425
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: Commerce Bancorp, Inc.
Commission File No.: 1-12069
This filing, which includes (i) a transcript of an interview with Ed Clark, President and CEO
of TD Bank Financial Group, on CNBC-TV on October 2, 2007 that
has been distributed to TD Bank employees and (ii) a transcript of an interview
with Ed Clark on BNN-TV on October 2, 2007 that
has been distributed to TD Bank employees, contains 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 Commerce Bancorp, Inc. stockholders; the ability to realize the expected synergies resulting for
the transaction in the amounts or in the timeframe anticipated; the ability to integrate Commerce
Bancorp, Inc.s businesses into those of TD Bank Financial Group 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 TD Bank Financial Groups and Commerce Bancorp, Inc.s results to differ materially from
those described in the forward-looking statements can be found in the 2006 Annual Report on Form
40-F for The Toronto-Dominion Bank and the 2006 Annual Report on Form 10-K of Commerce Bancorp,
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 Commerce Bancorp, Inc.
will be submitted to Commerce Bancorps shareholders for their consideration. Shareholders are
encouraged to read the proxy statement/prospectus regarding the proposed transaction when it
becomes available because it will contain important information. Shareholders will be able to
obtain a free copy of the proxy statement/prospectus, as well as other filings containing
information about The Toronto-Dominion Bank and Commerce Bancorp, Inc., without charge, at the
SECs Internet site (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings
with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be
obtained, when available, without charge, by directing a request to TD Bank Financial Group, 66
Wellington Street West, Toronto, ON M5K 1A2, Attention: Investor Relations, (416) 308-9030, or to
Commerce Bancorp, Inc., Shareholder Relations, 1701 Route 70 East, Cherry Hill, NJ 08034-5400,
(856) 751-9000.
The Toronto-Dominion Bank, Commerce Bancorp, 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, 2006, which was filed with the Securities and Exchange Commission on December 11, 2006, and its
notice of annual meeting and proxy circular for its most recent annual meeting, which was filed
with the Securities and Exchange Commission on February 23, 2007. Information regarding Commerce
Bancorp, Inc.s directors and executive officers is available in Commerce Bancorp, Inc.s proxy
statement for its most recent annual meeting, which was filed with the Securities and Exchange
Commission on April 13, 2007. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
THE
FOLLOWING IS A TRANSCRIPT OF AN INTERVIEW WITH ED CLARK, PRESIDENT AND CEO OF TD BANK FINANCIAL GROUP, ON CNBC-TV
ON OCTOBER 2, 2007 THAT
HAS BEEN DISTRIBUTED TO TD BANK EMPLOYEES.
INTERVIEW WITH ED CLARK, PRESIDENT AND CEO, TD BANK
FINANCIAL GROUP
CNBC-TV, 02 October 2007, 11:32 p.m. ET, 4:00 minutes
TRISH REGAN, ANNOUNCER: Toronto-Dominion Bank looking to double its presence in the U.S. The
Canadian banking giant announced an agreement to buy Commerce Bancorp this morning for $8.5
billion. We are joined now by Ed Clark, CEO of Toronto-Dominion Bank. Thanks for joining us, Ed.
ED CLARK, CEO, TD BANK: Hi, its great to be here, just great.
REGAN: Well, you know, youre buying a U.S. bank at a time when U.S. banks are under so much
pressure, questions of course about their balance sheets and the subprime fallout. Why expand into
the U.S. right now?
CLARK: Well I think we have a unique opportunity here. For your investors probably, or listeners,
dont realize, but in Canada, TD Bank is the most convenient bank in Canada. We run 50% longer
hours. Were the bank that has the best growth. We have dramatically faster growth and we always
win the J.D. Power award as the best service. So for the opportunity to buy Americas most
convenient bank with the best service, with a fantastic track record of producing, you know,
significantly faster growth opportunities, thats an opportunity we couldnt walk away from.
