##### Table of Contents



FORM 10-Q
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2005
  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
incorporation or organization)
    
    (I.R.S. Employer
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
  Common stock, par value $.01 per share
    
    173,537,008(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 FinancialCondition and Results of Operations
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    54Item 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
    
    
    55Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    55Item 5.
    
    Other Information
    
    
    55Item 6.
    
    Exhibits
    
    
    55Signatures
    
    
    56Exhibits
    
    
    57Ex-10.1 Form of Master ISDA Agreement for Interest Rate SwapsEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  2




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (Unaudited)
 Successor
    
    PredecessorJune 30, 2005
    
    December 31, 2004AssetsCash and due from banks
    
    $
    793,345
    
    
    $
    541,994Federal funds sold and other short-term investments
    
    
    6,393
    
    
    
    2,312Securities available for sale
    
    
    4,143,013
    
    
    
    6,728,523Securities held to maturity (fair value of $75,304 and $87,507 at
June 30, 2005 and December 31, 2004, respectively)
    
    
    74,856
    
    
    
    87,013Loans held for sale
    
    
    53,318
    
    
    
    51,693Loans and leases:Residential real estate mortgages
    
    
    3,259,283
    
    
    
    3,081,217Commercial real estate mortgages
    
    
    6,698,632
    
    
    
    6,249,513Commercial business loans and leases
    
    
    4,272,272
    
    
    
    3,928,594Consumer loans and leases
    
    
    5,798,475
    
    
    
    5,333,670Total loans and leases
    
    
    20,028,662
    
    
    
    18,592,994Less: Allowance for loan and lease losses
    
    
    228,168
    
    
    
    243,152Net loans and leases
    
    
    19,800,494
    
    
    
    18,349,842Premises and equipment, net
    
    
    308,018
    
    
    
    300,120Goodwill
    
    
    4,550,679
    
    
    
    1,365,780Identifiable intangible assets
    
    
    727,442
    
    
    
    50,376Bank-owned life insurance
    
    
    560,942
    
    
    
    523,129Other assets
    
    
    765,835
    
    
    
    687,028Total assets
    
    $
    31,784,335
    
    
    $
    28,687,810Liabilities and Shareholders EquityDeposits:Savings accounts
    
    $
    2,661,337
    
    
    $
    2,546,018Money market and NOW accounts
    
    
    7,977,996
    
    
    
    7,907,513Certificates of deposit
    
    
    4,681,623
    
    
    
    4,484,370Brokered deposits
    
    
    73,489
    
    
    
    576Noninterest-bearing deposits
    
    
    4,570,156
    
    
    
    4,289,104Total deposits
    
    
    19,964,601
    
    
    
    19,227,581Short-term borrowings
    
    
    3,605,978
    
    
    
    3,729,252Long-term debt
    
    
    1,152,696
    
    
    
    2,261,453Deferred tax liability on identifiable intangible assets
    
    
    269,517
    
    
    
    17,632Other liabilities
    
    
    318,047
    
    
    
    275,778Total liabilities
    
    
    25,310,839
    
    
    
    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
    
    
    6,835,110
    
    
    
    1,763,572Retained earnings
    
    
    84,564
    
    
    
    1,677,802Unearned compensation
    
    
    (1,881
    )
    
    
    Treasury stock, at cost (15,020,712 shares in 2005 and 12,374,515
shares in 2004)
    
    
    (477,251
    )
    
    
    (265,020
    )Accumulated other comprehensive income (loss)
    
    
    31,070
    
    
    
    (2,157
    )Total shareholders equity
    
    
    6,473,496
    
    
    
    3,176,114Total liabilities and shareholders equity
    
    $
    31,784,335
    
    
    $
    28,687,810
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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
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2004Interest and dividend income:Interest and fees on loans and leases
    
    $
    288,817
    
    
    $
    225,530
    
    
    $
    384,482
    
    
    $
    176,949
    
    
    $
    441,309Interest and dividends on securities
    
    
    53,630
    
    
    
    82,212
    
    
    
    73,481
    
    
    
    51,183
    
    
    
    157,962Total interest and dividend income
    
    
    342,447
    
    
    
    307,742
    
    
    
    457,963
    
    
    
    228,132
    
    
    
    599,271Interest expense:Interest on deposits
    
    
    48,127
    
    
    
    39,514
    
    
    
    62,875
    
    
    
    30,694
    
    
    
    78,332Interest on borrowed funds
    
    
    41,692
    
    
    
    39,582
    
    
    
    54,506
    
    
    
    32,654
    
    
    
    75,807Total interest expense
    
    
    89,819
    
    
    
    79,096
    
    
    
    117,381
    
    
    
    63,348
    
    
    
    154,139Net interest income
    
    
    252,628
    
    
    
    228,646
    
    
    
    340,582
    
    
    
    164,784
    
    
    
    445,132Provision for loan and lease losses
    
    
    3,597
    
    
    
    9,500
    
    
    
    4,597
    
    
    
    1,069
    
    
    
    19,000Net interest income after provision
for loan and lease losses
    
    
    249,031
    
    
    
    219,146
    
    
    
    335,985
    
    
    
    163,715
    
    
    
    426,132Noninterest income:Deposit services
    
    
    31,751
    
    
    
    27,260
    
    
    
    41,576
    
    
    
    18,359
    
    
    
    53,412Insurance agency commissions
    
    
    13,604
    
    
    
    12,278
    
    
    
    19,244
    
    
    
    8,252
    
    
    
    26,014Merchant and electronic banking income, net
    
    
    14,727
    
    
    
    13,069
    
    
    
    20,090
    
    
    
    7,751
    
    
    
    23,474Wealth management services
    
    
    10,395
    
    
    
    9,870
    
    
    
    13,940
    
    
    
    6,959
    
    
    
    19,019Bank-owned life insurance
    
    
    6,107
    
    
    
    6,275
    
    
    
    8,034
    
    
    
    4,169
    
    
    
    11,771Investment planning services
    
    
    5,462
    
    
    
    5,146
    
    
    
    7,335
    
    
    
    2,815
    
    
    
    9,985Net securities (losses) gains
    
    
    1,439
    
    
    
    3,355
    
    
    
    (2,488
    )
    
    
    (46,548
    )
    
    
    6,936Loans held for sale  Lower of cost or market adjustment
    
    
    386
    
    
    
    
    
    
    
    386
    
    
    
    (7,500
    )
    
    
    Change in unrealized loss on derivatives
    
    
    14,840
    
    
    
    
    
    
    
    6,664
    
    
    
    
    
    
    
    Other noninterest income
    
    
    18,561
    
    
    
    13,627
    
    
    
    24,749
    
    
    
    9,104
    
    
    
    29,610117,272
    
    
    
    90,880
    
    
    
    139,530
    
    
    
    3,361
    
    
    
    180,221Noninterest expense:Compensation and employee benefits
    
    
    105,096
    
    
    
    87,005
    
    
    
    137,987
    
    
    
    67,977
    
    
    
    174,538Occupancy
    
    
    18,066
    
    
    
    15,699
    
    
    
    24,557
    
    
    
    11,411
    
    
    
    31,408Equipment
    
    
    12,982
    
    
    
    11,813
    
    
    
    17,379
    
    
    
    8,440
    
    
    
    23,703Data processing
    
    
    11,618
    
    
    
    10,018
    
    
    
    15,419
    
    
    
    7,233
    
    
    
    20,455Advertising and marketing
    
    
    8,087
    
    
    
    6,303
    
    
    
    10,408
    
    
    
    4,373
    
    
    
    13,827Amortization of identifiable intangible assets
    
    
    31,656
    
    
    
    2,084
    
    
    
    41,591
    
    
    
    1,561
    
    
    
    3,988Merger and consolidation costs
    
    
    5,368
    
    
    
    4,135
    
    
    
    9,295
    
    
    
    27,264
    
    
    
    5,748Prepayment penalties on borrowings
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    6,300
    
    
    
    Other noninterest expense
    
    
    27,460
    
    
    
    26,769
    
    
    
    36,357
    
    
    
    15,887
    
    
    
    49,877220,333
    
    
    
    163,826
    
    
    
    292,996
    
    
    
    150,446
    
    
    
    323,544Income before income tax expense
    
    
    145,970
    
    
    
    146,200
    
    
    
    182,519
    
    
    
    16,630
    
    
    
    282,809Provision for income taxes
    
    
    50,375
    
    
    
    50,353
    
    
    
    63,296
    
    
    
    6,182
    
    
    
    96,636Net income
    
    $
    95,595
    
    
    $
    95,847
    
    
    $
    119,223
    
    
    $
    10,448
    
    
    $
    186,173Basic earnings per share
    
    $
    0.55
    
    
    $
    0.57
    
    
    $
    0.68
    
    
    $
    0.06
    
    
    $
    1.12Diluted earnings per share
    
    $
    0.55
    
    
    $
    0.55
    
    
    $
    0.68
    
    
    $
    0.06
    
    
    $
    1.10Weighted average shares outstanding:Basic
    
    
    173,428
    
    
    
    169,637
    
    
    
    175,181
    
    
    
    184,964
    
    
    
    166,318Dilutive effect of stock options
    
    
    833
    
    
    
    3,472
    
    
    
    858
    
    
    
    1,783
    
    
    
    3,585Diluted
    
    
    174,261
    
    
    
    173,109
    
    
    
    176,039
    
    
    
    186,747
    
    
    
    169,903
  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 (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,223Unrealized gains (losses) on securities, net
of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,974
    
    
    
    16,974Unrealized gains (losses)on cash flow hedges, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,096
    
    
    
    14,096Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,293Treasury stock issued for employee benefit
plans, including tax benefit of $0.5 million
    
    
    278
    
    
    
    
    
    
    
    (1,377
    )
    
    
    
    
    
    
    
    
    
    
    9,157
    
    
    
    
    
    
    
    7,780Treasury stock purchased
    
    
    (15,300
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (486,408
    )
    
    
    
    
    
    
    (486,408
    )Decrease in unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    375
    
    
    
    
    
    
    
    
    
    
    
    375Cash dividends declared ($0.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,659
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,659
    )Balances at June 30, 2005 (Successor)
    
    
    173,406
    
    
    $
    1,884
    
    
    $
    6,835,110
    
    
    $
    84,564
    
    
    
    ($1,881
    )
    
    
    ($477,251
    )
    
    $
    31,070
    
    
    $
    6,473,496Balances at December 31, 2003 (Predecessor)
    
    
    162,188
    
    
    $
    1,823
    
    
    $
    1,435,005
    
    
    $
    1,508,292
    
    
    $
    
    
    
    
    ($430,608
    )
    
    $
    6,007
    
    
    $
    2,520,519Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186,173
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186,173Unrealized gains (losses) on securities, net
of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,127
    )
    
    
    (98,127
    )Unrealized gains on cash flow hedges, net of
reclassification adjustment and net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    70Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,116Common stock issued for acquisitions
    
    
    9,193
    
    
    
    92
    
    
    
    298,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298,100Treasury stock issued for employee benefit
plans, including tax benefit of $5.1 million
    
    
    1,165
    
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    
    
    
    
    24,976
    
    
    
    
    
    
    
    25,269Cash dividends declared ($0.39 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,312
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,312
    )Balances at June 30, 2004 (Predecessor)
    
    
    172,546
    
    
    $
    1,915
    
    
    $
    1,733,306
    
    
    $
    1,629,153
    
    
    $
    
    
    
    
    ($405,632
    )
    
    
    ($92,050
    )
    
    $
    2,866,692
  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
    
    Six Months EndedJune 30, 2005
    
    February 28, 2005
    
    June 30, 2004Cash flows from operating activities:Net income
    
    $
    119,223
    
    
    $
    10,448
    
    
    $
    186,173Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan and lease losses
    
    
    4,597
    
    
    
    1,069
    
    
    
    19,000Depreciation of banking premises and equipment
    
    
    16,260
    
    
    
    7,807
    
    
    
    21,749Net amortization of premium and discounts
    
    
    3,533
    
    
    
    3,703
    
    
    
    13,963Amortization of intangible assets
    
    
    41,591
    
    
    
    1,561
    
    
    
    3,988Provision for deferred tax expense
    
    
    9,500
    
    
    
    2,000
    
    
    
    6,700Unearned
compensation
    
    
    375
    
    
    
    
    
    
    
