments
    
    
    15,611
    
    
    
    5,609
    
    
    
    10,002
    
    
    
    14,434
    
    
    
    5,562
    
    
    
    8,872Total earning assets
    
    
    24,422,886
    
    
    
    25,964,355
    
    
    
    (1,541,469
    )
    
    
    25,022,420
    
    
    
    24,988,928
    
    
    
    33,492Total interest-bearing liabilities
    
    
    20,107,340
    
    
    
    21,814,601
    
    
    
    (1,707,261
    )
    
    
    20,823,346
    
    
    
    21,192,237
    
    
    
    (368,891
    )Net earning assets
    
    $
    4,315,546
    
    
    $
    4,149,754
    
    
    $
    165,792
    
    
    $
    4,199,074
    
    
    $
    3,796,691
    
    
    $
    402,383
 28




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##### Table of Contents



Provision and Allowance for Loan and Lease Losses
   Noninterest Income
  Table 7 - Noninterest Income
 Successor
    
    
    Predecessor
    
    
    
    
    
    
    
    
    
    
    Combined
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    Change
    
    
    Nine Months Ended
    
    
    Nine Months Ended
    
    
    ChangeSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Amount
    
    
    Percent
    
    
    September 30, 2005
    
    
    September 30, 2004
    
    
    Amount
    
    
    PercentNoninterest income:Deposit services
    
    $
    34,558
    
    
    $
    27,583
    
    
    $
    6,975
    
    
    
    25
    %
    
    $
    94,493
    
    
    $
    80,995
    
    
    $
    13,498
    
    
    
    17
    %Insurance agency commissions
    
    
    12,216
    
    
    
    12,417
    
    
    
    (201
    )
    
    
    (2
    %)
    
    
    39,712
    
    
    
    38,431
    
    
    
    1,281
    
    
    
    3
    %Merchant and electronic banking
income, net
    
    
    15,824
    
    
    
    13,723
    
    
    
    2,101
    
    
    
    15
    %
    
    
    43,665
    
    
    
    37,196
    
    
    
    6,469
    
    
    
    17
    %Wealth management services
    
    
    10,662
    
    
    
    10,280
    
    
    
    382
    
    
    
    4
    %
    
    
    31,561
    
    
    
    29,300
    
    
    
    2,261
    
    
    
    8
    %Bank-owned life insurance
    
    
    5,994
    
    
    
    5,732
    
    
    
    262
    
    
    
    5
    %
    
    
    18,198
    
    
    
    17,503
    
    
    
    695
    
    
    
    4
    %Investment planning services
    
    
    4,708
    
    
    
    4,634
    
    
    
    74
    
    
    
    2
    %
    
    
    14,859
    
    
    
    14,619
    
    
    
    240
    
    
    
    2
    %Net securities gains (losses)
    
    
    1,014
    
    
    
    3,124
    
    
    
    (2,110
    )
    
    
    (68
    %)
    
    
    (48,022
    )
    
    
    10,060
    
    
    
    (58,082
    )
    
    
    N/MLoans held for sale  lower of cost or
market adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/M
    
    
    
    (7,114
    )
    
    
    
    
    
    
    (7,114
    )
    
    
    N/MChange in unrealized loss on
derivatives
    
    
    (711
    )
    
    
    
    
    
    
    (711
    )
    
    
    N/M
    
    
    
    5,954
    
    
    
    
    
    
    
    5,954
    
    
    
    N/MOther noninterest income:Loan fee income
    
    
    8,031
    
    
    
    5,841
    
    
    
    2,190
    
    
    
    37
    %
    
    
    23,843
    
    
    
    19,527
    
    
    
    4,316
    
    
    
    22
    %Covered call option premiums
    
    
    1,951
    
    
    
    5,661
    
    
    
    (3,710
    )
    
    
    (66
    %)
    
    
    6,080
    
    
    
    14,039
    
    
    
    (7,959
    )
    
    
    (57
    %)Mortgage banking services
income
    
    
    2,910
    
    
    
    1,913
    
    
    
    997
    
    
    
    N/M
    
    
    
    6,567
    
    
    
    5,249
    
    
    
    1,318
    
    
    
    25
    %Venture capital write-downs
    
    
    (840
    )
    
    
    (1,664
    )
    
    
    824
    
    
    
    N/M
    
    
    
    (1,233
    )
    
    
    (2,189
    )
    
    
    956
    
    
    
    44
    %Miscellaneous income
    
    
    7,290
    
    
    
    3,952
    
    
    
    3,338
    
    
    
    N/M
    
    
    
    17,938
    
    
    
    8,688
    
    
    
    9,250
    
    
    
    N/MTotal other noninterest
income
    
    
    19,342
    
    
    
    15,703
    
    
    
    3,639
    
    
    
    23
    %
    
    
    53,195
    
    
    
    45,314
    
    
    
    7,881
    
    
    
    17
    %Total noninterest income
    
    $
    103,607
    
    
    $
    93,196
    
    
    $
    10,411
    
    
    
    11
    %
    
    $
    246,501
    
    
    $
    273,418
    
    
    $
    (26,917
    )
    
    
    (10
    %)
 
