e425
Filed by The Toronto-Dominion Bank
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: The South Financial Group, Inc.
Commission File No.: 0-15083
This filing, which includes communications sent to employees of TD Bank, Americas Most
Convenient Bank and The Toronto-Dominion Bank on September 1, 2010, may contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995 and
comparable safe harbour provisions of applicable Canadian legislation, including, but not limited
to, statements relating to anticipated financial and operating results, the companies plans,
objectives, expectations and intentions, cost savings and other statements, including words such as
anticipate, believe, plan, estimate, expect, intend, will, should, may, and other
similar expressions. Such statements are based upon the current beliefs and expectations of our
management and involve a number of significant risks and uncertainties. Actual results may differ
materially from the results anticipated in these forward-looking statements. The following
factors, among others, could cause or contribute to such material differences: the ability to
obtain the approval of the transaction by The South Financial Group, Inc. shareholders; the ability
to realize the expected synergies resulting from the transaction in the amounts or in the timeframe
anticipated; the ability to integrate The South Financial Group, Inc.s businesses into those of
The Toronto-Dominion Bank in a timely and cost-efficient manner; and the ability to obtain
governmental approvals of the transaction or to satisfy other conditions to the transaction on the
proposed terms and timeframe. Additional factors that could cause The Toronto-Dominion Banks and
The South Financial Group, Inc.s results to differ materially from those described in the
forward-looking statements can be found in the 2009 Annual Report on Form 40F for The
TorontoDominion Bank and the 2009 Annual Report on Form 10K of The South Financial Group, Inc.
filed with the Securities and Exchange Commission and available at the Securities and Exchange
Commissions Internet site (http://www.sec.gov).
The proposed merger transaction involving The Toronto-Dominion Bank and The South
Financial Group, Inc. will be submitted to The South Financial Group, Inc.s shareholders for their
consideration. The Toronto-Dominion Bank has filed with the SEC a Registration Statement on Form
F-4 and a definitive proxy statement/prospectus and each of The Toronto-Dominion Bank and The South
Financial Group, Inc. may file with the SEC other documents regarding the proposed transaction.
Shareholders are encouraged to read the definitive proxy statement/prospectus regarding the
proposed transaction, as well as other documents filed with the SEC because they contain important
information. Shareholders may obtain a free copy of the definitive proxy statement/prospectus, as
well as other filings containing information about The Toronto-Dominion Bank and The South
Financial Group, Inc., without charge, at the SECs Internet site (http://www.sec.gov). Copies of
the definitive proxy statement/prospectus and the filings with the SEC that will be incorporated by
reference in the definitive proxy statement/prospectus can also be obtained, without charge, by
directing a request to The Toronto-Dominion Bank, 15th Floor, 66 Wellington Street West,
Toronto, ON M5K 1A2, Attention: Investor Relations, 1‑866‑486‑4826, or to The South Financial
Group, Inc., Investor Relations, 104 South Main Street, Poinsett Plaza, 6th Floor,
Greenville, South Carolina 29601, 1‑888‑592‑3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., 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 The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
its notice of annual meeting and proxy circular for its 2010 annual meeting, which was filed with
the Securities and Exchange Commission on February 25, 2010, and the above-referenced Registration
Statement on Form F-4, which was filed with the SEC on August 24, 2010. Information regarding The
South Financial Group, Inc.s directors and executive officers is available in The South Financial
Group, Inc.s proxy statement for its 2010 annual meeting, which was filed with the Securities and
Exchange Commission on April 07, 2010. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by security holdings or
otherwise, is contained in the definitive proxy statement/prospectus and other relevant materials
filed with the SEC.
THE FOLLOWING IS A COMMUNICATION SENT TO EMPLOYEES OF TD BANK, AMERICAS MOST
CONVENIENT BANK AND
THE TORONTO-DOMINION BANK ON SEPTEMBER 1, 2010.
Daily News Brief
September 1, 2010
Compiled by Jimmy A. Hernandez, Corporate and Public Affairs
TD BANK NEWS
1. |
|
TD Bank Rolls Out Mobile Banking Apps to Streamline Customer Service Mobile Commerce
Daily [Article also ran in FeelAndriod.com, IntoMobile.com, iStockAnalyst.com and other Websites.] |
TD Bank is streamlining its customer service operations via mobile applications for Apples iPhone
and Googles Android-powered devices. [TD Banks Rebecca Acevedo is quoted.]
2. |
|
A look at the 50 Largest US Banks and Thrifts by Assets in the 2nd Quarter The
Associated Press |
SNL Financials list ranks the largest U.S. banks and thrifts by assets. The following list gives
the current ranking, the bank or thrifts name, its previous ranking, its headquarters, its total
assets (in billions) and its total deposits (in billions). [TD Bank is mentioned.]
3. |
|
South Financial Sets Date for Merger Vote SouthCarolina1670.WordPress.com |
South Financial Group shareholders will vote on the proposed merger with TD Bank Financial Group on
Sept. 28 in Greenville, the company said in a filing with the US Securities and Exchange
Commission.
4. |
|
Be Happy: Be Your Own Boss Independent Retailer |
At last, the secret to happiness has been discovered: be a small business owner. A survey conducted
by TD Bank reveals that 69 percent of American small business owners polled said they would
describe themselves as, very happy.
5. |
|
First Niagaras Deal Also Opens Doors for Its Rivals American Banker |
If the best defense is a good offense, expect local community banks to take the fight to their
newest Connecticut competitor, First Niagara Financial Group of Buffalo. [TD Bank is
mentioned.]
6. |
|
PNC Pledges More Than $900 Million in Community Reinvestment The Record (NJ) |
Page 1 of 19
PNC Financial Services Group Inc. has agreed to make more than $900 million in community
reinvestments in New Jersey over the next three years, renewing a previous agreement, the company
said Tuesday. [TD Bank is mentioned.]
