Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — Investor Day (August 2005)
75 slides from Toronto-dominion Bank's investor day presentation, Aug 4, 2005
Slide 1: Building on Strength
7D Banknorth Inc. Building on Strength TD Banknorth Bill Ryan Analyst Conference Chairman, President and CEO August 3, 2005 Peter Verrill Chief Operating Officer
Slide 2: Note on Forward-Looking Information
Note on Forward-Looking Information This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of TD Banknorth. Words such as “expect”, “feel”, “believe”, “will”, “rnay", “anticipate”, “plan”, “estimate”, “intend”, “shoul
Slide 3: Today's Agenda
Today's Agenda Overview of TD Banknorth Hudson United Commercial Lending/Risk Management Questions and Answers Bill Ryan Peter Verrill Steve Boyle Wendy Suehrstedt John Fridlington Ed Schreiber
Slide 4: Headquartered in Portland, Maine
GI Headquartered in Portland, Maine CG Approximately 55% owned by TD Bank Financial Group (TD) 6 over 7,800 employees ©) $32 billion in assets as of 6/30/05 6 More than 1.3 million households throughout New England and upstate New York Gi Diversified loan and deposit base with emphasis on retail and
Slide 5: TD Banknorth Vision — Simple & Clear
TD Banknorth Vision — Simple & Clear Banknorth Inc. Our vision is to be the premier community financial services company in the Northeast ...
Slide 6: Solid Financial Services Franchise in New England and New York
Solid Financial Services Franchise in New England and New York D Banknorth Inc. Nearly 400 branches and 550 ATMs 30 Wealth Management offices 71 Bancnorth Investment Group offices* oO o oO O 27 Banknorth Insurance Group offices *Based on number of reps. housed in the branches as well as in centraliz
Slide 7: Significant Expansion in CT and Natural Extension into Mid-Atlantic
Significant Expansion in CT and Natural Extension into the Mid-Atlantic Region Bankmortts ine:
Slide 8: Community Banking Model
Community Banking Model Bank presidents in each state responsible for all major decisions affecting their customers and communities; Local decision-making authority and loan authority; React and make decisions quickly; Superior local service; Target both the middle/small business commercial market a
Slide 9: How We're Organized
How We're Organized Bill Ryan Peter Veril Cara Mitel! David Of Mickey Greene | WendySuehisteat | John Fridington Finance Human Resources Bank Presidents Insurance Fetal Banking Commercial Lending Fisk Management Technology Operations eCommerce Investor Relations Strategic Planing Facies Legal ‘Smal
Slide 10: Consistently Strong Performance
Consistently Strong Performance 10 consecutive years of operating EPS growth; Strong profitability » 29% cash ROE as of 6/30/05 » 51% cash efficiency ratio as of 6/30/05 Consistent, strong core loan and deposit growth; Low-risk fee income growth with emphasis on loan and deposit fees, investment and
Slide 11: What Differentiates TD Banknorth
What Differentiates TD Bankn: Banknorth Inc. Q Strong management team with a proven track record. Q We do what we say we'll do. Q Well-positioned for both organic and acquisition growth in higher growth markets in the Northeast. Q Access to capital to implement growth strategy as part of TD. Q Super
Slide 12: Do What We Say We'll Do
Do What We Say Weil Do... Banknorth Inc. QO On March 1, 2005, sold 51% of the company to TD; Q Asa result of TD Banknorth buybacks completed in March of 2005, TD now owns approximately 55% of the company; QO Strategic rationale of the sale to TD was to allow us to continue to grow in New England and
Slide 13: Key Performance Measures 2000-2004
[D) Banknorth inc. Key Performance Measures 2000 -2004 Peter Verrill Chief Operating Officer 13
Slide 14: Loans & Deposit Growth
g Loans & Deposit Growth D Banknorth Inc. Loans Deposits $ Billions $ Billions $18.6 $19.2 $17.9 $127 $108 $142 $12.4 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Loan and Lease Yields Interest-Bearing Deposit Rates 8.57% 7.97% 6.69% 5.65% 5.29% 4.13% 3.51% 2.05% 1.34% 1.08% 14
Slide 15: Commercial Loans by State