    Net losses (gains) realized from sales of securities and loans
    
    
    1,814
    
    
    
    46,548
    
    
    
    (8,447
    )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
    )
    
    
    (1,345
    )Increase in cash surrender value of bank owned life insurance
    
    
    (6,292
    )
    
    
    (4,169
    )
    
    
    (11,771
    )Proceeds from sales of loans held for sale
    
    
    655,489
    
    
    
    72,258
    
    
    
    237,696Residential loans originated and purchased for sale
    
    
    (161,999
    )
    
    
    (58,800
    )
    
    
    (253,997
    )Change in
fair value on derivatives
    
    
    (4,788
    )
    
    
    
    
    
    
    Net decrease
(increase) in other assets
    
    
    43,242
    
    
    
    47,443
    
    
    
    (4,446
    )Net increase
(decrease) in other liabilities
    
    
    27,154
    
    
    
    (42,559
    )
    
    
    (6,489
    )Net cash provided by operating activities
    
    
    756,812
    
    
    
    100,493
    
    
    
    202,774Cash flows from investing activities:Proceeds from sales of securities available for sale
    
    
    397,059
    
    
    
    83,271
    
    
    
    1,427,594Proceeds from sales of securities as part of deleveraging program
    
    
    374,488
    
    
    
    2,461,701
    
    
    
    Proceeds from maturities and principal repayments of securities
available for sale
    
    
    354,540
    
    
    
    190,117
    
    
    
    724,848Purchases of securities available for sale
    
    
    (500,556
    )
    
    
    (969,979
    )
    
    
    (2,736,856
    )Proceeds from maturities and principal repayments of securities
held to maturity
    
    
    7,487
    
    
    
    4,670
    
    
    
    20,448Net increase in loans and leases
    
    
    (505,743
    )
    
    
    (222,430
    )
    
    
    (788,361
    )Proceeds from sales of portfolio loans
    
    
    60,157
    
    
    
    
    
    
    
    37,097Net (additions) decrease to premises and equipment
    
    
    (14,010
    )
    
    
    798
    
    
    
    (13,940
    )Proceeds from policy coverage on bank-owned life insurance
    
    
    
    
    
    
    141
    
    
    
    Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    130,685
    
    
    
    48,681Net cash provided by (used in) investing activities
    
    
    173,422
    
    
    
    1,678,974
    
    
    
    (1,280,489
    )Cash flows from financing activities:Net (decrease) increase in deposits
    
    
    (187,188
    )
    
    
    (160,662
    )
    
    
    252,601Net increase in short-term borrowings
    
    
    251,621
    
    
    
    2,102,739
    
    
    
    1,136,358Payments on short-term borrowings as part of deleveraging program
    
    
    (374,491
    )
    
    
    (1,461,701
    )
    
    
    Proceeds from long-term debt
    
    
    446
    
    
    
    8,467
    
    
    
    10,340Payments on long-term debt
    
    
    (55,234
    )
    
    
    (474,664
    )
    
    
    (331,280
    )Payments on long-term debt as part of deleveraging program
    
    
    
    
    
    
    (1,006,300
    )
    
    
    Treasury stock issued for employee benefit plans
    
    
    7,780
    
    
    
    71,368
    
    
    
    25,269Purchase of treasury stock
    
    
    (486,408
    )
    
    
    
    
    
    
    Cash dividends paid to shareholders
    
    
    (34,659
    )
    
    
    (37,383
    )
    
    
    (65,312
    )Net cash (used in) provided by financing activities
    
    
    (878,133
    )
    
    
    (958,136
    )
    
    
    1,027,976Increase (Decrease) in cash and cash equivalents
    
    
    52,101
    
    
    
    821,331
    
    
    
    (49,739
    )Cash and cash equivalents at beginning of period
    
    
    747,637
    
    
    
    (73,694
    )
    
    
    674,331Cash and cash equivalents at end of period
    
    
    $799,738
    
    
    $
    747,637
    
    
    $
    624,592In 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
    
    $
    117,559
    
    
    $
    68,238
    
    
    $
    153,902Income taxes (received) paid
    
    
    (5,572
    )
    
    
    (779
    )
    
    
    65,126
  6




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##### Table of Contents



TD BANKNORTH INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
 June 30, 2005
 (In thousands, except per share data and as noted) (Unaudited)
 Note 1  Basis of Presentation
  
    
    cash paid by TD,
    
    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 resulting from the transaction (3)
    
    $
    4,537,623
 
 (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.(3)
    
    Adjustments of $13.1 million were recorded in the second quarter of 2005. See Note 6.  Note 3  Acquisitions
  8




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##### Table of Contents



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
  Successor
    
    Predecessor
    
    Successor
    
    Predecessor
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    March 1, 2005 to
    
    January 1, 2005 to
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2004Net income, as reported
    
    $
    95,595
    
    
    $
    95,847
    
    
    $
    119,223
    
    
    $
    10,448
    
    
    $
    186,173Deduct 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
    
    
    (2,227
    )
    
    
    (4,513
    )
    
    
    (2,373
    )
    
    
    (2,159
    )
    
    
    (8,555
    )Proforma net income (loss)
    
    $
    93,368
    
    
    $
    91,334
    
    
    $
    116,850
    
    
    
    ($1,004
    )
    
    $
    177,618Earnings per shareBasic   As reported
    
    $
    0.55
    
    
    $
    0.57
    
    
    $
    0.68
    
    
    $
    0.06
    
    
    $
    1.12Proforma
    
    $
    0.54
    
    
    $
    0.54
    
    
    $
    0.67
    
    
    
    ($0.01
    )
    
    $
    1.07Diluted  As reported
    
    $
    0.55
    
    
    $
    0.55
    
    
    $
    0.68
    
    
    $
    0.06
    
    
    $
    1.10Proforma
    
    $
    0.54
    
    
    $
    0.53
    
    
    $
    0.66
    
    
    
    ($0.01
    )
    
    $
    1.04
 9




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##### Table of Contents



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
    
    
    4
    
    
    $
    1,268
    
    
    
    ($1
    )
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    4
    
    
    $
    1,268
    
    
    
    ($1
    )Tax exempt bonds and notes
    
    
    95
    
    
    
    70,514
    
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    70,514
    
    
    
    (109
    )Other bonds and notes
    
    
    46
    
    
    
    76,744
    
    
    
    (416
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    76,744
    
    
    
    (416
    )Mortgage-backed securities
    
    
    566
    
    
    
    645,139
    
    
    
    (3,853
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    566
    
    
    
    645,139
    
    
    
    (3,853
    )Collateralized mortgage obligations
    
    
    18
    
    
    
    100,348
    
    
    
    (72
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    100,348
    
    
    
    (72
    )Equity securities
    
    
    10
    
    
    
    273
    
    
    
    (61
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    273
    
    
    
    (61
    )739
    
    
    $
    894,286
    
    
    
    ($4,512
    )
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    739
    
    
    $
    894,286
    
    
    
    ($4,512
    )
    10




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##### Table of Contents



Note 6
 Goodwill and Other Intangible Assets
  Other
    
    TotalCore Deposit
    
    Identifiable
    
    IdentifiableGoodwill
    
    Intangibles
    
    Intangibles
    
    IntangiblesBalance, 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
    
    
    
    
    
    
    (35,664
    )
    
    
    (5,927
    )
    
    
    (41,591
    )Change in deferred tax rate on intangible assets
    
    
    12,279
    
    
    
    
    
    
    
    
    
    
    
    Adjustments of purchase accounting estimates
    
    
    777
    
    
    
    
    
    
    
    1,595
    
    
    
    1,595Balance, June 30, 2005 (Successor)
    
    $
    4,550,679
    
    
    $
    530,336
    
    
    $
    197,106
    
    
    $
    727,442Estimated Annual Amortization Expense:Remaining 2005
    
    
    
    
    
    $
    53,500
    
    
    $
    8,437
    
    
    $
    61,9372006
    
    
    
    
    
    
    96,167
    
    
    
    16,134
    
    
    
    112,3012007
    
    
    
    
    
    
    74,833
    
    
    
    15,403
    
    
    
    90,2362008
    
    
    
    
    
    
    61,833
    
    
    
    14,354
    
    
    
    76,1872009
    
    
    
    
    
    
    51,667
    
    
    
    13,723
    
    
    
    65,390thereafter
    
    
    
    
    
    
    192,336
    
    
    
    129,055
    
    
    
    321,391
  SuccessorJune 30, 2005Gross Carrying
    
    Accumulated
    
    Net CarryingAmount
    
    Amortization
    
    AmountIdentifiable intangible assets:Core deposit intangibles
    
    $
    566,000
    
    
    $
    35,664
    
    
    $
    530,336Loan relationship intangibles
    
    
    95,826
    
    
    
    1,823
    
    
    
    94,003Other identifiable intangibles
    
    
    107,207
    
    
    
    4,104
    
    
    
    103,103Total
    
    $
    769,033
    
    
    $
    41,591
    
    
    $
    727,442
  Note 7
 Short-term Borrowings
  11




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##### Table of Contents



Successor
    
    PredecessorJune 30, 2005
    
    December 31, 2004Securities sold under agreements to repurchase  retail
    
    $
    1,206,202
    
    
    $
    1,165,905Federal funds purchased
    
    
    1,045,900
    
    
    
    618,000Treasury, tax and loan notes
    
    
    52,427
    
    
    
    375,347Federal Home Loan Bank advances
    
    
    1,301,449
    
    
    
    1,570,000$
    3,605,978
    
    
    $
    3,729,252
 Note 8
 Long-term Debt
  Successor
    
    PredecessorJune 30, 2005
    
    December 31, 2004Federal Home Loan Bank advances
    
    $
    306,420
    
    
    $
    428,825Securities sold under agreements to repurchase  wholesale
    
    
    
    
    
    
    1,100,000Securities sold under agreements to repurchase  retail
    
    
    91,903
    
    
    
    68,571Junior subordinated debentures issued to affiliated trusts
    
    
    371,356
    
    
    
    310,746Subordinated debt 7.625%, due 2011
    
    
    227,625
    
    
    
    200,000Senior notes 3.75%, due 2008
    
    
    148,666
    
    
    
    149,810Hedge-related basis adjustments on long-term debt
    
    
    
    
    
    
    (4,420
    )Other long-term debt
    
    
    6,726
    
    
    
    7,921Total
    
    $
    1,152,696
    
    
    $
    2,261,453
  Note 9  Comprehensive Income
  Successor
    
    PredecessorThree Months Ended
    
    Three Months EndedJune 30, 2005
    
    June 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
    
    $
    68,932
    
    
    
    ($24,120
    )
    
    $
    44,812
    
    
    
    ($231,586
    )
    
    $
    81,058
    
    
    
    ($150,528
    )Unrealized gain (loss) on
cash flow hedges
    
    
    37,997
    
    
    
    (14,594
    )
    
    
    23,403
    
    
    
    881
    
    
    
    (309
    )
    
    
    572Reclassification adjustment for
losses (gains) realized in net income
    
    
    (15,314
    )
    
    
    5,360
    
    
    
    (9,954
    )
    
    
    (4,203
    )
    
    
    1,471
    
    
    
    (2,732
    )Net change in unrealized gains (losses)
    
    $
    91,615
    
    
    
    ($33,354
    )
    
    $
    58,261
    
    
    
    ($234,908
    )
    
    $
    82,220
    
    
    
    ($152,688
    )
 Successor
    
    Predecessor
    
    PredecessorMarch 1, 2005 to
    
    January 1, 2005 to
    
    Six Months EndedJune 30, 2005
    
    February 28, 2005
    
    June 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
    
    $
    23,626
    
    
    
    ($8,269
    )
    
    $
    15,357
    
    
    
    ($42,769
    )
    
    $
    14,975
    
    
    
    ($27,794
    )
    
    
    ($144,028
    )
    
    $
    50,412
    
    
    
    ($93,616
    )Unrealized gain (loss) on
cash flow hedges
    
    
    37,554
    
    
    
    (14,439
    )
    
    
    23,115
    
    
    
    (7,851
    )
    
    
    (48
    )
    
    
    (7,899
    )
    
    
    7
    
    
    
    (3
    )
    
    
    4Reclassification adjustment for
losses (gains) realized in net income
    
    
    (11,387
    )
    
    
    3,985
    
    
    
    (7,402
    )
    
