For
the fiscal year ended
|
Commission
File Number
|
|
October
31, 2005
|
1-14446
|
The
Toronto-Dominion Bank
|
(Exact
name of Registrant as specified in its charter)
|
Canada
|
(Province
or other jurisdiction of incorporation or organization)
|
6029
|
(Primary
Standard Industrial Classification Code Number (if
applicable))
|
13-5640479
|
(I.R.S.
Employer Identification Number (if applicable))
|
c/o
General Counsel’s Office
P.O.
Box 1
Toronto
Dominion Centre
Toronto,
Ontario M5K 1A2
(416)
308-6963
|
(Address
and telephone number of Registrant’s principal executive
offices)
|
Brendan
O’Halloran, The Toronto-Dominion Bank
31
West 52nd
Street
New
York, NY
10019-6101
(212)
827-7000
|
(Name,
address (including zip code) and telephone number (including area
code)
of
agent for service in the United
States)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Shares
|
New
York Stock Exchange
|
|
Not
Applicable
|
(Title
of Class)
|
Not
Applicable
|
(Title
of Class)
|
x
|
Annual
information form
|
x
|
Audited
annual financial statements
|
Common
Shares
|
712,782,856
|
Class
A First Preferred Shares, Series I
|
16,065
|
Class
A First Preferred Shares, Series M
|
14,000,000
|
Class
A First Preferred Shares, Series N
|
8,000,000
|
Class
A First Preferred Shares, Series O
|
17,000,000
|
Yes
o
|
82-
______________
|
No
x
|
Yes
x
|
|
No
o
|
THE
TORONTO-DOMINION BANK
|
|||
DATE:
December 12, 2005
|
By:
|
/s/
CHRISTOPHER A. MONTAGUE
|
|
Name:
|
Christopher
A. Montague
|
||
Title:
|
Executive
Vice President and General Counsel
|
||
No.
|
Exhibits
|
|
1.
|
Annual
Information Form
|
|
2.
|
Management’s
Discussion and Analysis
|
|
3.
|
2005
Annual Statement and Principal Subsidiaries
|
|
4.
|
Corporate
Governance Disclosure
|
|
5.
|
Senior
Officers
|
|
6.
|
Corporate
Responsibility Report 2005
|
|
7.
|
Independent
Auditors’ Report to the Directors of Ernst & Young LLP and
PricewaterhouseCoopers LLP dated November 22, 2005 and Comments by
Auditors for U.S. Readers on Canada-U.S. Reporting
Difference
|
|
8.
|
Consent
of the Independent Auditors dated December 12, 2005
|
|
9.
|
Certification
Pursuant to Section 302 of the U.S. Sarbanes-Oxley Act of
2002
|
|
10.
|
Certification
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section
906 of
the U.S. Sarbanes-Oxley Act of 2002
|
|
|||
|
|
||
|
|
||
|
|
Page
Reference
|
|||||||
Annual
|
Incorporated
by
|
||||||
Information
|
Reference
from the
|
||||||
|
|
|
Form
|
Annual
Report
|
|||
CORPORATE
STRUCTURE
|
|
|
|||||
Name,
Address and Incorporation
|
1
|
||||||
Intercorporate
Relationships
|
110-111
|
||||||
GENERAL
DEVELOPMENT OF THE BUSINESS
|
|||||||
Three
Year History
|
1
|
25-42
|
|||||
DESCRIPTION
OF THE BUSINESS
|
|||||||
Review
of Business, including Foreign Operations
|
14-40
|
||||||
Competition
|
2
|
||||||
Intangible
Properties
|
82
|
||||||
Economic
Dependence
|
64-65
|
||||||
Average
Number of Employees
|
2
|
||||||
Lending
|
44-50,
58-60, 61-63
|
||||||
Reorganizations
|
2
|
||||||
Social
and Environmental Policies
|
120
|
||||||
Risk
Factors
|
3
|
56-66
|
|||||
DIVIDENDS
|
|||||||
Dividends
per
Share
|
3
|
||||||
Dividend
Policy
and Restrictions
|
52,
87-88
|
||||||
CAPITAL
STRUCTURE
|
|||||||
Common
Shares
|
4
|
87-88
|
|||||
Preferred
Shares
|
4
|
|
|
85-88
|
|||
Constraints
|
5
|
||||||
Ratings
|
5
|
||||||
MARKET
FOR SECURITIES OF THE BANK
|
|||||||
Market
Listings
|
6
|
||||||
Trading
Price and Volume
|
6
|
||||||
Prior
Sales
|
7
|
||||||
DIRECTORS
AND OFFICERS
|
|||||||
Directors
and
Board Committees of the Bank
|
7
|
9-12
|
|||||
Audit
Committee
|
9
|
11-12,
70
|
|||||
Executive
Officers of the Bank
|
10
|
118-119
|
|||||
Shareholdings
of Directors and Executive Officers
|
11
|
||||||
Additional
Disclosure for Directors and Executive Officers
|
11
|
||||||
LEGAL
PROCEEDINGS
|
12
|
||||||
INTEREST
OF MANAGEMENT AND OTHERS IN
|
|||||||
MATERIAL
TRANSACTIONS
|
12
|
||||||
TRANSFER
AGENTS AND REGISTRARS
|
|||||||
Transfer
Agent
|
12
|
||||||
Co-transfer
Agent and Registrar
|
12
|
||||||
Shareholder
Service Agent in Japan
|
13
|
||||||
MATERIAL
CONTRACTS
|
13
|
||||||
INTERESTS
OF EXPERTS
|
|||||||
Names of Experts |
14
|
||||||
Interests of Experts |
14
|
||||||
ADDITIONAL
INFORMATION
|
15
|
2005
|
|
|
2004
|
|
|
2003
|
||||
Common
Shares
|
$
|
1.58
|
$
|
1.36
|
$
|
1.16
|
||||
Preferred
Shares
|
||||||||||
Series
G
|
-
|
-
|
U.S.$0.68
|
|||||||
Series
H
|
-
|
$
|
0.90
|
$
|
1.78
|
|||||
Series
I
|
$
|
0.04
|
$
|
0.04
|
$
|
0.04
|
||||
Series
J
|
$
|
1.28
|
$
|
1.28
|
$
|
1.28
|
||||
Series
K
|
-
|
-
|
$
|
0.47
|
||||||
Series
L
|
-
|
-
|
U.S.$0.41
|
|||||||
Series