7. |
|
City Eyes Action vs. TD Over Beach Funds Gloucester Times (MA) |
Cooperation between TD Bank and the city on the investigation of what happened to $5,000 in missing
beach parking revenues has broken down, according to city officials, who are now threatening legal
action.
INDUSTRY NEWS
1. |
|
FDIC Finds 829 U.S. Banks at Risk The Wall Street Journal |
More than a 10th of U.S. banks remain at risk of failure even as some industry indicators,
including credit quality, show some nascent signs of revival.
2. |
|
Credit Losses Could Stay High Longer in This Cycle American Banker |
The banking industrys loan losses could stay elevated for years, recent federal data suggests,
even after appearing to peak in late 2009.
3. |
|
Stonegate Bank to Buy Fort Myers Bank South Florida Business Journal |
Stonegate Bank is continuing its growth tear. The Fort Lauderdale-based bank (OTCBB: SGBK) has
signed a deal to merge with Southwest Capital Bancshares, owner of Fort Myers-based Southwest
Capital Bank.
4. |
|
Florida Bank Losses Deepen to $263M South Florida Business Journal |
While the Federal Deposit Insurance Corp. trumpeted the news that national bank earnings were the
highest in nearly three years, Florida banks continued taking a beating in the second quarter.
5. |
|
Bair Promises Quick Turnaround for FDIC Resolution Rules American Banker |
Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday the agency would soon publish an
interim rule on its new resolution authority over systemically important banking companies and
certain nonbanks.
TD BANK NEWS
1. |
|
TD Bank Rolls Out Mobile Banking Apps to Streamline Customer Service
By Giselle Tsirulnik |
August 31, 2010 Mobile Commerce Daily [Article also ran in FeelAndriod.com, IntoMobile.com,
iStockAnalyst.com and other Websites.]
TD Bank is streamlining its customer service operations via mobile applications for Apples iPhone
and Googles Android-powered devices.
Page 2 of 19
Initially, customers can use the mobile banking applications to find stores and ATMs, check
deposit, loan and credit card balances, view pending transactions and account history, transfer
funds and make bill payments.
We worked to develop an app that suits the needs of our customers and keeps to our brand promise
to be simple, convenient and easy to use, said Rebecca S. Acevedo, public relations manager at TD
Bank, Portland, ME. This is just the first in a series of releases for mobile banking for us.
There will be exciting new additions to our app features in the future, she said. Our brand
mission has always been to be Americas Most Convenient Bank. That means having delivery channels
that meet our customers needs.
This is another way for us to do that. Now customers can do their banking on the go, when they
want too.
Mobile banking has seen a huge increase in usage and in institutions offering the service in the
last year, according to IDC Financial Insights 2009 Consumer Mobile Banking Preferences Survey
Results.
IDC Financial Insights recommends that financial institutions begin expanding what they offer,
marketing these offerings as easier to use, and providing more opportunities around payments and
fund movement.
Financial institutions that can capitalize on this will be better positioned to both obtain and
retain customers.
TD Bank is ahead of the curve with the launch of its mobile banking applications.
A factor driving the growth of mobile banking is the quick growth of smartphones.
Demographics are also driving momentum behind mobile as younger demographics are more likely to
conduct banking over the mobile device than they are using a traditional PC or laptop
We choose iPhone and Android because these are the devices our customers are using and requested,
Ms. Acevedo said. We anticipate that the app for the BlackBerry will be released in the upcoming
months.
Top
2. |
|
A look at the 50 Largest US Banks and Thrifts by Assets in the 2nd Quarter
August 31, 2010 The Associated Press |
SNL Financials list ranks the largest U.S. banks and thrifts by assets. The following list gives
the current ranking, the bank or thrifts name, its previous ranking, its headquarters, its total
assets (in billions) and its total deposits (in billions).
1. Bank of America Corp., 1, Charlotte, N.C., $2,343.9, $956.5
2. JPMorgan Chase & Co., 2, New York, $2,031.0, $887.8
Page 3 of 19
3. Citigroup Inc., 3, New York, $1,937.7, $814.0
4. Wells Fargo & Co., 4, San Francisco, $1,225.9, $815.6
5. HSBC North America Holdings Inc., 5, New York, $334, $116.7
6. U.S. Bancorp, 6, Minneapolis, $283.2, $183.1
7. PNC Financial Services Group Inc., 7, Pittsburgh, $259.9, $178.7
8. Bank of New York Mellon Corp., 8, New York, $237.5, $143.7
9. Capital One Financial Corp., 9, McLean, Va., $197.5, $117.3
10. SunTrust Banks Inc., 10, Atlanta, $170.7, $118.7
11. TD Bank US Holding Co., 11, Portland, Maine,$170.7, $137.6
12. State Street Corp., 13, Boston, $162.1, $95.7
13. BB&T Corp., 12, Winston-Salem, N.C., $155.1, $104.5
14. Citizens Financial Group Inc., 14, Providence, R.I., $140.0, $93.9
15. Regions Financial Corp., 15, Birmingham, Ala., $135.3, $96.3
16. Fifth Third Bancorp, 16, Cincinnati, $112.0, $82.1
17. KeyCorp, 17, Cleveland, $94.2, $62.4
18. ING Bank FSB, 18, Wilmington, Del., $90.0, $77.4
19. UnionBanCal Corp., 19, San Francisco, $84.3, $66.3
20. Santander Holdings USA Inc. 20, Boston, $83.1, $41.4
21. Northern Trust Corp., 21, Chicago, $80.0, $58.0
22. BancWest Corp., 22, San Francsico, $75.3, $46.8
23. M&T Bank Corp., 23, Buffalo, N.Y., $68.2, $47.5
24. Harris Financial Corp., 24, Wilmington, Del., $65.2, $31.9