    
    46,834
    
    
    
    (16,392
    )
    
    
    30,442
    
    
    
    (6,839
    )
    
    
    2,394
    
    
    
    (4,445
    )Net change in unrealized gains (losses)
    
    $
    49,793
    
    
    
    ($18,723
    )
    
    $
    31,070
    
    
    
    ($3,786
    )
    
    
    ($1,465
    )
    
    
    ($5,251
    )
    
    
    ($150,860
    )
    
    $
    52,803
    
    
    
    ($98,057
    )
 12




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##### Table of Contents



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 June 30, 2005
    
    
    25,102
 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
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2004Loan fee income
    
    $
    8,891
    
    
    $
    8,516
    
    
    $
    11,263
    
    
    $
    4,549
    
    
    $
    13,686Covered call premiums
    
    
    1,058
    
    
    
    2,305
    
    
    
    2,716
    
    
    
    1,412
    
    
    
    8,379Mortgage banking
services income
    
    
    2,330
    
    
    
    332
    
    
    
    2,734
    
    
    
    923
    
    
    
    3,337Venture capital
gains (write-downs)
    
    
    10
    
    
    
    (166
    )
    
    
    (96
    )
    
    
    (297
    )
    
    
    (524
    )Miscellaneous income
    
    
    6,272
    
    
    
    2,640
    
    
    
    8,132
    
    
    
    2,517
    
    
    
    4,732Total
    
    $
    18,561
    
    
    $
    13,627
    
    
    $
    24,749
    
    
    $
    9,104
    
    
    $
    29,610
 13




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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
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2004Mortgage banking services incomeGains on sales and fee income
    
    $
    1,741
    
    
    $
    595
    
    
    $
    2,193
    
    
    $
    460
    
    
    $
    3,065Net effect of derivatives
    
    
    82
    
    
    
    (536
    )
    
    
    (165
    )
    
    
    159
    
    
    
    (205
    )1,823
    
    
    
    59
    
    
    
    2,028
    
    
    
    619
    
    
    
    2,860Residential mortgage servicing income
    
    
    507
    
    
    
    273
    
    
    
    706
    
    
    
    304
    
    
    
    477$
    2,330
    
    
    $
    332
    
    
    $
    2,734
    
    
    $
    923
    
    
    $
    3,337
 Note
13  Pension and Other Postretirement Plans
  Components of net periodic benefit cost
 Successor
    
    Predecessor
    
    Successor
    
    Predecessor
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    March 1, 2005 to
    
    January 1, 2005 to
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2005Qualified PensionService cost
    
    $
    3,552
    
    
    $
    2,784
    
    
    $
    4,736
    
    
    $
    2,369
    
    
    $
    5,568Interest cost
    
    
    3,378
    
    
    
    3,331
    
    
    
    4,504
    
    
    
    2,253
    
    
    
    6,662Expected return on plan assets
    
    
    (5,508
    )
    
    
    (4,828
    )
    
    
    (7,344
    )
    
    
    (3,671
    )
    
    
    (9,656
    )Amortization of prior service cost
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    4Amortization of transition obligation
    
    
    
    
    
    
    (64
    )
    
    
    
    
    
    
    (39
    )
    
    
    (128
    )Amortization of net loss
    
    
    
    
    
    
    1,066
    
    
    
    
    
    
    
    809
    
    
    
    2,132Net periodic benefit cost
    
    
    1,422
    
    
    
    2,291
    
    
    
    1,896
    
    
    
    1,722
    
    
    
    4,582Nonqualified PensionService cost
    
    
    215
    
    
    
    99
    
    
    
    287
    
    
    
    106
    
    
    
    198Interest cost
    
    
    563
    
    
    
    405
    
    
    
    751
    
    
    
    305
    
    
    
    810Amortization of prior service cost
    
    
    298
    
    
    
    43
    
    
    
    430
    
    
    
    39
    
    
    
    86Amortization of transition obligation
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    2
    
    
    
    6Amortization of net loss
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    84
    
    
    
    100Net periodic benefit cost
    
    
    1,076
    
    
    
    600
    
    
    
    1,468
    
    
    
    536
    
    
    
    1,200Total net periodic benefit
cost  pensions plans
    
    $
    2,498
    
    
    $
    2,891
    
    
    $
    3,364
    
    
    $
    2,258
    
    
    $
    5,782Other Postretirement BenefitsService cost
    
    $
    57
    
    
    $
    40
    
    
    $
    76
    
    
    $
    37
    
    
    $
    80Interest cost
    
    
    321
    
    
    
    353
    
    
    
    428
    
    
    
    215
    
    
    
    706Amortization of prior service cost
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    23
    
    
    
    70Amortization of transition obligation
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    65
    
    
    
    196Amortization of net loss
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    35
    
    
    
    198Net periodic benefit cost  otherpostretirement benefit plans
    
    $
    378
    
    
    $
    625
    
    
    $
    504
    
    
    $
    375
    
    
    $
    1,250
   14




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##### 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
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2004The Toronto-Dominion Bank Merger ChargesTransaction costs
    
    $
    
    
    
    $
    
    
    
    $
    1,503
    
    
    $
    18,148
    
    
    $
    Personnel costs
    
    
    1,764
    
    
    
    
    
    
    
    2,654
    
    
    
    2,285
    
    
    
    Name change
    
    
    2,177
    
    
    
    
    
    
    
    2,201
    
    
    
    2,061
    
    
    
    Other costs
    
    
    18
    
    
    
    
    
    
    
    59
    
    
    
    2,941
    
    
    
    3,959
    
    
    
    
    
    
    
    6,417
    
    
    
    25,435
    
    
    
    BostonFed Bancorp, Inc. Merger ChargesPersonnel costs
    
    
    284
    
    
    
    
    
    
    
    735
    
    
    
    673
    
    
    
    Systems conversion and integration/customer communications
    
    
    273
    
    
    
    
    
    
    
    631
    
    
    
    987
    
    
    
    Other costs
    
    
    584
    
    
    
    2
    
    
    
    958
    
    
    
    211
    
    
    
    21,141
    
    
    
    2
    
    
    
    2,324
    
    
    
    1,871
    
    
    
    2Foxborough Savings Bank Merger ChargesPersonnel costs
    
    
    
    
    
    
    217
    
    
    
    1
    
    
    
    1
    
    
    
    217Systems conversion and integration/customer communications
    
    
    
    
    
    
    410
    
    
    
    
    
    
    
    
    
    
    
    540Other costs
    
    
    
    
    
    
    51
    
    
    
    8
    
    
    
    10
    
    
    
    77
    
    
    
    678
    
    
    
    9
    
    
    
    11
    
    
    
    834CCBT Financial Companies, Inc. Merger ChargesPersonnel costs
    
    
    1
    
    
    
    903
    
    
    
    2
    
    
    
    (219
    )
    
    
    903Systems conversion and integration/customer communications
    
    
    
    
    
    
    1,645
    
    
    
    
    
    
    
    12
    
    
    
    2,180Other costs
    
    
    197
    
    
    
    808
    
    
    
    310
    
    
    
    36
    
    
    
    961198
    
    
    
    3,356
    
    
    
    312
    
    
    
    (171
    )
    
    
    4,044Other CostsAmerican Financial Holdings, Inc. Merger Charges
    
    
    27
    
    
    
    18
    
    
    
    189
    
    
    
    117
    
    
    
    187First & Ocean Bancorp Merger Charges
    
    
    18
    
    
    
    73
    
    
    
    19
    
    
    
    1
    
    
    
    1,113Warren Bancorp, Inc. Merger Charges
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    29Reverse auto lease reserves (Banknorth  Vermont)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (470
    )Other costs
    
    
    25
    
    
    
    3
    
    
    
    25
    
    
    
    
    
    
    
    970
    
    
    
    99
    
    
    
    233
    
    
    
    118
    
    
    
    868Total merger and consolidation costs
    
    $
    5,368
    
    
    $
    4,135
    
    
    $
    9,295
    
    
    $
    27,264
    
    
    $
    5,748
  15




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##### Table of Contents



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
    
    6/30/05The Toronto-Dominion Bank Merger
    
    $
    22,891
    
    
    $
    
    
    
    $
    6,417
    
    
    
    ($24,976
    )
    
    $
    
    
    
    $
    4,332BostonFed Bancorp, Inc. Merger
    
    
    8,807
    
    
    
    
    
    
    
    2,324
    
    
    
    (6,676
    )
    
    
    (2,229
    )
    
    
    2,226Foxborough Savings Bank Merger
    
    
    458
    
    
    
    
    
    
    
    9
    
    
    
    (10
    )
    
    
    (457
    )
    
    
    0CCBT Financial Companies, Inc. Merger
    
    
    1,671
    
    
    
    
    
    
    
    312
    
    
    
    (449
    )
    
    
    (769
    )
    
    
    765First & Ocean Bancorp Merger
    
    
    204
    
    
    
    
    
    
    
    19
    
    
    
    (19
    )
    
    
    (204
    )
    
    
    American Financial Holdings, Inc.
Merger
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    (189
    )
    
    
    
    
    
    
    Andover / MetroWest Mergers
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    (25
    )
    
    
    
    
    
    
    Total
    
    $
    34,031
    
    
    $
    0
    
    
    $
    9,295
    
    
    
    ($32,344
    )
    
    
    ($3,659
    )
    
    $
    7,323
 Note
15  Earnings Per Share
  Successor
    
    Predecessor
    
    Successor
    
    Predecessor
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    March 1, 2005 to
    
    January 1, 2005 to
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    February 28, 2005
    
    June 30, 2004Antidilutive effect of
options outstanding
    
    
    2,139
    
    
    
    6
    
    
    
    1,624
    
    
    
    
    
    
    
    2
 Note
16  Related Party Transactions
  June 30, 2005Cash and due from banks
    
    $
    2,720Other assetsPositive fair value marks on derivatives
    
    
    17,134Accounts receivable
    
    
    891Borrowings under $110 million line of credit
    
    
    Other liabilities-negative fair value mark on
derivatives
    
    
    4,955Off-balance
sheet transactions (notional amounts)Interest rate swaps
    
    
    1,197,212Foreign exchange forward contracts
    
    
    4,621 16




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##### Table of Contents



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




---



##### Table of Contents



Guidance on Other-Than-Temporary Impairment
    Accounting Changes and Error Corrections
  Note 18  Subsequent Event
  18




---



##### Table of Contents



19




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##### Table of Contents



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,
    
    value of TD common shares issued and
    
    the value of TD Banknorth Inc. shares issued.
    20




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##### Table of Contents



Table 1  Selected Income Data
 Predecessor
    
    Successor
    
    Combined
    
    PredecessorJanuary 1, 2005 to
    
    March 1, 2005 to
    
    Six Months Ended
    
    Six Months EndedFebruary 28, 2005
    
    June 30, 2005
    
    June 30, 2005
    
    June 30, 2004Interest and dividend income:Interest and fees on loans and leases
    
    $
    176,949
    
    
    $
    384,482
    
    
    $
    561,431
    
    
    $
    441,309Interest and dividends on securities
    
    
    51,183
    
    
    
    73,481
    
    
    
    124,664
    
    
    
    157,962Total interest and dividend income
    
    
    228,132
    
    
    
    457,963
    
    
    
    686,095
    
    
    
    599,271Interest expense:Interest on deposits
    
    
    30,694
    
    
    
    62,875
    
    
    
    93,569
    
    
    
    78,332Interest on borrowed funds
    
    
    32,654
    
    
    
    54,506
    
    
    
    87,160
    
    
    
    75,807Total interest expense
    
    
    63,348
    
    
    
    117,381
    
    
    
    180,729
    
    
    
    154,139Net interest income
    
    
    164,784
    
    
    
    340,582
    
    
    
    505,366
    
    
    
    445,132Provision for loan and lease losses
    
    
    1,069
    
    
    
    4,597
    
    
    
    5,666
    
    
    
    19,000Net interest income after provision
for loan and lease losses
    
    
    163,715
    
    
    
    335,985
    
    
    
    499,700
    
    
    
    426,132Noninterest income:Deposit services
    
    
    18,359
    
    
    
    41,576
    
    
    
    59,935
    
    
    
    53,412Insurance agency commissions
    
    
    8,252
    
    
    
    19,244
    
    
    
    27,496
    
    
    
