The Toronto Star, Stuart Laidlaw, 12 January 2006
Portland, Me.—With its biggest purchase to date approved overwhelmingly yesterday in simultaneous meetings here and in New Jersey, Toronto Dominion Bank's U.S. unit is preparing for the next stage in its development.
"We'll start to look at things again," Bill Ryan, chief executive of TD Banknorth Inc., told the Toronto Star after shareholders of his New England bank voted 99 per cent in favour of buying Hudson United Bancorp.
In Malwah, N.J., yesterday, Hudson shareholders voted more than 98 per cent in favour of selling their bank to Banknorth.
The $1.9 billion (U.S.) deal combines Banknorth's branches across New England with Hudson's 204 branches, mostly in New Jersey and New York state.
When the deal closes at the end of the month, the new bank will have 590 branches and $26 billion in deposits across nine states from Maine to Pennsylvania.
When the deal was announced last July, Ryan said the bank, which has made 26 acquisitions throughout the U.S. northeast over 15 years, would not announce any more deals until this one closed.
A native New Yorker, Ryan has mused about taking Banknorth into his hometown with the purchase of a Manhattan bank.
With Hudson's strong New Jersey presence, speculation grew last summer that he might be poised to make that move.
In fact, yesterday's deal gives the bank its first location in New York City, with Hudson's branch in Rockefeller Center.
Yesterday, Ryan said that is still the plan, but the bank may take its time getting into the Big Apple. For now, he will follow past practice of sticking to the suburbs.
Most of Banknorth's branches are in small cities and towns, many of them bedroom communities of larger centres, such as Boston.
"Our strategy initially is to go into the suburbs, and it works for us," he said. "At some point, we will get the confidence to go into New York."
Most tempting to him, he said, are the 19 million potential customers in the greater New York area, something he said he would like to tap into.
"There's not 19 million people in the whole rest of our franchise."
In late November, Banknorth chief operating officer Peter Verrill told an investor conference in New York that the bank might bypass the city and begin moving south out of its New England base.
He speculated that the bank, already in Pennsylvania with the Hudson purchase, could be as far south as Washington, D.C., in five years and Florida in 10 years.
Yesterday, Ryan said such a strategy may become necessary as Banknorth becomes a bigger player in the northeast, saying regulators may be reluctant to approve more mergers that will make Banknorth too dominant a player in the market.
But for now, the bank will focus on the greater New York area. Analysts have identified several possible targets for the bank in New York City, a market that still has several small community banks despite being the country's largest banking market.
Possible targets include North Folk Bancorp, Astoria Financial Corp., Independence Community Bank, Dime Community Bancshares and Sterling Bancorp.
With the Hudson deal, Banknorth will get its first real urban experience, given Hudson's large presence in the Philadelphia market. Ryan said that should give the bank the expertise it needs before moving from the suburbs into other urban areas across the northeast.
He said the key, however, will be to ensure that the bank will be able to extend its community bank model — long branch hours and an emphasis on customer service — to larger centres rather than have to run two types of banks in two different markets.
"I don't know if you can really run two banks," he said.
Ryan expects to realize about 25 per cent cost savings at Hudson over the next six months, but will have to close only two or three branches because the two banks' markets did not overlap much.
But as the bank consolidates its market share, more cost cutting can be expected, Harvard business professor Robin Greenwood says.
"That's where the opportunities for capital creation are," Greenwood said in an interview before the deal was approved. "When you increase market share, you can increase fees and get rid of duplication and get rid of employees, even close offices."
Toronto Dominion bought a 51 per cent stake in Banknorth in 2004 for $3.8 billion, saying it planned to use its large cash reserves to fund growth through acquisition at Banknorth, already an aggressive acquisitor in the U.S. northeast.
With bank mergers a virtual impossibility at home, Canadian banks have looked abroad for investments.
The Bank of Montreal has invested in the U.S. Midwest, the Royal Bank of Canada in the southeast and TD in the northeast. The Bank of Nova Scotia has preferred to invest in developing countries, with a particular interest lately in Mexico.
TD has said it hopes to make Banknorth into a dominant force in New England.
Portland, Me.—With its biggest purchase to date approved overwhelmingly yesterday in simultaneous meetings here and in New Jersey, Toronto Dominion Bank's U.S. unit is preparing for the next stage in its development.
"We'll start to look at things again," Bill Ryan, chief executive of TD Banknorth Inc., told the Toronto Star after shareholders of his New England bank voted 99 per cent in favour of buying Hudson United Bancorp.
In Malwah, N.J., yesterday, Hudson shareholders voted more than 98 per cent in favour of selling their bank to Banknorth.
The $1.9 billion (U.S.) deal combines Banknorth's branches across New England with Hudson's 204 branches, mostly in New Jersey and New York state.