M
|
$
|
1.18
|
$
|
1.18
|
$
|
0.86
|
||||
Series
N
|
$
|
1.15
|
$
|
1.15
|
$
|
0.58
|
Dominion
Bond
Rating
Service
|
Moody’s
Investor
Services
|
Standard
&
Poor’s
|
Fitch
|
|
Long
Term Debt (deposits)
|
AA
(low)
|
Aa3
|
A+
|
AA
-
|
Subordinated
Debt
|
A
(high)
|
A1
|
A
|
A
+
|
Short
Term Debt (deposits)
|
R-1
(mid)
|
P-1
|
A-1
|
F-1+
|
Preferred
Shares
|
Pfd-1
(low)
|
A2
|
P-1
(low)
|
TORONTO
STOCK EXCHANGE
|
||||
Preferred
Shares
|
||||
Common
Shares
|
Series
J
|
Series
M
|
Series
N
|
|
November
2004
|
||||
High
Price ($)
|
49.18
|
26.63
|
27.57
|
27.83
|
Low
Price ($)
|
45.94
|
26.26
|
26.89
|
26.95
|
Volume
(’00)
|
275,061
|
529
|
911
|
2,337
|
December
|
||||
High
Price ($)
|
50.10
|
26.69
|
28.01
|
28.04
|
Low
Price ($)
|
47.80
|
26.40
|
27.21
|
27.12
|
Volume
(’00)
|
273,816
|
311
|
563
|
1,347
|
January
2005
|
||||
High
Price ($)
|
49.97
|
26.94
|
28.10
|
28.10
|
Low
Price ($)
|
48.08
|
26.23
|
26.93
|
26.75
|
Volume
(’00)
|
274,461
|
12,722
|
10,527
|
10,438
|
February
|
||||
High
Price ($)
|
50.90
|
26.59
|
28.10
|
29.00
|
Low
Price ($)
|
48.15
|
26.22
|
27.30
|
27.46
|
Volume
(’00)
|
327,669
|
836
|
9,995
|
15,107
|
March
|
||||
High
Price ($)
|
51.70
|
26.44
|
27.80
|
27.90
|
Low
Price ($)
|
49.11
|
26.00
|
27.25
|
26.51
|
Volume
(’00)
|
487,997
|
399
|
1,116
|
3,421
|
April
|
||||
High
Price ($)
|
51.14
|
26.40
|
27.79
|
27.50
|
Low
Price ($)
|
49.09
|
25.71
|
26.14
|
26.14
|
Volume
(’00)
|
305,934
|
12,644
|
20,549
|
16,550
|
TORONTO
STOCK EXCHANGE
|
||||
Preferred
Shares
|
||||
Common
Shares
|
Series
J
|
Series
M
|
Series
N
|
|
May
|
||||
High
Price ($)
|
53.68
|
26.49
|
27.60
|
27.79
|
Low
Price ($)
|
50.25
|
25.81
|
26.26
|
26.37
|
Volume
(’00)
|
341,699
|
788
|
600
|
2,098
|
June
|
||||
High
Price ($)
|
56.20
|
26.75
|
28.00
|
28.29
|
Low
Price ($)
|
52.10
|
26.20
|
27.03
|
26.51
|
Volume
(’00)
|
368,328
|
5,319
|
36,297
|
632
|
July
|
||||
High
Price ($)
|
57.55
|
26.45
|
27.99
|
27.81
|
Low
Price ($)
|
54.26
|
26.05
|
27.00
|
27.02
|
Volume
(’00)
|
301,637
|
12,374
|
18,400
|
15,862
|
August
|
||||
High
Price ($)
|
56.94
|
26.49
|
27.72
|
27.71
|
Low
Price ($)
|
54.09
|
26.05
|
27.35
|
27.30
|
Volume
(’00)
|
341,858
|
503
|
368
|
1,677
|
September
|
||||
High
Price ($)
|
59.03
|
26.24
|
27.94
|
27.98
|
Low
Price ($)
|
55.52
|
26.06
|
27.51
|
27.44
|
Volume
(’00)
|
339,817
|
540
|
1,082
|
2,772
|
October
|
||||
High
Price ($)
|
58.16
|
26.19
|
27.95
|
27.80
|
Low
Price ($)
|
54.75
|
25.77
|
27.12
|
27.30
|
Volume
(’00)
|
279,304
|
14,827
|
21,031
|
19,260
|
Director
Name
|
||
Principal
Occupation
|
Director
Since
|
|
William
E. Bennett
|
May
2004
|
|
Corporate
Director and retired President
and
Chief Executive Officer, Draper & Kramer, Inc.
|
||
Hugh
J. Bolton
|
April
2003
|
|
Chair
of the Board, EPCOR Utilities Inc.
(integrated
energy company)
|
Director
Name
|
||
Principal
Occupation
|
Director
Since
|
|
John
L. Bragg
|
October
2004
|
|
Chairman,
President and Co-Chief Executive Officer,
|
||
Oxford
Frozen Foods Limited
|
||
(distributor
of frozen food products)
|
||
W.
Edmund Clark
|
August
2000
|
|
President
and Chief Executive Officer,
|
||
The
Toronto-Dominion Bank
|
||
Marshall
A. Cohen
|
February
1992
|
|
Counsel,
Cassels Brock & Blackwell LLP
|
||
(law
firm)
|
||
Wendy
K. Dobson
|
October
1990
|
|
Professor
and Director, Institute for International
|
||
Business,
Joseph L. Rotman School of Management,
|
||
University
of Toronto
|
||
Darren
Entwistle
|
November
2001
|
|
President
and Chief Executive Officer,
|
||
TELUS
Corporation
|
||
(telecommunications
company)
|
||
Donna
M. Hayes
|
January
2004
|
|
Publisher
and Chief Executive Officer,
|
||
Harlequin
Enterprises Limited
|
||
(global
publishing company)
|
||
Henry
H. Ketcham
|
January
1999
|
|
Chairman
of the Board, President and Chief
|
||
Executive
Officer, West Fraser Timber Co. Ltd.
|
||
(integrated
forest products company)
|
||
Pierre
H. Lessard
|
October
1997
|
|
President
and Chief Executive Officer, METRO INC.
|
||
(food
retailer and distributor)
|
||
Harold
H. MacKay
|
November
2004
|
|
Counsel,
MacPherson Leslie & Tyerman LLP
|
||
(law
firm)
|
||
Brian
F. MacNeill
|
August
1994
|
|
Chairman
of the Board, Petro-Canada
|
||
(integrated
oil and gas company)
|
||
Roger
Phillips
|
February
1994
|
|
Corporate
Director and retired President and
|
||
Chief
Executive Officer, IPSCO Inc.
|
||
Wilbur
J. Prezzano
|
April
2003
|
|
Corporate
Director and retired Vice Chairman,
|
||
Eastman
Kodak Company
|
Director
Name
|
||
Principal
Occupation
|
Director
Since
|
|
William
J. Ryan
|
March
2005
|
|
Vice
Chair and Group Head,
|
||
U.S.