25. BBVA USA Bancshares Inc., 25, Houston, $65.1, $46.1
26. Discover Financial Services, 26, Riverwoods, Ill., $62.2, $35.0
27. Hudson City Bancorp Inc., 27, Paramus, N.J., $60.9, $25.2
28. Comerica Inc., 28, Dallas, $55.9, $39.8
Page 4 of 19
29. Marshall & Ilsley Corp., 29, Milwaukee, $53.9, $39.6
30. Zions BanCorp., 31, Salt Lake City, $52.1, $42.0
31. Huntington Bancshares Inc., 30, Columbus, Ohio, $51.8, $39.8
32. Charles Schwab Bank, 32, Reno, Nev., $49.8, $45.9
33. Popular Inc., 34, Hato Rey, Puerto Rico, $42.4, $27.1
34. E-Trade Bank, 33, Arlington, Va., $42.4, $28.0
35. New York Community Bancorp Inc., 35, Westbury, N.Y., $42.0, $22.4
36. USAA FSB, 36, San Antonio, Texas, $41.7, $37.3
37. Synovus Financial Corp., Columbus, Ga., $32.4, $26.3
38. First Niagara Financial Group Inc., 46, Buffalo, N.Y., $29.2, $18.9
39. OneWest Bank FSB, 38, Pasadena, Calif., $28.0, $14.7
40. RBC BanCorp., 39, Raleigh, N.C., $26.5, $19.3
41. First Horizon National Corp., 40, Memphis, Tenn., $26.3, $15.2
42. BOK Financial Corp., 41, Tulsa, Okla., $23.7, $16.1
43. Associated Banc-Corp, Green Bay, Wisc., $22.8, $17.0
44. Peoples United Financial Inc., Bridgeport, Conn., $22.0, $15.8
45. City National Corp., 47, Los Angeles, $21.2, $18.0
46. First Citizens BancShares Inc., 44, Raleigh, N.C., $21.1, $17.8
47. East West Bancorp Inc., 45, Pasadena, Calif., $20.0, $14.9
48. Astoria Financial Corp., 48, Lake Success, N.Y., $19.7, $12.2
49. GE Money Bank, 50, Draper, Utah, $19.2, $12.3
50. Commerce Bancshares Inc., no ranking, Kansas City, Mo., $18.4, $14.5
Top
3. |
|
South Financial Sets Date for Merger Vote
September 1, 2010 SouthCarolina1670.WordPress.com |
Page 5 of 19
South Financial Group shareholders will vote on the proposed merger with TD Bank Financial Group on
Sept. 28 in Greenville, the company said in a filing with the US Securities and Exchange
Commission.
The meeting, set for 10:30 a.m., will take place at Poinsett Plaza, the same building that houses
South Financials corporate headquarters.
Lest there be any doubt where the company comes down on the deal, this line should set the record
straight: The TSFG board of directors unanimously recommends that you vote FOR the approval of
the plan of merger.
In May, South Financial announced it would be acquired by TD for 28 cents a share. As recently as
early 2008, TSFG was trading for $17 a share.
Hurt by more than two years of staggering losses, South Financial was in a world of trouble when
the deal was announced. According to a recent filing with the US Securities and Exchange
Commission, TSFG and TD entered into a share-purchase agreement that called for TSFG to issue and
sell 100 shares of preferred stock in consideration for every 1,000 shares of TD common stock.
The stock issuance was an essential component of TDs willingness to enter into the deal, which, in
turn, was essential to maintaining South Financials financial viability, according to the SEC
filing.
While NASDAQ rules generally would require shareholder approval prior to the issuance of this kind
of preferred stock, NASDAQs shareholder-approval rules provide an exception in cases where the
delay involved in securing shareholder approval would seriously jeopardize the financial viability
of the listed company.
In accordance with that exception, TSFGs audit committee unanimously determined that the delay
necessary in securing shareholder approval prior to the issuance of the preferred stock to TD would
seriously jeopardize the financial viability of TSFG, according to the SEC filing.
In reaching this conclusion, the audit committee considered various factors, including the lack of
alternatives available to meet TSFGs capital and other regulatory obligations and prevent the
ultimate seizure of Carolina First Bank and resulting failure of TSFG, the filing added.
Interestingly, following announcement of the merger, NASDAQ informed TSFG that it had interpreted
the rules to not apply in the specific context of the merger.
But because there is no process for appealing NASDAQs conclusion other than as part of the
delisting appeal process and the preferred stock remains an important requirement under the terms
of the proposed transaction, South Financial will proceed with the preferred stock issuance, the
company said.
South Financial has lost more than $1.7 billion over the past two-plus years, including $400
million during 2010.
Top
Page 6 of 19
4. |
|
Be Happy: Be Your Own Boss
September 1, 2010 Independent Retailer |
At last, the secret to happiness has been discovered: be a small business owner. A survey conducted
by TD Bank reveals that 69 percent of American small business owners polled said they would
describe themselves as, very happy. In addition, 61 percent said they think they are happier than
their peers. Moreover, the stress of running a business during the worst economy since the Great
Depression has not turned these happy entrepreneurs off to the advantages of capitalism, since 87
percent say in the next five years, they are just as likely to still be operating their own
companies.
The poll, released as part of the TD Small Business Happiness Index, looked into the behaviors and
attitudes of North American small business people in a dozen metropolitan areas across the United
States and Canada. Those surveyed were even happier when contemplating the alternative, since 90
percent thought they would be more content owning a business than working for someone else. The
survey also found a correlation between doing what you love and spending a lot of time doing it.
