TD Banknorth Reports Fourth Quarter and 2006 Results and Announces Quarterly Dividend

(Fourth Quarter and 2006 Earnings Conference Call at 10:30 a.m. Eastern Time today, January 24, 2007. Dial-in number for USA and Canada is 866-700-5192. International dial-in number is 617-213-8833. Passcode for both numbers is 37364473. Replay number for USA and Canada is 888-286-8010. International replay dial-in number is 617-801-6888. Replay passcode for both is 30545902. Live webcast and webcast replay available at www.tdbanknorth.com, Investor Relations.)

Highlights for the fourth quarter of 2006 include:
• Adjusted earnings1 increased to $117.8 million in the fourth quarter of 2006 up from $108.1 million in the fourth quarter of 2005, reflecting in part the acquisition of Hudson United Bancorp on January 31, 2006.
• The Company’s capital ratios improved in the fourth quarter of 2006 as compared to the third quarter of 2006 with the Company’s total risk-based capital ratio increasing to 11.62% at December 31, 2006 as compared to 11.44% at September 30, 2006.
• The Board of Directors declared a dividend of 22 cents per share payable on February 15, 2007 to shareholders of record as of the close of business on February 5, 2007.

Fourth Quarter Adjustments (Items of Note)
The following material items of note (net of tax) are included in the Company’s reported GAAP earnings for the fourth quarter of 2006 as compared to the fourth quarter of 2005. Share impact is on a per diluted share basis.
• Amortization of identifiable intangible assets of $24.0 million (10 cents per share) as compared to $20.0 million (11 cents per share) for the fourth quarter of 2005.
• Merger and restructuring charges of $8.9 million (4 cents per share) as compared to $3.4 million (2 cents per share) for the fourth quarter of 2005.
• $1.5 million impact (1 cent per share) related to the discontinued operations associated with certain subsidiaries engaged in energy operations acquired from Hudson United as compared to no related impact for the fourth quarter of 2005.
• Deleveraging losses of $29.3 million (17 cents per share) for the fourth quarter of 2005 as compared to no related impact for the fourth quarter of 2006.

PORTLAND, Maine — TD Banknorth Inc. (“TD Banknorth” or the “Company”) (NYSE: BNK) today reported net income of $83.4 million for the quarter ended December 31, 2006 as compared to $55.6 million for the quarter ended December 31, 2005. On a per diluted share basis, reported net income was 36 cents for the fourth quarter of 2006 as compared to 32 cents for the fourth quarter of 2005.

Net income for the year ended December 31, 2006 was $339.1 million as compared to $274.0 million for the year ending December 31, 2005. On a per diluted share basis, net income for the year ended December 31, 2006 was $1.51 as compared to $1.55 for the year ending December 31, 2005.

Adjusted earnings were $117.8 million for the fourth quarter of 2006 as compared to $108.1 million for the fourth quarter of 2005. On a per diluted share basis, adjusted earnings were 51 cents for the fourth quarter of 2006 as compared to 62 cents for the same quarter a year ago.

Adjusted earnings for the year ended December 31, 2006 were $478.7 million as compared to $438.5 million for 2005. On a per diluted share basis, adjusted earnings for the year ended December 31, 2006 were $2.13 as compared to $2.48 for the same period a year ago.

The Company’s results for the fourth quarter of 2006 reflect the full impact of the acquisition of Hudson United Bancorp on January 31, 2006. On a per diluted share basis, results for both the fourth quarter of 2006 and for the year ended December 31, 2006 reflect the issuance of approximately 62 million shares of TD Banknorth common stock in conjunction with the acquisition of Hudson United Bancorp, which was offset in part by the Company’s repurchase of 8.5 million shares during the first quarter of 2006.

“The current operating environment continues to be challenging,” said TD Banknorth President, Bharat B. Masrani. “While competition for loans and deposits continues to be intense, we remain focused on the organic growth of our loans, deposits and fee income.”

