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For Immediate Release
January 19, 2005

Contact:
Jeff Nathanson, Sr. V.P., Communications
(207) 761-8517

Web Site: http://www.tdbank.com/

Banknorth Reports Fourth Quarter and 2004 Earnings

PORTLAND, Maine (January 19, 2005) – Banknorth Group Inc. (NYSE: BNK) reported earnings for 2004 of $304.6 million as compared to $350.8 million in 2003. For the fourth quarter ended December 31, 2004, Banknorth's earnings were $20.7 million as compared to $91.6 million for the same quarter a year ago. The declines in earnings for both the quarter and the year were attributable to the Company’s previously-announced deleveraging strategy and certain merger and consolidation costs associated with the Company’s pending transaction with The Toronto-Dominion Bank, or “TD”. Earnings per diluted share for 2004 were $1.75 as compared to $2.15 in 2003. Earnings per diluted share were 12 cents for the quarter ended December 31, 2004 as compared to 55 cents for the quarter ended December 31, 2003.

Exclusive of the after-tax impact of merger and consolidation costs and of the Company’s balance sheet deleveraging, earnings for 2004 were $396.6 million up 11% as compared to $356.0 million for 2003 while earnings for the quarter ended December 31, 2004 were $104.6 million up 13% as compared to $92.4 million for the quarter ended December 31, 2003.

Exclusive of the after-tax impact of merger and consolidation costs and of the Company’s balance sheet deleveraging, earnings per diluted share for 2004 increased by 5% to $2.28 from $2.18 in 2003 while earnings for the quarter ended December 31, 2004 increased to 58 cents as compared to 56 cents for the quarter ended December 31, 2003.

Earnings per diluted share were impacted primarily by two events in the fourth quarter. First, the after-tax impact associated with the Company’s previously-announced deleveraging strategy of $51.6 million represented 29 cents per diluted share for the quarter ended December 31, 2004. Second, merger and consolidation costs of $32.3 million represented an additional 17 cents per diluted share. A majority of the $32.3 million of merger and consolidation costs was due to the payment of certain long-term incentive payments and other expenses related to the acquisition of 51% of Banknorth by TD.

In addition to the above, as a result of the pending transaction with TD, a significant number of Banknorth employees exercised stock options in the fourth quarter of 2004. As a result, the number of weighted average shares outstanding on a diluted basis increased by 3.2 million shares in the fourth quarter ended December 31, 2004, resulting in a decrease in earnings, exclusive of the after-tax impact of merger and consolidation costs and of the Company’s balance sheet deleveraging, of approximately 1 cent per share.

"Our core banking business remains strong," said William J. Ryan, Banknorth Chairman, President and Chief Executive Officer. “We continue to see solid loan and deposit growth and believe that we are well positioned to execute our growth strategy going forward.” Ryan added.

Total average loans and leases in 2004 were $17.7 billion, up 13% from $15.6 billion in 2003, led by increases in commercial business loans and leases of 17%, commercial real estate mortgages of 15% and consumer loans and leases of 14%. Exclusive of acquisitions, total average commercial and consumer loans increased by 11% in 2004.

Total average core deposits consisting of noninterest bearing deposits, retail money market and NOW accounts and regular savings accounts increased to $14.2 billion in 2004, up 16% from $12.3 billion in 2003, led by increases in noninterest bearing deposits of 24% and retail money market and NOW accounts of 15%, which more than offset a decline in retail certificates of deposit of 8%. Exclusive of acquisitions, total average core deposits increased by 9% in 2004.

The Company’s capital ratios improved in 2004. At December 31, 2004, the Company's Tier 1 leverage capital ratio was 7.58% and its total risk based capital ratio was 12.16% as compared to 6.65% and 11.29%, respectively, at December 31, 2003. Tangible equity to tangible assets at December 31, 2004 was 6.45%, up 108 basis points from 5.37% at December 31, 2003. Shareholders' equity at December 31, 2004 was $3.2 billion, up from $2.5 billion at December 31, 2003.

Excluding the net gain/loss on the sale of securities, noninterest income increased 7% in 2004 over 2003 led by increases in wealth management services income of 25%, investment planning services income of 24%, net merchant banking and electronic banking income of 21%, deposit services income of 12% and insurance brokerage commissions of 10%, all of which more than offset a decline in other noninterest income of 21% due primarily to a decline in covered call option income. For the fourth quarter ended December 31, 2004, excluding the net gain/loss on the sale of securities, noninterest income increased 8% over the same quarter a year ago.

