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The purchase would give the bank, which owns TD Banknorth in Portland, 85 new branches in Florida.

By EDWARD D. MURPHY, Staff Writer May 20, 2009

TD Bank appears poised to pick up a troubled Florida bank, giving the company a stronger presence in that state.

TD Bank of Canada is the parent company of TD Banknorth, headquartered in Portland and New Jersey, which will itself soon be renamed TD Bank.

TD Banknorth picked up more than two dozen branches in Florida for its parent when it bought New Jersey-based Commerce Bank. Now TD Bank stands to pick up another 85 branches, if the purchase of Bank United goes through.

Gerard Cassidy, a bank analyst for RBC Capital, said the deal could be a smart one for TD Bank.

"We have always believed buying a failed institution from the government has always been a very good financial transaction for the buyer," Cassidy said. "The government takes all the bad assets and leaves the deposits and the good assets for the buyer."

The Wall Street Journal reported Tuesday that TD Bank was working with investment banker Goldman, Sachs Group to buy Bank United, which is being auctioned by federal regulators. Bank United got into trouble with bad real estate loans in Florida, where a housing bubble has burst over the past two years, with housing values dropping at the same time borrowers are having more trouble making payments due to job losses.

Jen Carlson, a spokeswoman for TD Banknorth, declined to comment on the report.

TD Banknorth has pursued growth through acquiring other banks before. The purchase of Commerce Bank for $8.5 billion in 2007 was the biggest acquisition and gave the company a string of branches from New York to Virginia, along with a toehold in South Florida.

"It's a safer way to build your franchise in Florida," Cassidy said because of the protections the government offers as an inducement for buyers to take on troubled banks.

Commerce's business was growing in South Florida, he said, but the expansion stalled after TD Banknorth purchased it when the financial crisis occurred. Buying Bank United gets TD Bank growing again, Cassidy said.

Cassidy said Florida was a profitable state for many banks before the real estate bubble burst. But once home prices stabilize and the economy starts to pick up, it could become a growth area again.

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:

emurphy@pressherald.com