Personal and Commercial Banking,
|
||
The
Toronto-Dominion Bank and
|
||
Chairman,
President and Chief Executive Officer,
|
||
TD
Banknorth Inc.
|
||
(banking
and financial services holding company)
|
||
Helen
K. Sinclair
|
June
1996
|
|
Chief
Executive Officer, BankWorks Trading Inc.
|
||
(satellite
communications company)
|
||
John
M. Thompson
|
August
1988
|
|
Chairman
of the Board,
|
||
The
Toronto-Dominion Bank
|
(i)
|
in
the last ten years, no director or executive officer of the Bank
is or has
been a director or officer of a company (including the Bank) that,
while
that person was acting in that capacity:
|
(a)
|
was
the subject of a cease trade or similar order or an order that denied
the
relevant company access to any exemption under securities legislation
for
a period of more than 30 consecutive days, except Mr. Pierre Lessard
who
was a director of CINAR Corporation at the time its shares were suspended
from trading on the Toronto Stock Exchange for more than 30 consecutive
days and were delisted from the Toronto Stock Exchange and the NASDAQ
due
to the inability of CINAR Corporation to meet continued listing
requirements;
|
(b)
|
was
subject to an event that resulted, after the director or executive
officer
ceased to be a director or executive officer, in the company being
the
subject of a cease trade or similar order or an order that denied
the
relevant company access to any exemption under securities legislation,
for
a period of more than 30 consecutive days;
or
|
(c)
|
within
a year of the person ceasing to act in that capacity, became bankrupt,
made a proposal under any legislation relating to bankruptcy or insolvency
or was subject to or instituted any proceedings, arrangement or compromise
with creditors or had a receiver, receiver manager or trustee appointed
to
hold its assets, except Mr. Marshall Cohen who ceased to be a director
of
Haynes International Inc. within twelve months prior to Haynes
International Inc. filing for relief under Chapter 11 of the United
States
Bankruptcy Code in March 2004; and who is currently a director
of Collins & Aikman Corp. which filed for relief under
Chapter 11 of the United States Bankruptcy Code in May 2005;
|
(ii)
|
in
the last ten years, no director or executive officer of the Bank
has
become bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the director
or executive officer; and
|
(iii)
|
no
director or executive officer of the Bank has been subject to any
penalties or sanctions imposed by a court relating to securities
legislation or by a securities regulatory authority or has entered
into a
settlement agreement with a securities regulatory authority or has
been
subject to any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
investor in making an investment
decision.
|
1.
|
On
June 22, 2005, Ameritrade Holding Corporation entered into an Agreement
of
Sale and Purchase with the Bank pursuant to which Ameritrade agreed
to
purchase from TD all of the capital stock of TD Waterhouse Group,
Inc., a
wholly-owned subsidiary of the Bank, in exchange for 193,600,000
shares of
common stock, par value US$0.01 per share, of Ameritrade and US$20,000
in
cash. The shares of Ameritrade common stock represent approximately
32% of
the outstanding shares of Ameritrade after giving effect to the
transaction. In connection with the acquisition, Ameritrade will
change
its name to TD Ameritrade at the completion of the
transaction.
|
2.
|
On
October 28, 2005, Ameritrade and the Bank entered into Amendment
No. 1 to
the Agreement of Sale and Purchase dated June 22, 2005. The parties
amended the Agreement of Sale and Purchase to increase the number
of
shares of common stock comprising the stock consideration from 193,600,000
to 196,300,000 to reflect the intent of the parties that the stock
consideration represent, as of the signing of the Sale and Purchase
Agreement and after giving effect to the issuance of the Stock
Consideration in the Sale and Purchase Agreement, 32% of the diluted
shares outstanding of Ameritrade.
|
3.
|
On
June 22, 2005, Ameritrade, the Bank and J. Joe Ricketts and certain
of his
affiliates entered into a Stockholders Agreement. The Stockholders
Agreement sets forth certain governance arrangements and contains
various
provisions relating to stock ownership, voting and other matters.
The
Stockholders Agreement also contemplates changes to the Ameritrade’s
certificate of incorporation and bylaws to give effect to and facilitate
the provisions contained in the Stockholders Agreement. In addition,
the
Stockholders Agreement provides that following consummation of the
share
purchase, pursuant to the Agreement of Sale and Purchase described
above,
the Bank will commence a cash tender offer pursuant to which the
Bank will
offer to purchase a number of shares of TD Ameritrade common stock
such
that, upon successful completion of the offer, the Bank will own
39.9% of
the outstanding TD Ameritrade common stock. While J. Joe Ricketts
is also
permitted under the Stockholders Agreement to participate in this
tender
offer, he has informed Ameritrade that he does not intend to participate
in the tender offer as a co-bidder.
|
4.
|
On
June 22, 2005, the Bank entered into a Voting Agreement with each
of J.
Joe Ricketts and certain of his affiliates, entities affiliated with
TA
Associates and entities affiliated with Silver Lake Partners, who
collectively beneficially own approximately 34% of the outstanding
shares
of Ameritrade common stock, pursuant to which each party agreed to
vote
such party’s shares of Ameritrade common stock in favour of the issuance
of Ameritrade common stock in the share purchase described above
and the
related matters submitted for the approval of the Ameritrade stockholders
and against competing proposals unless Ameritrade has effected a
change in
recommendation with respect to the transaction as permitted under
Agreement of Sale and Purchase.
|
5.
|
On
July 11, 2005, TD Banknorth Inc. and Hudson United Bancorp announced
that
they had entered into an Agreement and Plan of Merger, dated July
11, 2005
which sets forth the terms and conditions pursuant to which Hudson
United
will be merged with and into TD Banknorth. Under the terms of the
Agreement, Hudson United shareholders will have the right, subject
to
proration, to elect to receive cash and/or TD Banknorth common stock,
in
either case having a value equal to US$21.07 plus the product of
0.7247
times the average closing price of the TD Banknorth common stock
during a
ten-trading day period ending on the fifth trading day before the
closing
date. Based upon a closing stock price of TD Banknorth on July 11,
2005,
the deal is valued at US$42.78 per share and the aggregate merger
consideration of US$1.9 billion consists of approximately 51% TD
Banknorth
common stock and 49% cash. The cash for the transaction will be financed
through TD Banknorth’s sale of approximately 29.6 million shares of TD
Banknorth common stock to the Bank at a price of US$31.79 per
share.
