UPDATE 3-TD Bank to buy South Financial for $191.6 mln

* South Financial holders to get $0.28/shr or 0.004 TD shrs

* TD to pay $130.6 mln to U.S. Treasury

* Deal to close in TD’s third quarter

* Acquisition to add to TD’s earnings in 2011

* South Financial shares drop 55 percent

(Adds quotes from TD chief executive)

TORONTO, May 17 (BestGrowthStock) – Canada’s Toronto-Dominion Bank
(TD.TO: ) said on Monday it would buy another troubled U.S.
lender, South Financial Group Inc (TSFG.O: ), for about $191.6
million as it expands its footprint in the Southeast.

The company, which last month bought up three Florida
banks, will pay $61 million in cash or stock to South Financial
shareholders, less than half of the U.S. bank’s market value of
$144.5 million as of Friday. South Financial’s stock tumbled
after the deal was announced.

TD, the second-largest Canadian bank, will also pay $130.6
million in cash to the U.S. Treasury to buy $347 million of
South Financial’s preferred stock.

Canadian banks, healthier than most global rivals, are
moving to expand their U.S. assets, snapping up small, troubled
banks south of the border. TD is becoming one of the most
aggressive in building up its U.S. portfolio.

The transaction will give TD Bank another 176 branches in
the U.S. Southeast, including 66 in the deposit-rich Florida
market. It will also give the Canadian bank a foothold in North
and South Carolina.

Last month, TD Bank acquired assets and liabilities of
three Florida banks worth $3.8 billion from the Federal Deposit
Insurance Corp. [ID:nSGE63F0KC]

TD Chief Executive Ed Clark said the bank probably would
not announce any more acquisitions over the summer, preferring
to absorb what it has bought to date.

“If we stopped now we would be happy. We are not
strategically in danger. We’re a pretty big bank now in the
United States,” Clark said in a telephone interview.

The South Financial deal will help make TD the fifth
largest bank in South Carolina in terms of branches and fourth
largest by deposits.

TD Bank expects the deal to add slightly to its earnings in
fiscal 2011. It plans to issue about C$250 million ($241.5
million) worth of common shares in Canada before the deal
closes, likely in August.

At March 31, South Financial had a total of $8 billion in
loans and $9.8 billion in deposits.

The Greenville, South Carolina-based South Financial said
last month it will report more losses during 2010 and may enter
into a formal agreement with regulators on its capital levels.

Morgan Stanley is serving as financial adviser for South
Financial, while BofA Merrill Lynch and Goldman Sachs are
advising TD Bank.

South Financial’s shares were down 55 percent at 30 cents in
early trade on Nasdaq. TD shares dropped C$1.83 to C$71.56, in
line with a 2 percent decline by the Toronto Stock Exchange’s
S&P/TSX composite index.

Investing Advice

($1=1.04 Canadian Dollar)

(Reporting by Supantha Mukherjee in Bangalore and Pav
Jordan in Toronto)

UPDATE 3-TD Bank to buy South Financial for $191.6 mln