    26,014Merchant and electronic banking income, net
    
    
    7,751
    
    
    
    20,090
    
    
    
    27,841
    
    
    
    23,474Wealth management services
    
    
    6,959
    
    
    
    13,940
    
    
    
    20,899
    
    
    
    19,019Bank-owned life insurance
    
    
    4,169
    
    
    
    8,034
    
    
    
    12,203
    
    
    
    11,771Investment planning services
    
    
    2,815
    
    
    
    7,335
    
    
    
    10,150
    
    
    
    9,985Net securities (losses) gains
    
    
    (46,548
    )
    
    
    (2,488
    )
    
    
    (49,036
    )
    
    
    6,936Loans held for sale  Lower of cost or market
adjustment
    
    
    (7,500
    )
    
    
    386
    
    
    
    (7,114
    )
    
    
    Change in unrealized loss on derivatives
    
    
    
    
    
    
    6,664
    
    
    
    6,664
    
    
    
    Other noninterest income
    
    
    9,104
    
    
    
    24,749
    
    
    
    33,853
    
    
    
    29,6103,361
    
    
    
    139,530
    
    
    
    142,891
    
    
    
    180,221Noninterest expense:Compensation and employee benefits
    
    
    67,977
    
    
    
    137,987
    
    
    
    205,964
    
    
    
    174,538Occupancy
    
    
    11,411
    
    
    
    24,557
    
    
    
    35,968
    
    
    
    31,408Equipment
    
    
    8,440
    
    
    
    17,379
    
    
    
    25,819
    
    
    
    23,703Data processing
    
    
    7,233
    
    
    
    15,419
    
    
    
    22,652
    
    
    
    20,455Advertising and marketing
    
    
    4,373
    
    
    
    10,408
    
    
    
    14,781
    
    
    
    13,827Amortization of identifiable intangible assets
    
    
    1,561
    
    
    
    41,591
    
    
    
    43,152
    
    
    
    3,988Merger and consolidation costs
    
    
    27,264
    
    
    
    9,295
    
    
    
    36,559
    
    
    
    5,748Prepayment penalties on borrowings
    
    
    6,300
    
    
    
    3
    
    
    
    6,303
    
    
    
    Other noninterest expense
    
    
    15,887
    
    
    
    36,357
    
    
    
    52,244
    
    
    
    49,877150,446
    
    
    
    292,996
    
    
    
    443,442
    
    
    
    323,544Income before income tax expense
    
    
    16,630
    
    
    
    182,519
    
    
    
    199,149
    
    
    
    282,809Provision for income taxes
    
    
    6,182
    
    
    
    63,296
    
    
    
    69,478
    
    
    
    96,636Net income
    
    $
    10,448
    
    
    $
    119,223
    
    
    $
    129,671
    
    
    $
    186,173Basic earnings per share
    
    
    
    
    
    
    
    
    
    $
    0.73
    
    
    $
    1.12Diluted earnings per share
    
    
    
    
    
    
    
    
    
    $
    0.72
    
    
    $
    1.10Weighted average shares outstanding:Basic
    
    
    
    
    
    
    
    
    
    
    178,417
    
    
    
    166,318Dilutive effect of stock options
    
    
    
    
    
    
    
    
    
    
    1,199
    
    
    
    3,585Diluted
    
    
    
    
    
    
    
    
    
    
    179,616
    
    
    
    169,903
   21




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##### Table of Contents



Acquisitions
  Table 2  Acquisitions
 Total AssetsDate
    
    at AcquisitionAcquisition
    
    Acquired
    
    Date(in millions)BostonFed Bancorp, Inc.
    
    
    1/21/2005
    
    
    $
    1,467.8CCBT Financial Companies, Inc.
    
    
    4/30/2004
    
    
    
    1,292.9Foxborough Savings Bank
    
    
    4/30/2004
    
    
    
    241.8
 Operations
  
    
    Net interest income increased by $24.0 million, reflecting a 46 basis point increase in
net interest margin. The net interest margin increased 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 $5.9 million lower, reflecting continued strong asset
quality and lower charge-offs.
    
    Noninterest income increased by $26.4 million, of which $14.8 million, or 56%, related
to the change in unrealized loss on certain derivatives. Excluding the change in
unrealized loss on derivatives, non-interest income increased by $11.6 million, or 13%.
    
    Amortization of identifiable intangible assets increased by $29.6 million as a result
of the new basis of accounting.
    
    Noninterest expenses excluding the amortization of intangible assets increased by
$26.9 million as a result of the on-going operating expenses of three banks acquired since
April 1, 2004, 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, and marked down by $7.5 million to the estimated
selling price. A $41.6 million after-tax loss was incurred in connection with this
deleveraging program in the first quarter. 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 at an average cost of $31.79 per
share.
    
    We completed the acquisitions of BostonFed Bancorp Inc. on January 21, 2005.
Acquisitions continue to be an important part of our long-term strategy for growth.
 22




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##### Table of Contents




    
    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 second quarter of 2005 increased 15% compared to
the second quarter of 2004 due to acquisitions and internal growth.
    
    Total average deposits for the second quarter of 2005 increased by 6% compared to the
second quarter of 2004 as increases from acquisitions more than offset declines in
certificates of deposit. Excluding the effects of acquisitions, total average deposits
declined by 3%, 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 6% during the second quarter of 2005 compared to
the second quarter of 2004.
 
 23




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##### Table of Contents



Table 3  Selected Quarterly Data
 Successor
    
    Combined
    
    Predecessor2005
    
    2004Second
    
    First
    
    Fourth
    
    Third
    
    SecondCondensed Income StatementInterest income
    
    
    
    
    
    $
    342,447
    
    
    $
    343,645
    
    
    $
    327,900
    
    
    $
    323,677
    
    
    $
    307,742Interest expense
    
    
    
    
    
    
    89,819
    
    
    
    90,912
    
    
    
    83,783
    
    
    
    85,701
    
    
    
    79,096Net interest income
    
    
    (A
    )
    
    
    252,628
    
    
    
    252,733
    
    
    
    244,117
    
    
    
    237,976
    
    
    
    228,646Provision for loan and lease losses
    
    
    
    
    
    
    3,597
    
    
    
    2,069
    
    
    
    10,670
    
    
    
    10,670
    
    
    
    9,500Net interest income after provision
for loan and lease losses
    
    
    
    
    
    
    249,031
    
    
    
    250,664
    
    
    
    233,447
    
    
    
    227,306
    
    
    
    219,146Noninterest income (1)
    
    
    (B
    )
    
    
    117,272
    
    
    
    25,621
    
    
    
    72,537
    
    
    
    93,196
    
    
    
    90,880Noninterest expense, excluding merger and
consolidation costs (2)
    
    
    (C
    )
    
    
    214,965
    
    
    
    191,918
    
    
    
    229,073
    
    
    
    168,595
    
    
    
    159,691Merger and consolidation costs
    
    
    (D
    )
    
    
    5,368
    
    
    
    31,191
    
    
    
    38,286
    
    
    
    5,603
    
    
    
    4,135Income before income taxes
    
    
    
    
    
    
    145,970
    
    
    
    53,176
    
    
    
    38,625
    
    
    
    146,304
    
    
    
    146,200Income tax expense
    
    
    
    
    
    
    50,375
    
    
    
    19,101
    
    
    
    17,927
    
    
    
    48,534
    
    
    
    50,353Net income (1) (2)
    
    
    
    
    
    $
    95,595
    
    
    $
    34,075
    
    
    $
    20,698
    
    
    $
    97,770
    
    
    $
    95,847Weighted average shares outstanding:Basic
    
    
    
    
    
    
    173,428
    
    
    
    183,393
    
    
    
    177,071
    
    
    
    173,271
    
    
    
    169,637Diluted
    
    
    
    
    
    
    174,261
    
    
    
    184,890
    
    
    
    179,953
    
    
    
    176,756
    
    
    
    173,109Basic earnings per share
    
    
    
    
    
    $
    0.55
    
    
    $
    0.19
    
    
    $
    0.12
    
    
    $
    0.56
    
    
    $
    0.57Diluted earnings per share
    
    
    
    
    
    $
    0.55
    
    
    $
    0.18
    
    
    $
    0.12
    
    
    $
    0.55
    
    
    $
    0.55Financial RatiosReturn on average assets (1) (2) (3)
    
    
    
    
    
    
    1.20
    %
    
    
    0.45
    %
    
    
    0.29
    %
    
    
    1.33
    %
    
    
    1.36
    %Return on average equity (1) (2) (3)
    
    
    
    
    
    
    5.98
    %
    
    
    3.09
    %
    
    
    2.66
    %
    
    
    13.24
    %
    
    
    13.54
    %Net interest margin (fully-taxable equivalent) (3)
    
    
    
    
    
    
    4.12
    %
    
    
    3.96
    %
    
    
    3.87
    %
    
    
    3.68
    %
    
    
    3.66
    %Noninterest income as a percent of total income (4)
    
    
    
    
    
    
    31.70
    %
    
    
    9.20
    %
    
    
    22.91
    %
    
    
    28.14
    %
    
    
    28.44
    %Efficiency ratio (1) (2) (5)
    
    
    
    
    
    
    59.57
    %
    
    
    80.15
    %
    
    
    84.43
    %
    
    
    52.60
    %
    
    
    51.27
    %Per Share DataBook value per share
    
    
    
    
    
    $
    37.33
    
    
    $
    36.65
    
    
    $
    17.71
    
    
    $
    17.50
    
    
    $
    16.61Dividends per share
    
    
    
    
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.195
 
 (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 the first quarter of 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
   
    
    a $233.6 million, or 6%, increase in average net earning assets;
 24




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##### Table of Contents




    
    changes in the composition of earning assets resulting from deleveraging programs (loans
comprised 81% of earning assets during the second quarter of 2005 compared to 69% during
the second quarter of 2004);
    
    changes in the composition of interest-bearing liabilities resulting from deleveraging
programs (deposits comprised 75% of interest-bearing liabilities during the second quarter
of 2005 compared to 70% during the second 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 $7.0 million; and
    
    a 12% increase in noninterest-bearing deposits.
   25




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##### Table of Contents



Table 4  Average Balances, Yields and Rates
 Successor
    
    Predecessor2005 Second Quarter
    
    2004 Second QuarterYield/
    
    
    
    
    
    
    
    
    
    Yield/Average Balance
    
    Interest
    
    Rate (1)
    
    Average Balance
    
    Interest
    
    Rate (1)Loans and leases (2):Residential real estate mortgages
    
    $
    3,665,306
    
    
    $
    49,737
    
    
    
    5.43
    %
    
    $
    2,987,625
    
    
    $
    37,368
    
    
    
    5.00
    %Commercial real estate mortgages
    
    
    6,658,257
    
    
    
    97,389
    
    
    
    5.87
    
    
    
    5,883,659
    
    
    
    83,959
    
    
    
    5.74Commercial business loans and leases
    
    
    4,162,669
    
    
    
    59,551
    
    
    
    5.74
    
    
    
    3,675,217
    
    
    
    43,015
    
    
    
    4.71Consumer loans and leases
    
    
    5,686,240
    
    
    
    83,620
    
    
    
    5.90
    
    
    
    4,981,924
    
    
    
    62,222
    
    
    
    5.02Total loans and leases
    
    
    20,172,472
    
    
    
    290,297
    
    
    
    5.77
    
    
    
    17,528,425
    
    
    
    226,564
    
    
    
    5.19Investment securities (3)
    
    
    4,578,749
    
    
    
    54,060
    
    
    
    4.72
    
    
    
    7,714,985
    
    
    
    82,706
    
    
    
    4.29Federal funds sold and other short-term investments
    
    
    12,574
    
    
    
    77
    
    
    
    2.44
    
    
    
    3,683
    
    
    
    16
    
    
    
    1.74Total earning assets
    
    
    24,763,795
    
    
    
    344,434
    
    
    
    5.57
    
    
    
    25,247,093
    
    
    
    309,286
    
    
    
    4.91Bank-owned life insurance
    
    
    557,665
    
    
    
    
    
    
    
    
    
    
    
    497,250Goodwill
    
    
    4,536,952
    
    
    
    
    
    
    
    
    
    
    
    1,295,806Indentifiable intangible assets
    
    
    746,331
    
    
    
    
    
    
    
    
    
    
    