REGAN: How much is this opportunity related to the weak currency right now? When you look at the
loonie versus the dollar obviously you know a much different scenario than it would have been even
a year ago.
CLARK: Oh, yeah. I think theres several things. Really the stars all aligned because our share
price were up about 10% faster than the other Canadian banks, primarily because I took a decision
about a year ago that the U.S. market was going to, subprime market was going to cause problems,
and we got out of the structured product area. We avoided completely subprime lending, and so the
markets reflected that in our share price and then at the same time weve had this surge in the
Canadian dollar. So you put those two together, our currency is really couldnt be stronger to do
this kind of acquisition.
REGAN: Lets talk a little bit about that subprime risk. What is your sense of recession right
now? Are you worried at all about the U.S. headed towards recession?
CLARK: Were worried about it. What makes, again, this a very interesting transaction for us is
that this is a deposit rich institution that really in terms of assets has about a third of the
risk of a normal institution. And so going into a recession with a machine that knows how to grow
deposits continuously its not actually a bad decision to be in.
REGAN: So do you think we are headed in that direction?
CLARK: Well we took a view, you know, some time ago, and this you know I think when you look at the
Ameritrade situation they took a view, the same view that we did, that the mortgage banking
business wasnt a very good business to be in and that was into trouble. And I think that trouble
hasnt played itself out fully yet.
REGAN: What is your expectation as far as the Fed goes in October?
CLARK: I dont have a clear view of that. I think the Fed has probably done what its going to do for a
while would be my view. Im just going to sit back and watch.
REGAN: You think its enough then?
CLARK: I think that the problem in the financial services industry cant just be solved by rate
cuts. What we need is for financial institutions, I say, go to confession, tell us whats on your
balance sheet, take the appropriate write-downs and if they do that the market will start to clear
itself. Thats the fundamental thing that has to happen here.
REGAN: Okay. Well thank you so much for joining us. Ed Clark, congratulations again on that merger
announcement.
CLARK: Thank you for having me.
THE
FOLLOWING IS A TRANSCRIPT OF AN INTERVIEW WITH ED CLARK ON BNN-TV ON
OCTOBER 2, 2007 THAT
HAS BEEN DISTRIBUTED TO TD BANK EMPLOYEES.
INTERVIEW WITH ED CLARK, PRESIDENT AND CEO, TD BANK
FINANCIAL GROUP
BNN-TV, 02 October 2007, 6:32 p.m. ET, 15:00 minutes
HOWARD GREEN (BNN-TV): And TDs CEO told us today the Manhattan presence puts his bank on the map
in the US. Ed Clark says New Yorkers know Commerce Bancorp, so they are now paying attention to
TD. I sat down with Clark this afternoon. Well, good of you to make time for us today.
ED CLARK: Terrific, looking forward to it.
HOWARD GREEN: So this is a pretty big gulp for you guys. The biggest deal you have ever done,
really.
ED CLARK: Yes, it is. It is and its about, I think it probably feels about the same size as the
Canada Trust acquisition, and I think whats amazing is there is a lot of parallels. I mean, we
were quite struck as we work our way through because were buying a business model, were buying
people who understand that model. Were buying a growth strategy, an organic growth strategy, and I
think the most exciting thing for us is they get it. We wander the world, and Id have to say that
most bankers dont get what being a retailer is. Whereas these guys literally described themselves
as retailers that went into banking.
HOWARD GREEN: So when you made the decision to pull the trigger on this, did you have to gulp hard
because of the price, because it was the biggest one you had?
ED CLARK: Well, I think the challenge in this deal is that, you know, they have traded at a 21
times PE and we traded at 13 times PE. Tough for 13 PE to buy 21 times, and they have traditionally
traded at at least 5 to 7 percentage points, PE, above everyone else. Why? Because they have this
fantastic embedded growth. I mean, they are growing their deposits 15, 16 per cent a year, every
year, even in this current thing where people are having no growth in deposits. So can a low PE
company buy a high PE? Well, a couple of things. We got lucky. I mean, it was usual business.