Commercial Loans by State 2002 - 2004 [Dp Banknorth inc. er) 5 ; Ss 40 = 30 5 < 20 E | Ean 0 a las mA | ME | NH | VT | CT | NY a2004| 46 | 17 | 13 | 11 | 10 | 4 m2003| 42 | 18 | 14 | 12 | 10 | 4 ci2002| 41 | 19 | 16 | 13 | 7 | 5 State Source: TD Banknorth 2004 10-K, 15
Slide 16: Loans by Type
Loans by Type 2002 - 2004 Banknorth Inc. @ Fd 40 8 4 2 30 5 a 204 2 5 S104 5 2 0 a Commercial RE] Consumer ] Commercial | Residential RE 2 Mortgages | Loansand |Business Loans| Mortgages 02004 34 29 21 7 0 2003 33 29 20 18 02002 32 28 20 20 Source: TD Banknorth 2004 10-K, 16
Slide 17: Deposits by Type
Deposits by Type 2002 - 2004 Banknorth Inc. 50 £ 40 + 3 2 30 + J | a Bz 24 $ 2 eo oa a4 Nowandmoney | Norvinterest | pecuiersavings | Cetficates of market accounts | bearing deposits @ ¢ deposits and 2004 41 2 14 2 @ 2003 38 19 14 29 02002 38 18 12 33 Source: TD Banknorth 2004 10-K, 7
Slide 18: Other Income Growth and Improved Efficiency
Other Income Growth and Improved Efficiency TD) Banknorth ine. Noninterest income Cash efficiency ratio (excluding securities gainsi(losses) $ Millions 528% $347.5 52.5% $324.7 52.2% $267.2 $239.2 50.9% 50.4% 2000 2001» 2002, 2008S 2004 2000-2001 200220032004 Cash Efficiency Ratio excludes securitie
Slide 19: Diversified Noninterest Income
Diversified Noninterest Income Noninterest Income by Type as of 12/91/04 6% 2% 4% 7% 31% 8% 12% 15% 15% [Deport senices Wi Nerchant and etedronio banking income, nel ID insurance brokerage commissions EWweath management services I Lan ee inoome Banke cvined ie ireurance i inves ment panning sewices
Slide 20: Solid Earnings Growth
Solid Earnings Growth [Dp Banknorth inc. Cash Operating Earnings* $ Millions $402 $362 $312 $252 $267 2000 2001 2002 2003 2004 * Earnings excluding merger and consolidation costs, deleveraging losses and the amortization of identifiable intangible assets. 20
Slide 21: EPS Growth Per Diluted Share
EPS Growth Per Diluted Share [Dp Banknorth inc. I cash Operating Earnings* I aap $221 §231 $209 $2.15 $1.88 $1.99 $174 $1.68 5175 $132 2000 2001 2002 2003 2004 * Earnings excluding merger and consolidation costs, deleveraging losses and the amortization of identifiable intangible assets. 21
Slide 22: Asset Quality
ig Asset Quality NPA’s as a % of Total Assets 37% 039% 0.29% 2000-2001» 2002, 2008S 2004 NPA‘s as a % of Total Assets have remained relatively stable while Total Assets have increased by 5700 from 2000-2004, 0.28% 0.24% [Dp Banknorth inc. Net charge-offs as a % of Avg. Loans 0.33% 0.29% 0. 24% O: 24
Slide 23: History of Successful Acquisitions
History of Successful Acquisitions Q Acquisitions are a core competency >» TD Banknorth utilizes a disciplined and conservative acquisition model » Acquisitions must be accretive in the first full year Q All acquisitions have met or exceeded financial targets Q Completed 25 acquisitions since 1987 »
Slide 24: Note on Non-GAAP Financial Information
Note on Non-GAAP Financial Information Banknorth Inc. This presentation cantains financial information determined by methods other than in accardance with accaunting principles generally accepted in the United States of America (SGAAP”), The Cornpany’s management uses these non-GAAP measures in its
Slide 25: Additional Information about the Transaction
Additional Information about the Transaction [Dp Banknorth inc. This presentation may be deerned to be solicitation material in respect of the proposed merger of TD Banknorth and Hudson united. In cannection with the proposed transaction, @ registration statement an Form S-4 will be filed with the S
Slide 26: Reconciliation Table — Non-GAAP Financial Information
TD Banknorth Inc. and Subsidiaries Reconciliation Table — Non-GAAP Financial Information 26
Slide 27: Hudson United...A Platform for Growth
BD Banknorth Inc. Building on Strength Hudson United...A Steve Boyle Platform for Growth Chief Financial Officer August 3, 2005 Wendy Suehrstedt EVP and Chief Retail Banking Officer
Slide 28: Note on Forward-Looking Information
Note on Forward-Looking Information This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of TD Banknorth. Words such as “expect”, “feel”, “believe”, “will”, “rnay", “anticipate”, “plan”, “estimate”, “intend”, “shoul
Slide 29: Hudson United... More Than Just the Map!