    44,164Noninterest-earning assets
    
    
    1,403,735
    
    
    
    
    
    
    
    
    
    
    
    1,298,436Total assets
    
    $
    32,008,478
    
    
    
    
    
    
    
    
    
    
    $
    28,382,749Interest-bearing deposits:Regular savings
    
    $
    2,696,236
    
    
    
    1,973
    
    
    
    0.29
    
    
    $
    2,614,679
    
    
    
    1,931
    
    
    
    0.30NOW and money market accounts
    
    
    8,031,408
    
    
    
    24,425
    
    
    
    1.22
    
    
    
    7,646,403
    
    
    
    14,959
    
    
    
    0.79Certificates of deposit
    
    
    4,786,696
    
    
    
    20,998
    
    
    
    1.76
    
    
    
    4,719,524
    
    
    
    22,624
    
    
    
    1.93Brokered deposits
    
    
    76,441
    
    
    
    731
    
    
    
    3.84
    
    
    
    
    
    
    
    
    
    
    
    Total interest-bearing deposits
    
    
    15,590,781
    
    
    
    48,127
    
    
    
    1.24
    
    
    
    14,980,606
    
    
    
    39,514
    
    
    
    1.06Borrowed funds
    
    
    5,140,876
    
    
    
    41,692
    
    
    
    3.25
    
    
    
    6,467,964
    
    
    
    39,582
    
    
    
    2.46Total interest-bearing liabilities
    
    
    20,731,657
    
    
    
    89,819
    
    
    
    1.73
    
    
    
    21,448,570
    
    
    
    79,096
    
    
    
    1.48Non-interest bearing deposits
    
    
    4,351,905
    
    
    
    
    
    
    
    
    
    
    
    3,898,967Deferred tax liability related to
identifiable intangible assets
    
    
    264,676
    
    
    
    
    
    
    
    
    
    
    
    15,457Other liabilities
    
    
    244,650
    
    
    
    
    
    
    
    
    
    
    
    173,139Shareholders equity
    
    
    6,415,590
    
    
    
    
    
    
    
    
    
    
    
    2,846,616Total liabilities and shareholders equity
    
    $
    32,008,478
    
    
    
    
    
    
    
    
    
    
    $
    28,382,749Net earning assets
    
    $
    4,032,138
    
    
    
    
    
    
    
    
    
    
    $
    3,798,523Net interest income (fully-taxable equivalent)
    
    
    
    
    
    
    254,615
    
    
    
    
    
    
    
    
    
    
    
    230,190Less: fully-taxable equivalent adjustments
    
    
    
    
    
    
    (1,987
    )
    
    
    
    
    
    
    
    
    
    
    (1,544
    )Net interest income
    
    
    
    
    
    $
    252,628
    
    
    
    
    
    
    
    
    
    
    $
    228,646Net interest rate spread (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    3.84
    %
    
    
    
    
    
    
    
    
    
    
    3.43
    %Net interest margin (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    4.12
    %
    
    
    
    
    
    
    
    
    
    
    3.66
    %
 
 (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
    
    PredecessorSix Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004Yield/
    
    
    
    
    
    
    
    
    
    Yield/Average Balance
    
    Interest
    
    Rate (1)
    
    Average Balance
    
    Interest
    
    Rate (1)Loans and leases (2):Residential real estate mortgages
    
    $
    3,735,498
    
    
    $
    98,533
    
    
    
    5.28
    %
    
    $
    2,856,423
    
    
    $
    72,744
    
    
    
    5.09
    %Commercial real estate mortgages
    
    
    6,553,657
    
    
    
    192,167
    
    
    
    5.91
    
    
    
    5,712,075
    
    
    
    162,573
    
    
    
    5.72Commercial business loans and leases
    
    
    4,091,063
    
    
    
    115,658
    
    
    
    5.70
    
    
    
    3,531,263
    
    
    
    83,593
    
    
    
    4.76Consumer loans and leases
    
    
    5,594,277
    
    
    
    157,858
    
    
    
    5.69
    
    
    
    4,932,477
    
    
    
    124,428
    
    
    
    5.07Total loans and leases
    
    
    19,974,495
    
    
    
    564,216
    
    
    
    5.69
    
    
    
    17,032,238
    
    
    
    443,338
    
    
    
    5.23Investment securities (3)
    
    
    5,338,825
    
    
    
    125,556
    
    
    
    4.70
    
    
    
    7,456,034
    
    
    
    158,937
    
    
    
    4.26Federal funds sold and other short-term investments
    
    
    12,003
    
    
    
    160
    
    
    
    2.69
    
    
    
    5,605
    
    
    
    31
    
    
    
    1.12Total earning assets
    
    
    25,325,323
    
    
    
    689,932
    
    
    
    5.48
    
    
    
    24,493,877
    
    
    
    602,306
    
    
    
    4.93Bank-owned life insurance
    
    
    551,842
    
    
    
    
    
    
    
    
    
    
    
    493,839Goodwill
    
    
    3,532,889
    
    
    
    
    
    
    
    
    
    
    
    1,211,738Indentifiable intangible assets
    
    
    524,947
    
    
    
    
    
    
    
    
    
    
    
    39,644Noninterest-earning assets
    
    
    1,424,746
    
    
    
    
    
    
    
    
    
    
    
    1,215,773Total assets
    
    $
    31,359,747
    
    
    
    
    
    
    
    
    
    
    $
    27,454,871Interest-bearing deposits:Regular savings
    
    $
    2,669,867
    
    
    
    3,854
    
    
    
    0.29
    
    
    $
    2,541,547
    
    
    
    3,769
    
    
    
    0.30NOW and money market accounts
    
    
    8,059,616
    
    
    
    45,387
    
    
    
    1.14
    
    
    
    7,382,671
    
    
    
    29,119
    
    
    
    0.79Certificates of deposit
    
    
    4,742,817
    
    
    
    42,963
    
    
    
    1.83
    
    
    
    4,689,767
    
    
    
    45,444
    
    
    
    1.95Brokered deposits
    
    
    71,179
    
    
    
    1,365
    
    
    
    3.87
    
    
    
    
    
    
    
    Total interest-bearing deposits
    
    
    15,543,479
    
    
    
    93,569
    
    
    
    1.21
    
    
    
    14,613,985
    
    
    
    78,332
    
    
    
    1.08Borrowed funds
    
    
    5,644,617
    
    
    
    87,160
    
    
    
    3.11
    
    
    
    6,257,627
    
    
    
    75,807
    
    
    
    2.43Total interest-bearing liabilities
    
    
    21,188,096
    
    
    
    180,729
    
    
    
    1.72
    
    
    
    20,871,612
    
    
    
    154,139
    
    
    
    1.48Non-interest bearing deposits
    
    
    4,287,179
    
    
    
    
    
    
    
    
    
    
    
    3,693,342Deferred tax liability related to
identifiable intangible assets
    
    
    134,551
    
    
    
    
    
    
    
    
    
    
    
    13,875Other liabilities
    
    
    297,194
    
    
    
    
    
    
    
    
    
    
    
    166,079Shareholders equity
    
    
    5,452,727
    
    
    
    
    
    
    
    
    
    
    
    2,709,963Total liabilities and shareholders equity
    
    $
    31,359,747
    
    
    
    
    
    
    
    
    
    
    $
    27,454,871Net earning assets
    
    $
    4,137,227
    
    
    
    
    
    
    
    
    
    
    $
    3,622,265Net interest income (fully-taxable equivalent)
    
    
    
    
    
    
    509,203
    
    
    
    
    
    
    
    
    
    
    
    448,167Less: fully-taxable equivalent adjustments
    
    
    
    
    
    
    (3,837
    )
    
    
    
    
    
    
    
    
    
    
    (3,035
    )Net interest income
    
    
    
    
    
    $
    505,366
    
    
    
    
    
    
    
    
    
    
    $
    445,132Net interest rate spread (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    3.76
    %
    
    
    
    
    
    
    
    
    
    
    3.45
    %Net interest margin (fully-taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    4.04
    %
    
    
    
    
    
    
    
    
    
    
    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
    
    Six Months EndedJune 30, 2005 (Successor) vs. Three Months Ended
    
    June 30, 2005 (Combined) vs. Six Months EndedJune 30, 2004 (Predecessor)
    
    June 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
    
    $
    34,213
    
    
    $
    25,347
    
    
    $
    4,173
    
    
    $
    63,733
    
    
    $
    76,308
    
    
    $
    38,852
    
    
    $
    5,718
    
    
    $
    120,878Investment securities
    
    
    (33,544
    )
    
    
    8,271
    
    
    
    (3,373
    )
    
    
    (28,646
    )
    
    
    (44,726
    )
    
    
    16,268
    
    
    
    (4,923
    )
    
    
    (33,381
    )Federal funds sold and
other short-term investments
    
    
    39
    
    
    
    6
    
    
    
    16
    
    
    
    61
    
    
    
    36
    
    
    
    44
    
    
    
    49
    
    
    
    129Total interest income
    
    
    708
    
    
    
    33,624
    
    
    
    816
    
    
    
    35,148
    
    
    
    31,618
    
    
    
    55,164
    
    
    
    844
    
    
    
    87,626Interest expense:Interest-bearing deposits:Regular savings
    
    
    61
    
    
    
    (65
    )
    
    
    46
    
    
    
    42
    
    
    
    191
    
    
    
    (126
    )
    
    
    20
    
    
    
    85NOW and money market accounts
    
    
    758
    
    
    
    8,197
    
    
    
    511
    
    
    
    9,466
    
    
    
    2,652
    
    
    
    12,813
    
    
    
    803
    
    
    
    16,268Certificates of deposit
    
    
    323
    
    
    
    (2,000
    )
    
    
    51
    
    
    
    (1,626
    )
    
    
    513
    
    
    
    (2,791
    )
    
    
    (203
    )
    
    
    (2,481
    )Brokered deposits
    
    
    0
    
    
    
    0
    
    
    
    731
    
    
    
    731
    
    
    
    0
    
    
    
    0
    
    
    
    1,365
    
    
    
    1,365Total interest-bearing deposits
    
    
    1,142
    
    
    
    6,132
    
    
    
    1,339
    
    
    
    8,613
    
    
    
    3,356
    
    
    
    9,896
    
    
    
    1,985
    
    
    
    15,237Borrowed funds
    
    
    (8,139
    )
    
    
    12,739
    
    
    
    (2,490
    )
    
    
    2,110
    
    
    
    (7,387
    )
    
    
    21,101
    
    
    
    (2,361
    )
    
    
    11,353Total interest expense
    
    
    (6,997
    )
    
    
    18,871
    

    
    
    (1,151
    )
    
    
    10,723
    
    
    
    (4,031
    )
    
    
    30,997
    
    
    
    (376
    )
    
    
    26,590Net interest income (fully taxable equivalent)
    
    $
    7,705
    
    
    $
    14,753
    
    
    $
    1,967
    
    
    $
    24,425
    
    
    $
    35,649
    
    
    $
    24,167
    
    
    $
    1,220
    
    
    $
    61,036
 
 (1)
    
    Volume increases include the effects of acquisitions, including the acquisitions 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. 28




---



##### Table of Contents



Table 6  Analysis of Net Interest Income
 Combined
    
    Predecessor
    
    
    
    
    
    Combined
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    
    
    
    
    Six Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    Change
    
    June 30, 2005
    
    June 30, 2004
    
    ChangeComponents of net interest incomeIncome on earning assets (fully-taxable equivalent)
    
    $
    344,434
    
    
    $
    309,286
    
    
    $
    35,148
    
    
    $
    689,932
    
    
    $
    602,306
    
    
    $
    87,626Expense on interest-bearing liabilities
    
    
    89,819
    
    
    
    79,096
    
    
    
    10,723
    
    
    
    180,729
    
    
    
    154,139
    
    
    
    26,590Net interest income (fully-taxable equivalent)
    
    
    254,615
    
    
    
    230,190
    
    
    
    24,425
    
    
    
    509,203
    
    
    
    448,167
    
    
    
    61,036Less: fully-taxable equivalent adjustments
    
    
    (1,987
    )
    
    
    (1,544
    )
    
    
    443
    
    
    
    (3,837
    )
    
    
    (3,035
    )
    
