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This Foreign Bank Is Ready to Make an Acquisition in the U.S.

By Bram Berkowitz - Apr 1, 2021 at 12:53PM

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The bank already has a sizable operation in the U.S., and its CEO has said rising bank valuations do not deter him.

Toronto-Dominion Bank (TD 0.17%) is apparently interested in bulking up its U.S. banking operations.

"With respect to major mergers and acquisitions in the United States, we're very open," TD Bank's CEO Bharat Masrani told Bloomberg recently. "If we can find some opportunity that fits all our criteria, we will look at it very seriously, and our capital gives us that flexibility."

As the largest bank in Canada, TD Bank has more than $1.73 trillion in assets and already a sizable U.S. operation.

Picture of two people shaking hands with city background.

Image source: Getty Images.

As of June 30 of 2020, TD Bank had 1,227 branches in 16 different U.S. states, totaling more than $351 billion in deposits. That makes it one of the largest U.S. banks when just looking at its U.S. presence.

TD Bank also has $9.6 billion in excess capital above the regulatory capital levels it targets, giving it the ability to go in and make a big purchase.

In January, TD Bank purchased Wells Fargo's Canadian direct equipment-finance business, which had $1.18 billion in assets and over 120 employees.

Over the last several months, bank valuations have risen significantly, but Masrani does not see this as a deterrent.

"A seller always feels that valuations are not high enough, and as an acquirer, we always feel that they're over the top," he said. "But there are always opportunities. That's what makes markets."

TD Bank currently trades at about 182% of tangible book value, which is very solid right now and will give it decent purchasing power in an all- or part-stock deal.

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