 N/M   not meaningful  29




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##### Table of Contents



30




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##### Table of Contents



31




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##### Table of Contents



Noninterest Expense
  Table 8  Noninterest Expense
 Successor
    
    
    Predecessor
    
    
    
    
    
    
    
    
    
    
    Combined
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    Change
    
    
    Nine Months Ended
    
    
    Nine Months Ended
    
    
    ChangeSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Amount
    
    
    Percent
    
    
    September 30, 2005
    
    
    September 30, 2004
    
    
    Amount
    
    
    PercentNoninterest expense:Compensation and
employee benefits
    
    $
    102,059
    
    
    $
    91,935
    
    
    $
    10,124
    
    
    
    11
    %
    
    $
    308,023
    
    
    $
    266,473
    
    
    $
    41,550
    
    
    
    16
    %Occupancy
    
    
    17,114
    
    
    
    15,866
    
    
    
    1,248
    
    
    
    8
    %
    
    
    53,081
    
    
    
    47,274
    
    
    
    5,807
    
    
    
    12
    %Equipment
    
    
    12,831
    
    
    
    12,074
    
    
    
    757
    
    
    
    6
    %
    
    
    38,650
    
    
    
    35,777
    
    
    
    2,873
    
    
    
    8
    %Data processing
    
    
    11,675
    
    
    
    11,118
    
    
    
    557
    
    
    
    5
    %
    
    
    34,327
    
    
    
    31,573
    
    
    
    2,754
    
    
    
    9
    %Advertising and
marketing
    
    
    7,503
    
    
    
    6,278
    
    
    
    1,225
    
    
    
    20
    %
    
    
    22,284
    
    
    
    20,105
    
    
    
    2,179
    
    
    
    11
    %Amortization of identifiable
intangible assets
    
    
    31,041
    
    
    
    2,379
    
    
    
    28,662
    
    
    
    N/M
    
    
    
    74,193
    
    
    
    6,367
    
    
    
    67,826
    
    
    
    N/MMerger and
consolidation costs
    
    
    1,163
    
    
    
    5,603
    
    
    
    (4,440
    )
    
    
    (79
    %)
    
    
    37,722
    
    
    
    11,351
    
    
    
    26,371
    
    
    
    N/MPrepayment penalties
on borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,303
    
    
    
    
    
    
    
    6,303
    
    
    
    N/MOther noninterest
expense:Telephone
    
    
    3,078
    
    
    
    3,829
    
    
    
    (751
    )
    
    
    (20
    %)
    
    
    10,062
    
    
    
    10,893
    
    
    
    (831
    )
    
    
    (8
    %)Office supplies
    
    
    3,626
    
    
    
    2,829
    
    
    
    797
    
    
    
    28
    %
    
    
    9,246
    
    
    
    7,823
    
    
    
    1,423
    
    
    
    18
    %Postage and freight
    
    
    2,893
    
    
    
    2,742
    
    
    
    151
    
    
    
    6
    %
    
    
    8,647
    
    
    
    7,887
    
    
    
    760
    
    
    
    10
    %Miscellaneous loan
costs
    
    
    1,215
    
    
    
    1,405
    
    
    
    (190
    )
    
    
    (14
    %)
    
    
    3,858
    
    
    
    3,190
    
    
    
    668
    
    
    
    21
    %Deposits and other
assessments
    
    
    993
    
    
    
    963
    
    
    
    30
    
    
    
    3
    %
    
    
    3,139
    
    
    
    2,811
    
    
    
    328
    
    
    
    12
    %Collection and carrying costs
of
non-performing
assets
    
    
    608
    
    
    
    628
    
    
    
    (20
    )
    
    
    (3
    %)
    
    
    1,747
    
    
    
    1,944
    
    
    
    (197
    )
    
    
    (10
    %)Miscellaneous
    
    
    15,930
    
    
    
    16,549
    
    
    
    (619
    )
    
    
    (4
    %)
    
    
    43,889
    
    
    
    44,274
    
    
    
    (385
    )
    
    
    (1
    %)Total other
noninterest
expense
    
    
    28,343
    
    
    
    28,945
    
    
    
    (602
    )
    
    
    (2
    %)
    
    
    80,588
    
    
    
    78,822
    
    
    
    1,766
    
    
    
    2
    %Total
noninterest expense
    
    $
    211,729
    
    
    $
    174,198
    
    
    $
    37,531
    
    
    
    22
    %
    
    $
    655,171
    
    
    $
    497,742
    
    
    $
    157,429
    
    
    
    32
    %
 
 N/M  not meaningful     32




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##### Table of Contents



Taxes
   33




---



##### Table of Contents



Comprehensive Income
   FINANCIAL CONDITION
    Securities
   34




---



##### Table of Contents



Loans and Leases
       35




---



##### Table of Contents



Deposits
     Other Funding Sources
     36




---



##### Table of Contents



Shareholders Equity
    37




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##### Table of Contents



CONTRACTUAL OBLIGATIONS
   Table
9  Contractual Obligations and Other Commitments 
Successor
 Payments Due By PeriodLess than
    
    
    1  3
    
    
    4  5
    
    
    After 5Contractual Obligations (1)
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsLong-term debt
    