Hudson United... More Than Just the Map! Banknorth Inc. But the map is pretty good!
Slide 30: What's Been Covered to Date
What's Been Covered to Date Banknorth Inc. Q Great Markets > Wealth > Growth >» Diversity QO) Break-out of New England creates more options » Organic growth - existing locations >» De Novo fill-in » Acquisitions - small, large, north, south, east or west
Slide 31: Additional Detail on the Hudson Transaction
Additional Detail on the Banknorth Inc. Hudson Transaction - = QO Solidly commercial franchise >» Nominal mortgages » Lower than average CDs QO Correct entry into a competitive market; O Cost saves achievable; O) Franchise investment plan more than sufficient; O Significant revenue enhancements exis
Slide 32: C&I Loans Comprise 45% of Hudson United's Total Loan Portfolio
in mitions) cad Commercial Real Estate Consumer Residential Real Estate Credit Cards Total Loans Less: Loan Loss Reserves Net Loans Yield C&I Loans Comprise 45% of Hudson United’s Total Loan Portfolio TD Banknorth Loans $4,095, 6,559 5,607 3,389 $19,650 (228) $19,422 5.60 % % 21% 33 29 100 % Source:
Slide 33: Hudson United Has a Commercial Bank Deposit Base
Hudson United Has a Commercial Bank Deposit Base That is Similar to TD Banknorth’s Banknorth Inc. in mitions) TD Banknorth Hudson Ut Combined Deposits % Deposits % Deposits % Non-Interest Bearing $4,216 21% $1,320 21% $5,535 21% NOW, Savings & MMDA 10,871 55 3,220 st 14,092 54 Non-Brokered Time Depa
Slide 34: Hudson United Peer Analysis - Deposit Base
Theifts Banks Hudson United Peer Analysis - Deposit Base More Like a Commercial Bank Banknorth Inc. Noninterest Bearing Deposits/ Total Deposits ! Idependence Community 15.5 % New York Community 65 Astoria 2.0 Sovereign 14.6 Webster Finandal 13.0 North Fork Bancorp 20.3 % MacT Bank Corporation 23.3
Slide 35: Correct Entry into Competitive Markets
Correct Entry into Competitive Markets O Fixed costs already positioned O) Capacity to handle substantially more volume Q Modest rate-sensitive base to disintermediate QO) Generally good locations and facilities (excepting deferred maintenance) > BNK retail team visited 95% of Hudson locations durin
Slide 36: Similar Experience in MA and CT
Siminas) Similar Experience in MA and CT BNK Expansion in MA 2003 2002 2001 $5,664 $4,962 $3,088 320% 324% 2.28% 6 6 6 BNK Expansion in CT 2003 2002 2001 $2,542 $27 20 363% 04% OB % 6 34 % 10
Slide 37: Hudson United Average Branch Size
Hudson United Average Branch Size Market Hudson United Market Average ( inmilions) ( inmilions) Connecticut $38.5 $61.9 Northern New Jersey (1) $30.7 $69.0 Hudson River Valley (2) $40.4 $62.0 Philadelphia MSA $22.7 $54.7 Average deposits per TD Banknorth branch are $51 mil 4.
