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Decision  Decision of April 18, 2007

Date: 04/18/2007
Organization: Division of Banks
  • Petitioner: Toronto-Dominion Bank
  • Respondent: Board of Bank Incorporation

Table of Contents

Decision relative to the petition of Toronto-Dominion Bank, Toronto, Ontario, Canada to increase to 100% its ownership of TD Banknorth, Inc., Portland, Maine

Toronto-Dominion Bank ("Toronto-Dominion" or the "Petitioner"), Toronto, Canada, has petitioned the Board of Bank Incorporation ("the Board") pursuant to Massachusetts General Laws chapter 167A, sections 2 and 4 to acquire 100% of the voting shares of TD Banknorth Inc., ("Banknorth") and its subsidiary bank, Banknorth, N.A., Portland, Maine. Toronto-Dominion received approval from the Board on February 28, 2005 to acquire up to 70% of the stock of Banknorth. At this time, Petitioner seeks to increase its ownership interest in Banknorth from approximately 60% to 100%. Pursuant to the Board's February 28, 2005 Decision, Petitioner is required to seek approval of the Board to acquire additional stock of Banknorth in excess of the 70% authorized limit.

As directed by the Board, notice of the application was published and posted and a public hearing was held, thereby affording an opportunity for interested parties to attend or submit comments. Other standard procedures informing the public of this matter before the Board were implemented. The public hearing was held on February 14, 2007. Representatives of Toronto-Dominion offered testimony and responded to questions from the members of the Board. Following the hearing, Petitioners submitted supplemental information dated February 21, 2007 in response to questions asked by members of the Board. No additional comments were received. The public comment period closed on February 16, 2007.

The Petitioner is a $340 billion financial services company headquartered in Toronto, Canada. Toronto-Dominion is the second largest bank in Canada based on assets and employs 51,000 people worldwide. In the United States, in addition to its majority interest in Banknorth, Petitioner owns TD Bank USA, N.A., a national bank headquartered in Jersey City, New Jersey. Toronto-Dominion maintains a single branch in New York, New York. In addition, Petitioner owns approximately 40% of TD Ameritrade, one of the top three on-line brokers. Toronto-Dominion offers a full range of financial products and services to approximately 10 million customers worldwide through four key business lines: Canadian personal and commercial banking, wealth management, wholesale banking, and U.S. personal and commercial banking.

Banknorth is headquartered in Portland, Maine and its banking subsidiary, TD Banknorth, N.A., operates banking divisions in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Vermont. As of September 30, 2006, Banknorth had $39.9 billion in total assets and 587 banking offices located in those states. Banknorth, N.A. also operates subsidiaries and divisions in insurance, money management, merchant services, mortgage banking, government banking and other financial services and investment products in association with PrimeVest Financial Services, Inc.

As an interstate transaction and pursuant to requirements of chapter 167A, the reciprocity laws of Petitioner's home state are subject to the review of the Commissioner of Banks. For purposes of the International Banking Act, 12 U.S.C. § 3101 et seq., the home state of the Petitioner is New York. Similarly, under the Bank Holding Company act, 12 U.S.C. § 1841 et seq., and the test set out therein, New York is also the home state of Toronto-Dominion. The Commissioner of Banks has determined that the banking holding company laws of New York relative to reciprocity have been repealed. Accordingly, the Board will proceed to consider whether other statutory requirements are met by this application.

Prior to approving an application under chapter 167A, the Board must have received notice from the Massachusetts Housing Partnership Fund (the "MHPF") that satisfactory arrangements have been made by the Petitioner consistent with statute and MHPF's various affordable housing loan programs. The Board received notice in a letter dated March 28, 2007 that satisfactory arrangements had been made by Toronto-Dominion with the MHPF.

The Board's review of this transaction focuses on the applicable statutory and administrative criteria which include, among other things, whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage will be promoted. In determining whether the public convenience and advantage are promoted by the proposed transaction, the Board considers, among other things, whether there has been a showing of "net new benefits." Net new benefits are defined as initial capital investments, job creation plans, consumer and business services, commitment to maintain and open branch offices within a bank's delineated local community, and such other matters as the Board may deem necessary or advisable. The Board also considers the record of performance of the banks involved in this transaction under the Community Reinvestment Act ("CRA") and any relevant public testimony or commentary submitted into the record.

