TD Banknorth Reports Second Quarter Results and Announces Quarterly Dividend

Highlights for the second quarter of 2006 include:

** Adjusted earnings1 increased to $128.3 million in the second quarter of 2006 up from $109.1 million in the second quarter of 2005, reflecting the acquisition of Hudson United Bancorp on January 31, 2006.

** The Company successfully completed the systems conversion of Hudson United during the second quarter of 2006.

** The Company exhibited strong expense control during the second quarter of 2006 with the increase in adjusted noninterest expense in the second quarter of 2006 as compared to the second quarter of 2005 being entirely attributable to the acquisition of Hudson United.

** Asset quality remained strong with the ratio of nonperforming assets to total assets amounting to 0.22% at June 30, 2006, the same as at March 31, 2006.

** The Board of Directors declared a dividend of 22 cents per share payable on August 14, 2006 to shareholders of record as of the close of business on August 4, 2006.

Second Quarter Adjustments
The following material items of note (net of tax) are included in the Company’s reported GAAP earnings for the second quarter of 2006 as compared to the second quarter of 2005. Share impact is on a per diluted share basis.

** Amortization of identifiable intangible assets of $24.0 million (11 cents per share) as compared to $19.8 million (12 cents per share) for the second quarter of 2005.

** Merger and restructuring charges of $9.6 million (4 cents per share) as compared to $3.5 million (2 cents per share) for the second quarter of 2005.

** Gains of $9.6 million (6 cents per share) related to changes in unrealized loss on derivates recognized in the second quarter of 2005 as compared to none in the second quarter of 2006.

PORTLAND, Maine - TD Banknorth Inc. (“TD Banknorth” or the “Company”) (NYSE: BNK) today reported net income of $93.4 million for the quarter ended June 30, 2006 as compared to $95.6 million for the quarter ended June 30, 2005. On a per diluted share basis, reported net income was 41 cents for the second quarter of 2006 as compared to 55 cents for the second quarter of 2005.

Net income for the six months ended June 30, 2006 was $169.6 million as compared to $129.7 million for the same period in 2005. On a per diluted share basis, net income for the six months ended June 30, 2006 was 77 cents as compared to 72 cents for the same period a year ago.

Adjusted earnings were $128.3 million for the second quarter of 2006 as compared to $109.1 million for the second quarter of 2005. On a per diluted share basis, adjusted earnings were 56 cents for the second quarter of 2006 as compared to 63 cents for the same quarter a year ago.

Adjusted earnings for the six months ended June 30, 2006 were $243.9 million as compared to $220.9 million for the same period in 2005. On a per diluted share basis, earnings for the six months ended June 30, 2006 were $1.11 as compared to $1.23 for the same period a year ago.

The Company’s results in the second 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 second quarter of 2006 and for the six months ended June 30, 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 in part offset by the Company’s repurchase of 8.5 million shares during the first quarter of 2006.

“We continue to see intense competition for high quality loans and deposits,” said William J. Ryan, TD Banknorth Chairman, President and Chief Executive Officer. “At the same time, we successfully completed the Hudson United conversion, asset quality remained strong and we exhibited strong expense control during the quarter. I believe we remain well positioned for the future.”

Hudson United Systems Conversion
The Company completed the systems conversion at Hudson United during the second quarter. “The conversion went extremely well. This was the largest conversion in our history and it went as planned,” said Wendy Suehrstedt, President and CEO of the Mid-Atlantic Division. “We are pleased to welcome the former Hudson United customers to TD Banknorth.” The Hudson United acquisition added approximately 200 branches in New Jersey, Pennsylvania, Connecticut and the metropolitan New York area to the TD Banknorth branch network.

Total Assets
Total assets at June 30, 2006 were $40.3 billion, up 26% 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 27.2% to $25.7 billion for the quarter ended June 30, 2006 as compared to $20.2 billion for the second quarter of 2005, due primarily to the acquisition of Hudson United. For the six months ended June 30, 2006, total average loans and leases were $24.8 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 (including credit cards) increased 7.8% in the aggregate for the quarter ended June 30, 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 increased 1.2% (4.8% annualized), reflecting the competition for high-quality commercial and consumer loans.

Average Deposits
Average deposits increased by 34.2% to $26.8 billion for the quarter ended June 30, 2006 as compared to the quarter ended June 30, 2005, due primarily to the acquisition of Hudson United. For the six months ended June 30, 2006, total average deposits were $25.6 billion as compared to $19.8 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 deposits increased 1.9% for the quarter ended June 30, 2006 as compared to the same period a year ago. On a linked quarter basis, average deposits were comparable with the first quarter of 2006, reflecting the continued competitive environment for deposit gathering in the Company’s market areas.

Net Interest Income and Net Interest Margin
Net interest income was $306.8 million for the second quarter of 2006, a 21% increase from net interest income of $252.6 million for the same quarter of 2005. The increase was due primarily to the acquisition of Hudson United. For the six months ended June 30, 2006, the Company’s net interest income amounted to $589.3 million as compared to $505.4 million for the same period in 2006, largely due to the acquisition of Hudson United.

The Company’s net interest margin for the quarter ended June 30, 2006 was 4.07% as compared to 4.12% for the quarter ended June 30, 2005 and up from 3.83% for the quarter ended March 31, 2006. The increase in net interest margin from the first quarter of 2006 reflected the full impact of the Company’s balance sheet deleveraging program implemented in the first quarter of 2006.