|
Our
Main Responsibilities:
• overseeing
of reliable, accurate and clear financial reporting to shareholders
• overseeing
internal controls - the necessary checks and balances must be in
place
• directly
responsible for the selection, compensation, retention and oversight
of
the work of the shareholders’ auditors - the shareholders’ auditors report
directly to the Committee
• listening
to the shareholders’ auditors, internal auditor and the chief compliance
officer, and evaluating the effectiveness and independence of each
• overseeing
the establishment and maintenance of processes that ensure the Bank
is in
compliance with the laws and regulations that apply to it as well
as its
own policies
• acting
as the audit committee and conduct review committee for certain
subsidiaries of the Bank that are federally-regulated financial
institutions and insurance companies;
• receiving
reports on and approving, if appropriate, certain transactions with
related parties
|
Independence
is Key:
• our
Committee is composed entirely of independent directors
• we
meet regularly without management present
• we
have the authority to engage independent advisors, paid for by the
Bank,
to help us make
the best possible decisions on the financial reporting, accounting
policies and practices, disclosure practices, and internal controls
of the
Bank
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS
The
following section provides a discussion and analysis of the Bank’s
operations
for
the most recent fiscal period ended October 31, 2005 and compared
to
the
previous
two fiscal years. This information should be read in conjunction
with the
Bank’s
audited Consolidated Financial Statements, which are prepared in
accordance
with
Canadian generally accepted accounting principles (GAAP), on pages
71 to
109.
Management's
Discussion and Analysis is current as of December 8,
2005.
|
|||
14
|
HOW
WE PERFORMED
|
||
FINANCIAL
RESULTS OVERVIEW
|
|||
17
|
Net
Income
|
||
18
|
Revenues
|
||
21
|
Expenses
|
||
23
|
Quarterly
Financial Information
|
||
BUSINESS
SEGMENT ANALYSIS
|
|||
25
|
Business
Focus
|
||
27
|
Canadian
Personal and Commercial Banking
|
||
31
|
U.S.
Personal and Commercial Banking
|
||
34
|
Wholesale
Banking
|
||
37
|
Wealth
Management
|
||
40
|
Corporate
|
||
2004
FINANCIAL RESULTS OVERVIEW
|
|||
41
|
Summary
of 2004 Performance
|
||
42
|
2004
Financial Performance by Business Line
|
||
GROUP
FINANCIAL CONDITION
|
|||
43
|
Balance
Sheet Review
|
||
44
|
Credit
Portfolio Quality
|
||
51
|
Capital
Position
|
||
53
|
Off-balance
Sheet Arrangements
|
||
55
|
Financial
Instruments
|
||
RISK
FACTORS AND MANAGEMENT
|
|||
56
|
Risk
Factors that May Affect Future Results
|
||
57
|
Managing
Risk
|
||
ACCOUNTING
STANDARDS AND POLICIES
|
|||
66
|
Critical
Accounting Policies and Estimates
|
||
69
|
Accounting
Policies Changes in 2005
|
||
69
|
Future
Accounting and Reporting Changes
|
||
70
|
Controls
and Procedures
|
||
70
|
Bank’s
Auditors
|
||
Certain
comparative amounts have been restated.
Additional
information relating to TD Bank Financial Group, including the Bank’s
Annual Information Form for the year ended October 31, 2005 is on
the
Bank’s website at www.td.com, on SEDAR at www.sedar.com, as well as on
the
United States Securities and Exchange Commissions website at www.sec.gov
(EDGAR filers section).
Caution
regarding forward-looking statements
From
time to
time, the Bank makes written and oral forward-looking statements,
including in this report, in other filings with Canadian regulators
or the
U.S. Securities and Exchange Commission (SEC), and in other
communications. All such statements are made pursuant to the “safe
harbour” provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, among others,
statements regarding the Bank’s objectives and targets, and strategies to
achieve them, the outlook for the Bank’s business lines, and the Bank’s
anticipated financial performance. Forward-looking statements are
typically identified by words such as “believe”, “expect”, “anticipate”,
“intend”, “estimate”, “plan”, “may” and “could”. By their very nature,
these statements require us to make assumptions and are subject to
inherent risks and uncertainties, general and specific, which may
cause
actual results to differ materially from the expectations expressed
in the
forward-looking statements. Some of the factors that could cause
such
differences include: the credit, market, liquidity, interest rate,
operational, reputational and other risks discussed in the management
discussion and analysis section of this report and in other regulatory
filings made in Canada and with the SEC; general business and economic
conditions in Canada, the United States and other countries in which
the
Bank conducts business, as well as the effect of changes in monetary
policy in those jurisdictions and changes in the foreign exchange
rates
for the currencies of those jurisdictions; the degree of competition
in
the markets in which the Bank operates, both from established competitors
and new entrants; legislative and regulatory developments; the accuracy
and completeness of information the Bank receives on customers and
counterparties; the timely development and introduction of new products
and services in receptive markets; expanding existing distribution
channels; developing new distribution channels and realizing increased
revenue from these channels, including electronic commerce-based
efforts;
the Bank’s ability to execute its growth and acquisition strategies
including those of its subsidiaries; changes in accounting policies
and
methods the Bank uses to report its financial condition, including
uncertainties associated with critical accounting assumptions and
estimates; the effect of applying future accounting changes; global
capital market activity; consolidation in the Canadian financial
services
sector; the Bank’s ability to attract and retain key executives; reliance
on third parties to provide components of the Bank’s business
infrastructure; technological changes; change in tax laws; unexpected
judicial or regulatory proceedings; continued negative impact of
the
United States securities litigation environment; unexpected changes
in
consumer spending and saving habits; the possible impact on the Bank’s
businesses of international conflicts and terrorism; acts of God,
such as
earthquakes; the effects of disease or illness on local, national
or
international economies; the effects of disruptions to public
infrastructure, such as transportation, communications, power or
water
supply; and management’s ability to anticipate and manage the risks
associated with these factors and execute the Bank’s strategies. A
substantial amount of the Bank’s business involves making loans or
otherwise committing resources to specific companies, industries
or
countries. Unforeseen events affecting such borrowers, industries
or
countries could have a material adverse effect on the Bank’s financial
results, businesses, financial condition or liquidity. The preceding
list
is not exhaustive of all possible factors. Other factors could also
adversely affect the Bank’s results. For more information, please see the
discussion starting on page 56 of this report concerning the effect
certain key factors could have on actual results. All such factors
should
be considered carefully when making decisions with respect to the
Bank,
and undue reliance should not be placed on the Bank’s forward-looking
statements. The Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to
time by
or on its behalf.
