TD Banknorth Inc. of Portland, Maine, contributed a smaller share of Toronto-Dominion Bank's profits in the February-April quarter than a year earlier.
TD Banknorth earned $52.8 million, 250% more than a year earlier, thanks to its Jan. 31 acquisition of Hudson United Bancorp. of Mahwah, N.J. But its contribution to Toronto-Dominion's bottom line slipped from 11.3% to 8%.
The Canadian giant bought into the Maine company in March 2005 and now owns 56.2%.
Toronto-Dominion, which has $348 billion of assets, said Thursday that its earnings in the quarter, the second of its fiscal year, came to $661 million - 39% more than a year earlier - under Canadian generally accepted accounting principles. The per-share figure was 90 cents.
Revenue totaled $2.8 billion; TD Banknorth's contribution was $412.9 million, or 14.8%, up from 4.5% a year earlier.
TD Banknorth's expenses also rose, to $254.4 million - 13.5% of Toronto-Dominion's total, up from 3.8%.
Eighteen percent of Toronto-Dominion's revenue, the same fraction as a year earlier, came from its U.S. businesses, which now include its 34.3% of TD Ameritrade.
Brenda Lum, a fixed-income analyst at Dominion Bond Rating Service Ltd. in Toronto, said she is not expecting a lot from the U.S. business right now. They are "really in a growth mode," she said. The Canadian business "is much more mature."
She predicted better performance from the U.S. businesses later this year and next year. The company "continues to be on track" with its U.S. strategy, she said.
Tom Kersting, an analyst at Edward Jones in St. Louis, said investors are paying close attention to that strategy because "the Canadian banking industry is quite consolidated."
"Growth is difficult to come by" in Canada, Mr. Kersting said, "so a lot of these banks are looking for growth engines outside of Canada. The U.S. is going to play a big role in TD's future growth plans."
TD Banknorth reported April 26 that it earned $76.2 million in the January-March quarter, 123% more than a year earlier, or 36 cents a share. Operating earnings rose 3%, to $115.6 million, or 55 cents a share.
The $41 billion-asset company said stiffer competition for deposits and a tough rate environment crimped profits.
Ed Clark, Toronto-Dominion's president and chief executive officer, said TD Banknorth "continues to face a tough interest rate environment, but it is moving rapidly to adjust."
His company is pleased with "the quality of the earnings that TD Banknorth is now producing," Mr. Clark said on a conference call.