    $
    1,266,725
    
    
    $
    176,281
    
    
    $
    33,744
    
    
    $
    167,625
    
    
    $
    889,075Capital lease obligations
    
    
    6,472
    
    
    
    132
    
    
    
    816
    
    
    
    1,391
    
    
    
    4,133Total long-term debt
    
    
    1,273,197
    
    
    
    176,413
    
    
    
    34,560
    
    
    
    169,016
    
    
    
    893,208Operating lease obligations
    
    
    135,143
    
    
    
    26,946
    
    
    
    40,536
    
    
    
    28,259
    
    
    
    39,402Pension plan contribution (2)
    
    
    27,600
    
    
    
    27,600
    
    
    
    
    
    
    
    
    
    
    
    Other benefit plan payments  estimated
    
    
    46,875
    
    
    
    4,318
    
    
    
    9,055
    
    
    
    12,602
    
    
    
    20,900Other vendor obligations (3)
    
    
    87,509
    
    
    
    13,111
    
    
    
    13,822
    
    
    
    6,565
    
    
    
    54,011Total contractual obligations
    
    $
    1,570,324
    
    
    $
    248,388
    
    
    $
    97,973
    
    
    $
    216,442
    
    
    $
    1,007,521
 
 (1)
    
    Other liabilities which are short term in nature are not included in this table.(2)
    
    Funding requirements for pension benefits after 2005 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 effective July 1, 2005
net of TDs 50% share. 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
    
    $
    5,521,806
    
    
    $
    1,386,990
    
    
    $
    253,814
    
    
    $
    149,451
    
    
    $
    3,731,551Standby letters of credit
    
    
    553,960
    
    
    
    94,489
    
    
    
    95,600
    
    
    
    94,315
    
    
    
    269,556Commercial letters of credit
    
    
    16,618
    
    
    
    11,851
    
    
    
    513
    
    
    
    1,440
    
    
    
    2,814Commitments to originate loans
    
    
    2,364,505
    
    
    
    1,467,328
    
    
    
    416,424
    
    
    
    135,745
    
    
    
    345,008Other commitments
    
    
    247,871
    
    
    
    4,850
    
    
    
    12,448
    
    
    
    2,367
    
    
    
    228,206Total commitments
    
    $
    8,704,760
    
    
    $
    2,965,508
    
    
    $
    778,799
    
    
    $
    383,318
    
    
    $
    4,577,135
 38




---



##### Table of Contents



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)
    
    $
    1,092,411
    
    
    $
    9,500
    
    
    $
    86,301
    
    
    $
    185,017
    
    
    $
    811,593Interest rate swaps with dealers (2)
    
    
    1,092,411
    
    
    
    9,500
    
    
    
    86,301
    
    
    
    185,017
    
    
    
    811,593Interest rate caps with commercial borrowers
    
    
    10,888
    
    
    
    
    
    
    
    
    
    
    
    9,435
    
    
    
    1,453Interest rate caps with dealers
    
    
    10,888
    
    
    
    
    
    
    
    
    
    
    
    9,435
    
    
    
    1,453Interest rate swaps on loans (3)
    
    
    2,200,000
    
    
    
    275,000
    
    
    
    550,000
    
    
    
    550,000
    
    
    
    825,000Cross currency swap (USD) (4)
    
    
    228,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228,620Forward commitments to sell loans
    
    
    85,328
    
    
    
    85,328
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency rate contracts: (5)Forward contracts with customers
    
    
    28,312
    
    
    
    27,706
    
    
    
    606
    
    
    
    
    
    
    
    Forward contracts with dealers
    
    
    28,312
    
    
    
    27,706
    
    
    
    606
    
    
    
    
    
    
    
    Foreign exchange options to purchase
    
    
    11,156
    
    
    
    11,156
    
    
    
    
    
    
    
    
    
    
    
    Foreign exchange options to sell
    
    
    11,156
    
    
    
    11,156
    
    
    
    
    
    
    
    
    
    
    
    Rate-locked loan commitments
    
    
    59,986
    
    
    
    59,986
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Swaps with commercial loan customers (TD Banknorth receives fixed, pays variable).(2)
    
    Offsetting swaps with dealers (TD Banknorth pays fixed, receives variable), which offset the interest rate swaps with commercial borrowers.(3)
    
    Swaps on loans (TD Banknorth pays fixed, receives variable).(4)
    
    Swap on borrowings.(5)
    
    Forward contracts for customer accommodations. RISK MANAGEMENT
   CREDIT RISK MANAGEMENT
 General
  39




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##### Table of Contents



Table 10  Composition of Loans and Leases
 Successor
    
    
    PredecessorSeptember 30, 2005
    
    
    December 31, 2004Percent
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    PercentAmount
    
    
    of Loans
    
    
    Nonperforming
    
    
    Amount
    
    
    of Loans
    
    
    NonperformingResidential real estate mortgages
    
    $
    3,048,411
    
    
    
    15
    %
    
    
    0.21
    %
    
    $
    3,081,217
    
    
    
    16
    %
    
    
    0.25
    %Commercial real estate mortgages
    
    
    6,716,035
    
    
    
    34
    %
    
    
    0.43
    %
    
    
    6,249,513
    
    
    