|
|||
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
13
|
TABLE
1
|
RECONCILIATION
OF NON-GAAP MEASURES
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest income
|
$
|
6,021
|
$
|
5,773
|
$
|
5,437
|
||||
Provision
for credit losses
|
319
|
336
|
423
|
|||||||
Other
income
|
6,015
|
4,961
|
4,469
|
|||||||
Non-interest
expenses
|
7,825
|
7,081
|
6,881
|
|||||||
Income
before provision for income taxes and non-controlling
interest
|
3,892
|
3,317
|
2,602
|
|||||||
Provision
for income taxes
|
899
|
832
|
657
|
|||||||
Non-controlling
interest
|
132
|
-
|
-
|
|||||||
Income
before amortization of intangibles and items of
note
|
2,861
|
2,485
|
1,945
|
|||||||
Items
of note impacting income, net of income taxes3
|
||||||||||
Tax
charge related to reorganizations
|
(163
|
)
|
-
|
-
|
||||||
Other
tax items
|
98
|
-
|
-
|
|||||||
Loss
on structured derivative portfolios
|
(100
|
)
|
-
|
-
|
||||||
Restructuring
charge
|
(29
|
)
|
-
|
(617
|
)
|
|||||
Non-core
portfolio loan loss recoveries (sectoral related)
|
127
|
426
|
52
|
|||||||
General
allowance release
|
23
|
43
|
100
|
|||||||
Litigation
charge
|
(238
|
)
|
(195
|
)
|
-
|
|||||
Preferred
share redemption
|
(13
|
)
|
-
|
-
|
||||||
Hedging
impact due to AcG-13
|
17
|
(50
|
)
|
-
|
||||||
Net
income before amortization of intangibles
|
2,583
|
2,709
|
1,480
|
|||||||
Amortization
of intangibles, net of income taxes
|
(354
|
)
|
(477
|
)
|
(491
|
)
|
||||
Net
income available to common shareholders - reported
basis
|
$
|
2,229
|
$
|
2,232
|
$
|
989
|
||||
Earnings
per share (EPS) before amortization of intangibles and items of note
to
reported results
|
||||||||||
(Canadian
dollars)
|
||||||||||
Basic
- reported basis
|
$
|
3.22
|
$
|
3.41
|
$
|
1.52
|
||||
Diluted
- reported basis
|
3.20
|
3.39
|
1.51
|
|||||||
Items
of note impacting income (as above)
|
.40
|
(.34
|
)
|
.72
|
||||||
Amortization
of intangibles
|
.51
|
.72
|
.75
|
|||||||
Item
of note impacting EPS
|
.03
|
2 |
-
|
-
|
||||||
Diluted
- before amortization of intangibles and items of
note
|
$
|
4.14
|
$
|
3.77
|
$
|
2.98
|
14 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
2
|
RECONCILIATION
OF ECONOMIC PROFIT, RETURN ON INVESTED CAPITAL AND
NET INCOME BEFORE AMORTIZATION OF INTANGIBLES AND ITEMS OF
NOTE |
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Average
common equity
|
$
|
14,600
|
$
|
12,050
|
$
|
11,396
|
||||
Average
cumulative goodwill/intangible assets amortized
|
3,213
|
2,834
|
2,396
|
|||||||
Average
invested capital
|
$
|
17,813
|
$
|
14,884
|
$
|
13,792
|
||||
Rate
charged for invested capital
|
10.1
|
%
|
10.7
|
%
|
10.9
|
%
|
||||
Charge
for invested capital
|
(1,799
|
)
|
(1,593
|
)
|
(1,530
|
)
|
||||
Net
income before amortization of intangibles
|
2,583
|
2,709
|
1,480
|
|||||||
Economic
profit before amortization of intangibles
|
$
|
784
|
$
|
1,116
|
$
|
(50
|
)
|
|||
Items
of note (as per Table 1)
|
278
|
(224
|
)
|
465
|
||||||
Economic
profit before amortization of intangibles and items of
note
|
$
|
1,062
|
$
|
892
|
$
|
415
|
||||
Return
on invested capital before amortization of intangibles
|
14.5
|
%
|
18.2
|
%
|
10.5
|
%
|
||||
Return
on total common equity - reported basis
|
15.3
|
%
|
18.5
|
%
|
8.7
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
15
|
ECONOMIC
PROFIT1
Economic
profit increased by $170 million or 19% in 2005. The increase was
primarily due to Canadian Personal and Commercial Banking earnings
generating $228 million of growth in economic profit. Strong volume
growth
across most personal and business products particularly in insurance
products, business deposits and real estate secured lending drove
the
increase that was partially offset by tightening margins. Wealth
Management generated $91 million of growth in economic profit largely
driven by higher discount brokerage spreads and cash balances.
Partially
offsetting the above-mentioned growth was an economic loss of $105
million
in TD Banknorth that was acquired in 2005. In addition, Wholesale
Banking
had a $49 million decline in economic profit largely due to lower
trading
revenues from the interest and credit portfolios.
TOTAL
SHAREHOLDER RETURN
The
total shareholder return was 16.9% compared to a Canadian Bank
peer
average of 12.9%. The result was driven primarily by appreciation
of the
Bank’s share price as the closing price of $55.70 on October 31, 2005
was
$6.72 higher than a year earlier. In addition the Bank paid quarterly
dividends consistently throughout the past year. Total quarterly
dividends
were $1.58 per common share and included two dividend increases
during the
year.
DILUTED
EARNINGS PER SHARE1
Diluted
earnings per share growth was 10% for 2005. The increase was the
result of
strong earnings in Canadian Personal and Commercial Banking and
Wealth
Management. The diluted earnings per share growth was due to stronger
earnings and the accretive acquisition of TD Banknorth. This acquisition
on March 1, 2005 resulted in the number of average common shares
outstanding increasing 6% during the year.