Total Assets
Total assets at December 31, 2006 were $40.2 billion, up 25% from $32.1 billion at December 31, 2005. The increase was due primarily to the acquisition of Hudson United.

Average Loans and Leases
Average loans and leases increased by 27% to $25.6 billion for the quarter ended December 31, 2006 as compared to $20.2 billion for the fourth quarter of 2005, due primarily to the acquisition of Hudson United. For the year ended December 31, 2006, total average loans and leases were $25.2 billion as compared to $20.0 billion for the same period in 2005, also largely due to the acquisition of Hudson United.

Excluding the effects of acquisitions and purchase accounting adjustments, average commercial business loans and leases, commercial real estate mortgages and consumer loans and leases increased 6.3% in the aggregate for the year ended December 31, 2006 as compared to the same period a year ago. On a linked quarter basis, average commercial business loans and leases, commercial real estate mortgages and consumer loans and leases for the fourth quarter of 2006 were essentially flat as compared with the previous quarter, reflecting the competition for high-quality commercial and consumer loans.

Average Deposits
Average deposits increased by 34% to $27.3 billion for the quarter ended December 31, 2006 as compared to $20.4 billion for the quarter ended December 31, 2005, due primarily to the acquisition of Hudson United. For the year ended December 31, 2006, total average deposits were $26.4 billion as compared to $20.1 billion for 2005, also largely due to the acquisition of Hudson United.

Excluding the effects of acquisitions and purchase accounting adjustments, total average deposits for the year ended December 31, 2006 increased by 1.0% as compared to the same period a year ago, reflecting the highly competitive environment for deposit gathering in the Company’s market areas. On a linked quarter basis, total average deposits increased in the fourth quarter of 2006 by 1.2%.

Net Interest Income and Net Interest Margin
Net interest income was $295.1 million for the fourth quarter of 2006, a 21% increase from net interest income of $243.4 million for the same quarter of 2005. The increase was due primarily to the acquisition of Hudson United. For the year ended December 31, 2006, the Company’s net interest income amounted to $1.2 billion as compared to $997.8 million for 2005, largely due to the acquisition of Hudson United.

The Company’s net interest margin for the quarter ended December 31, 2006 was 3.95% as compared to 3.96% for the quarter ended December 31, 2005 and 4.01% for the quarter ended September 30, 2006. On a linked quarter basis, the decrease in the Company’s net interest margin in the fourth quarter of 2006 was due primarily to the impact on the margin associated with competition for both loans and deposits.

Provision for Credit Losses and Asset Quality
The Company’s total provision for credit losses amounted to $15.5 million for the quarter ended December 31, 2006, as compared to $6.3 million for the quarter ended December 31, 2005 and $14.1 million for the quarter ended September 30, 2006. The increase in the provision was due primarily to an increase in net chargeoffs, which amounted to $14.1 million in the three months ended December 31, 2006, as compared to $11.3 million and $11.5 million in the three months ended December 31, 2005 and September 30, 2006, respectively. Total nonperforming assets amounted to $132.4 million at December 31, 2006 as compared to $61.5 million at December 31, 2005 and $93.8 million at September 30, 2006. The increase in nonperforming assets at December 31, 2006 as compared to September 30, 2006 was due primarily to a $24.8 million increase in nonperforming assets associated with commercial real estate mortgages due, in large part, to a slowdown in residential construction activity.

Despite the increase in nonperforming assets during the quarter ended December 31, 2006, the Company’s asset quality ratios remained solid. The Company’s allowance for credit losses to total loans and leases was 1.13% at December 31, 2006 as compared to 1.15% at December 31, 2005 and 1.12% at September 30, 2006. As a percentage of total assets, nonperforming assets amounted to 0.33% at December 31, 2006, as compared to 0.19% at December 31, 2005 and 0.23% at September 30, 2006. Annualized net charge-offs to average loans remained historically low and for the quarter ended December 31, 2006 amounted to 0.22% as compared to 0.22% for the same period a year ago and 0.18% for the quarter ended September 30, 2006.

