By Carol Coultas,Business Writer

LEWISTON – TD Banknorth has roots here extending back to 1875.

But it was the bottom line – not sentimentality – that prompted the bank to expand its customer service operation on Mollison Way. And more investments are likely to come.

“It was the economics of the situation,” said Joe Hanson, executive vice president for banking operations, at a news conference Friday. “At the end of the day, that’s what’s got to work.”

Hanson and Gov. John Baldacci jointly announced TD Banknorth’s plan to sink nearly $1 million into upgrading the bank’s existing customer service center and hire up to 50 new employees. The bank was certified for the governor’s Pine Tree Zone initiative in April, making it eligible for several tax breaks.

Chief among them is the employee tax credit. Under the program, 80 percent of Maine withholding tax can be refunded to a qualifying company for 10 years. The new hires, who will handle incoming customer service calls, will earn salaries in the $26,000 to $27,000 range.

According to Roy Drukker, tax director for the bank, that averages out to about a $1,000 refund per new employee per year.

“Of the specific incentives, that’s probably the biggest one,” said Drukker.

About 100 people are already working at the TD Banknorth facility in the Fairgrounds Business Park. The tax breaks apply only to the new hires.

But there are other carrots that put Lewiston in good stead for future TD Banknorth investment. Although the bank has 50 locations in Maine, only 10 fall within a designated Pine Tree Zone, and of those, nine are in Lewiston; the other one is in Caribou.

“As we grow, we could be hiring hundreds more people,” said Drukker. “It makes sense to consider putting those people in a Pine Tree Zone.”

And if the bank decides to build or renovate a new facility, it would save all the sales taxes associated with the construction work if it built in a Pine Tree Zone. Although other factors, such as access to the turnpike and available work force, would play into future building decisions, the sales tax break is significant, said Drukker.

“Lewiston already has a lot employees … there’s an existing critical mass,” said Drukker, giving the city a potential edge in the bank’s future plans.

The bank employs about 2,600 people in Maine, nearly 1,000 of them in Lewiston.

At the news conference announcing the expansion, Hanson said it was the city, state and private partnership that made the deal possible. Baldacci picked up the theme in his remarks, calling Lewiston Mayor Lionel Guay “the real star” of the day for his efforts in promoting the city.

About 50 companies have qualified for Pine Tree Zone status in the year or so since the program has been implemented. Baldacci said he’s pleased by its success so far, noting that more than 2,600 jobs have been created through it.

Financial services companies are among the industries selected for Pine Tree incentives. Maine already provides an attractive environment to banks by structuring its tax code in a predictable manner, said Drukker.

Taxes on assets and income are fixed percentages, which in many cases result in a smaller tax burden for banks than in states with more complicated formulas, such as New Hampshire and Massachusetts.

“Everything (in Maine) is very clear. There are no surprises,” said Drukker.

Before merging with Canada-based TD Bank last summer, Maine-based Banknorth had assets of nearly $30 billion. CEO William Ryan said the merger allowed the bank to increase its assets to between $40 billion and $60 billion.