TD Banknorth Reports Solid Second Quarter Results

(Second Quarter Earnings Conference Call webcast replay available at www.tdbanknorth.com, Investor Relations.)

· Solid loan growth – Average loans increased 15% in the second quarter of 2005 over the same period in the prior year;
· Asset quality remained strong – the percentage of nonperforming loans to total loans was 0.35% at June 30, 2005;
· Net interest margin increased to 4.12% during the second quarter of 2005 from 3.96% during the first quarter of 2005;
· Capital ratios improved - the ratio of tangible equity to tangible assets increased to 5.53% at June 30, 2005 from 4.92% at March 31, 2005.

PORTLAND, Maine (July 21, 2005) – TD Banknorth Inc. (“TD Banknorth” or the “Company”) (NYSE: BNK) today announced net income of $95.6 million for the second quarter ended June 30, 2005 as compared to net income of $95.8 million for the second quarter ended June 30, 2004. On a per diluted share basis, net income was 55 cents for the second quarter of 2005, on par with 55 cents for the same quarter a year ago.

Earnings for the six months ended June 30, 2005 were $129.7 million as compared to $186.2 million for the same period in 2004. On a per diluted share basis, earnings for the six months ended June 30, 2005 were $0.72 as compared to $1.10 for the same period a year ago.

GAAP earnings were significantly impacted by three events in the second quarter of 2005. First, as a result of the use of purchase accounting to account for the acquisition of a majority interest in TD Banknorth by TD Bank Financial Group, the after-tax impact of the amortization of identifiable intangible assets amounted to $19.8 million or 11 cents per diluted share. Second, the after-tax effects of merger and consolidation costs amounted to $3.5 million or 2 cents per diluted share. Third, the after-tax effect of the change in fair value of derivatives as a result of the application of purchase accounting resulted in a gain of $9.6 million or 5 cents per diluted share.

Excluding the above items, earnings for the quarter ended June 30, 2005 were $109.1 million, up 9% from $99.9 million for the second quarter of 2004. On a per diluted share basis excluding the above items, earnings for the second quarter of 2005 were 63 cents, up 9% from 58 cents for the same quarter a year ago.

Excluding the above items and the charges related to the Company’s deleveraging strategies, earnings for the six months ended June 30, 2005 were $220.9 million, up 15% from $192.5 million for the same period in 2004. On a per diluted share basis excluding the same items, earnings for the six months ended June 30, 2005 were $1.23, up 9% from $1.13 for the same period a year ago.

“It was another solid quarter characterized by strong loan growth, solid asset quality and strong fee income growth,” said William J. Ryan, TD Banknorth Chairman, President and Chief Executive Officer. “We are well positioned to execute our growth strategy going forward.”

Average loans and leases increased by 15% for the quarter ended June 30, 2005 compared to the same quarter a year ago, including increases of 23% for average residential real estate mortgages (largely due to the acquisition of BostonFed Bancorp), 13% for average commercial real estate mortgages, 13% for average commercial business loans and leases and 14% for average consumer loans and leases. Excluding the impact of acquisitions, average loans and leases for commercial real estate, commercial and consumer increased 10% for the quarter ended June 30, 2005 as compared to the same period a year ago.

Securities available for sale at June 30, 2005 declined to $4.1 billion, down 46% from June 30, 2004, due largely to the sale of securities associated with the Company’s balance sheet deleveraging strategies, and down 11% from the quarter ended March 31, 2005.

Average deposits increased by 6% for the quarter ended June 30, 2005 as compared to the quarter ended June 30, 2004. During the three months ended June 30, 2005 average noninterest bearing deposits increased by 12%, average retail money market and NOW accounts increased by 5% and average regular savings accounts increased by 3% as compared to the three months ended June 30, 2004. Excluding acquisitions, average demand deposits increased 6% and average core deposits (noninterest bearing deposits, retail money market and NOW accounts and regular savings accounts) for the quarter ended June 30, 2005 were consistent with the level in the same period for the prior year.

Net interest income was $252.6 million for the second quarter of 2005, a 10% increase as compared to $228.6 million of net interest income for the second quarter of 2004. The Company’s net interest margin for the quarter ended June 30, 2005 was 4.12% as compared to 3.66% for the quarter ended June 30, 2004 and 3.96% for the quarter ended March 31, 2005.

The Company’s provision for loan and lease losses amounted to $3.6 million for the quarter ended June 30, 2005, as compared to $9.5 million for the quarter ended June 30, 2004 and $2.1 million for the quarter ended March 31, 2005. Asset quality remained strong during the second quarter. As a percentage of total loans, nonperforming loans amounted to 0.35% at June 30, 2005, as compared to 0.36% at June 30, 2004 and 0.32% at March 31, 2005. Total net chargeoffs for the quarter ended June 30, 2005 declined to $3.6 million down from $8.8 million for the same period a year ago and down from $10.1 million for the quarter ended March 31, 2005.

Noninterest income experienced strong growth in the second quarter of 2005 as compared to the second quarter of 2004 led by increases in noninterest income from deposit services of 16%, merchant and electronic banking income of 13%, and insurance brokerage commissions of 11%. Other income increased $4.6 million including a $2 million increase in mortgage banking income.

Noninterest expense increased $57 million in the second quarter of 2005 versus the same period a year ago, largely due to a $30 million increase in the amortization of identifiable intangible assets.