Noninterest Income
Noninterest income increased to $128.8 million in the fourth quarter of 2006 as compared to $60.1 million in the fourth quarter of 2005. The increase was due to the acquisition of the Hudson United and $45.0 million in deleveraging-related losses incurred in the fourth quarter of 2005.

For the year ended December 31, 2006, noninterest income increased to $502.0 million as compared to $306.6 million for 2005, due to the acquisition of Hudson United and to $100.2 million in deleveraging-related losses incurred in 2005.

Noninterest Expense
Noninterest expense increased $72.1 million to $287.8 million for the fourth quarter of 2006 as compared to $215.7 million for the fourth quarter of 2005, due primarily to increased Hudson United-related operating expenses, increases in the amortization of identifiable intangible assets, and merger and restructuring charges. Adjusted noninterest expense increased $57.3 million to $237.1 million for the fourth quarter of 2006 as compared to $179.8 million for the fourth quarter of 2005, primarily due to operating expenses associated with the acquisition of Hudson United.

For the year ended December 31, 2006, noninterest expense increased to $1.1 billion as compared to $870.8 million for 2005 largely due to increased operating expenses associated with the acquisition of Hudson United, increased amortization of identifiable intangible assets, and restructuring charges incurred in 2006. For the year ended December 31, 2006, adjusted noninterest expense increased to $929.1 million as compared to $716.8 million for 2005, largely due to increased operating expenses associated with the acquisition of Hudson United.

On a linked quarter basis, noninterest expense for the fourth quarter of 2006 decreased by $6.2 million to $287.8 million as compared to $294.0 million for the third quarter of 2006. The decrease was due in part to a $1.3 million decrease in salaries and employee benefits, a $2.0 million decrease in advertising and marketing expenses and a $2.9 million decrease in merger and restructuring charges.

The Company’s adjusted efficiency ratio for the year ended December 31, 2006 amounted to 55.08% as compared to 51.25% for the same period in 2005.

Capital
On a linked quarter basis, the Company’s capital ratios improved in the fourth quarter of 2006 and the Company and its banking subsidiary continue to qualify as “well capitalized” institutions under applicable laws and regulations. At December 31, 2006, the Company’s tier 1 capital ratio was 7.20% as compared to 7.07% at December 31, 2005 and up from 6.94% at September 30, 2006; its total risk-based capital ratio was 11.62% as compared to 11.73% at December 31, 2005 and up from 11.44% at September 30, 2006; and its ratio of tangible equity to tangible assets was 5.56% as compared to 5.69% at December 31, 2005 and up from 5.40% at September 30, 2006.

Shares Outstanding and Other Information
The number of diluted weighted average shares outstanding for the quarter ended December 31, 2006 was 229.6 million as compared to 174.4 million for the quarter ended December 31, 2005. The increase was due primarily to shares issued in conjunction with the acquisition of Hudson United.

The Company’s adjusted return on average tangible equity for the fourth quarter of 2006 was 25.55%, as compared to 29.36% for the fourth quarter of 2005 and 26.75% for the third quarter of 2006, while the Company’s adjusted return on average tangible assets for the fourth quarter of 2006 was 1.42%, as compared to 1.60% for the fourth quarter of 2005 and 1.40% for third quarter of 2006.

At December 31, 2006, the Company’s tangible book value per share was $8.12 as compared to $8.81 at December 31, 2005 and up from $7.84 at September 30, 2006.

Quarterly Dividend
TD Banknorth also announced that its Board of Directors has approved a quarterly dividend of 22 cents per share based on earnings for the quarter ended December 31, 2006. The dividend is level with the dividend paid following the quarter ended September 30, 2006 and will be paid on February 15, 2007 to shareholders of record at the close of business on February 5, 2007.