    34
    %
    
    
    0.48
    %Commercial business loan and leases
    
    
    4,178,327
    
    
    
    21
    %
    
    
    0.50
    %
    
    
    3,928,594
    
    
    
    21
    %
    
    
    0.83
    %Consumer loan and leases
    
    
    6,028,411
    
    
    
    30
    %
    
    
    0.11
    %
    
    
    5,333,670
    
    
    
    29
    %
    
    
    0.14
    %$
    19,971,184
    
    
    
    100
    %
    
    
    0.32
    %
    
    $
    18,592,994
    
    
    
    100
    %
    
    
    0.42
    %
     Table 11  Commercial Loans and Leases by State
 Commercial Real Estate Loans
    
    
    Commercial Business Loans and LeasesSuccessor
    
    
    Predecessor
    
    
    Change
    
    
    Successor
    
    
    Predecessor
    
    
    ChangeSeptember 30,
    
    
    December 31,
    
    
    
    
    
    
    
    
    
    
    September 30,
    
    
    December 31,2005
    
    
    2004
    
    
    Amount
    
    
    Percent
    
    
    2005
    
    
    2004
    
    
    Amount
    
    
    PercentMassachusetts
    
    $
    3,352,922
    
    
    $
    3,085,278
    
    
    $
    267,644
    
    
    
    8.67
    %
    
    $
    1,666,161
    
    
    $
    1,569,911
    
    
    $
    96,250
    
    
    
    6.13
    %Maine
    
    
    1,005,014
    
    
    
    933,677
    
    
    
    71,337
    
    
    
    7.64
    %
    
    
    828,772
    
    
    
    787,822
    
    
    
    40,950
    
    
    
    5.20
    %New Hampshire
    
    
    853,780
    
    
    
    767,590
    
    
    
    86,190
    
    
    
    11.23
    %
    
    
    564,628
    
    
    
    564,604
    
    
    
    24
    
    
    
    0.00
    %Vermont
    
    
    639,038
    
    
    
    664,063
    
    
    
    (25,025
    )
    
    
    (3.77
    %)
    
    
    441,771
    
    
    
    433,055
    
    
    
    8,716
    
    
    
    2.01
    %Connecticut
    
    
    636,450
    
    
    
    583,907
    
    
    
    52,543
    
    
    
    9.00
    %
    
    
    505,354
    
    
    
    412,601
    
    
    
    92,753
    
    
    
    22.48
    %New York
    
    
    228,831
    
    
    
    214,998
    
    
    
    13,833
    
    
    
    6.43
    %
    
    
    171,641
    
    
    
    160,601
    
    
    
    11,040
    
    
    
    6.87
    %Total
    
    $
    6,716,035
    
    
    $
    6,249,513
    
    
    $
    466,522
    
    
    
    7.46
    %
    
    $
    4,178,327
    
    
    $
    3,928,594
    
    
    $
    249,733
    
    
    
    6.36
    %
 40




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##### Table of Contents



Table 12  Composition of Consumer Loans and Leases
 Successor
    
    
    PredecessorSeptember 30,
    
    
    December 31,2005
    
    
    2004
    
    
    Change% of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    PercentHome equity
    
    $
    3,513,918
    
    
    
    58.29
    %
    
    $
    3,123,525
    
    
    
    58.55
    %
    
    $
    390,393
    
    
    
    12.50
    %Automobile
    
    
    1,990,194
    
    
    
    33.01
    %
    
    
    1,678,817
    
    
    
    31.48
    %
    
    
    311,377
    
    
    
    18.55
    %Mobile home
    
    
    94,352
    
    
    
    1.57
    %
    
    
    111,874
    
    
    
    2.10
    %
    
    
    (17,522
    )
    
    
    (15.66
    %)Vision, dental and orthodontia fee plan
    
    
    23,394
    
    
    
    0.39
    %
    
    
    49,934
    
    
    
    0.94
    %
    
    
    (26,540
    )
    
    
    (53.15
    %)Education
    
    
    185,642
    
    
    
    3.08
    %
    
    
    159,314
    
    
    
    2.99
    %
    
    
    26,328
    
    
    
    16.53
    %Other
    
    
    220,911
    
    
    
    3.66
    %
    
    
    210,206
    
    
    
    3.94
    %
    
    
    10,705
    
    
    
    5.09
    %Total
    
    $
    6,028,411
    
    
    
    100.00
    %
    
    $
    5,333,670
    
    
    
    100.00
    %
    
    $
    694,741
    
    
    
    13.03
    %
 Nonperforming Assets
   41




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##### Table of Contents



Table 13  Nonperforming Assets
 Successor
    
    
    Predecessor2004
    
    
    2005September 30
    
    
    June 30
    
    
    March 31
    
    
    December 31
    
    
    September 30Nonaccrual loans and leases:Residential real estate loans
    
    $
    6,531
    
    
    $
    6,165
    
    
    $
    8,614
    
    
    $
    7,846
    
    
    $
    7,274Commercial real estate loans (1)
    
    
    29,224
    
    
    
    30,353
    
    
    
    23,553
    
    
    
    29,948
    
    
    
    33,249Commercial business loans and leases (2)
    
    
    21,306
    
    
    
