TD Banknorth Buys Hudson United for Nearly $2B

MAHWAH, NJ-TD Banknorth, a $32.1 billion institution based in Portland, ME has acquired Hudson United Bancorp, based here, the fourth largest bank actually based in New Jersey. If the deal is approved by shareholders and regulators, the combined institutions will have $41 billion in total assets, $26 billion in deposits and more than 590 branches.

"We are hoping to expand our franchise as we head south into the metro New York area, and this is a market expansion opportunity that we feel is a perfect fit," TD Banknorth CEO William Ryan said in a conference call. "This acquisition is consistent with our growth strategy."

That strategy actually went into high gear in March when Canada's Toronto-Dominion paid $4 billion for a 51% share of what was then simply known as Banknorth, and gave bank officials the mandate to grow by acquisition. TD Banknorth's existing 386 branches are in the six New England states and Upstate New York, while Hudson United's 204 branches are in New Jersey, New York, Connecticut and Pennsylvania.

Hudson United does come with some baggage, most notably a cease-and-desist order from the FDIC for failure to monitor customer accounts relating to money laundering. The bank has also struggled to make a profit in recent years. "This transaction rewards our shareholders while maintaining our focus on local community banking," Kenneth Neilson, Hudson United's chairman/president/CEO said in a statement.

But Neilson won't be part of the combined institutions for long. As part of the deal, he's scheduled to depart in Q1 2006, when the acquisition is expected to close, and Wendy Suehrstedt, a TD Banknorth exec, has already been tapped to replace him. As far as the deal itself, TD Banknorth will pay for it through a combination of cash and stock. And two Hudson United directors will be added to TD Banknorth's board.