Slide 38: Cost Saves Realistic - In Line With Other Recent Deals
Cost Saves Realistic —- In Line With Other knorth Inc. Recently Announced Deals — we Announce InMki Deal. = Announced Date Acquirer / Target Ou-of Mit Value GMM) Cost Saves 71672005 Zions Bancomp/ Amegy OutoMarket $1,702 18% 611322005 BNP Paribas Group! Commercial Federal Outof Market 1,360 al 37200
Slide 39: Cost Saves Consistent with Our Experience
Cost Saves Consistent with Banknorth Inc. Our Experience a es ‘aenn . Pal fue!” Aawing, Tepahsie/ Acwine Gmfevag Bite Pror Aci tins Yehe “Rye RGR ety” “Combined ey Bat LAWNS Babe hong he /Boxbewh fag Ba BB Sse 0 fey Ba S102 Baw skGog fe amenean acca ig erat) ton uae Ba Shoda Repke Eshp/Pumiy Bory ws
Slide 40: Cost Saves Achievable
Cost Saves Achievable Banknorth Inc. O our efficiency ratio is 50.5%; Hudson United’s is 55.7% O Pro forma efficiency ratio is 49.4% including the retail franchise investments O Approximately 45% of Hudson United’s core non-interest expense are in support and overhead areas QO Assuming 50% cost save
Slide 41: Revenue Enhancements - Retail
Revenue Enhancements - Retail Banknorth Inc. General - Add focus, stability, products and marketing/brand awareness to Hudson United Specifically: O Introduce free checking > Currently 81% of BNK’s new checking accounts and 79% of BNK’s checking base » Hudson United Checking and Banking fees are cur
Slide 42: Revenue Enhancements - Commercial
Revenue Enhancements - Commercial Banknorth Inc. General - Build on solid base by adding credit support and additional lenders Specifically: O Introduce swap program - currently 37bps of commercial loans at BNK O Add lenders to improve loan growth - Hudson United 8% vs. BNK’s 10% QO combined balance
Slide 43: Revenue Enhancements - Other
Revenue Enhancements - other Banknorth Inc. BNK is significantly larger in insurance, wealth management, and investment planning (8% of BNK’s revenue vs. 1% for Hudson United) BNK has capital to back growth of Hudson Untied niche businesses: - Flatiron - insurance premium finance - Shoppers Charge -
Slide 44: Buyback Update
Buyback Update Q Excess capital is available for share buybacks; QO Management believes that opportunities will exist for TD Banknorth to repurchase shares; QO However, the SEC’s Reg M prohibits repurchases during specified periods following the announcement of a stock acquisition; O In addition, th
Slide 45: Banknorth Inc.
Banknorth Inc. QO Comfortable with assumptions in the model Q Confident that this is the right entry point into NY metro market Q Enhances our strategic options QO When executed should provide meaningful opportunities for accelerated organic growth 19
Slide 46: Hudson United: It's All About Execution!
Hudson United Banknorth Inc. It’s All About Execution! Wendy Suehrstedt EVP and Chief Retail Banking Officer 20
Slide 47: Successful Conversion
Successful Conversion Banknorth Inc. Gi Long history of successful conversion efforts 6 Several previous successful conversions of financial institutions of the same or greater proportional magnitude »® Bank of New Hampshire 35% of PHFG deposit base » CFX 40% of PHFG deposit base » Banknorth 44% of
Slide 48: Build a Strong Team
Build a Strong Team Banknorth Inc. G Retain strong personnel TD Banknorth Hudson United ] Benchmark 2004 2004 2000* Total Turnover 20.2% 36.6% 24.9% Total Exempt 11.8% 24.4% 14.7% Tatal nonexempt 24.9% 45.2% 32.4% Total Retail Turnover 27.1% 45.3% Total Retail Exempt 11.5% 29.0% Total Retail Nonexer
Slide 49: Build a Strong Team - Ensure appropriate staffing