    26,776
    
    
    
    24,520
    
    
    
    32,421
    
    
    
    18,573Consumer loans and leases
    
    
    6,899
    
    
    
    6,816
    
    
    
    6,229
    
    
    
    7,344
    
    
    
    6,827Total nonaccrual loans and leases
    
    
    63,960
    
    
    
    70,110
    
    
    
    62,916
    
    
    
    77,559
    
    
    
    65,923Other nonperforming assets:Other real estate owned, net of related reserves
    
    
    1,554
    
    
    
    2,101
    
    
    
    3,925
    
    
    
    1,878
    
    
    
    698Repossessions, net of related reserves
    
    
    1,375
    
    
    
    1,695
    
    
    
    2,087
    
    
    
    1,666
    
    
    
    1,358Total other nonperforming assets
    
    
    2,929
    
    
    
    3,796
    
    
    
    6,012
    
    
    
    3,544
    
    
    
    2,056Total nonperforming assets
    
    $
    66,889
    
    
    $
    73,906
    
    
    $
    68,928
    
    
    $
    81,103
    
    
    $
    67,979Accruing loans and leases 90 days or more overdue
    
    $
    6,489
    
    
    $
    6,122
    
    
    $
    5,041
    
    
    $
    5,254
    
    
    $
    5,018Total nonperforming loans as a percentage of total
loans and leases(3)
    
    
    0.32
    %
    
    
    0.35
    %
    
    
    0.32
    %
    
    
    0.42
    %
    
    
    0.36
    %Total nonperforming assets as a percentage of total assets
    
    
    0.21
    %
    
    
    0.23
    %
    
    
    0.21
    %
    
    
    0.28
    %
    
    
    0.23
    %Total nonperforming assets as a percentage of total loans
and leases (3) and total other nonperforming assets
    
    
    0.33
    %
    
    
    0.37
    %
    
    
    0.35
    %
    
    
    0.44
    %
    
    
    0.37
    %
 
 (1)
    
    In connection with the accounting for the TD tranaction, as of March 1, 2005, specific reserves of $6.9 million were applied to reduce the
individual loan balances on impaired commercial business loans and leases.(2)
    
    In connection with the accounting for the TD transaction, as of March 1, 2005, specific reserves of $14.5 million were applied to reduce the
individual loan balances on impaired commercial real estate loans.(3)
    
    Total loans and leases exclude residential real estate loans held for sale.  Net Charge-offs
  42




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##### Table of Contents



Table
14  Allowance for Credit Losses
 Successor
    
    
    Successor
    
    
    Combined
    
    
    Predecessor2005 Third
    
    
    2005 Second
    
    
    2005 First
    
    
    2004 Fourth
    
    
    2004 ThirdQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterAllowance for loan and lease losses at beginning of period
    
    $
    228,168
    
    
    $
    228,165
    
    
    $
    243,152
    
    
    $
    242,885
    
    
    $
    247,620Additions due to acquisitions
    
    
    
    
    
    
    
    
    
    
    14,494
    
    
    
    
    
    
    
    Charge-offs:Residential real estate mortgages (1)
    
    
    17
    
    
    
    93
    
    
    
    65
    
    
    
    (4
    )
    
    
    101Commercial real estate mortgages
    
    
    2,194
    
    
    
    271
    
    
    
    5,551
    
    
    
    216
    
    
    
    4Commercial business loans and leases
    
    
    2,828
    
    
    
    1,366
    
    
    
    2,069
    
    
    
    7,531
    
    
    
    4,458Consumer loans and leases
    
    
    6,716
    
    
    
    5,313
    
    
    
    6,738
    
    
    
    6,494
    
    
    
    7,566Total loans and leases charged off
    
    
    11,755
    
    
    
    7,043
    
    
    
    14,423
    
    
    
    14,237
    
    
    
    12,129Recoveries:Residential real estate mortgages
    
    
    142
    
    
    
    4
    
    
    
    8
    
    
    
    5
    
    
    
    15Commercial real estate mortgages
    
    
    477
    
    
    
    663
    
    
    
    1,519
    
    
    
    703
    
    
    
    534Commercial business loans and leases
    
    
    2,825
    
    
    
    1,595
    
    
    
    1,524
    
    
    
    1,937
    
    
    
    1,519Consumer loans and leases
    
    
    1,977
    
    
    
    1,187
    
    
    
    1,257
    
    
    
    1,189
    
    
    
    1,256Total loans and leases recovered
    
    
    5,421
    
    
    
    3,449
    
    
    
    4,308
    
    
    
    3,834
    
    
    
    3,324Net charge-offs
    
    
    6,334
    
    
    
    3,594
    
    
    
    10,115
    
    
    
    10,403
    
    
    
    8,805Transfer for off-balance sheet loan commitments (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,600
    )Provision for loan and lease losses
    
    
    5,500
    
    
    
    3,597
    
    
    
    2,069
    
    
    
    10,670
    
    
    
    10,670Specific reserves applied to reduce impaired loan carrying values (3)
    
    
    1,000
    
    
    
    
    
    
    
    (21,435
    )
    
    
    
    
    
    
    Allowance for loan and lease losses at end of period (2)
    