REVENUE
GROWTH EXCEEDS EXPENSE GROWTH1
During
2005 each of our businesses had revenue growth that exceeded expense
growth with the exception of Wholesale Banking. The differential
between
revenue and expense growth for each of our businesses was: 5% Canadian
Personal and Commercial Banking (CP & CB), 4% Wealth Management (WM)
and (2%) Wholesale Banking (WB). Our U.S. Personal and Commercial
Banking
business was acquired in 2005 and hence does not have comparable
growth
information.
Canadian
Personal and Commercial Banking and Wealth Management experienced
strong
revenue growth throughout 2005 primarily in real estate secured
lending,
insurance and discount brokerage spreads and cash balances. Prudent
expense management in these businesses contained expense growth
to
reasonable levels. Wholesale Banking experienced lower trading
related
revenues during the year compared to 2004. Current year Wholesale
Banking
expenses were lower than 2004, however, the decline did not fully
offset
the lower revenue impact.
RETURN
ON RISK WEIGHTED ASSETS1
The
Bank’s return on risk weighted assets was 2.33% compared to the highest
Canadian peer of 1.99%. Average risk-weighted assets increased
$14.2
billion or 14% from 2004 due largely to TD Banknorth. While still
maintaining a good risk profile, we also experienced strong volume
growth
in real estate secured lending and personal lending in Canadian
Personal
and Commercial Banking.
1
These
shareholder indicators and financial measures are presented before
amortization of intangibles and excluding items of note (see Table
1 and
“How the Bank Reports”). Reported diluted earnings per share decreased
5.6%. On a reported basis the difference between revenue and expense
growth in Wholesale Banking was (12)% and there would be no change
in
Canadian Personal and Commercial Banking and Wealth Management.
The return
on risk weighted assets on a reported basis was 1.88%.
|
16 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
3
|
RESULTS
BY GEOGRAPHIC SEGMENT1
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
||||||||||||||||||||||||||||||||||
Other
|
Other
|
Other
|
|||||||||||||||||||||||||||||||||||
United
|
Intern-
|
United
|
Intern-
|
United
|
Intern-
|
||||||||||||||||||||||||||||||||
Canada
|
States
|
ational
|
Total
|
Canada
|
States
|
ational
|
Total
|
Canada
|
States
|
ational
|
Total
|
||||||||||||||||||||||||||
Net
interest income
|
$
|
3,860
|
$
|
1,338
|
$
|
810
|
$
|
6,008
|
$
|
3,849
|
$
|
747
|
$
|
1,177
|
$
|
5,773
|
$
|
3,579
|
$
|
681
|
$
|
1,177
|
$
|
5,437
|
|||||||||||||
Other
income
|
4,550
|
1,286
|
53
|
5,889
|
4,118
|
812
|
(47
|
)
|
4,883
|
3,623
|
907
|
(106
|
)
|
4,424
|
|||||||||||||||||||||||
Total
revenues
|
8,410
|
2,624
|
863
|
11,897
|
7,967
|
1,559
|
1,130
|
10,656
|
7,202
|
1,588
|
1,071
|
9,861
|
|||||||||||||||||||||||||
Provision
for (reversal of) credit losses
|
301
|
(222
|
)
|
(24
|
)
|
55
|
(388
|
)
|
2
|
-
|
(386
|
)
|
401
|
(150
|
)
|
(65
|
)
|
186
|
|||||||||||||||||||
Non-interest
expenses
|
6,168
|
1,587
|
481
|
8,236
|
5,793
|
1,119
|
469
|
7,381
|
5,113
|
1,749
|
730
|
7,592
|
|||||||||||||||||||||||||
Provision
for income taxes
|
475
|
483
|
(67
|
)
|
891
|
721
|
175
|
56
|
952
|
523
|
12
|
68
|
603
|
||||||||||||||||||||||||
Non-controlling
interest
|
-
|
132
|
-
|
132
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||
Net
income before amortization of intangibles
|
1,466
|
644
|
473
|
2,583
|
1,841
|
263
|
605
|
2,709
|
1,165
|
(23
|
)
|
338
|
1,480
|
||||||||||||||||||||||||
Amortization
of intangibles, net of income taxes
|
349
|
5
|
-
|
354
|
473
|
4
|
-
|
477
|
491
|
-
|
-
|
491
|
|||||||||||||||||||||||||
Net
income - reported basis
|
$
|
1,117
|
$
|
639
|
$
|
473
|
$
|
2,229
|
$
|
1,368
|
$
|
259
|
$
|
605
|
$
|
2,232
|
$
|
674
|
$
|
(23
|
)
|
$
|
338
|
$
|
989
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
17
|
TABLE
4
|
ANALYSIS
OF CHANGE IN NET INTEREST
INCOME
|
(millions
of Canadiandollars)
|
2005
vs 2004
|
2004
vs 2003
|
|||||||||||||||||
Favourable
(unfavourable) due to change in
|
Favourable
(unfavourable) due to change in
|
||||||||||||||||||
Average
|
Average
|
Net
|
Average
|
Average
|
Net
|
||||||||||||||
volume
|
rate
|
change
|
volume
|
rate
|
change
|
||||||||||||||
Total
earning assets
|
$
|
1,634
|
$
|
10
|
$
|
1,644
|
$
|
335
|
$
|
(405
|
)
|
$
|
(70
|
)
|
|||||
Total
interest-bearing liabilities
|
(525
|
)
|
(884
|
)
|
(1,409
|
)
|
$
|
(29
|
)
|
435
|
406
|
||||||||
Net
interest income
|
$
|
1,109
|
$
|
(874
|
)
|
$
|
235
|
$
|
306
|
$
|
30
|
$
|
336
|
18 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
5
|
NET
INTEREST INCOME ON AVERAGE EARNING BALANCES1
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||||||||||||||||||||
Average
|
Average2
|
Average
|
Average2
|
Average
|
Average2
|
|||||||||||||||||||||||
balance
|
Interest
|
rate
|
balance
|
Interest
|
rate
|
balance
|
Interest
|
rate
|
||||||||||||||||||||
Earning
assets
|
||||||||||||||||||||||||||||
Deposits
with banks
|
$
|
10,654
|
$
|
415
|
3.90
|
%
|
$
|
7,760
|
$
|
517
|
6.66
|
%
|
$
|
7,323
|
$
|
212
|
2.89