    
    802Net interest income, as reported
    
    $
    252,628
    
    
    $
    228,646
    
    
    $
    23,982
    
    
    $
    505,366
    
    
    $
    445,132
    
    
    $
    60,234Average yields and rates paidEarning assets yield (fully-taxable equivalent)
    
    
    5.57
    %
    
    
    4.91
    %
    
    
    0.66
    %
    
    
    5.48
    %
    
    
    4.93
    %
    
    
    0.55
    %Rate paid on interest-bearing liabilities
    
    
    1.73
    %
    
    
    1.48
    %
    
    
    0.25
    %
    
    
    1.72
    %
    
    
    1.48
    %
    
    
    0.24
    %Net interest rate spread (fully-taxable equivalent)
    
    
    3.84
    %
    
    
    3.43
    %
    
    
    0.41
    %
    
    
    3.76
    %
    
    
    3.45
    %
    
    
    0.31
    %Net interest margin (fully-taxable equivalent)
    
    
    4.12
    %
    
    
    3.66
    %
    
    
    0.46
    %
    
    
    4.04
    %
    
    
    3.67
    %
    
    
    0.37
    %Average balancesLoans
    
    $
    20,172,472
    
    
    $
    17,528,425
    
    
    $
    2,644,047
    
    
    $
    19,974,495
    
    
    $
    17,032,238
    
    
    $
    2,942,257Investment securities
    
    
    4,578,749
    
    
    
    7,714,985
    
    
    
    (3,136,236
    )
    
    
    5,338,825
    
    
    
    7,456,034
    
    
    
    (2,117,209
    )Federal funds sold and other short-term investments
    
    
    12,574
    
    
    
    3,683
    
    
    
    8,891
    
    
    
    12,003
    
    
    
    5,605
    
    
    
    6,398Total earning assets
    
    
    24,763,795
    
    
    
    25,247,093
    
    
    
    (483,298
    )
    
    
    25,325,323
    
    
    
    24,493,877
    
    
    
    831,446Total interest-bearing liabilities
    
    
    20,731,657
    
    
    
    21,448,570
    
    
    
    (716,913
    )
    
    
    21,188,096
    
    
    
    20,871,612
    
    
    
    316,484Net earning assets
    
    $
    4,032,138
    
    
    $
    3,798,523
    
    
    $
    233,615
    
    
    $
    4,137,227
    
    
    $
    3,622,265
    
    
    $
    514,962
 Provision and Allowance for Loan and Lease Losses
   29




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##### Table of Contents



Noninterest Income
  Table 7  Noninterest Income
 Combined
    
    Predecessor
    
    
    
    
    
    
    
    
    
    Combined
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    Change
    
    Six Months Ended
    
    Six Months Ended
    
    ChangeJune 30, 2005
    
    June 30, 2004
    
    Amount
    
    Percent
    
    June 30, 2005
    
    June 30, 2004
    
    Amount
    
    PercentNoninterest income:Deposit services
    
    $
    31,751
    
    
    $
    27,260
    
    
    $
    4,491
    
    
    
    16
    %
    
    $
    59,935
    
    
    $
    53,412
    
    
    $
    6,523
    
    
    
    12
    %Insurance agency commissions
    
    
    13,604
    
    
    
    12,278
    
    
    
    1,326
    
    
    
    11
    %
    
    
    27,496
    
    
    
    26,014
    
    
    
    1,482
    
    
    
    6
    %Merchant and electronic banking
income, net
    
    
    14,727
    
    
    
    13,069
    
    
    
    1,658
    
    
    
    13
    %
    
    
    27,841
    
    
    
    23,474
    
    
    
    4,367
    
    
    
    19
    %Wealth management services
    
    
    10,395
    
    
    
    9,870
    
    
    
    525
    
    
    
    5
    %
    
    
    20,899
    
    
    
    19,019
    
    
    
    1,880
    
    
    
    10
    %Bank-owned life insurance
    
    
    6,107
    
    
    
    6,275
    
    
    
    (168
    )
    
    
    (3
    %)
    
    
    12,203
    
    
    
    11,771
    
    
    
    432
    
    
    
    4
    %Investment planning services
    
    
    5,462
    
    
    
    5,146
    
    
    
    316
    
    
    
    6
    %
    
    
    10,150
    
    
    
    9,985
    
    
    
    165
    
    
    
    2
    %Net securities gains (losses)
    
    
    1,439
    
    
    
    3,355
    
    
    
    (1,916
    )
    
    
    (57
    %)
    
    
    (49,036
    )
    
    
    6,936
    
    
    
    (55,972
    )
    
    
    N/MLoans held for sale  lower of cost or
market adjustment
    
    
    386
    
    
    
    
    
    
    
    386
    
    
    
    N/M
    
    
    (7,114
    )
    
    
    
    
    
    
    (7,114
    )
    
    
    N/MChange in unrealized loss on derivatives
    
    
    14,840
    
    
    
    
    
    
    
    14,840
    
    
    
    N/M
    
    
    6,664
    
    
    
    
    
    
    
    6,664
    
    
    
    N/MOther noninterest income:Loan fee income
    
    
    8,891
    
    
    
    8,516
    
    
    
    375
    
    
    
    4
    %
    
    
    15,812
    
    
    
    13,686
    
    
    
    2,126
    
    
    
    16
    %Covered call option premiums
    
    
    1,058
    
    
    
    2,305
    
    
    
    (1,247
    )
    
    
    (54
    %)
    
    
    4,128
    
    
    
    8,379
    
    
    
    (4,251
    )
    
    
    (51
    %)Mortgage banking services income
    
    
    2,330
    
    
    
    332
    
    
    
    1,998
    
    
    
    N/M
    
    
    3,657
    
    
    
    3,337
    
    
    
    320
    
    
    
    10
    %Venture capital write-downs
    
    
    10
    
    
    
    (166
    )
    
    
    176
    
    
    
    N/M
    
    
    (393
    )
    
    
    (524
    )
    
    
    131
    
    
    
    (25
    %)Miscellaneous income
    
    
    6,272
    
    
    
    2,640
    
    
    
    3,632
    
    
    
    N/M
    
    
    10,649
    
    
    
    4,732
    
    
    
    5,917
    
    
    
    N/MTotal other noninterest income
    
    
    18,561
    
    
    
    13,627
    
    
    
    4,934
    
    
    
    36
    %
    
    
    33,853
    
    
    
    29,610
    
    
    
    4,243
    
    
    
    14
    %Total noninterest income
    
    $
    117,272
    
    
    $
    90,880
    
    
    $
    26,392
    
    
    
    29
    %
    
    $
    142,891
    
    
    $
    180,221
    
    
    ($
    37,330
    )
    
    
    (21
    %)
 
 N/M   not meaningful     30




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##### Table of Contents



31




---



##### Table of Contents



Noninterest Expense
  Table 8  Noninterest Expense
 Successor
    
    Predecessor
    
    
    
    
    
    
    
    
    
    Combined
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    Change
    
    Six Months Ended
    
    Six Months Ended
    
    ChangeJune 30, 2005
    
    June 30, 2004
    
    Amount
    
    Percent
    
    June 30, 2005
    
    June 30, 2004
    
    Amount
    
    PercentNoninterest expense:Compensation and employee benefits
    
    $
    105,096
    
    
    $
    87,005
    
    
    $
    18,091
    
    
    
    21
    %
    
    $
    205,964
    
    
    $
    174,538
    
    
    $
    31,426
    
    
    
    18
    %Occupancy
    
    
    18,066
    
    
    
    15,699
    
    
    
    2,367
    
    
    
    15
    %
    
    
    35,968
    
    
    
    31,408
    
    
    
    4,560
    
    
    
    15
    %Equipment
    
    
    12,982
    
    
    
    11,813
    
    
    
    1,169
    
    
    
    10
    %
    
    
    25,819
    
    
    
    23,703
    
    
    
    2,116
    
    
    
    9
    %Data processing
    
    
    11,618
    
    
    
    10,018
    
    
    
    1,600
    
    
    
    16
    %
    
    
    22,652
    
    
    
    20,455
    
    
    
    2,197
    
    
    
    11
    %Advertising and marketing
    
    
    8,087
    
    
    
    6,303
    
    
    
    1,784
    
    
    
    28
    %
    
    
    14,781
    
    
    
    13,827
    
    
    
    954
    
    
    
    7
    %Amortization of identifiable
intangible assets
    
    
    31,656
    
    
    
    2,084
    
    
    
    29,572
    
    
    
    N/M
    
    
    
    43,152
    
    
    
    3,988
    
    
    
    39,164
    
    
    
    N/MMerger and consolidation costs
    
    
    5,368
    
    
    
    4,135
    
    
    
    1,233
    
    
    
    N/M
    
    
    
    36,559
    
    
    
    5,748
    
    
    
    30,811
    
    
    
    N/MPrepayment penalties on borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/M
    
    
    
    6,303
    
    
    
    
    
    
    
    6,303
    
    
    
    N/MOther noninterest expense:Telephone
    
    
    3,287
    
    
    
    3,694
    
    
    
    (407
    )
    
    
    (11
    %)
    
    
    6,984
    
    
    
    7,064
    
    
    
    (80
    )
    
    
    (1
    %)Office supplies
    
    
    3,042
    
    
    
    2,557
    
    
    
    485
    
    
    
    19
    %
    
    
    5,620
    
    
    
    4,995
    
    
    
    625
    
    
    
    13
    %Postage and freight
    
    
    2,880
    
    
    
    2,744
    
    
    
    136
    
    
    
    5
    %
    
    
    5,754
    
    
    
    5,145
    
    
    
    609
    
    
    
    12
    %Miscellaneous loan costs
    
    
    1,359
    
    
    
    1,271
    
    
    
    88
    
    
    
    7
    %
    
    
    2,644
    
    
    
    1,785
    
    
    
    859
    
    
    
    48
    %Deposits and other assessments
    
    
    1,070
    
    
    
    940
    
    
    
    130
    
    
    
    14
    %
    
    
    2,146
    
    
    
    1,848
    
    
    
    298
    
    
    
    16
    %Collection and carrying costs
of non-performing assets
    
    
    371
    
    
    
    591
    
    
    
    (220
    )
    
    
    (37
    %)
    
    
    1,139
    
    
    
    1,316
    
    
    
    (177
    )
    
    
    (13
    %)Miscellaneous
    
    
    15,451
    
    
    
    14,972
    
    
    
    479
    
    
    
    3
    %
    
    
    27,957
    
    
    
    27,724
    
    
    
    233
    
    
    
    1
    %Total other noninterest expense
    
    
    27,460
    
    
    
    26,769
    
    
    
    691
    
    
    
    3
    %
    
    
    52,244
    
    
    
    49,877
    
    
    
    2,367
    
    
    
    5
    %Total noninterest expense
    
    $
    220,333
    
    
    $
    163,826
    
    
    $
    56,507
    
    
    
    34
    %
    
    $
    443,442
    
    
    $
    323,544
    
    
    $
    119,898
    
    
    
    37
    %
 
 N/M  not meaningful  32




---



##### 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
     CONTRACTUAL OBLIGATIONS
  37




---



##### Table of Contents



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
    
    $
    1,146,107
    
    
    $
    272,704
    
    
    $
    44,470
    
    
    $
    173,096
    
    
    $
    655,837Capital lease obligations
    
    
    6,589
    
    
    
    124
    
    
    
    699
    
    
    
    1,352
    
    
    
    4,414Total long-term debt
    
    
    1,152,696
    
    
    
    272,828
    
    
    
    45,169
    
    
    
    174,448
    
    
    
    660,251Operating lease obligations
    
    
    137,318
    
    
    
    27,378
    
    
    
    45,837
    
    
    
    33,312
    
    
    
    30,791Pension plan contribution (2)
    
    
    20,000
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    Other benefit plan payments  estimated
    
    
    46,875
    
    
    
    4,318
    
    
    
    9,055
    
    
    
    12,602
    
    
    
    20,900Other vendor obligations (3)
    
    
    90,044
    
    
    
    13,112
    
    
    
    16,356
    
    
    
    6,565
    
    
    
    54,011Total contractual obligations
    
    $
    1,446,933
    
    
    
    337,636
    
    
    $
    116,417
    
    
    $
    226,927
    
    
    $
    765,953
 
 (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
    
    $
    5,306,477
    
    
    $
    1,346,120
    
    
    $
    240,582
    
    
    $
    91,656
    
    
    $
    3,628,119Standby letters of credit
    
    
    531,536
    
    
    