The majority of small business owners surveyed work more than 50 hours a week, and 39 percent work
more than 60 hours weekly.
Why are these small business owners so glad to be their own bosses? Of all those polled, 97 percent
said they are motivated by a sense of pride and accomplishment, while 94 percent valued a strong
personal connection to their employees. These business owners have firm ideas of the advantages and
disadvantages of the path they have chosen. Their top three benefits, according to the study: 1)
being their own boss, 2) setting their own schedule, and 3) being in control or being able to make
their own decisions. And their top three challenges: 1) managing budgets and cash flow, 2) the
responsibilities, risks and stress associated with owning their companies, and 3) the long hours
and limited time off.
The study also found that Americans are more content with their lot in life than Canadians. Those
working north of the border were slightly less happy, and fewer thought they would be in business
in five years. Both are working the same hours, on average, but Canadians say they are having a
harder time managing their workforces.
The TD Small Business Happiness Index looked at the reported activities and feelings of small
business owners in 12 North American metro areas. Their companies employed five to 50 people. The
research was conducted by Environics Research and consisted of a poll of 1,213 small business
owners in North America in May and June of 2010, including 502 U.S. small business people.
Top
5. |
|
First Niagaras Deal Also Opens Doors for Its Rivals
By Kate Davidson
August 31, 2010 American Banker |
If the best defense is a good offense, expect local community banks to take the fight to their
newest Connecticut competitor, First Niagara Financial Group of Buffalo.
Page 7 of 19
After it completes its deal for NewAlliance Bancshares in New Haven, the upstate New York company
will bring more than $29 billion of assets to bear in its bid for market share in New England.
But First Niagaras expansion strategy could yet backfire, and allow other sizable Connecticut
banks to pick up former NewAlliance customers.
As with all new entrances, theres opportunity to try to take market share and market yourself as
the local lender, as the homegrown bank, said Damon DelMonte, an analyst with KBW Inc.s Keefe,
Bruyette & Woods Inc. I think thats going to be a challenge for First Niagara, and its also
going to be a positive for some of the in-market guys.
They include the $17.9 billion-asset Webster Financial in Waterbury and the $21.3 billion-asset
Peoples United Financial in Bridgeport. Each is smaller by assets than First Niagara will be after
buying NewAlliance , but theyre no pushovers.
They go up against the big guys every day, DelMonte said.
As of June 30, 2009, Webster and Peoples ranked second and third in deposit share in Connecticut,
with 12.53% and 10.35%. They trailed only Bank of America in deposit share in the state, and bested
Wells Fargos Wachovia Bank and Toronto-Dominions TD Bank. NewAlliance was fifth, with 5.12% of
the states deposits.
James Smith, Websters chief executive, said in an interview last week that he hoped to benefit
from the natural fallout that occurs when one company buys another.
Any kind of merger creates disruption in the market, Smith said,andcustomers sometimes will look
around and say, Am I happy where I am?
Analysts said New England customers may have a tough time getting past the First Niagara name, and
its association with New York. New Englanders have especially strong brand identification, said
Collyn Bement Gilbert at Stifel, Nicolaus & Co.
I would think it would be harder to build the First Niagara brand in Connecticut than it would in
Pennsylvania or New York, Gilbert said.
Meanwhile, the New England press has been negative on the deal, which is to close in the second
quarter of 2011, and some NewAlliance shareholders filed a class action against it in late August.
The outcry over the transaction is reminiscent of the controversy that ensued when the target
company then New Haven Savings Bank announced in 2003 that it was converting to a fully public
concern.
Critics predicted the bank would eventually sell to an out-of-state company,but at the time it
insisted it was committed to New Haven.
So when the First Niagara deal was announced Aug. 19, community leaders called it a betrayal.
New Haven Mayor John DeStefano, perhaps the most vocal opponent of the conversion, maintained that
the First Niagara deal would make it tougher for local residents to obtain
Page 8 of 19
loans because decisions would be made by managers in Buffalo, not New Haven. (First Niagara has
said much of the decision-making would remain at the local level.)
An editorial Aug. 24 in the New Haven Register which supported the conversion in 2004 blasted
the banks leaders, especially NewAlliance Chief Executive Peyton Patterson and her compensation
package. (Under the agreement, Patterson would receive up to $22.4 million even if she stays on
in a new role at First Niagara because her CEO position is being terminated.)
And last week, two shareholders filed a lawsuit in Connecticut Superior Court asking a judge to
block the sale. They claimed NewAlliance and its board of directors violated their fiduciary duty by
conspiring to sell the company to enrich themselves.
John Carusone, president of Bank Analysis Center Inc. in Hartford, Conn., said he doubts the uproar
in New Haven proper will make much of a difference in the long run. Connecticut is a big state, he
said; the NewAlliance franchise stretches far beyond New Haven.
The mayor of New Haven is an important constituent in the greater New Haven area, but NewAlliance
is a southern New England regional player, and his reach is within a 50-mile radius of Yale
University, and thats about it, Carusone said. So I think that there are a variety of
constituents that First Niagara has to address.
Meanwhile, Gilbert said First Niagara has proven to be a formidable competitor in Pennsylvania,
where it has completed two successful acquisitions of struggling banks in less than two years.
First Niagara has shown that when they move into a new market, they move in with a deliberate
strategy and the intention to grow, Gilbert said. Mark Fitzgibbon, an analyst at Sandler ONeill &
Partners LP, said the company may be able to pick up market share by offering commercial products
to existing customers of NewAlliance , which has operated more as a conventional thrift.
He pointed to North Fork Bank in Mattituck, N.Y. on Long Islands North Fork and Banknorthin
Portland, Maine, as examples of companies that overcame concerns about how their names would play
outside their primary market.