|
%
|
||||||||||
Securities
|
||||||||||||||||||||||||||||
Investment
|
32,354
|
1,503
|
4.65
|
27,678
|
1,219
|
4.40
|
29,183
|
1,017
|
3.48
|
|||||||||||||||||||
Trading
|
77,906
|
2,536
|
3.26
|
71,188
|
2,438
|
3.42
|
62,161
|
2,431
|
3.91
|
|||||||||||||||||||
Total
securities
|
110,260
|
4,039
|
3.66
|
98,866
|
3,657
|
3.70
|
91,344
|
3,448
|
3.77
|
|||||||||||||||||||
Securities
purchased under reverse repurchase agreements
|
27,253
|
907
|
3.33
|
28,306
|
734
|
2.59
|
33,311
|
902
|
2.71
|
|||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||
Residential
mortgages
|
58,033
|
2,807
|
4.84
|
52,155
|
2,625
|
5.03
|
53,168
|
2,881
|
5.42
|
|||||||||||||||||||
Consumer
instalment and other personal
|
55,975
|
3,067
|
5.48
|
45,215
|
2,373
|
5.25
|
36,909
|
2,195
|
5.95
|
|||||||||||||||||||
Credit
card
|
2,690
|
323
|
12.01
|
2,289
|
271
|
11.84
|
2,181
|
271
|
12.43
|
|||||||||||||||||||
Business
and government
|
23,288
|
1,218
|
5.23
|
20,778
|
955
|
4.60
|
27,571
|
1,293
|
4.69
|
|||||||||||||||||||
Total
loans
|
139,986
|
7,415
|
5.30
|
120,437
|
6,224
|
5.17
|
119,829
|
6,640
|
5.54
|
|||||||||||||||||||
Total
earning assets
|
$
|
288,153
|
$
|
12,776
|
4.43
|
%
|
$
|
255,369
|
$
|
11,132
|
4.36
|
%
|
$
|
251,807
|
$
|
11,202
|
4.45
|
%
|
||||||||||
Interest-bearing
liabilities
|
||||||||||||||||||||||||||||
Deposits
|
||||||||||||||||||||||||||||
Personal
|
$
|
122,032
|
$
|
2,509
|
2.06
|
%
|
$
|
108,586
|
$
|
2,077
|
1.91
|
%
|
$
|
102,485
|
$
|
2,130
|
2.08
|
%
|
||||||||||
Banks
|
14,683
|
462
|
3.15
|
16,166
|
309
|
1.91
|
22,170
|
412
|
1.86
|
|||||||||||||||||||
Business
and government
|
99,827
|
2,158
|
2.16
|
81,139
|
1,467
|
1.81
|
77,750
|
1,660
|
2.14
|
|||||||||||||||||||
Total
deposits
|
236,542
|
5,129
|
2.17
|
205,891
|
3,853
|
1.87
|
202,405
|
4,202
|
2.08
|
|||||||||||||||||||
Subordinated
notes and debentures
|
5,626
|
328
|
5.83
|
5,731
|
312
|
5.44
|
4,710
|
259
|
5.50
|
|||||||||||||||||||
Obligations
related to securities sold short and under repurchase
agreements
|
34,499
|
1,164
|
3.37
|
34,730
|
1,024
|
2.95
|
38,378
|
1,125
|
2.93
|
|||||||||||||||||||
Preferred
shares and capital trust secuities
|
2,215
|
147
|
6.64
|
2,672
|
170
|
6.36
|
2,789
|
179
|
6.42
|
|||||||||||||||||||
Total
interest-bearing liabilities
|
$
|
278,882
|
$
|
6,768
|
2.43
|
%
|
$
|
249,024
|
$
|
5,359
|
2.15
|
%
|
$
|
248,282
|
$
|
5,765
|
2.32
|
%
|
||||||||||
Total
net interest income
|
$
|
6,008
|
2.00
|
%
|
$
|
5,773
|
2.21
|
%
|
$
|
5,437
|
2.13
|
%
|
TABLE
6
|
NET
INTEREST RATE MARGIN
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||||||||||||||||||||
Average
|
Net
|
Average
|
Net
|
Average
|
Net
|
|||||||||||||||||||||||
earning
|
interest
|
earning
|
interest
|
earning
|
interest
|
|||||||||||||||||||||||
assets
|
income
|
Margin
|
assets
|
income
|
Margin
|
assets
|
income
|
Margin
|
||||||||||||||||||||
Canada
|
$
|
183,607
|
$
|
3,860
|
2.10
|
%
|
$
|
166,647
|
$
|
3,849
|
2.31
|
%
|
$
|
156,193
|
$
|
3,579
|
2.29
|
%
|
||||||||||
United
States
|
61,159
|
1,339
|
2.19
|
43,067
|
747
|
1.73
|
48,582
|
681
|
1.40
|
|||||||||||||||||||
Other
international
|
43,387
|
809
|
1.86
|
45,655
|
1,177
|
2.58
|
47,032
|
1,177
|
2.50
|
|||||||||||||||||||
Total
Bank
|
$
|
288,153
|
$
|
6,008
|
2.09
|
%
|
$
|
255,369
|
$
|
5,773
|
2.26
|
%
|
$
|
251,807
|
$
|
5,437
|
2.16
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
19
|
TABLE
7
|
OTHER
INCOME
|
(millions
of Canadiandollars)
|
2005
vs 2004
|
||||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
%
change
|
||||||||||||||
Investment
and securities services:
|
|||||||||||||||||||
Discount
brokerage
|
$
|
866
|
$
|
985
|
$
|
957
|
$
|
922
|
$
|
1,002
|
(12.1
|
)%
|
|||||||
Securities
and
full service brokerage
|
927
|
738
|
667
|
641
|
701
|
25.6
|
|||||||||||||
Mutual
funds
|
624
|
573
|
508
|
522
|
502
|
8.9
|
|||||||||||||
Credit
fees
|
343
|
343
|
415
|
415
|
425
|
-
|
|||||||||||||
Net
investment securities gains
|
242
|
192
|
23
|
26
|
216
|
26.0
|
|||||||||||||
Trading
income (loss)
|
147
|
(153
|
)
|
104
|
529
|
1,318
|
196.1
|
||||||||||||
Service
charges
|
787
|
673
|
641
|
596
|
561
|
16.9
|
|||||||||||||
Loan
securitizations
|
414
|
390
|
250
|
218
|
272
|
6.2
|
|||||||||||||
Card
services
|
279
|
172
|
252
|
249
|
249
|
62.2
|
|||||||||||||
Insurance,
net of claims
|
826
|
593
|
420
|
375
|
326
|
39.3
|
|||||||||||||
Trust
fees
|
111
|
78
|
70
|
76
|
86
|
42.3
|
|||||||||||||
Gains
on sale of investment real estate
|
-
|
-
|
-
|
-
|
350
|
-
|
|||||||||||||
Gain
on sale of mutual fund record keeping and custody business
|
-
|
-
|
-
|
40
|
-
|
-
|
|||||||||||||
Write-down
of investment in joint ventures
|
-
|
-
|
(39
|
)
|
-
|
-
|
-
|
||||||||||||
Other
|
323
|
299
|
156
|
320
|
439
|
8.0
|
|||||||||||||
Total
|
$
|
5,889
|
$
|
4,883
|
$
|
4,424
|
$
|
4,929
|
$
|
6,447
|
20.6
|
%
|
TABLE
8
|
TRADING
RELATED INCOME1
|
(millions
of Canadian dollars)
|
2005
vs 2004
|
||||||||||||
2005
|
2004
|
2003
|
%
change
|
||||||||||
Net
interest income
|
$
|
457
|
$
|
1,037
|
$
|
889
|
(55.9
|
)%
|
|||||
Other
income
|
147