Excluding merger and consolidation costs and the prepayment penalties associated with the Company’s balance sheet deleveraging, noninterest expense increased by 8.5% in 2004, the majority of which was associated with the acquisitions of CCBT Financial Companies and Foxborough Savings Bank. The Company’s cash efficiency ratio exclusive of these items and amortization of intangible assets improved slightly to 50.38% in 2004 as compared to 50.94% in 2003.

The Company’s net interest margin during the three months ended December 31, 2004 increased to 3.87%, up 19 basis points from 3.68% for the quarter ended September 30, 2004. The margin was positively impacted by the Company’s balance sheet deleveraging.

For the quarter ended December 31, 2004, total nonperforming assets (“NPAs”) increased to $81 million from $68 million for the quarter ended September 30, 2004 due primarily to an increase in nonperforming assets associated with one large commercial business loan. “Despite an uptick in our NPAs, our overall asset quality remains strong,” said Mr. Ryan. Total net charge-offs for the year ended December 31, 2004 of $36.5 million declined by $.8 million as compared to the year ended December 31, 2003. The Company’s ratio of nonperforming assets to total assets was just 28 basis points at December 31, 2004 up slightly from 24 basis points at December 31, 2003. At December 31, 2004, the Company’s allowance for loan and lease losses to nonperforming loans was 322% and the Company’s allowance as a percentage of total outstanding loans was 1.34%.

In 2004, the Company completed acquisitions in Massachusetts of Foxborough Savings Bank, which had $242 million in assets, and CCBT Financial Companies, which had $1.3 billion in assets. The Company also completed the acquisition of Drake, Swan & Crocker Insurance Agency of Orleans, Massachusetts. The Company anticipates closing the acquisition of BostonFed Bancorp, Inc., with assets of $1.5 billion, on or about January 21, 2005.

On August 26, 2004, Banknorth Group, Inc. and TD announced that they entered into a definitive merger agreement for TD to acquire 51% of the outstanding shares of Banknorth, subject to receipt of required regulatory and shareholder approvals and other customary conditions. A special meeting of Banknorth shareholders to vote on the merger agreement will be held on February 18, 2005.

At December 31, 2004, Banknorth Group Inc., headquartered in Portland, Maine, had assets of $28.7 billion. The Company's banking subsidiary, Banknorth, N.A., operates banking divisions in Connecticut (Banknorth Connecticut); Maine (Peoples Heritage Bank); Massachusetts (Banknorth Massachusetts); New Hampshire (Bank of New Hampshire); New York (Evergreen Bank); and Vermont (Banknorth Vermont). The Company and Banknorth, N.A. also operate subsidiaries and divisions in insurance, money management, merchant services, mortgage banking, government banking and other financial services and offers investment products in association with PrimeVest Financial Services, Inc. The Company's website is at www.banknorth.com.
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Note: This news release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance. These measures typically adjust GAAP performance measures to exclude the effects of charges and expenses related to the consummation of mergers and acquisitions and costs related to the integration of merged entities, as well as the amortization of intangible assets in the case of “cash basis” performance measures. These non-GAAP measures also may exclude other significant gains or losses that are unusual in nature, such as security gains and prepayment penalties. Because these items and their impact on the Company’s performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

This news release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Banknorth. Forward-looking statements are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited, to, changes in general economic conditions, interest rates, deposit flows, loan demand, competition, legislation or regulation and accounting principles, policies or guidelines, as well as other economic, competitive, governmental, regulatory and accounting and technological factors affecting Banknorth’s operations. In addition, acquisitions may result in large one-time charges to income, may not produce revenue enhancements or cost savings at levels or within time frames originally anticipated and may result in unforeseen integration difficulties. Investors are encouraged to access Banknorth’s periodic reports filed with the Securities and Exchange Commission for financial and business information regarding Banknorth, including information which could affect Banknorth’s forward-looking statements.


CONTACT: Banknorth Group, Inc.
Jeffrey Nathanson, 207-761-8517
SOURCE: Banknorth Group, Inc.



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