DBRS Comments on TD Acquisition of Assets and Liabilities of Three Florida Banks from FDIC

DBRS has today commented on The Toronto-Dominion Bank (TD or the Bank) announced acquisition of the assets and liabilities of Riverside National Bank of Florida, First Federal Bank of North Florida and AmericanFirst Bank in a transaction assisted by the Federal Deposit Insurance Corporation (FDIC). There are no rating implications for TD at this time.

The acquisitions will accelerate TD’s growth strategy in the fast-growing market of Florida by adding 69 branches, predominately in central Florida and along the Treasure Coast, that are geographically complementary to TD’s existing Florida banking franchise, for a total of approximately 100 locations. There is very little overlap of stores.

This transaction has limited downside credit risk as there is a loss-sharing agreement in place (FDIC has a share in 50% of the loan losses up to certain thresholds and then 80% in excess of those thresholds). It also has no material impact on earnings and a minimal impact on capital. DBRS notes that TD purchased $3.8 billion in assets, including $2.1 billion in loss-covered loans, and assumed $3.1 billion in deposits.

The purchases are consistent with TD’s long-term plans to maintain its conservative retail/wholesale mix strategy.

DBRS believes one of the challenges facing TD is the conversion of all three banks, but the Bank has a breadth of experience in this area.

Based in Toronto, The Toronto-Dominion Bank’s services include a full-service banking operation in retail and wholesale banking and wealth management in Canada, U.S. retail banking and global discount brokerage. In Canada, TD has one of the largest personal banking operations, with ten million customers.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Global Methodology for Rating Banks and Banking Organizations, which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.