John Koelmel, First Niagaras chief executive, said in an interview last week that he had no doubt
the company could pick up market share in its new turf, especially as NewAlliance is much healthier
than the banks it purchased earlier.
Being able to turn the tide as quickly as we have in other markets gives us real comfort in our
ability to do it under fairly onerous circumstances, Koelmel said. This is all excitement and
energy about how we can help Peyton [Patterson] and her team take an even bigger slice of the pie
from the very competition that may be sitting back and licking their chops a bit.
Top
6. |
|
PNC Pledges More Than $900 Million in Community Reinvestment
By Richard Newman
September 1, 2010 The Record (NJ) |
Page 9 of 19
There is a lot of hand-holding in the process. We have less of a default rate than we have with
conventional mortgages. We want mortgages that are actually performing.
WILLIAM BEST, A SENIOR VICE PRESIDENT FOR PNC
PNC Financial Services Group Inc. has agreed to make more than $900 million in community
reinvestments in New Jersey over the next three years, renewing a previous agreement, the company
said Tuesday.
The accord negotiated with non-profits New Jersey Citizen Action and the Housing and Community
Development Network of New Jersey includes a pledge to make $550 million in business loans in
targeted areas, which in northern New Jersey may include low- and moderate-income neighborhoods in
cities such as Paterson, Passaic and Hackensack.
The agreement also includes $211 million in discount home-equity and home-improvement loans, $66
million in mortgages at discounted rates and other investments geared to low- and moderate-income
individuals and neighborhoods.
Extending this agreement reflects our historic focus on providing community and economic
development opportunities for local communities that deliver sustainable, tangible results, said
Linda Bowden, regional president for Pittsburgh-based PNC in northern New Jersey, in a statement.
In the past three years, PNC made more than $1 billion in similar investments in the state, William
Best, a senior vice president for PNC, said Tuesday during a luncheon in Newark where the agreement
was announced.
Best said that despite the housing-market downturn over the past two years and soaring
foreclosures, the loans which help the bank meet federal community reinvestment requirements
are performing well because borrowers qualifications are carefully assessed and the buyers receive
homeownership and credit counseling through Citizen Action.
There is a lot of hand-holding in the process, Best said. We have less of a default rate than we
have with conventional mortgages. He declined to provide specific numbers. Best said the bank
holds most of the discount-rate home loans on its books instead of selling them on the secondary
market for a quick profit.
We want mortgages that are actually performing, he said. As of June 30, PNC had $838 million in
non-performing residential mortgages out of a portfolio of $18.58 billion in residential mortgages,
according to documents filed with regulators.
The bank also promises to provide funding to help non-profit developers build affordable housing
and community-services facilities, make millions of dollars in investments in low-income housing
tax credit projects, and give grants to assist low- and moderate-income home buyers in making down
payments. The bank also will make grants and loans available to people with disabilities.
This agreement came out of a long-term relationship, said Phyllis Salowe-Kaye, executive director
of New Jersey Citizen Action. This is at least the third time we renewed with PNC.
Page 10 of 19
The best way to kick-start the local economy is to give people the tools they need to live in
homes they can afford, said Diane Sterner, executive director of the Housing & Community
Development Network of New Jersey.
Borrowers earning up to 80 percent of the median income will get a half-percentage-point discount
on mortgage rates, she said. Meanwhile, the two non-profits are negotiating a renewal of a
community reinvestment agreement with TD Bank that expires next year. That three-year accord, which
TD inherited from its March 2008 acquisition of Commerce Bancorp, was for $700 million.
Sandra Bartlett of Maplewood, a retired Essex County welfare caseworker, said community
reinvestment lending worked well for her. She bought a two-family house 16 years ago for $162,000
with a discounted mortgage rate through a homeownership program where Citizen Action partnered with
First Union, now Wachovia.
At that time, people were paying 8, 8.5 percent and I got 5.65, Bartlett said. I could afford it
because the rate was low.
She still lives there, renting out the upstairs apartment to help pay the mortgage. I love my
house, she said. Its been a wonderful ride.
Top
7. |
|
City Eyes Action vs. TD Over Beach Funds
By Patrick Anderson
September 1, 2010 Gloucester Times (MA) |
Cooperation between TD Bank and the city on the investigation of what happened to $5,000 in missing
beach parking revenues has broken down, according to city officials, who are now threatening legal
action.
The bank has yet to follow up on their commitment to have the appropriate bank officers get in
touch with the city, Mayor Carolyn Kirk said Tuesday.
If we dont hear back by the end of the week, we will escalate with a written correspondence to
proper bank officials, she added. We will pursue a course of action different from what we are
trying to accomplish cooperatively.
Money collected from visitors at the citys beach parking lots began disappearing in June. First,
managers suspected sloppiness or theft by beach workers was to blame, and one worker was fired on
July 2.
But during the busy Fourth of July weekend, the discrepancies between what was being collected and
what was ending up in the citys account with TD Bank grew.
That prompted Gloucester detectives and Treasurer Jeffrey Towne to conduct an experiment: each
independently counted the cash coming from the beach before dropping it in the deposit box.
What they found was that the amount deposited was not matching the total credited by TD Bank to the
account.
Page 11 of 19
Since then, TD Bank agreed to perform an internal investigation running parallel to the probe
conducted by Gloucester detectives.
But neither investigation has broken the case.
Towne said that surveillance tapes had shown unspecified questionable activity and lax security
controls at the bank, but nothing that could prove conclusively what had happened to the citys
money.
Police since requested additional video tapes; it is unclear what they revealed.
Meanwhile, TD Bank has been silent about the results of its internal investigation and is not
returning Townes phone calls. The last known contact between the bank and city over the missing
money was at the end of July
I havent heard anything from them, Towne said.