    108,017
    
    
    
    121,470
    
    
    
    83,304
    
    
    
    218,745Commercial letters of credit
    
    
    29,851
    
    
    
    26,781
    
    
    
    473
    
    
    
    102
    
    
    
    2,495Commitments to originate loans
    
    
    2,271,155
    
    
    
    1,373,907
    
    
    
    426,593
    
    
    
    105,002
    
    
    
    365,653Other commitments
    
    
    268,380
    
    
    
    7,973
    
    
    
    8,348
    
    
    
    5,259
    
    
    
    246,800Total commitments
    
    $
    8,407,399
    
    
    $
    2,862,798
    
    
    $
    797,466
    
    
    $
    285,323
    
    
    $
    4,461,812
 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)
    
    $
    972,647
    
    
    $
    9,500
    
    
    $
    55,788
    
    
    $
    214,778
    
    
    $
    692,581Interest rate swaps with dealers (2)
    
    
    972,647
    
    
    
    9,500
    
    
    
    55,788
    
    
    
    214,778
    
    
    
    692,581Interest rate caps with commercial borrowers
    
    
    10,928
    
    
    
    
    
    
    
    
    
    
    
    9,435
    
    
    
    1,493Interest rate caps with dealers
    
    
    10,928
    
    
    
    
    
    
    
    
    
    
    
    9,435
    
    
    
    1,493Interest rate swaps on loans (4)
    
    
    2,200,000
    
    
    
    275,000
    
    
    
    550,000
    
    
    
    550,000
    
    
    
    825,000Forward commitments to sell loans
    
    
    92,725
    
    
    
    92,725
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency rate contracts: (5)Forward contracts with customers
    
    
    54,595
    
    
    
    52,791
    
    
    
    1,804
    
    
    
    
    
    
    
    Forward contracts with dealers
    
    
    54,754
    
    
    
    52,945
    
    
    
    1,809
    
    
    
    
    
    
    
    Foreign exchange options to purchase
    
    
    47,378
    
    
    
    47,378
    
    
    
    
    
    
    
    
    
    
    
    Foreign exchange options to sell
    
    
    47,378
    
    
    
    47,378
    
    
    
    
    
    
    
    
    
    
    
    Treasury lock agreement (6)
    
    
    165,000
    
    
    
    165,000
    
    
    
    
    
    
    
    
    
    
    
    Rate-locked loan commitments
    
    
    62,784
    
    
    
    62,784
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Swaps with commercial loan customers (Banknorth receives fixed, pays variable).(2)
    
    Offsetting swaps with dealers (Banknorth pays fixed, receives variable),
which offset the interest rate swaps with commercial borrowers.(3)
    
    Swaps on loans (Banknorth pays fixed, receives variable).(4)
    
    Swaps on borrowings (Banknorth pays variable, receives fixed).(5)
    
    Forward contracts for customer accommodations.(6)
    
    Intended to hedge the cash flows on a planned 12 year $150 million subordinated debt issuance. RISK MANAGEMENT
   CREDIT RISK MANAGEMENT
 General
  39




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##### Table of Contents



Table 10  Composition of Loans and Leases
 Successor
    
    
    PredecessorJune 30, 2005
    
    
    December 31, 2004Percent
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    PercentAmount
    
    
    of Loans
    
    
    Nonperforming
    
    
    Amount
    
    
    of Loans
    
    
    NonperformingResidential real estate mortgages
    
    $
    3,259,283
    
    
    
    16
    %
    
    
    0.19
    %
    
    $
    3,081,217
    
    
    
    16
    %
    
    
    0.25
    %Commercial real estate mortgages
    
    
    6,698,632
    
    
    
    34
    %
    
    
    0.45
    %
    
    
    6,249,513
    
    
    
    34
    %
    
    
    0.48
    %Commercial business loan and leases
    
    
    4,272,272
    
    
    
    21
    %
    
    
    0.63
    %
    
    
    3,928,594
    
    
    
    21
    %
    
    
    0.83
    %Consumer loan and leases
    
    
    5,798,475
    
    
    
    29
    %
    
    
    0.12
    %
    
    
    5,333,670
    
    
    
    29
    %
    
    
    0.14
    %$
    20,028,662
    
    
    
    100
    %
    
    
    0.35
    %
    
    $
    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
    
    
    ChangeJune 30,
    
    
    December 31,
    
    
    
    
    
    
    
    
    
    
    June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    Amount
    
    
    Percent
    
    
    2005
    
    
    2004
    
    
    Amount
    
    
    PercentMassachusetts
    
    $
    3,350,150
    
    
    $
    3,085,278
    
    
    $
    264,872
    
    
    
    8.59
    %
    
    $
    1,703,305
    
    
    $
    1,569,911
    
    
    $
    133,394
    
    
    
    8.50
    %Maine
    
    
    1,008,296
    
    
    
    933,677
    
    
    
    74,619
    
    
    
    7.99
    %
    
    
    842,528
    
    
    
    787,822
    
    
    
    54,706
    
    
    
    6.94
    %New Hampshire
    
    
    828,452
    
    
    
    767,590
    
    
    
    60,862
    
    
    
    7.93
    %
    
    
    593,021
    
    
    
    564,604
    
    
    
    28,417
    
    
    
    5.03
    %Vermont
    
    
    669,982
    
    
    
    664,063
    
    
    
    5,919
    
    
    
    0.89
    %
    
    
    456,283
    
    
    
    433,055
    
    
    
    23,228
    
    
    
    5.36
    %Connecticut
    
    
    618,898
    
    
    
    583,907
    
    
    
    34,991
    
    
    
    5.99
    %
    
    
    488,421
    
    
    
    412,601
    
    
    
    75,820
    
    
    
    18.38
    %New York
    
    
    222,854
    
    
    
    214,998
    
    
    
    7,856
    
    
    
    3.65
    %
    
    
    188,714
    
    
    
    160,601
    
    
    
    28,113
    
    
    
    17.50
    %Total
    
    $
    6,698,632
    
    
    $
    6,249,513
    
    
    $
    449,119
    
    
    
    7.19
    %
    
    $
    4,272,272
    
    
    $
    3,928,594
    
    
    $
    343,678
    
    
    
    8.75
    %
 40




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##### Table of Contents



The following table presents our consumer loans and leases by type at June 30, 2005 and December
31, 2004.
 Table 12  Composition of Consumer Loans and Leases
 Successor
    
    PredecessorJune 30,
    
    December 31,2005
    
    2004
    
    Change% of
    
    
    
    
    
    % ofAmount
    
    Total
    
    Amount
    
    Total
    
    Amount
    
    PercentHome equity
    
    $
    3,467,603
    
    
    
    59.80
    %
    
    $
    3,123,525
    
    
    
    58.55
    %
    
    $
    344,078
    
    
    
    11.02
    %Automobile
    
    
    1,867,241
    
    
    
    32.20
    %
    
    
    1,678,817
    
    
    
    31.48
    %
    
    
    188,424
    
    
    
    11.22
    %Mobile home
    
    
    100,798
    
    
    
    1.74
    %
    
    
    111,874
    
    
    
    2.10
    %
    
    
    (11,076
    )
    
    
    (9.90
    %)Vision, dental and orthodontia fee plan
    
    
    30,285
    
    
    
    0.52
    %
    
    
    49,934
    
    
    
    0.94
    %
    
    
    (19,649
    )
    
    
    (39.35
    %)Education
    
    
    133,599
    
    
    
    2.31
    %
    
    
    159,314
    
    
    
    2.99
    %
    
    
    (25,715
    )
    
    
    (16.14
    )%Other
    
    
    198,949
    
    
    
    3.43
    %
    
    
    210,206
    
    
    
    3.94
    %
    
    
    (11,257
    )
    
    
    (5.36
    %)Total
    
    $
    5,798,475
    
    
    
    100.00
    %
    
    $
    5,333,670
    
    
    
    100.00
    %
    
    $
    464,805
    
    
    
    8.71
    %
 Nonperforming Assets
   41




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##### Table of Contents



Table 13  Nonperforming Assets
 Successor
    
    Predecessor2005
    
    2004June 30
    
    March 31
    
    December 31
    
    September 30
    
    June 30Nonaccrual loans and leases:Residential real estate loans
    
    $
    6,165
    
    
    $
    8,614
    
    
    $
    7,846
    
    
    $
    7,274
    
    
    $
    7,870Commercial real estate loans (1)
    
    
    30,353
    
    
    
    23,553
    
    
    
    29,948
    
    
    
    33,249
    
    
    
    27,951Commercial business loans and leases (2)
    
    
    26,776
    
    
    
    24,520
    
    
    
    32,421
    
    
    
    18,573
    
    
    
    23,636Consumer loans and leases
    
    
    6,816
    
    
    
    6,229
    
    
    
    7,344
    
    
    
    6,827
    
    
    
    5,685Total nonaccrual loans and leases
    
    
    70,110
    
    
    
    62,916
    
    
    
    77,559
    
    
    
    65,923
    
    
    
    65,142Other nonperforming assets:Other real estate owned, net of related reserves
    
    
    2,101
    
    
    
    3,925
    
    
    
    1,878
    
    
    
    698
    
    
    
    398Repossessions, net of related reserves
    
    
    1,695
    
    
    
    2,087
    
    
    
    1,666
    
    
    
    1,358
    
    
    
    1,627Total other nonperforming assets
    
    
    3,796
    
    
    
    6,012
    
    
    
    3,544
    
    
    
    2,056
    
    
    
    2,025Total nonperforming assets
    
    $
    73,906
    
    
    $
    68,928
    
    
    $
    81,103
    
    
    $
    67,979
    
    
    $
    67,167Accruing loans and leases 90 days or more overdue
    
    $
    6,122
    
    
    $
    5,041
    
    
    $
    5,254
    
    
    $
    5,018
    
    
    $
    4,142Total nonperforming loans as a percentage of total
loans and leases(3)
    
    
    0.35
    %
    
    
    0.32
    %
    
    
    0.42
    %
    
    
    0.36
    %
    
    
    0.36
    %Total nonperforming assets as a percentage of total assets
    
    
    0.23
    %
    
    
    0.21
    %
    
    
    0.28
    %
    
    
    0.23
    %
    
    
    0.23
    %Total nonperforming assets as a percentage of total loans
and leases (3) and total other nonperforming assets
    
    
    0.37
    %
    
    
    0.35
    %
    
    
    0.44
    %
    
    
    0.37
    %
    
    
    0.37
    %
 
 (1)
    
    In connection with the accounting for the TD transaction, 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
    
    Combined
    
    Predecessor2005 Second
    
    2005 First
    
    2004 Fourth
    
    2004 Third
    
    2004 SecondQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterAllowance for loan and lease losses at beginning of period
    
    $
    228,165
    
    
    $
    243,152
    
    
    $
    242,885
    
    
    $
    247,620
    
    
    $
    233,297Additions due to acquisitions
    
    
    
    
    
    
    14,494
    
    
    
    
    
    
    
    
    
    
    
    13,665Charge-offs:Residential real estate mortgages (1)
    
    
    93
    
    
    
    65
    
    
    
    (4
    )
    
    
    101
    
    
    
    (25
    )Commercial real estate mortgages
    
    
    271
    
    
    
    5,551
    
    
    
    216
    
    
    
    4
    
    
    
    172Commercial business loans and leases
    
    
    1,366
    
    
    
    2,069
    
    
    
    7,531
    
    
    
    4,458
    
    
    
    5,460Consumer loans and leases
    
    
    5,313
    
    
    
    6,738
    
    
    
    6,494
    
    
    
    7,566
    
    
    
    7,434Total loans and leases charged off
    
    
    7,043
    
    
    
    14,423
    
    
    
    14,237
    
    
    
    12,129
    
    
    
    13,041Recoveries:Residential real estate mortgages
    
    
    4
    
    
    
    8
    
    
    
    5
    
    
    
    15
    
    
    
    17Commercial real estate mortgages
    
    
    663
    
    
    
    1,519
    
    
    
    703
    
    
    
    534
    
    
    
    835Commercial business loans and leases
    
    
    1,595
    
    
    
    1,524
    
    
    
    1,937
    
    
    
    1,519
    
    
    
    2,073Consumer loans and leases
    
    
    1,187
    
    
    
    1,257
    
    
    