    $
    228,334
    
    
    $
    228,168
    
    
    $
    228,165
    
    
    $
    243,152
    
    
    $
    242,885Total Allowance for Credit Losses:Allowance for loan and lease losses
    
    $
    228,334
    
    
    $
    228,168
    
    
    $
    228,165
    
    
    $
    243,152
    
    
    $
    242,885Liability for unfunded credit commitments (2)
    
    
    7,607
    
    
    
    6,807
    
    
    
    6,707
    
    
    
    6,600
    
    
    
    6,600Total allowance for credit losses
    
    $
    235,941
    
    
    $
    234,975
    
    
    $
    234,872
    
    
    $
    249,752
    
    
    $
    249,485Ratio of net charge-offs to average loans and
leases outstanding during the period, annualized (4)
    
    
    0.13
    %
    
    
    0.07
    %
    
    
    0.21
    %
    
    
    0.22
    %
    
    
    0.19
    %Ratio of allowance for credit losses to total loans and leases
at end of period (2)
    
    
    1.18
    %
    
    
    1.17
    %
    
    
    1.20
    %
    
    
    1.34
    %
    
    
    1.36
    %Ratio of allowance for credit losses to nonperforming loans
and leases at end of period
    
    
    369
    %
    
    
    335
    %
    
    
    373
    %
    
    
    322
    %
    
    
    378
    %Ratio of net charge-offs (recoveries) as a percent of
average outstanding loans and leases, annualized (4):Residential real estate mortgages
    
    
    (0.015
    %)
    
    
    0.011
    %
    
    
    0.006
    %
    
    
    (0.001
    %)
    
    
    0.011
    %Commercial real estate mortgages
    
    
    0.101
    %
    
    
    (0.024
    %)
    
    
    0.254
    %
    
    
    (0.031
    %)
    
    
    (0.034
    %)Commercial business loans and leases
    
    
    (0.000
    %)
    
    
    (0.022
    %)
    
    
    0.055
    %
    
    
    0.576
    %
    
    
    0.305
    %Consumer loans and leases
    
    
    0.318
    %
    
    
    0.291
    %
    
    
    0.404
    %
    
    
    0.396
    %
    
    
    0.483
    %Total portfolio loans and leases at end of period (4)
    
    $
    19,971,184
    
    
    $
    20,028,662
    
    
    $
    19,649,943
    
    
    $
    18,592,994
    
    
    $
    18,410,791Total nonperforming loans and leases at end of period
    
    
    63,960
    
    
    
    70,110
    
    
    
    62,916
    
    
    
    77,559
    
    
    
    65,923Average loans and leases outstanding
during the period (4)
    
    
    20,021,651
    
    
    
    19,803,681
    
    
    
    19,561,761
    
    
    
    18,515,595
    
    
    
    18,263,613
 
 (1)
    
    Residential real estate charge-offs include estimates of charge-offs and reversals of prior period estimates, which may result in
negative charge-offs.(2)
    
    During the third quarter of 2004, we reclassified the portion of our allowance for credit losses related to unfunded credit commitments
from the allowance for loan and lease losses to a separate liability account.(3)
    
    In connection with the TD transaction, $21.4 million of the allowance for loan and lease losses related to impaired commercial loans was transferred
in accordance with the implementation of American Institute of Certified Public Accountants Statement of Position 03-3, Accounting for Certain
Loans or Debt Securities Acquired in a Transfer to reduce the carrying value of impaired commercial loans. In the third quarter of 2005, a $1 million
reduction was made to the original amount recorded in the first quarter.(4)
    
    Excludes residential real estate loans held for sale. 43




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##### Table of Contents



Potential Problem Loans
  Analysis and Determination of the Allowance for Loan and Lease Losses
     Interest Rate Risk
 44
    Table of Contents     Assessment and Measurement
   Net Interest Income Sensitivity
 45
    Table of Contents    Table 15  Sensitivity of Net Interest Income
 200 Basis Point
    
    
    100 Basis Point
    
    
    100 Basis Point
    
    
    200 Basis PointRate Increase
    
    
    Rate Increase
    
    
    Rate Decrease
    
    
    Rate DecreaseSeptember 30, 2005
    
    
    (2.53
    %)
    
    
    (1.20
    %)
    
    
    0.96
    %
    
    
    1.42
    %December 31, 2004
    
    
    (2.13
    %)
    
    
    (0.68
    %)
    
    
    0.20
    %
    
    
    (1.51
    %)
   2005 Asset-Liability Management Actions
  
    
    changes in the shape of the U.S. Government securities and interest rate swap yield
curves,
    
    changes in the prepayment speeds of mortgage assets,
    
    the addition of $2.2 billion of interest rate swap agreements fixing the cash flows of
certain variable-rate loans tied to LIBOR or a designated prime rate,
    
    the approximately $3.4 billion deleveraging program implemented by us in the first
quarter of 2005, which included the sale of $519 million of single-family residential
loans, $2.4 billion of mortgage-backed securities and $500 million of securities of
U.S. federal agencies,
    
    the repurchase of 15.3 million shares of our common stock through March 31, 2005,
    
    the issuance in September 2005 of Can$270 million subordinated debt which has a fixed
rate of 4.644% for the first 12 years, and a rate which adjusts every three months in
accordance with changes in the Canadian Bankers Acceptance Rate plus 100 basis points
thereafter, and, subject to any required regulatory approvals, is callable prior to
September 17, 2017 at a redemption price which is equal to the higher of 100% of the
principal amount and the Canada yield price (as defined) and thereafter at 100% of the
principal amount, together in each case with accrued and unpaid interest. The
subordinated debt is guaranteed by TD. Simultaneous with this issuance, we
synthetically converted the underlying subordinated debt into U.S. dollars with a cross
currency swap described under Derivative Instruments below; and
 46