Top
INDUSTRY NEWS
1. |
|
FDIC Finds 829 U.S. Banks at Risk
By Michael R. Crittenden
September 1, 2010 The Wall Street Journal |
More than a 10th of U.S. banks remain at risk of failure even as some industry indicators,
including credit quality, show some nascent signs of revival.
The Federal Deposit Insurance Corp. said Tuesday that 829 of the nations roughly 7,800 banks were
on its problem list at the end of June, up from 775 at the end of the first three months of the
year. Already 118 banks have failed this year, well ahead of the pace set last year when 140 were
seized by regulators.
Lending by U.S. banks also continues to be stunted; loan balances across all major loan categories
fell during the second quarter, and total loan and lease balances fell 1.3%. Total assets for the
industry fell 1% to $13.2 trillion during the quarter.
FDIC Chairman Sheila Bair said banks are starting to ease their lending standards for some types of
loans but warned that lending will not pick up until businesses and consumers gain the confidence
they need to hire and spend.
She suggested regulators are closely watching for any indications of how the economy is affecting
banks, but played down the potential effects of another downturn.
I think if we did have a double-dip [recession], and we are not predicting that would happen, it
would have a less profound impact, she said.
The results highlighted the diverging fortunes of larger banks and their smaller rivals. Major
firms, which benefited from outsize government support at the height of the financial crisis, have
been able to recover faster as evidenced by their ability to set aside less money for
Page 12 of 19
future loan losses. Smaller banks, conversely, increasingly make up a greater portion of the banks
on the FDICs list of troubled banks and continued to set aside more money for future loan
problems.
The number of banks in the U.S. continued to fall; the FDIC said there were 104 fewer banks in the
second quarter compared with the first quarter. And for the first time in the 38 years that data
have been collected, the FDIC didnt add any new banks.
The smaller banks are recovering, but it is at a slower rate, Ms. Bair said. It hit the large
banks first and then the community banks, so they will be lagging the larger banks in terms of
coming out of this.
Banks second-quarter profits totaled $21.6 billion, reversing a combined loss of $4.4 billion in
the second quarter of 2009. The latest results were the highest quarterly earnings since before the
financial crisis. The FDIC said nearly two-thirds of U.S. banks reported a year-over-year
improvement in their quarterly results, though 20% of firms still reported a net loss.
For the first time since 2006 the number of loans at least three months past due fell, declining
nearly 5%, and the number of loans charged off by banks declined across most major loan categories.
Banks boosted their results by setting aside less to cover future loan losses than they have in
recent quarters. The agency said firms set aside a total of $40.3 billion. That still is high by
historic standards, but the figure is the lowest total reported by the industry in two years.
Top
2. |
|
Credit Losses Could Stay High Longer in This Cycle
By Matt Monks
September 1, 2010 American Banker |
The banking industrys loan losses could stay elevated for years, recent federal data suggests,
even after appearing to peak in late 2009.
Banks chargeoffs narrowed for the second quarter in a row in the April-June period, according to
the Federal Deposit Insurance Corp. and Federal Reserve. That bolsters a view among many analysts
and investors that losses may have stopped rising permanently in the fourth quarter.
But no one is celebrating that positive development just yet. It took two years for banks loan
losses to fall from peak levels after the recession of the early 1990s. It could take even longer
this time around, given the depth of this cycle and ongoing problems in the real estate market,
industry watchers said.
If home prices dont stabilize, how can we be sure that chargeoffs have peaked? asked David
Dietze, chief investment strategist with Point View Financial Services Inc. in Summit, N.J.
Page 13 of 19
At best, were going to be in for a long slog. At worst, [the data is] forecasting another
material dip down. My guess is that that there is another round of chargeoffs.
Market watchers have been scouring recent regulatory updates on banks to determine whether the
first half of the year was the beginning of a recovery.
Though the early reads are mixed, theres a case to be made that it was, with loan losses
industrywide having fallen for six months straight. The industrys total losses narrowed 6.5% from
the prior quarter and 0.4% from a year earlier to $48.96 billion at June 30, according to the
FDICs quarterly update on the banking industry, released Aug. 31. The second quarter was the first
time in more three years that banks lowered chargeoffs year-over-year.
That data jibes with recently released Federal Reserve data showing the industrys chargeoff rate
fell for the second straight quarter, to 2.79% in the second quarter from 2.88%.
I think it peaked, said Jamie Cox, managing partner at Harris Financial Group in Colonial
Heights, Va.
Jason Goldberg, an analyst with Barclays Capital, agreed that losses are improving. But theyre
still awful by historical standards and could stay that way for a while with the unemployment rate
hovering at 9.6% and existing home sales falling 27% in July.
Ultimately, banks are a reflection of the economy, Goldberg said. While credit quality is
improving, its not a straight shot to better results. There could be some fits and starts along
the way.
The second quarters chargeoff rate was the fourth highest on record since regulators began
tracking such data in the 1930s, he said. Only the three prior quarters were worse.
In the savings and loan crisis, the industrys chargeoff rate peaked at 1.9% in the fourth quarter
of 1989. That cycles second-highest quarterly chargeoff rate didnt come for a full two years.
Goldberg said that shows that recoveries can be lengthy and volatile. Data collected from banks
filings with the Federal Reserve indicate that this one could be both, he said.
Losses rose last quarter in commercial real estate even though they fell in other areas like
residential real estate and equipment leasing, he said.
BB&T Corp., SunTrust Banks Inc., Regions Financial Corp. and Synovus Financial Corp. have large
bundles of commercial real estate loans outstanding in hard-hit regions across the South, Goldberg
said, but their CRE chargeoff rates have been relatively low in comparison to chargeoffs in other
portfolios like acquisition and development loans. Its likely that these companies are delaying
taking inevitable losses.