On the issue of whether banking competition will be unreasonably affected by the proposed transaction, the Board considers, but does not rely exclusively on, the guidelines used by federal authorities to review bank mergers. In this transaction neither Toronto-Dominion nor its U.S. Bank subsidiary, TD Bank USA, N.A., maintain any bank branches in the Commonwealth. This was also the case at the time of the Board's 2005 decision approving the acquisition of up to 70% of Banknorth by Toronto-Dominion. Petitioner states that since Banknorth is already controlled by Toronto-Dominion, this transaction will have no effect on banking competition in Massachusetts. The Board finds that banking competition will not be unreasonably affected by the proposed transaction.

Petitioner submitted information relating to the public convenience and advantage that will result from the proposed transaction. As a general matter, the Petitioner asserts that the principal way in which public convenience and advantage will be promoted by the proposed transaction is that it will result in a financially stronger Banknorth that will be in a better position to achieve growth and to serve its customers. Petitioner expects some of the growth to come through the addition of more products and services in Massachusetts and throughout Banknorth's footprint. Some of these products include enhanced international capabilities, the development of more sophisticated commercial product sets, further enhancements to commercial swaps and enhanced investment products for its customers. Banknorth customers will continue to be able to conducts business at any of the full service branches located throughout Massachusetts. Petitioner stated in response to questions from the Board that it intends to increase its presence in downtown Boston. Petitioner hopes to expand Banknorth's franchise through organic growth and possible additional acquisitions. Toronto-Dominion states that a 100% ownership structure will provide greater operating flexibility and eliminate the constraints, including some regulatory requirements and other considerations of a public company, as well as certain costs associated with the operation of Petitioner and Banknorth as separate companies with independent stockholder bases. The senior management and workforce of Banknorth will not be significantly impacted as a result of this transaction. In the long-term, Petitioner anticipates that the proposed transaction will result in increased growth and increased employment opportunities for our Massachusetts operations by Banknorth as it strives to increase its banking and financial services presence and growth in the Commonwealth. While this matter was pending, the Board became aware of recent announcements concerning the banking operations of Banknorth.

Based on the foregoing, and on the entire record of this matter, the Board finds that the public convenience and advantage will be promoted by the proposed transaction, and that the criteria for net new benefits has been established.

The Board's review of this transaction includes an assessment of the subsidiary banks' performance under the Community Reinvestment Act ("CRA"). Such assessment for a state-chartered bank includes examination by Division of Bank personnel, as well as an analysis of the legitimate concerns raised by the community and the bank's response to those concerns. For other institutions, the Board reviews the descriptive rating and evaluation by the applicable federal or state bank regulatory agency. Here, the relevant evaluations were submitted as part of Petitioner's application materials. Petitioner, in response to an inquiry from the Board, included additional information in its supplemental filing of February 21, 2007 relative to CRA. Banknorth, N.A. received an overall "Satisfactory" rating from the Office of the Comptroller of the Currency in its most recent CRA Performance Evaluation. The Petitioner noted in its supplemental filing that Banknorth, N.A. received an "Outstanding" CRA rating for the Massachusetts assessment area. TD Bank USA, N.A. has satisfied its CRA obligations by adopting a strategic plan given the nature of its customer base and manner in which it delivers services. TD Bank USA's most recent CRA Performance Evaluation resulted in a "Satisfactory" rating.


Based on the record of this matter and considered in light of all relevant statutory and administrative requirements, the Board concludes that competition among banking institutions in the Commonwealth will not be unreasonably affected and that the transaction will promote the public convenience and advantage. The Board also finds that the banks involved in this transaction have a satisfactory record of performance under CRA. In accordance with these findings and pursuant to the statutory authority cited herein, the Board approves the application and authorizes Toronto-Dominion to acquire up to 100% of the stock of Banknorth.

The approval granted herein is subject to the condition that the transaction to acquire up to 100% of the stock of Banknorth is completed within one year of the date of this Decision.

April 18, 2007

Board of Bank

Steven L. Antonakes
Commissioner of Banks

Alan L. LeBovidge
Commissioner of Revenue

Timothy P. Cahill
Treasurer and Receiver-General

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