Acquisition of Interchange Financial Services Corporation
As previously announced, on January 1, 2007, the Company completed the acquisition of Interchange Financial Services Corporation (NASDAQ: IFCJ) for approximately $480.6 million in cash. In conjunction with the transaction, the Company issued 13 million shares of TD Banknorth common stock to TD Bank Financial Group at a price of $31.17 per share.

Going-Private Transaction
On November 20, 2006, the Company announced that it had entered into a definitive agreement for TD Bank Financial Group (“TDBFG”) to acquire all of the outstanding shares of common stock of TD Banknorth not currently owned by TDBFG for $32.33 per share in cash. The transaction, which is subject to both shareholder and regulatory approval, is expected to close in March or April of 2007.

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 December 31, 2006, TD Banknorth had $40 billion of total consolidated assets. TD Banknorth's banking subsidiary, TD Banknorth, N.A., operates banking divisions in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Vermont. TD Banknorth and TD Banknorth, N.A. also operate subsidiaries and divisions in insurance, wealth management, merchant services, mortgage banking, government banking, private label credit cards, insurance premium financing and other financial services and offers investment products in association with PrimeVest Financial Services, Inc. The TD Banknorth common stock trades on the New York Stock Exchange under the symbol "BNK". For more information, visit www.TDBanknorth.com.

NOTES: 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. The Company arrives at these measures, indicated by the use of the term “adjusted,” by removing “items of note” from the reported GAAP measure. The material items of note excluded from adjusted measures are described at the outset of this release, and a complete reconciliation of all non-GAAP measures to the most comparable GAAP measure can be found in the financial tables in the back of this release. The items of note relate to items which management does not believe are indicative of underlying business performance, and include the effects of charges and expenses related to mergers and acquisitions, the amortization of intangible assets and other significant gains or losses that are considered to be unusual in nature, such as securities gains or losses 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 adjusted financial measures excluding the impact of these items of note provide useful supplemental information that is essential to a proper understanding of the operating results of the Company. 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 press release contains 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, the ability to obtain the approval of the merger with TD Bank Financial Group by TD Banknorth shareholders and the ability to obtain governmental approvals of that transaction or to satisfy other conditions to the transaction on the proposed terms and schedule. In addition, acquisitions may result in large one-time charges to income, may not produce revenue enhancements or synergies 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 may occur after the date on which such statements were made.

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 Company uses 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 ended 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 under the heading “Combined” combines 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.

In connection with the proposed merger with TD Bank Financial Group, TD Banknorth has filed a preliminary proxy statement with the Securities and Exchange Commission. Stockholders of TD Banknorth are urged to read the definitive proxy statement regarding the proposed merger when it becomes available, because it will contain important information. The definitive proxy statement will be mailed to stockholders of TD Banknorth. Investors and security holders will be able to obtain a free copy of the proxy statement as well as other filings containing information about TD Bank Financial Group and TD Banknorth, when available, without charge, at the Securities and Exchange Commission's Internet site (http://www.sec.gov). In addition, copies of the definitive proxy statement can be obtained, when available, without charge, by directing a request to TD Bank Financial Group, 66 Wellington Street West, Toronto, ON M5K 1A2, Attention: Investor Relations, (416) 308-9030, or to TD Banknorth Inc., Two Portland Square, P.O. Box 9540, Portland, ME 04112-9540, Attention: Investor Relations, (207) 761-8517.

TD Bank Financial Group, TD Banknorth, their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding TD Bank Financial Group's directors and executive officers is available in its Annual Report on Form 40-F for the year ended October 31, 2006, which was filed with the Securities and Exchange Commission on December 11, 2006, and its notice of annual meeting and proxy circular for its most recent annual meeting, which was filed with the Securities and Exchange Commission on February 24, 2006. Information regarding TD Banknorth's directors and executive officers is available in TD Banknorth's proxy statement for its most recent annual meeting, which was filed with the Securities and Exchange Commission on March 30, 2006. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement, the Schedule 13E-3 transaction statement and other relevant materials to be filed with the Securities and Exchange Commission when they become available.

Source: TD Banknorth Inc.

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