The Company and its banking subsidiary continue to qualify as “well capitalized” institutions under applicable laws and regulations. At June 30, 2005, the Company’s ratio of tangible equity to tangible assets improved to 5.53% from 4.92% at March 31, 2005, its tier 1 leverage capital increased to 6.64% from 6.29% at March 31, 2005 and its total risk-based capital ratio increased to 10.43% from 10.13% at March 31, 2005.

As detailed in the accompanying financial statements, the Company’s cash return on average tangible assets for the period ended June 30, 2005 was 1.64% as compared to 1.49% for the same period a year ago and the Company’s cash return on average tangible equity for the second quarter of 2005 was 31.32% as compared to 26.39% for the same period a year ago. For the six months ended June 30, 2005, the Company’s cash return on average tangible assets was 1.63% as compared to 1.48% for the same period in 2004 while the Company’s cash return on average tangible equity for the six months ended June 30, 2005 was 29.13% as compared to 26.26% for the same period a year ago.

At June 30, 2005, the Company’s tangible book value per share was $8.45, up from $7.63 at March 31, 2005. Tangible equity was $1.5 billion at June 30, 2005 up from $1.4 billion at March 31, 2005.

On July 12, 2005, the Company announced it had entered into a definitive agreement to acquire Hudson United Bancorp (NYSE: HU) for approximately $1.9 billion in stock and cash. The acquisition, subject to both Hudson United and TD Banknorth shareholder approval, as well as customary regulatory approvals, is anticipated to close in the first quarter of 2006.

About TD Banknorth Inc.

TD Banknorth Inc. is a leading banking and financial services company headquartered in Portland, Maine and a majority-owned subsidiary of TD Bank Financial Group. At June 30, 2005, TD Banknorth had $31.8 billion of total consolidated assets and provided financial services to over 1.3 million households in the Northeast. TD Banknorth's banking subsidiary, TD Banknorth, N.A., operates banking divisions in Maine, New Hampshire, Massachusetts, Connecticut, Vermont and upstate New York. TD Banknorth and TD Banknorth, N.A. also operate subsidiaries and divisions in insurance, wealth management, merchant services, mortgage banking, government banking and other financial services and offer investment products in association with PrimeVest Financial Services, Inc. TD Banknorth common stock trades on the New York Stock Exchange under the symbol "BNK". For more information, visit www.tdbanknorth.com.

Notes: On May 16, 2005, the Company announced that it had adopted purchase accounting to account for TD Bank Financial Group’s acquisition of a majority interest in the Company on March 1, 2005. To most accurately reflect the application of purchase accounting, the accompanying financial statements use the term “predecessor” to refer to the results of Banknorth Group, Inc., the predecessor entity to TD Banknorth Inc., at the dates and for the periods ending on or prior to February 28, 2005, which are based on historical accounting, and the term “successor” to refer to the results of TD Banknorth Inc. at the dates and for the periods beginning on or after March 1, 2005, which are based on the application of purchase accounting. To assist in the comparability of the Company’s financial results and to make it easier to discuss and understand these results, the financial information discussed herein and presented in the accompanying financial statements combine the “predecessor period” January 1, 2005 to February 28, 2005 with the applicable “successor period” thereafter. Due to the application of purchase accounting as of March 1, 2005, results for the combined periods may not be comparable to the results for the respective predecessor periods. For a detailed discussion of the impact of purchase accounting on the Company’s balance sheet and income statement, reference is made to the Company’s first quarter 2005 earnings release dated May 16, 2005.

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 incurred in connection with deleveraging strategies. 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 TD Banknorth. Words such as “expect”, “feel”, “believe”, “will”, “may”, “anticipate”, “plan”, “estimate”, “intend”, “should” and similar expressions are intended to identify forward-looking statements. 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 TD 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 TD Banknorth’s periodic reports filed with the Securities and Exchange Commission for financial and business information regarding TD Banknorth, including information which could affect TD Banknorth’s forward-looking statements. TD Banknorth does not undertake any obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
This news release may be deemed to be solicitation material in respect of the proposed merger of TD Banknorth and Hudson United. In connection with the proposed transaction, a registration statement on Form S-4 will be filed with the SEC. Shareholders of TD Banknorth and shareholders of Hudson United are encouraged to read the registration statement and any other relevant documents filed with the SEC, including the joint proxy statement/prospectus that will be part of the registration statement, because they will contain important information about the proposed merger. The final joint proxy statement/prospectus will be mailed to shareholders of TD Banknorth and shareholders of Hudson United. Investors and security holders will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov, from TD Banknorth, Two Portland Square, P.O. Box 9540, Portland, Maine 04112-9540, Attention: Investor Relations, or from Hudson United, 1000 MacArthur Boulevard, Mahwah, New Jersey 07430, Attention: Investor Relations.
TD Banknorth, Hudson United and their respective directors and executive officers and other members of management and employees may be deemed to participate in the solicitation of proxies in respect of the proposed transaction. Information regarding TD Banknorth’s directors and executive officers is available in TD Banknorth’s proxy statement for its 2005 annual meeting of shareholders, which was filed with the SEC on April 20, 2005, and information regarding Hudson United’s directors and executive officers is available in Hudson United’s proxy statement for its 2005 annual meeting of shareholders, which was filed with the SEC on March 23, 2005. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.

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