Banks have also been busy selling and modifying loans, he said. That could be making loan
portfolios appear healthier than they are. Most modified loans tend to go bad over time; but banks
can reclassify a past-due loan as performing after it is modified and shows a history of payments
under the new terms.
Nonaccrual loans fell in the first quarter at 17 of the 26 large and midsize banks Goldberg covers;
renegotiated loans, meanwhile, rose at 19 of them. Bank of America Corp. Citigroup
Page 14 of 19
Inc., Fifth Third Bancorp. and PNC Financial Services Group Inc., among others, reported lower
nonaccruals and higher renegotiated loans.
Loan sales also may be skewing the numbers, he said. Banks he covers sold $5.03 billion nonaccrual
assets in the quarter, about $1.23 billion more than the prior one. Elevated unemployment and
slower home sales could sap demand for nonaccrual assets in the second half of the quarter, he
said.
Top
3. |
|
Stonegate Bank to Buy Fort Myers Bank
By Brian Bandell
August 31, 2010 South Florida Business Journal |
Stonegate Bank is continuing its growth tear. The Fort Lauderdale-based bank (OTCBB: SGBK) has
signed a deal to merge with Southwest Capital Bancshares, owner of Fort Myers-based Southwest
Capital Bank.
The all-stock deal is valued at $9.4 million.
If the deal goes through, Southwest Capital Bancshares shareholders would get between 0.21 and 0.26
shares of Stonegate Bank stock for each of their shares, and could get a performance-based bonus
after three years.
Raising $42 million over the past 12 months has helped Stonegate Bank jump on growth opportunities.
In 2009, it acquired the assets of the failed Jupiter-based Integrity Bank, and then jumped into
Southwest Florida by acquiringthe failed Partners Bank and Hillcrest Bank of Florida.
It later consolidated Partners and Hillcrest into a single Naples office. That gives Stonegate five
branches, although it plans to open a branch in Coral Gables.
Southwest Capital has two branches in Fort Myers and one in nearby St. James City. It has $121
million in assets.
Stonegate Bank has $579 million in assets.
We are very excited to become affiliated with a quality team of bankers and directors as we
continue our expansion along the west coast of Florida, said David Seleski, Stonegates president
and CEO, who would remain in that position following the deal. This merger provides a unique
opportunity to accelerate our combined growth by capitalizing on the operational synergies between
two strong, well-capitalized institutions.
The banks in Lee County will be renamed Stonegate Bank, and Southwest Capital President and CEO
Bruce Schultz will oversee that county. Southwest Capitals Gerald Laboda would join Stonegate
Banks board.
This is the other pillar we will see develop more frequently as healthy banks merge or acquire one
another, while others around them fail, are taken over and sold in assisted deals, said Carlos J.
Arboleda, executive director of the national banking and financial
Page 15 of 19
services group for Stephen James Associates in Plantation. This merger is advantageous to both
institutions, and they will capture market share as a result.
Founded in 2006, Southwest Capital has concentrated much of its loans in commercial real estate,
followed by residential mortgages. Its 4.59 percent late or unpaid loan ratio as of June 30 was
below the Florida average. Its reserve for future loan losses covered 41 percent of its noncurrent
loans, which is considered below average for the industry.
Southwest Capital lost $1.4 million in the first six months of this year, following a $4.5 million
loss last year.
Meanwhile, Stonegate Bank has been profitable for 18 consecutive quarters.
Stonegate Bank shares closed up 5 cents to $14.40. The 52-week high was $16.90 on April 22. The
52-week low was $10.40 on Sept. 16.
Top
4. |
|
Florida Bank Losses Deepen to $263M
By Brian Bandell
September 1, 2010 South Florida Business Journal |
While the Federal Deposit Insurance Corp. trumpeted the news that national bank earnings were the
highest in nearly three years, Florida banks continued taking a beating in the second quarter.
Florida chartered banks lost a combined $263 million in the second quarter, nearly doubling their
$132 million loss in the first quarter. The FDIC reported that 62 percent of Florida banks lost
money, up from 55 percent in the first quarter.
Charge-offs of bad loans continued rising at Florida banks, a reverse of the national trend.
So far this year, 22 Florida banks have failed, up from 14 for all of 2009. The state has accounted
for nearly one in every five bank failures this year.
We are the new Georgia when it comes to being the bank failure capitol of the U.S., said
Miami-based banking analyst and economist Kenneth H. Thomas. The FDIC was slower to get here since
the Jacksonville office focused first on Atlanta and then came down Interstate 75 and finally over
to our side of the state.
Thomas said a big problem was the lax regulation of start-up banks, since Florida was one of only
three states where more than 100 banks were created over the past decade. The others, Georgia and
California, were also hit hard by failures.
Nationwide, a reduction in bad loan charges and improved net interest income contributed to a
combined $21.6 billion profit the industrys highest since the third quarter of 2007.
One trend that both Florida and the nation saw was a decline in late or unpaid loans. Florida banks
saw their noncurrent loan ratio decline to 7.54 percent as of June 30 from 7.72 percent on March
31. The national noncurrent loan ratio was 5.21 percent.
Page 16 of 19
Without question, the industry still faces challenges, FDIC Chairman Sheila Bair said in a news
release. Earnings remain low by historical standards, and the numbers of unprofitable
institutions, problem banks and failures remain high. But, the banking sector is gaining strength.
Earnings have grown, and most asset quality indicators are moving in the right direction.
