TD Bank Financial Group to Become Majority Shareholder of Banknorth Group, Inc.; Strategic acquisition provides TD with personal and commercial banking growth opportunity in the US

Business Wire, August 26, 2004

PORTLAND, Maine -- Banknorth gains partner to expand its community-based banking model

Banknorth Group, Inc. (NYSE: BNK) and TD Bank Financial Group (TDBFG) today announced that they have signed a definitive agreement for TDBFG to acquire 51% of the outstanding shares of Banknorth for approximately US$3.8 billion (approximately CDN$5 billion) in cash and TD common shares. This acquisition will provide TD with the majority interest in a growth company that has a proven track record of making strategic acquisitions.

"This strategic acquisition provides us with an expanding beachhead in the Northeastern United States and an outstanding personal and commercial banking complement to our strong U.S. wealth management franchise," said Ed Clark, TD Bank Financial Group President and Chief Executive Officer. "The addition of Banknorth to our brand provides us with immediately accretive earnings and a majority interest in a company that has an excellent management team focused on growing their business both organically and through smart and profitable acquisitions."

"Having TDBFG as our majority shareholder offers us the depth to continue with our strategy of acquiring high potential banks in strategic locations and positions us to move to the next level in terms of size and product capability," said William J. Ryan, Banknorth's Chairman, President and Chief Executive Officer. "Both TD and Banknorth are leaders in employing a customer-focused approach to their markets and bring proven track records of successfully integrating acquisitions. I firmly believe that working with TD will be a positive experience for our shareholders, our customers and our employees."

Acquisition Details

The agreement between TDBFG and Banknorth provides for the merger of Banknorth with a TD subsidiary in which each Banknorth shareholder will receive a package of US$12.24 in cash, 0.2351 of a TD common share and 0.49 shares of the new Banknorth stock, which will continue to be listed on the New York Stock Exchange. TD will be permitted to buy additional Banknorth shares up to a limit of 66 2/3% either in the open market or in specific circumstances directly from Banknorth, such as if Banknorth were looking to raise capital.

The transaction will be taxable for Banknorth shareholders for U.S. federal income tax purposes with respect to the cash and TD shares they receive. The new Banknorth shares will be tax free.

The agreement also permits TD to bid for the remaining publicly held shares in subsequent years, subject to certain limitations in the first two years, approval by a majority of designated independent directors and unaffiliated Banknorth shareholders during the first five years and approval by a majority of designated independent directors or unaffiliated Banknorth shareholders after five years. The deal, which is subject to approval by Banknorth's shareholders and by U.S. and Canadian regulatory authorities, is expected to close in February, 2005 and be immediately accretive to TD's earnings, without reliance on synergies.

"We have structured the deal this way to allow the maximum degree of flexibility for both TD and Banknorth. TD gains an important personal and commercial footprint in the U.S. while maintaining our strong capital ratios," said Clark.

"From our perspective, we are gaining access to capital and additional flexibility to allow us to continue to participate in larger acquisitions," added Ryan.

Bill Ryan will remain Chairman, President and CEO of Banknorth and will join TD's Board of Directors upon the conclusion of the deal. He will continue to be based at Banknorth's headquarters in Portland, Maine. Banknorth's experienced management team was an integral component of the deal and will remain intact.

To maintain the Banknorth board's effective working size, but at the same time reflect the interests of the majority shareholder, TD will initially be adding up to five members to the board in addition to the current 14 Banknorth directors, all of whom are expected to remain on the board following the closing. A majority of both the full board and the directors appointed by TD will be required for any motion put before the Board to reflect TDBFG's majority shareholder position. TD will have the right to elect a majority of board members generally as long as it remains a majority shareholder.

Maintaining Community Roots

"Banknorth has a long standing reputation of being committed to the communities in which it operates and we intend to continue with that same approach," said Ryan. "We are pleased that our two organizations have the same focus on meeting the needs of our customers in the local markets we serve. We think that there is a good cultural fit between the two banks," added Clark.

TD Bank Financial Group and Banknorth will hold an analyst conference call and meeting today, August 26th, 2004 at 8:45 a.m. ET to discuss the details of the transaction. The call will feature a presentation by Ed Clark, President and CEO of TD Bank Financial Group and Bill Ryan, Chairman, President and CEO of Banknorth. A question and answer period for pre-qualified analysts and investors will follow the formal presentation. The call will be webcast live via TD's website at www.td.com/investor as well as the investor relations section of Banknorth's website at www.banknorth.com. Pre-qualified analysts and investors may access the call by calling 416-640-1907 or toll free at 1-800-814-4860. Media may also access the call at those numbers, but in listen-only mode. Recordings of the presentation will be archived on TD's website www.td.com following the webcast and will be available for replay for a period of at least one month. The replay of the webcast will also be accessible from the investor relations section of Banknorth's website at www.banknorth.com.