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##### Table of Contents




    
    the sale of $165 million of primarily fixed-rate one-to-four family residential
loans.
  Derivative Instruments
 Purpose and Benefits
   Table 16  Derivative Positions
 Asset-Liability Management Positions
 Notional Amount Maturing
    
    
    
    
    
    
    FairSuccessor - September 30, 2005
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    Thereafter
    
    
    Total
    
    
    ValueCross Currency Swap Agreement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    228,620
    
    
    $
    228,620
    
    
    $
    4,797Interest Rate Swap AgreementPay variable, receive fixed  loans
    
    
    68,750
    
    
    
    275,000
    
    
    
    275,000
    
    
    
    275,000
    
    
    
    1,306,250
    
    
    
    2,200,000
    
    
    
    (17,837
    )Forward commitments to sell loans
    
    
    85,328
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,328
    
    
    
    275
 Customer-related Positions
 Notional Amount Maturing
    
    
    
    
    
    
    FairSuccessor - September 30, 2005
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    Thereafter
    
    
    Total
    
    
    ValueInterest rate contractsReceive fixed, pay variable
    
    $
    2,000
    
    
    $
    9,500
    
    
    $
    22,478
    
    
    $
    82,862
    
    
    $
    986,459
    
    
    $
    1,103,299
    
    
    $
    10,442Pay fixed, receive variable
    
    
    2,000
    
    
    
    9,500
    
    
    
    22,478
    
    
    
    82,862
    
    
    
    986,459
    
    
    
    1,103,299
    
    
    
    (10,442
    )Foreign currency forward contractsForward contracts purchased
    
    
    12,584
    
    
    
    15,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,312
    
    
    
    (235
    )Forward contracts sold
    
    
    12,584
    
    
    
    15,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,312
    
    
    
    235Foreign Exchange OptionsOptions purchased
    
    
    6,700
    
    
    
    4,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,156
    
    
    
    530Options to sell
    
    
    6,700
    
    
    
    4,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,156
    
    
    
    (530
    )Rate-locked loan commitments (1)
    
    
    59,986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,986
    
    
    
    (6
    )
 
 (1)
    
    No value has been assigned to potential mortagage servicing rights related to rate-locked loan commitments. 47




---



##### Table of Contents



Designated Hedges
      Table 17  Average Balances of Loans Held for Sale and Related Hedges
 Successor
    
    
    Predecessor
    
    
    Combined
    
    
    PredecessorThree Months Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004Residential mortgage loans held for sale
    
    $
    54,564
    
    
    $
    41,913
    
    
    $
    47,767
    
    
    $
    47,081Rate-locked loan commitments
    
    
    58,588
    
    
    
    50,421
    
    
    
    52,875
    
    
    
    52,363Forward sales contracts
    
    
    95,197
    
    
    
    77,839
    
    
    
    83,933
    
    
    
    86,020
 48




---



##### Table of Contents



Customer-related Positions
 .
 Foreign Exchange or Market Risk
   LIQUIDITY
  Parent Company
  49




---



##### Table of Contents



Banking Subsidiary
        CAPITAL
 50
    Table of Contents     
  Table 18  Capital Ratios
 Actual
    
    
    Capital Requirements
    
    
    ExcessAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioSeptember 30, 2005TD Banknorth Inc.  SuccessorTotal capital (to risk-weighted assets)
    
    $
    2,560,174
    
    
    
    11.72
    %
    
    $
    1,748,263
    
    
    
    8.00
    %
    
    $
    811,911
    
    
    
    3.72
    %Tier 1 capital (to risk-weighted assets)
    
    
    1,865,609
    
    
    
    8.54
    %
    
    
    874,132
    
    
    
    4.00
    %
    
    
    991,477
    
    
    
    4.54
    %Tier 1 leverage capital ratio (to average assets)
    
    
    1,865,609
    
    
    
    6.99
    %
    
    
    1,067,383
    
    
    
    4.00
    %
    
    
    798,226
    
    
    
    2.99
    %TD Banknorth, NATotal capital (to risk-weighted assets)
    
    $
    2,615,168
    
    
    
    11.99
    %
    
    $
    1,744,664
    
    
    
    8.00
    %
    
    $
    870,504
    
    
    
    3.99
    %Tier 1 capital (to risk-weighted assets)
    
    
    1,926,286
    
    
    
    8.83
    %
    
    
    872,332
    
    
    
    4.00
    %
    
    
    1,053,954
    
    
    
    4.83
    %Tier 1 leverage capital ratio (to average assets)
    
    
    1,926,286
    
    
    