    1,189
    
    
    
    1,256
    
    
    
    1,274Total loans and leases recovered
    
    
    3,449
    
    
    
    4,308
    
    
    
    3,834
    
    
    
    3,324
    
    
    
    4,199Net charge-offs
    
    
    3,594
    
    
    
    10,115
    
    
    
    10,403
    
    
    
    8,805
    
    
    
    8,842Transfer for off-balance sheet loan commitments (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,600
    )
    
    
    Provision for loan and lease losses
    
    
    3,597
    
    
    
    2,069
    
    
    
    10,670
    
    
    
    10,670
    
    
    
    9,500Specific reserves applied to reduce impaired loan carrying values (3)
    
    
    
    
    
    
    (21,435
    )
    
    
    
    
    
    
    
    
    
    
    Allowance for loan and lease losses at end of period (2)
    
    $
    228,168
    
    
    $
    228,165
    
    
    $
    243,152
    
    
    $
    242,885
    
    
    $
    247,620Total Allowance for Credit Losses:Allowance for loan and lease losses
    
    $
    228,169
    
    
    $
    228,165
    
    
    $
    243,152
    
    
    $
    242,885Liability for unfunded credit commitments (2)
    
    
    6,807
    
    
    
    6,707
    
    
    
    6,600
    
    
    
    6,600Total allowance for credit losses
    
    $
    234,976
    
    
    $
    234,872
    
    
    $
    249,752
    
    
    $
    249,485Ratio of net charge-offs to average loans and
leases outstanding during the period, annualized (4)
    
    
    0.07
    %
    
    
    0.21
    %
    
    
    0.22
    %
    
    
    0.19
    %
    
    
    0.20
    %Ratio of allowance for credit losses to total loans and leases
at end of period (2)
    
    
    1.17
    %
    
    
    1.20
    %
    
    
    1.34
    %
    
    
    1.36
    %
    
    
    1.37
    %Ratio of allowance for credit losses to nonperforming loans
and leases at end of period
    
    
    335
    %
    
    
    373
    %
    
    
    322
    %
    
    
    378
    %
    
    
    380
    %Ratio of net charge-offs (recoveries) as a percent of
average outstanding loans and leases, annualized (4):Residential real estate mortgages
    
    
    0.011
    %
    
    
    0.006
    %
    
    
    (0.001
    %)
    
    
    0.011
    %
    
    
    (0.006
    %)Commercial real estate mortgages
    
    
    (0.024
    %)
    
    
    0.254
    %
    
    
    (0.031
    %)
    
    
    (0.034
    %)
    
    
    (0.045
    %)Commercial business loans and leases
    
    
    (0.022
    %)
    
    
    0.055
    %
    
    
    0.576
    %
    
    
    0.305
    %
    
    
    0.370
    %Consumer loans and leases
    
    
    0.291
    %
    
    
    0.404
    %
    
    
    0.396
    %
    
    
    0.483
    %
    
    
    0.496
    %Total portfolio loans and leases at end of period (4)
    
    $
    20,028,662
    
    
    $
    19,649,943
    
    
    $
    18,592,994
    
    
    $
    18,410,791
    
    
    $
    18,110,312Total nonperforming loans and leases at end of period
    
    
    70,110
    
    
    
    62,916
    
    
    
    77,559
    
    
    
    65,923
    
    
    
    65,142Average loans and leases outstanding
during the period (4)
    
    
    19,803,681
    
    
    
    19,561,761
    
    
    
    18,515,595
    
    
    
    18,263,613
    
    
    
    17,484,997
 
 (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. The liability for unfunded credit commitments previously
included in the allowance for loan and and lease losses was $5.4 million at June 30, 2004.(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.(4)
    
    Excludes residential real estate loans held for sale. Potential Problem Loans
  43




---



##### Table of Contents



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 DecreaseJune 30, 2005
    
    
    (2.40
    %)
    
    
    (1.09
    %)
    
    
    0.84
    %
    
    
    0.86
    %December 31, 2004
    
    
    (2.13
    %)
    
    
    (0.68
    %)
    
    
    0.20
    %
    
    
    (1.51
    %)
  2005 Asset-Liability Management Actions
   Derivative Instruments
 Purpose and Benefits
  46




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##### Table of Contents



Table 16  Derivative Positions
 Asset-Liability Management Positions
 Notional Amount Maturing
    
    
    
    
    
    FairSuccessor - June 30, 2005
    
    2005
    
    2006
    
    2007
    
    2008
    
    Thereafter
    
    Total
    
    ValueTreasury lock agreement (1)
    
    $
    165,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    165,000
    
    
    $
    (2,438
    )Interest rate swap agreements-Pay variable, receive fixed  loans
    
    
    137,500
    
    
    
    275,000
    
    
    
    275,000
    
    
    
    275,000
    
    
    
    1,237,500
    
    
    
    2,200,000
    
    
    
    20,287Forward commitments to sell loans
    
    
    92,725
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,725
    
    
    
    (653
    )
 Customer-related Positions
 Notional Amount Maturing
    
    
    
    
    
    FairSuccessor - June 30, 2005
    
    2005
    
    2006
    
    2007
    
    2008
    
    Thereafter
    
    Total
    
    ValueInterest rate contractsReceive fixed, pay variable
    
    $
    2,000
    
    
    $
    9,500
    
    
    $
    18,974
    
    
    $
    71,922
    
    
    $
    870,251
    
    
    $
    972,647
    
    
    
    ($31,549
    )Pay fixed, receive variable
    
    
    2,000
    
    
    $
    9,500
    
    
    $
    18,974
    
    
    $
    71,922
    
    
    $
    870,251
    
    
    
    972,647
    
    
    
    31,549Foreign
currency rate contractsForward contracts with customers
    
    
    42,246
    
    
    
    12,349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,595
    
    
    
    731Forward contracts with dealers
    
    
    42,372
    
    
    
    12,382
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,754
    
    
    
    (890
    )Foreign exchange options to purchase
    
    
    28,272
    
    
    
    19,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,378
    
    
    
    1,550Foreign exchange options to sell
    
    
    28,272
    
    
    
    19,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,378
    
    
    
    (1,550
    )Rate-locked loan commitments (2)
    
    
    62,784
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,784
    
    
    
    320
 
 (1)
    
    Intended to hedge the cash flows on a planned 12 year $150 million subordinated debt issuance.(2)
    
    No value has been assigned to potential mortgage servicing rights related to rate-locked loan commitments. Designated Hedges
    47




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##### Table of Contents



Table 17  Average Balances of Loans Held for Sale and Related Hedges
 Successor
    
    Predecessor
    
    Combined
    
    PredecessorThree Months Ended
    
    Three Months Ended
    
    Six Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004Residential mortgage loans held for sale
    
    $
    48,559
    
    
    $
    61,471
    
    
    $
    44,368
    
    
    $
    49,664Rate-locked loan commitments
    
    
    56,584
    
    
    
    57,707
    
    
    
    50,019
    
    
    
    53,334Forward sales contracts
    
    
    86,670
    
    
    
    104,622
    
    
    
    78,301
    
    
    
    90,111
 Customer-related Positions
 .
 Foreign Exchange or Market Risk
   48




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##### Table of Contents



LIQUIDITY
  Parent Company
   Banking Subsidiary
      49




---



##### Table of Contents



CAPITAL
     50




---



##### Table of Contents



Table 18  Capital Ratios
 Actual
    
    Capital Requirements
    
    ExcessAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioJune 30,
2005TD Banknorth Inc.  SuccessorTotal capital (to risk-weighted assets)
    
    $
    2,255,003
    
    
    
    10.41
    %
    
    $
    1,732,702
    
    
    
    8.00
    %
    
    $
    522,301
    
    
    
    2.41
    %Tier 1 capital (to risk-weighted assets)
    
    
    1,792,388
    
    
    
    8.28
    %
    
    
    866,351
    
    
    
    4.00
    %
    
    
    926,037
    
    
    
    4.28
    %Tier 1 leverage capital ratio (to average assets)
    
    
    1,792,388
    
    
    
    6.65
    %
    
    
    1,078,565
    
    
    
    4.00
    %
    
    
    713,823
    
    
    
    2.65
    %TD Banknorth, NATotal capital (to risk-weighted assets)
    
    $
    2,337,059
    
    
    
    10.81
    %
    
    
    1,729,672
    
    
    
    8.00
    %
    
    
    607,387
    
    
    
    2.81
    %Tier 1 capital (to risk-weighted assets)
    
    
    1,879,529
    
    
    
    8.69
    %
    
    
    864,836
    
    
    
    4.00
    %
    
    
    1,014,693
    
    
    
    4.69
    %Tier 1 leverage capital ratio (to average assets)
    
    
    1,879,529
    
    
    
    6.99
    %
    
    
    1,076,160
    
    
    
    4.00
    %
    
    
    803,369
    
    
    
    2.99
    %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
    %
    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
    
    
    
    5.74
    %
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,619$
    332,275
    
    
    $
    11,461
    
    
    $
    371,355
 
 (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. 51




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CRITICAL ACCOUNTING POLICIES
  52




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##### Table of Contents







Accounting for Derivatives and Hedging Activities




IMPACT OF NEW ACCOUNTING STANDARDS




FORWARD LOOKING STATEMENTS




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   
 Part II  Other Information
 
   
    Total Number ofShares Purchased as
    
    Maximum Number ofTotal Number
    
    Average
    
    Part of Publicly
    
    Shares that May Yet Beof Shares
    
    Price Paid
    
    Announced Plans or
    
    Purchased Under thePeriod
    
    Purchased
    
    Per Share
    
    Programs
    
    Plans or Programs (1)April 1-30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    May 1-31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1-30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 54




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##### Table of Contents



(a)
    
    An annual meeting of shareholders of TD Banknorth was held on May 24, 2005
(Annual Meeting).(b)
    
    Not applicable.(c)
    
    There were 173,217,825 shares of common stock eligible to be voted at the
Annual Meeting and 156,730,831 shares were represented in the meeting by the holders
thereof, which constituted a quorum. The items voted upon at the Annual Meeting and
vote for each proposal were as follows:
 1.
    
    Election of Class A directors for one year terms.
  FOR
    
    AGAINSTRobert G. Clarke
    
    
    155,683,278
    
    
    
    1,047,553P. Kevin Condron
    
    
    155,692,575
    
    
    
    1,038,256John O. Drew
    
    
    155,636,447
    
    
    
    1,094,384Colleen A. Khoury
    
    
    155,686,213
    
    
    
    1,044,618Dana S. Levenson
    
    
    155,714,330
    
    
    
    1,016,501Steven T. Martin
    
    
    155,696,388
    
    
    
    1,034,443John M. Naughton
    
    
    155,685,180
    
    
    
    1,045,651Malcolm W. Philbrook Jr.
    
    
    146,464,408
    
    
    
    10,266,423Angelo P. Pizzagalli
    
    
    155,679,125
    
    
    
    1,051,706Irving Rogers, III
    
    
    155,670,029
    
    
    
    1,060,802William J. Ryan
    
    
    155.294.312
    
    
    
    1,436,519Curtis M. Scribner
    
    
    155,592,150
    
    
    
    1,138,681Gerry S. Weidema
    
    
    155,721,509
    
    
    
    1,009,322
  2.
    
    Proposal to approve the Amended and Restated 2003 Equity
Incentive Plan
 FOR
    
    AGAINST
    
    ABSTAIN
    
    BROKER NON-VOTES123,186,946
    
    
    17,285,264
    
    
    
    542,856
    
    
    
    15,715,765
 
  
   Exhibit 10.1 Form of Master ISDA Agreement for Interest
Rate Swaps between TD Banknorth N.A. and the Toronto-Dominion BankExhibit 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.
 55




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##### Table of Contents



SIGNATURES
  TD BANKNORTH INC.Date:August 9, 2005
    
    By:
    
    /s/ William J. RyanWilliam J. RyanChairman, President andChief Executive OfficerDate: August 9, 2005
    
    By:
    
    /s/ Stephen J. BoyleStephen J. BoyleExecutive Vice President andChief Financial Officer(principal financial and accounting officer)
 56




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##### Table of Contents



Exhibit 10.1 Form of Master ISDA Agreement for Interest Rate
Swaps between TD Banknorth N.A. and the Toronto - Dominion BankExhibit 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.
 57