Build a Strong Team Banknorth Inc. 6 Ensure appropriate staffing is in place to grow TD Banknorth Hudson United Deposits per Retail Employee $6.2MM $4.9MM >» Estimated additional incentive spend: >» Estimated base pay adjustment spend: $5,000,000-$8,000,000 >» Estimated additional sales staff spend:
Slide 50: Build Strong Brand and Name Awareness
Build Strong Brand and Name Awareness © TD Banknorth successful track record 2002 2004 ] % Change Massachusetts Name Recognition 52.5% 76.3% 45% Connecticut Name Recognition 18.4% 46.8% 154% Total MA/CT Marketing Spend —_| $3,200,000] $4,050,000] 26.5% 24
Slide 51: Build Strong Brand and Name Awareness - Marketing Expense
Mar Bank TD Banknorth Commerce Bancorp Mercantile Bankshares Fulton Financial valley National Webster Financial Chittenden Susquehanna Provident Bankshares First Commonwealth Financial Average Hudson United Bancorp TD Banknorth 1 Most vacant Fiscal yaar reported. Build Strong Brand and Name Awarenes
Slide 52: Build Strong Brand and Name Awareness - Marketing scenarios
Build Strong Brand and Name Awareness G Incremental marketing expense increase scenarios: 13.3 bp of 12/04 deposits $8,275,000 13.3 bp on $10.2B deposit base $13,500,000 ($50MM average deposit base per branch, 204 branches) Incremental increase over 2004 marketing spend: $1,400,000-$6,600,000 Increm
Slide 53: Build on Commercial Success
Build on Commercial Success Banknorth Inc. 0 Core Hudson United Commercial Business > Strong management > Solid results Commercial loan outstanding balance growth 2002 5.4% 2003 16.3% 2004 5.5% 7
Slide 54: Build on Commercial Success - Track Record
Build on Commercial Success Banknorth Inc. (TD Banknorth proven track record of consistent commercial success ‘Cammercial loan outstanding ‘Cammercial loan eutstanding balance growth excluding balance grawth including acquisition ‘acquisition impact impact 2002 11.5% 18.4% 2008 10.4% 13.6% 2004 10.3
Slide 55: Build on Specialty Business Success
Build on Specialty Business Success 0 Private Label Credit Card > Strong management > Strong results Gi Insurance Premium Financing > Strong management > Strong results 29
Slide 56: Enhance Retail Sales Culture
Enhance Retail Sales Culture Banknorth Inc. Gi Increase sales training TD Banknorth | Hudson United 2004 2004 Total training spend perRetail employee | $1,350 $110 Additional $300,000 spend would even the training investment per Retail employee CG Establish sales goals Gi Establish supporting incent
Slide 57: Enhance Retail Sales Culture - Track Record
Enhance Retail Sales Culture Banknorth Inc. OTD Banknorth successful track record Connecticut Same Store Sales Growth Qtr 3&4 2004 vs. Qtr 3&4 2003, DDA Account Openings: 12.7% DDA Deposit Growth 59.5% Cansumer Loan Originations 10.0% ‘Small Business Lean Originations 50.9% 31
Slide 58: Underscore Strong Customer Service
Underscore Strong Customer Service Banknorth Inc. 1 TD Banknorth outperforms the competition as a whole on all touch points Touch Point Satisfaction (%8-10) - Customers v. All Non.customers 100% 92% ag, 21% 90% 21% gq, 90% 99% 87% 88% 80% 20% g7q% 89% 83% 849% pugs 87° 86% 5905 80% one 40%-| gO 35%
Slide 59: Underscore Strong Customer Service - Problem Resolution
Underscore Strong Customer Service © TD Banknorth’s Problem Resolution efforts outperform those of our competitors’ Problem Resolution Feature High Scores (%8-10) - Customers v. Non-customers * *” 80% BOB 56% . a ae 43% 18% 12% 10% 19 3% =f Fn Stat Convenient. egraed. Kroltgeable Spe Ease Response.