    7.24
    %
    
    
    1,064,719
    
    
    
    4.00
    %
    
    
    861,567
    
    
    
    3.24
    %December 31, 2004Banknorth Group, Inc.  PredecessorTotal capital (to risk-weighted assets)
    
    $
    2,510,570
    
    
    
    12.13
    %
    
    $
    1,655,428
    
    
    
    8.00
    %
    
    $
    855,142
    
    
    
    4.13
    %Tier 1 capital (to risk-weighted assets)
    
    
    2,060,335
    
    
    
    9.96
    %
    
    
    827,714
    
    
    
    4.00
    %
    
    
    1,232,621
    
    
    
    5.96
    %Tier 1 leverage capital ratio (to average assets)
    
    
    2,060,335
    
    
    
    7.58
    %
    
    
    1,087,190
    
    
    
    4.00
    %
    
    
    973,145
    
    
    
    3.58
    %Banknorth, NATotal capital (to risk-weighted assets)
    
    $
    2,387,678
    
    
    
    11.57
    %
    
    $
    1,650,894
    
    
    
    8.00
    %
    
    $
    736,784
    
    
    
    3.57
    %Tier 1 capital (to risk-weighted assets)
    
    
    1,941,151
    
    
    
    9.41
    %
    
    
    825,447
    
    
    
    4.00
    %
    
    
    1,115,704
    
    
    
    5.41
    %Tier 1 leverage capital ratio (to average assets)
    
    
    1,941,151
    
    
    
    7.16
    %
    
    
    1,084,507
    
    
    
    4.00
    %
    
    
    856,644
    
    
    
    3.16
    %
   51    Table of Contents  Table 19  Affiliated Trusts
 JuniorIssuance
    
    
    Capital
    
    
    Common
    
    
    Subordinated
    
    
    Stated
    
    
    Maturity
    
    
    Call
    
    
    CallName
    
    Date
    
    
    Securities
    
    
    Securities
    
    
    Debentures (1)
    
    
    Rate
    
    
    Date
    
    
    Date
    
    
    PricePeoples Heritage Capital Trust I
    
    
    1/31/1997
    
    
    $
    61,775
    
    
    $
    3,093
    
    
    $
    64,868
    
    
    
    9.06
    %
    
    
    2/1/2027
    
    
    
    2/1/2007
    
    
    
    104.53
    %Banknorth Capital Trust I
    
    
    5/1/1997
    
    
    
    30,000
    
    
    
    928
    
    
    
    30,928
    
    
    
    10.52
    %
    
    
    5/1/2027
    
    
    
    5/1/2007
    
    
    
    105.26
    %Ipswich Statutory Trust I
    
    
    2/22/2001
    
    
    
    3,500
    
    
    
    109
    
    
    
    3,609
    
    
    
    10.20
    %
    
    
    2/22/2031
    
    
    
    2/22/2011
    
    
    
    105.10
    %CCBT Statutory Trust I
    
    
    7/31/2001
    
    
    
    5,000
    
    
    
    155
    
    
    
    5,155
    
    
    
    7.27
    %
    
    
    7/31/2031
    
    
    
    7/31/2006
    
    
    
    107.50
    %Banknorth Capital Trust II
    
    
    2/22/2002
    
    
    
    200,000
    
    
    
    6,186
    
    
    
    206,186
    
    
    
    8.00
    %
    
    
    4/1/2032
    
    
    
    4/1/2007
    
    
    
    100.00
    %BFD Preferred Capital Trust I
    
    
    7/12/2000
    
    
    
    10,000
    
    
    
    309
    
    
    
    10,309
    
    
    
    11.30
    %
    
    
    7/19/2030
    
    
    
    7/19/2010
    
    
    
    105.65
    %BFD Preferred Capital Trust II
    
    
    9/19/2000
    
    
    
    22,000
    
    
    
    681
    
    
    
    22,681
    
    
    
    10.88
    %
    
    
    10/1/2030
    
    
    
    10/1/2010
    
    
    
    100.00
    %343,736Remaining fair value adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,060$
    332,275
    
    
    $
    11,461
    
    
    $
    368,796
 
 (1)
    
    Amounts include junior subordinated debentures acquired by affiliated trusts from us with the capital contributed by us in exchange for the common
securities of such trusts. Junior subordinated debentures prior to fair value adjustment are equal to capital securities plus common securities.    CRITICAL ACCOUNTING POLICIES
  52
    Table of Contents  Accounting for Derivatives and Hedging Activities
  IMPACT OF NEW ACCOUNTING STANDARDS
  FORWARD LOOKING STATEMENTS
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  53
    Table of Contents  Item 4. Controls and Procedures
   
 Part II  Other Information
 
   
    
  
  
  54
    Table of Contents  Exhibit 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.
 
 SIGNATURES
  TD BANKNORTH INC.Date:    November 9, 2005
    By:
    /s/ William J. RyanWilliam J. RyanChairman, President and
Chief Executive Officer
(principal executive officer)Date:    November 9, 2005
    By:
    /s/ Stephen J. BoyleStephen J. BoyleExecutive Vice President and
Chief Financial Officer
(principal financial and accounting officer) 55
    Table of Contents  Exhibit 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.
 56