Provision for Credit Losses and Asset Quality
The Company’s total provision for credit losses amounted to $9.0 million for the quarter ended June 30, 2006, as compared to $3.7 million for the quarter ended June 30, 2005 and $7.2 million for the quarter ended March 31, 2006. Total nonperforming assets amounted to $89.1 million at June 30, 2006 as compared to $73.9 million at June 30, 2005 and $90.7 million at March 31, 2006. The decline in nonperforming assets from March 31, 2006 was due primarily to the sale during the second quarter of two properties classified as Other Real Estate Owned.

Overall, the Company’s asset quality ratios remained strong during the second quarter of 2006. The Company’s allowance for credit losses to total loans and leases was 1.10% at June 30, 2006 as compared to 1.17% at June 30, 2005 and 1.11% at March 31, 2006. As a percentage of total assets, nonperforming assets amounted to 0.22% at June 30, 2006, as compared to 0.23% at June 30, 2005 and 0.22% at March 31, 2006. Annualized net charge-offs to average loans remain historically low and for the quarter ended June 30, 2006 amounted to 0.14% as compared to 0.07% for the same period a year ago and 0.10% for the quarter ended March 31, 2006.

Noninterest Income
Noninterest income increased to $127.1 million in the second quarter of 2006 as compared $117.3 million in the second quarter of 2005 due primarily to the impact of the acquisition of Hudson United. Adjusted noninterest income increased to $127.1 million for the second quarter of 2006 as compared to $102.3 million for the second quarter in 2005 due primarily to the acquisition of Hudson United.

For the six months ended June 30, 2006, noninterest income increased to $244.9 million as compared to $142.9 million for the same period in 2005, due to the acquisition of Hudson United and to a $50.4 million deleveraging loss incurred in the first six months of 2005. For the six months ended June 30, 2006, adjusted noninterest income increased to $245.2 million as compared to $193.7 million for the same period in 2005, primarily due to the acquisition of Hudson United.

Noninterest Expense
Noninterest expense increased $65.7 million for the second quarter of 2006 as compared to the second quarter of 2005, due to increased Hudson United-related operating expenses and increases in the amortization of identifiable intangible assets and merger and restructuring charges. The Company exhibited strong expense control during the second quarter of 2006 with the increase in adjusted noninterest expense in the second quarter of 2006 as compared to the second quarter of 2005 being entirely attributable to the acquisition of Hudson United.

The Company successfully completed the systems conversion at Hudson United in the second quarter of 2006 and has begun to realize the cost savings associated with the acquisition of Hudson United with the full benefit to be realized in the third quarter of 2006. On a linked quarter basis, the Company’s adjusted efficiency ratio for the quarter ended June 30, 2006 improved to 53.47% from 54.84% for the quarter ended March 31, 2006 reflecting the Company’s continued emphasis on expense control. During the second quarter of 2005, which does not reflect the acquisition of Hudson United, the Company’s adjusted efficiency ratio amounted to 51.89%.

For the six months ended June 30, 2006, noninterest expense increased to $563.1 million as compared to $443.4 million for the same period in 2005 largely due to increased operating expenses associated with the acquisition of Hudson United and increased amortization of identifiable intangible assets. For the six months ended June 30, 2006, adjusted noninterest expense increased to $451.5 million as compared to $357.4 million for the same period in 2005, largely due to increased operating expenses associated with the acquisition of Hudson United.

Capital
The Company and its banking subsidiary continue to qualify as “well capitalized” institutions under applicable laws and regulations. At June 30, 2006, the Company’s tier 1 capital ratio was 6.70% as compared to 7.08% at December 31, 2005 and to 6.76% at March 31, 2006; its total risk-based capital ratio was 11.15% as compared to 11.73% at December 31, 2005 and up from 11.03% at March 31, 2006; and its ratio of tangible equity to tangible assets was 5.06% as compared to 5.69% at December 31, 2005 and up from 4.80% at March 31, 2006.

Shares Outstanding and Other Information
The number of diluted weighted average shares outstanding for the quarter ended June 30, 2006 was 228.8 million as compared to 174.3 million for the quarter ended June 30, 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 second quarter of 2006 was 30.86%, as compared to 31.32% for the second quarter of 2005 and 29.21% for the first quarter of 2006, while the Company’s adjusted return on average tangible assets for the second quarter of 2006 was 1.54%, as compared to 1.64% for the second quarter of 2005 and 1.43% for first quarter of 2006.

At June 30, 2006, the Company’s tangible book value per share was $7.42 as compared to $8.81 at December 31, 2005 and up from $7.16 at March 31, 2006.

Quarterly Dividend
TD Banknorth also announced today that its Board of Directors has approved a quarterly dividend of 22 cents per share based on earnings for the quarter ended June 30, 2006. The dividend is level with the dividend paid following the quarter ended March 31, 2006 and will be paid on August 14, 2006 to shareholders of record at the close of business on August 4, 2006.

Acquisition of Interchange Financial Services Corporation
On April 13, 2006, the Company announced it had entered into a definitive agreement to acquire Interchange Financial Services Corporation (NASDAQ: IFCJ), Saddle Brook, New Jersey, for approximately $480.6 million in cash. As part of the transaction, TD Bank Financial Group has agreed to purchase 13 million shares of TD Banknorth common stock from TD Banknorth at a price of $31.17 per share. The acquisition is subject to the receipt of Interchange shareholder approval and all required regulatory approvals and other customary conditions and is anticipated to close early in the first quarter of 2007 with systems integration shortly thereafter.

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, 2006, TD Banknorth had over $40 billion of total consolidated assets and provided financial services to more than 1.5 million households in the Northeast. 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 http://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 items of note excluded from adjusted measures are described at the outset of this release, and a reconciliation of these 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 typically are 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. Items of note also include 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. 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 second quarter 2005 earnings release dated May 16, 2005.

Source: TD Banknorth Inc.

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