Anyone that tells you that Im just smart and thats why I do well, then you know they are not that
smart.
HOWARD
GREEN: Because the owner got into trouble?
ED CLARK: Youve got to be lucky. First off, they lose their leader, so they never were for sale,
and all of a sudden, their leader, they lose their leader. So they werent primed for sale. They
didnt do all the things that people always do before they get to the sale to find some more
earnings, to look good. As it happens, we were able to avoid all the troubles that are bothering
everybody else.
HOWARD GREEN: Theres no subprime there?
ED CLARK: Theres no subprime there, there was no subprime at us, and we had got out of the
structured products. So our share price in relative terms has moved up
dramatically because of banks around the world we were clearly best positioned for all of the
events of July and August and September. So our relative price moved up. And then you top it off
with the Canadian dollar decides to go from, you know, 90 cents or 85 cents to par in the middle of
these discussions, narrowing again the value gap.
And so the issue around this acquisition isnt, Is this a great deal? Its a great deal. The
problem is can you avoid the dilution? And so we went from having a deal that would have been
dilutive, at the old exchange rate ...
HOWARD GREEN: Yes.
ED CLARK: And if our currency hadnt improved, to one thats not dilutive. So to be able to buy a
21 times PE company with huge embedded growth at no dilution is really a miracle.
HOWARD GREEN: Does this help cover up what a lot of people thought was a lousy acquisition?
ED CLARK: (laughter)
HOWARD GREEN: The Hudson United.
ED CLARK: Please, come on, Howard. Thats not a nice way to put that. I think the interesting
thing, two points Ill make. We could not have done this acquisition without having Banknorth for a
couple of reasons. One is we are a presence in the United States because of Banknorth. We know the
market, we know the people, we were a natural on everybodys list inside Commerce, to say okay, we
know these guys. Weve seen their rep. We do business with these guys. Secondly, Banknorth brings
capabilities that Commerce doesnt have. Commerce Bank has never bought a bank. Its never done an
integration. Its a 100 per cent organic growth engine.
HOWARD GREEN: Is it tough to do the integration with a company like that, though, because it sounds
like a very rah-rah bank.
ED CLARK: It is absolutely...
HOWARD GREEN: Theyve got fans versus customers. That doesnt sound like pinstripe TD.
ED CLARK: Well, no, but pinstripe TD isnt what, when youre down in retail, we dont look like
pinstripe TD. Thats what I think makes us different. Thats why we take market share every year in
Canada. The key is how were going to do this. Like how are we going to get the cost savings out
to make this pay? Well, the reality is that theres really two major sources. First, theres 138 Banknorth branches
in New Jersey, in New York, in Philadelphia. Well just roll them into the Commerce system, because
the Commerce big branches there can absorb lots of those. Those wont probably get all of them, but
well make them into the system and in fact
take the good ones in Banknorth and turn them into the Commerce model, which we hope then gets the
kind of growth that we have there. Secondly, well take the backrooms and well take the backroom costs out and thats what Banknorth
knows how to do. Its done 26 of them. Thats two every year. It knows exactly how to make that
happen. And then the third thing well do is well take the Commerce front-end system which is an
astounding sort of customer- and employee-friendly system, and well put it into the Banknorth
world.
HOWARD
GREEN: So whats the ultimate goal for TD in the U.S. or size-wise totally?
ED CLARK: Yes, so you know, everyone says how can you get size in a consolidating world? And we
have come to a view that you know to try and become a world-class wholesale bank from a Canadian
base is not a strategy that I believe in. I think we can have a top-strat franchise in the
wholesale area in Canada, which we have proven that we have now and were clearly in the top three
and some people would argue were the top bank in Canada. I think we can build a franchise alongside our banking in the U.S., but I dont believe in going
and saying, Im going to go and take on Goldman Sachs and J.P. Morgan around the world as a
wholesale bank.