Perhaps that is the case nationally, but not so much in Florida. The states banks held $1.95
billion in repossessed real estate at midyear, up from $1.81 billion as of March 31. Their total
loans fell 6 percent during the second quarter and a disheartening 13.4 percent during the past 12
months. Nationwide, loans declined by just 1.3 percent during the second quarter.
Its no wonder that many Floridians say they cant get a loan.
Florida banks also continued keeping relatively low reserves for future loan losses. As of June 30,
Florida banks set aside reserves for 29 percent of their noncurrent loans, which is less than half
of the national reserve coverage ratio of 65 percent. That means Florida banks could be more
vulnerable to additional loan charge-offs.
Florida had 19 banks considered undercapitalized under FDIC guidelines at midyear.
The FDIC said the number of banks on its problem list rose to 829 at midyear from 775 on March
31. However, the assets of these problem institutions declined to $403 billion from $431 billion.
That indicates that its mostly smaller banks that have trouble.
The quarter wasnt bad for everyone. The most profitable Florida-chartered banks in the second
quarter were:
|
o |
|
Miami Lakes-based BankUnited: $54.1 million |
|
|
o |
|
Jacksonville-based EverBank: $43.8 million |
|
|
o |
|
Miami-based Northern Trust N.A.: $27.7 million |
|
|
o |
|
St. Petersburg-based Raymond James Bank: $18.7 million |
|
|
o |
|
Miami-based Premier American Bank: $8.1 million |
The biggest second quarter losses at Florida banks were:
|
o |
|
Sanford-based Federal Trust Bank: $105.4 million |
|
|
o |
|
Miami-based Ocean Bank: $52.8 million |
|
|
o |
|
Tampa-based Superior Bank: $50.3 million |
|
|
o |
|
Fort Lauderdale-based BankAtlantic: $40.1 million |
|
|
o |
|
Miami-based City National Bank of Florida: $34.4 million. |
Top
5. |
|
Bair Promises Quick Turnaround for FDIC Resolution Rules
By Cheyenne Hopkins
September 1, 2010 American Banker |
Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday the agency would soon publish an
interim rule on its new resolution authority over systemically important banking companies and
certain nonbanks.
Page 17 of 19
At an agency forum on implementing the new resolution authority, Bair acknowledged market
uncertainty surrounding how the FDIC plans to use its new powers, and said the interim rule will
provide clarity on how the agency will treat creditors.
We would very much like to get an interim role in place in the fairly near future that would
provide the broad framework for our resolution authority would work, Bair said. We think its
important to clarify for the market how these rules would work.
Bair noted concern over the regulatory reform law, which was signed into law on July 21, which
allows the FDCI some flexibility to differentiate between creditors during a resolution, but said
the agency has long had that power with bank receiverships. She emphasized that the FDIC will
largely follow the same priority that bankruptcy court does.
We want to make it very clear that the claims priority we would be following will be pretty much
the same thing that is followed in bankruptcy, she said. This kind of authority... would only be
used where it would maximize recovery.
The forum brought together executives from the largest banks and regulators from the Treasury
Department, FDIC, Federal Reserve Board, Securities and Exchange Commission, Office of Comptroller
of the Currency, and Commodities Futures Trading Commission.
Bair said the FDIC will have joint rule making authority with the Fed and may have another
roundtable discussion on systemic entities filing resolution plans with the FDIC.
At the forum, regulators and bankers discussed the FDICs backup authority against systemic
companies, information collection, bridge banks, and living wills.
Bankers said they have already started developing living wills and assigning employees to oversee
their resolution plans. They also suggested the FDIC identify what assets could be included in a
bridge bank. Bankers stressed the need for speed and transparency from the FDIC on the process.
The three days you have to determine for the bridge is going to seem like an eternity for the
market and not enough time for you, said one banker.
Top
The Daily News Brief is published exclusively for the Employees of TD Bank; please do not
distribute outside the company.
The proposed merger transaction involving The Toronto-Dominion Bank and The South Financial
Group, Inc. will be submitted to The South Financial Group, Inc.s shareholders for their
consideration. The Toronto-Dominion Bank has filed with the SEC a Registration Statement on Form
F-4 and a definitive proxy statement/prospectus and each of The Toronto-Dominion Bank and The South
Financial Group, Inc. may file with the SEC other documents regarding the proposed transaction.
Shareholders are encouraged to read the definitive proxy statement/prospectus regarding the
proposed transaction, as well as other documents filed with the SEC because they contain important
information. Shareholders may obtain a free copy of the definitive proxy statement/prospectus, as
well as other filings containing information about The Toronto-Dominion Bank and The South
Financial Group, Inc., without charge, at the SECs Internet site (http://www.sec.gov). Copies of
the
definitive proxy statement/prospectus and the filings with the SEC that will be incorporated by
reference in the definitive proxy statement/prospectus can also be obtained, without charge, by
directing a request to The Toronto-Dominion Bank,15th Floor, 66 Wellington Street West,
Toronto, ON M5K 1A2, Attention: Investor Relations, 1-866-
Page 18 of 19
486-4826, or to The South Financial
Group, Inc., Investor Relations, 104 South Main Street, Poinsett Plaza, 6th Floor,
Greenville, South Carolina 29601, 1-888-592-3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., 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 The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
its notice of annual meeting and proxy circular for its 2010 annual meeting, which was filed with
the Securities and Exchange Commission on February 25, 2010, and the above-referenced Registration
Statement on Form F-4, which was filed with the SEC on August 24, 2010. Information regarding The
South Financial Group, Inc.s directors and executive officers is available in The South Financial
Group, Inc.s proxy statement for its 2010 annual meeting, which was filed with the Securities and
Exchange Commission on April 07, 2010. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by security holdings or
otherwise, is contained in the definitive proxy statement/prospectus and other relevant materials
filed with the SEC.
Page 19 of 19