When the deal closes at the end of the month, the new bank will have 590 branches and $26 billion in deposits across nine states from Maine to Pennsylvania.
When the deal was announced last July, Ryan said the bank, which has made 26 acquisitions throughout the U.S. northeast over 15 years, would not announce any more deals until this one closed.
A native New Yorker, Ryan has mused about taking Banknorth into his hometown with the purchase of a Manhattan bank.
With Hudson's strong New Jersey presence, speculation grew last summer that he might be poised to make that move.
In fact, yesterday's deal gives the bank its first location in New York City, with Hudson's branch in Rockefeller Center.
Yesterday, Ryan said that is still the plan, but the bank may take its time getting into the Big Apple. For now, he will follow past practice of sticking to the suburbs.
Most of Banknorth's branches are in small cities and towns, many of them bedroom communities of larger centres, such as Boston.
"Our strategy initially is to go into the suburbs, and it works for us," he said. "At some point, we will get the confidence to go into New York."
Most tempting to him, he said, are the 19 million potential customers in the greater New York area, something he said he would like to tap into.
"There's not 19 million people in the whole rest of our franchise."
In late November, Banknorth chief operating officer Peter Verrill told an investor conference in New York that the bank might bypass the city and begin moving south out of its New England base.
He speculated that the bank, already in Pennsylvania with the Hudson purchase, could be as far south as Washington, D.C., in five years and Florida in 10 years.
Yesterday, Ryan said such a strategy may become necessary as Banknorth becomes a bigger player in the northeast, saying regulators may be reluctant to approve more mergers that will make Banknorth too dominant a player in the market.
But for now, the bank will focus on the greater New York area. Analysts have identified several possible targets for the bank in New York City, a market that still has several small community banks despite being the country's largest banking market.
Possible targets include North Folk Bancorp, Astoria Financial Corp., Independence Community Bank, Dime Community Bancshares and Sterling Bancorp.
With the Hudson deal, Banknorth will get its first real urban experience, given Hudson's large presence in the Philadelphia market. Ryan said that should give the bank the expertise it needs before moving from the suburbs into other urban areas across the northeast.
He said the key, however, will be to ensure that the bank will be able to extend its community bank model — long branch hours and an emphasis on customer service — to larger centres rather than have to run two types of banks in two different markets.
"I don't know if you can really run two banks," he said.
Ryan expects to realize about 25 per cent cost savings at Hudson over the next six months, but will have to close only two or three branches because the two banks' markets did not overlap much.
But as the bank consolidates its market share, more cost cutting can be expected, Harvard business professor Robin Greenwood says.
"That's where the opportunities for capital creation are," Greenwood said in an interview before the deal was approved. "When you increase market share, you can increase fees and get rid of duplication and get rid of employees, even close offices."
Toronto Dominion bought a 51 per cent stake in Banknorth in 2004 for $3.8 billion, saying it planned to use its large cash reserves to fund growth through acquisition at Banknorth, already an aggressive acquisitor in the U.S. northeast.
With bank mergers a virtual impossibility at home, Canadian banks have looked abroad for investments.
The Bank of Montreal has invested in the U.S. Midwest, the Royal Bank of Canada in the southeast and TD in the northeast. The Bank of Nova Scotia has preferred to invest in developing countries, with a particular interest lately in Mexico.
TD has said it hopes to make Banknorth into a dominant force in New England.
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Hudson United & TD Banknorth Shareholders Approve Merger
Portland, Maine--(BUSINESS WIRE)--Jan. 11, 2006--TD Banknorth Inc. shareholders voted at a special meeting today to approve the acquisition of Hudson United Bancorp. More than 99% of the votes cast were voted in favor of the transaction. In a separate meeting held in Mahwah, New Jersey, the shareholders of Hudson United Bancorp also voted heavily in favor of sale to TD Banknorth . Over 98% of the votes cast by Hudson United shareholders were in favor of the transaction.
Pending approval by the Federal Reserve, the transaction is expected to close later in the first quarter of 2006.
"This acquisition is in keeping with our growth strategy into the mid-Atlantic region. We're excited about expanding our franchise in both Connecticut and eastern New York, and gaining a new presence in the fast-growing New Jersey and Philadelphia markets," said William J. Ryan, TD Banknorth's Chairman, President and Chief Executive Officer. "We look forward to welcoming Hudson United into the TD Banknorth family and to offering our new customers a broader array of products and services."
"We are excited about joining TD Banknorth ," said Kenneth Neilson, Hudson United's Chairman, President and Chief Executive Officer. "This transaction rewards our shareholders while maintaining our focus on local community banking."
On a pro forma basis, the transaction creates a regional financial services company with approximately 590 branches, 751 ATMs and over $26 billion in deposits across eight northeastern states.