HOWARD GREEN: But what about retail?
ED CLARK: But the space that is available to us is we are better retailers than any bank in the
world. And we can show you the numbers.
HOWARD GREEN: Thats a big statement. Better than anybody in the world?
ED CLARK: Absolutely, and so can we go down against Bank of America, Wachovias, a Wells Fargo head
to head and beat them. Absolutely. The interesting thing is we look at Commerce and you ask them
why are you so successful in New York? And they said, well, its not very complicated. All we do
is put a branch opposite Bank of America, CitiBank and Chase
Manhattan and well take market share. Thats exactly the strategy that we use in Canada. Put TD Canada Trust on a corner, well get more
than 25 per cent of the business because we have longer hours, 50 per cent more in Canada, and we
have better service every year.
Thats their model.
HOWARD GREEN: So before you leave this joint, ultimately, how many branches do you want in the
U.S.?
ED CLARK: Well, were already in North America, were the seventh largest bank in North America,
and so thats a 2,100 branch size but I think well probably have another 1,000 branches on top of
that and so well probably have 2,000 in the United States and 1,000 in Canada. We will be the...
we are today the only North American bank with scale on both sides of the border. I mean, we have,
with this acquisition, we have market
strength in a market area thats bigger than Canada. Were number three in New Jersey with this
acquisition. We have, as you know, top positions in New England, and we are the major force in
Manhattan.
HOWARD GREEN: So would you expand the northeast, the U.S. northeast?
ED CLARK: Well, they have already in their plan, theyre already number three in Philadelphia, they
are already going into Virginia, around Washington, D.C., and they are already in Florida.
HOWARD GREEN: So youre cutting into Centura there?
ED CLARK: Yes, well, not particularly Centura, to be honest with you, but what they have is they
have this unique model they can walk into a new territory, drop a bunch of branches, and take
market share.
HOWARD GREEN: Yes.
ED CLARK: And you look at their average size of their deposit per branch, its twice the American
average.
HOWARD GREEN: So how did you price in the risk of a possible recession in the U.S., which a lot of
people are talking about?
ED CLARK: Right, and Ive been talking about, so...
HOWARD GREEN: Yes.
ED CLARK: So we position the bank obviously overall, we thought bad things could happen here and
thats how Ive positioned the bank. What makes this unique is that this is a deposit machine, not
an asset machine, so its assets are only a third of its deposits. So that meant in terms of the
size we could buy, we were taking one third the asset risk that you would normally take, and then
when we looked at the assets, theyre very conservative lenders; doesnt mean if the U.S. goes in
recession, are we going to have loan losses in our U.S. portfolio? Yes. Am I going to have them in
my Canada portfolio? Yes. That is what banking is about. But this, you know, this is actually
uniquely positioned to ride out. It will be an outlier, just as TD Bank will be an outlier in
Canada if there is a recession.
HOWARD GREEN: And more with TDs Ed Clark after this short break.
BREAK
HOWARD GREEN: Now the rest of our chat with TDs Ed Clark. We pick up the conversation on where the
banks future opportunities lie. Does this say that youve maxed it out in Canada? Is that what the
sub-plot is here?
ED CLARK: Well, right ... What we have always said we have grown our retail business in Canada over
the last five years, we have grown our earnings 15 to 16 per cent a year. Every single year, we
significantly outgrow the other four banks in both revenue and profits. As I say, if you believe
that will go on forever, then you believe that TD Canada Trust will account for 100 per cent of the
GNP of Canada.
HOWARD GREEN: (laughter)
ED CLARK: That is not going to happen. So clearly what we have said is I want that to go on as
long as it can. I do believe when you have a superior banking model, you can just constantly eat
away at your competition and grow faster; but over time, eventually that number has to come down.
And so we had to find another growth engine. Weve got that growth engine.
HOWARD GREEN: So, was it more important for you to buy a retail bank in the U.S. than to do
something more with Ameritrade in the U.S. right now?
