Reuters, Jonathan Stempel, 16 November 2006
TD Banknorth Inc., the U.S. retail banking arm of Canada's Toronto-Dominion Bank, on Thursday said it may close branches to cut costs as "aggressive" competition weighs on profitability.
Chief Operating Officer Peter Verrill also projected fourth-quarter profit around the low end of the bank's prior forecast, and estimated 2007 profit below analysts' forecasts. He spoke at a Merrill Lynch & Co. financial services conference.
Verrill said TD Banknorth, long one of the fastest-growing eastern U.S. banks, may close or consolidate some of its roughly 600 branches, as loan growth slows and customers shift to costlier, higher-yielding deposit accounts.
Portland, Maine-based TD Banknorth operates in eight states from Maine to Pennsylvania.
Noting that TD Banknorth earned 51 cents per share before items in the third quarter, Verrill said that is "probably a good benchmark and barometer for what we think the fourth quarter would provide."
He also projected 2007 profit of $2.05 to $2.15 per share. Verrill characterized the forecasts as "not changed" from last month, when TD Banknorth had projected fourth-quarter profit of 51 cents to 54 cents per share.
Analysts polled by Reuters Estimates on average forecast profit per share of 51 cents for the fourth quarter, $2.14 for 2006, and $2.17 for 2007.
Verrill said this year might be the first since the early 1990s that earnings per share will fall. "We're not happy about that," he said.
Like many banks, TD Banknorth is being hurt by converging long- and short-term interest rates, creating an "inverted" yield curve that narrows the gap between what the bank can earn on loans and must pay on deposits.
"We are still being negatively impacted by the inverted yield curve (as) deposit customers continue to strive for higher levels of interest rates, but also by the increased competition (as) banks fight to maintain their piece of a shrinking deposit and loan base," Verrill said.
TD Banknorth paid $1.9 billion for Mahwah, New Jersey's Hudson United Bancorp in January. It expects add 30 branches in early 2007 when it pays $481 million for Saddle Brook, New Jersey's Interchange Financial Services Corp.
TD Bank last year paid $4 billion for a majority stake in TD Banknorth, and now owns about 57 percent.
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TD Banknorth Inc., the U.S. retail banking arm of Canada's Toronto-Dominion Bank, on Thursday said it may close branches to cut costs as "aggressive" competition weighs on profitability.
Chief Operating Officer Peter Verrill also projected fourth-quarter profit around the low end of the bank's prior forecast, and estimated 2007 profit below analysts' forecasts. He spoke at a Merrill Lynch & Co. financial services conference.
Verrill said TD Banknorth, long one of the fastest-growing eastern U.S. banks, may close or consolidate some of its roughly 600 branches, as loan growth slows and customers shift to costlier, higher-yielding deposit accounts.
Portland, Maine-based TD Banknorth operates in eight states from Maine to Pennsylvania.
Noting that TD Banknorth earned 51 cents per share before items in the third quarter, Verrill said that is "probably a good benchmark and barometer for what we think the fourth quarter would provide."
He also projected 2007 profit of $2.05 to $2.15 per share. Verrill characterized the forecasts as "not changed" from last month, when TD Banknorth had projected fourth-quarter profit of 51 cents to 54 cents per share.
Analysts polled by Reuters Estimates on average forecast profit per share of 51 cents for the fourth quarter, $2.14 for 2006, and $2.17 for 2007.
Verrill said this year might be the first since the early 1990s that earnings per share will fall. "We're not happy about that," he said.
Like many banks, TD Banknorth is being hurt by converging long- and short-term interest rates, creating an "inverted" yield curve that narrows the gap between what the bank can earn on loans and must pay on deposits.
"We are still being negatively impacted by the inverted yield curve (as) deposit customers continue to strive for higher levels of interest rates, but also by the increased competition (as) banks fight to maintain their piece of a shrinking deposit and loan base," Verrill said.
TD Banknorth paid $1.9 billion for Mahwah, New Jersey's Hudson United Bancorp in January. It expects add 30 branches in early 2007 when it pays $481 million for Saddle Brook, New Jersey's Interchange Financial Services Corp.
TD Bank last year paid $4 billion for a majority stake in TD Banknorth, and now owns about 57 percent.