Slide 60: Ensure Strong Regulatory Compliance
Ensure Strong Regulatory Compliance (TD Banknorth successful track record > TD Banknorth feels it is in satisfactory compliance with respect to Bank Secrecy ACT/Anti-Money Laundering as well as all other regulations OTD Banknorth transitionary compliance oversight > Conduct testing for compliance wi
Slide 61: Retail Investment
Retail Investment Banknorth Inc. G Early thoughts on likely incremental investments to ensure success: Annual Incremental Expense Marketing & Promotions $4,000,000-$8,000,000 Base Pay Adjustments/Incentives/Staff Adds $5,000,000-$8, 000,000 Bricks & Mortar Improvements $1,000,000-$3,000,000 TOTAL $1
Slide 62: Hudson United - Summary
Hudson United - Summary O Hudson represents a significant market expansion opportunity; QTD Banknorth can improve and grow the Hudson franchise; Q Hudson represents a low-risk transaction; and Q Asound investment. 36
Slide 63: Additional Information about the Transaction
Additional Information about the Transaction [Dp Banknorth inc. This presentation may be deerned to be solicitation material in respect of the proposed merger of TD Banknorth and Hudson united. In cannection with the proposed transaction, @ registration statement an Form S-4 will be filed with the S
Slide 64: Commercial and Consumer Lending & Risk Management
BD Banknorth Inc. Building on Strength Commercial and John Fridlington Consumer Lending & Chief Lending Officer Risk Management Edward Schreiber August 3, 2005 Chief Risk Officer
Slide 65: Note on Forward-Looking Information
Note on Forward-Looking Information This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of TD Banknorth. Words such as “expect”, “feel”, “believe”, “will”, “rnay", “anticipate”, “plan”, “estimate”, “intend”, “shoul
Slide 66: Lending Overview
Lending Overview Q Nominal turnover in lending staff Q Senior lending positions have extensive experience Q Solid growth of the commercial portfolio Q Sustained growth of the consumer portfolio
Slide 67: Portfolio Information
Portfolio Information Banknorth Inc. Q Average size loan relationship is approximately $850 thousand O) Number of borrowers: 17,767 Q Geographic distribution >» MA and CT markets represent 56% of outstandings O Asset based lending & corporate lending
Slide 68: Loan Approval Process
Loan Approval Process Non - Committee Approval QLess than $2.5 million - Signature Authority Q $2.5 million - $7.5 million - Local Management Loan Committee O $7.5 million - $15 million - Senior Credit Committee TD Banknorth Board Risk Committee Approval Limits O No approval needed, just notificatio
Slide 69: Loan Approval Process - continued
Loan Approval Process - continued TD Banknorth’s House Hold Limi its QO $40 million for 1,2,3 rated credits QO) $30 million for 4 rated credits QO) $25 million for 5 rated credits QO) $20 million for 6 rated credits O overall aggregate hold limit of $60 million
Slide 70: Top Relationships
Top Relationships Q Twenty largest relationships > Asset range from $54 million to $24 million QO Nonperforming > Top 15 range from $4.4 million to $719 thousand Q Top industries >» Services » Manufacturing - durable and non-durable > Investment real estate: Office buildings and apartments » Constru
Slide 71: Risk Management Organization at TD Banknorth
Risk Management Organization at TD Banknorth Departments included in Risk Management are; O Loan Review O) audit QO compliance O Credit Administration O Appraisal O) Retail Credit Risk O Portfolio Management & MIS Q Treasury and Operational Risk
Slide 72: Risk Management Overview (Credit)
Risk Management Overview (Credit) O Seasoned Senior Credit Administration Staff O) Independent of the Lending Staff O Staff is positioned throughout the footprint Q Strong working relationship with the lending staff
Slide 73: Portfolio Concentrations
Portfolio Concentrations Banknorth Inc. Ocal = 42% of outstandings & unfunded commitments QO CRE Owner = 22% of outstandings & unfunded commitments Q CRE Investment = 36% of outstandings & unfunded commitments To assist in the management of concentrations, TD Banknorth has developed: O“White Paper P
Slide 74: Asset Quality at TD Banknorth
Asset Quality at TD Banknorth Q Problem loan levels continue to remain stable Q watch Credit loan levels continue to show minor changes over the last year O Rate of downgrades within pass grades remains stable 4.
Slide 75: Searchable text section of graphics shown above
Searchable text section of graphics shown above [L OGO] [GRAPHIC] Building on Strength [GRAPHIC] TD Banknorth Bill Ryan Analyst Conference Chairman, President and CEO August 3, 2005 Peter Verrill Chief Operating Officer Not e on Forward-Looking Information [LOGO] This presentation contains certain f