ED CLARK: Right.
HOWARD GREEN: Because...
ED CLARK: Theyre not choices. I think the key thing that people find hard to understand, which I
understand why they do, is they werent choices. As it happened, this came up. This was an
accidental purchase, in a sense. This was not a company primed for resale and so it was an accident
that made it available. But you know, the issues around TD Ameritrade, you know, as Joe Moglia has said, there is two
questions. One has been timing and the second is strategy. On the timing issue, there are two
elements to it. First off, we said we didnt want to do a deal so we got through the conversion and
stabilized our operating platform. And, two, you know, thinking about the obvious target, we had a view that the mortgage market was
going to go in a downturn. So why would we want to buy a huge mortgage portfolio early in the year?
HOWARD GREEN: So you think thats over now?
ED CLARK: We think its... were starting... I think itll be over in six to nine months, I dont
think its over now. I think were still starting it. But clearly, we were right on timing and to
say, dont do a deal. On the other hand, do I believe and this, when I talk a deal, I talk acquisitions, not mergers
could TD Ameritrade buy somebody? I think yes. Would TD back them? Absolutely. And can we make
money for the TD Ameritrade shareholders doing that and provide a very good price to the target?
Yes.
HOWARD GREEN: But are SAC and Janna calling you up today and saying, hey, you know, why didnt you
do something with Ameritrade rather than go buy Commerce?
ED CLARK: Well, they have been calling us up for the past year, but they also said dont worry
about the U.S. mortgage market. This is perfect. There will never be a downturn. So I dont really
find that their advice on what I should do with TD Ameritrade particularly helpful. What we have
done is maximize the value for TD Ameritrades shareholders and we will take advantage, if there is
an opportunity, to do an acquisition in the United States that uses our strategy. And core in that
strategy is TD Ameritrade has a unique banking model. Essentially, they outsource their banking to
us and so they get as approximately the same spread as if you went into the business yourself, but
with a difference. They dont pay any expenses, they dont have to put up any capital and they are
absolutely risk free. That is an unbelievable model.
HOWARD GREEN: I want to ask you one more question before we have to leave you, but its about the
other bank in the neighbourhood, who did the deal in the Caribbean today, Trinidad and Tobago,
Royal. Why are you so enamoured with the U.S. when other banks seem to be heading off into these
areas?
ED CLARK: I think because thats where our competitive advantage is. When I built Canada Trust,
all the research I did was U.S. research and I was convinced that the model of convenience and
service was a superior model. And I only found one bank in the United States, Commerce, that was
running that same model and sure enough, it proved out. I think if you look at the five Canadian
banks, each of them are trying to find where is their competitive advantage? As I put it
internally, where can you prove to me that if youre up against your competition, youll win the
ties? But youll always do a little better than the other guy because you have a distinctive
advantage. And so I think people are trying to build on their areas of strength. I think its a
great thing for Canada that the five Canadian banks, frankly, are stopping talking about mergers,
which I think is a distraction, and getting on with...
HOWARD GREEN: Never going to happen?
ED CLARK: Never going to happen. Why dont they go out in the world, go head to head with the world
competition and prove what I think all of us who run these banks believe, were better bankers than
anyone in the world. Lets prove it by actually going out and competing.
HOWARD GREEN: New phase for Canadian banks?
ED CLARK: I think so and I think its exciting. You know the reality is people think that the five
of us compete against each other. And obviously we do domestically, ferociously. But nothing could
be better for me than to have the Royal be a successful bank outside Canada because I only do as
well in Canada as Canada does, and Canada will do well if all five Canadian banks are incredibly
successful outside Canada.
HOWARD GREEN: We will leave it there, Ed. Many thanks.
ED CLARK: Take care.
HOWARD GREEN: Thats Ed Clark, President and CEO of TD Bank Financial Group. And TD wasnt the only
one doing some shopping today. Mark Bunting brings us that story and more street reaction to the
TD deal after this.