|
(153
|
)
|
104
|
196.1
|
||||||||
Total
trading related income
|
$
|
604
|
$
|
884
|
$
|
993
|
(31.7
|
)%
|
|||||
By
product
|
|||||||||||||
Interest
rate and credit portfolios
|
$
|
370
|
$
|
559
|
$
|
581
|
(33.8
|
)%
|
|||||
Foreign
exchange portfolios
|
248
|
230
|
248
|
7.8
|
|||||||||
Equity
and other portfolios
|
(14
|
)
|
95
|
164
|
(114.7
|
)
|
|||||||
Total
trading related income
|
$
|
604
|
$
|
884
|
$
|
993
|
(31.7
|
)%
|
|||||
Trading
related revenues as a percentage of total revenues
|
5.1
|
%
|
8.3
|
%
|
10.1
|
%
|
20 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
AT
A GLANCE OVERVIEW
• Reported
non-interest expenses increased by $775 million.
•
TD
Banknorth expenses before amortization of intangibles were $549
million.
•
Enron
related litigation provisions of $365 million.
•
Restructuring
charges of $43 million.
NON-INTEREST
EXPENSES
Expenses
include costs, such as salaries, occupancy and equipment costs,
amortization of intangibles and other operating and non-operating
expenses.
In
2005, we continued to tightly manage our cost base with a clear
focus on
improving the efficiency of all our businesses. On a reported basis,
expenses for fiscal 2005 were $8,782 million compared with $8,007
million
in fiscal 2004, up $775 million or 10%. The inclusion of results
from the
TD Banknorth acquisition contributed $549 million to this expense
increase. Expenses before amortization of intangibles in fiscal
2005 were
$8,236 million up from $7,381 million in 2004.
As
shown in Table 9, salaries and employee benefits rose $438 million
or 12%
during the year, reflecting a $290 million or 13% increase in salaries,
a
$55 million or 5% increase in incentive compensation and a $93
million or
21% increase in pension and other employee benefits. Occupancy
costs were
up $64 million or 11%. Equipment costs were up $47 million or 8%.
Occupancy and equipment costs increased due to the inclusion of
TD
Banknorth results which operates 397 branches and 556 automated
banking
machines. Professional and advisory services expenses increased
by $48
million or 11%, primarily due to increased business development
activity
related to the acquisition of TD Banknorth, the proposed transactions
with
Ameritrade and Hudson United Bancorp. The increase in other expenses
was
largely due to the recognition of approximately $365 million of
expense
related to contingent litigation reserves increases related to
Enron,
compared to $300 million the previous year and increases in restructuring
costs and marketing and business development. The impact of the
amortization of intangibles on the Bank’s reported expenses was $546
million, compared with $626 million in fiscal 2004.
Expenses
in Canadian Personal and Commercial Banking increased mainly due
to very
strong growth in the insurance business, growth in compensation
costs,
increased marketing costs and increased investments in systems
development
and infrastructure. Also this was the first full year of expenses
from the
Liberty Mutual acquisition. Expenses increased in Wealth Management
due to
an increase in compensation costs in the advisory businesses and
higher
mutual fund sales commissions, driven by higher assets under management.
The expense increase was partially offset by the impact of foreign
exchange translation in TD Waterhouse U.S.A.. Expenses in Wholesale
Banking increased primarily due to the recognition of $43 million
in
restructuring costs relating to the global structured products
businesses.
The restructuring costs are further explained in Note 24 on page
104.
|
EFFICIENCY
RATIO
The
efficiency ratio measures the efficiency of operations. The ratio
is
calculated by taking expenses as a percentage of total revenue.
A lower
ratio indicates a more efficient business operation.
On
a reported basis, the Bank’s overall efficiency ratio improved to 73.8%
from 75.1% in 2004 and 84.8% in 2003. The Bank’s consolidated efficiency
ratio is impacted by shifts in its business mix. The efficiency
ratio is
viewed as a more relevant measure for Canadian Personal and Commercial
Banking, which had an efficiency ratio, before amortization of
intangibles
of 56.3% this year compared with 58.7% in 2004 and 59.2% in 2003.
The
Bank’s efficiency ratio before amortization of intangibles was 69.2%
compared with 69.3% in 2004 and 77.0% in
2003.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
21
|
TABLE
9
|
NON-INTEREST
EXPENSES AND EFFICIENCY
RATIO
|
(millions
of Canadian dollars)
|
2005
vs 2004
|
||||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
%
change
|
||||||||||||||
Salaries
and employee benefits
|
|||||||||||||||||||
Salaries
|
$
|
2,544
|
$
|
2,254
|
$
|
2,304
|
$
|
2,273
|
$
|
2,225
|
12.9
|
%
|
|||||||
Incentive
compensation
|
1,139
|
1,084
|
986
|
875
|
1,150
|
5.1
|
|||||||||||||
Pension
and other employee benefits
|
535
|
442
|
468
|
418
|
333
|
21.0
|
|||||||||||||
Salaries
and employee benefits total
|
4,218
|
3,780
|
3,758
|
3,566
|
3,708
|
11.6
|
|||||||||||||
Occupancy
|
|||||||||||||||||||
Rent
|
373
|
353
|
361
|
330
|
323
|
5.7
|
|||||||||||||
Depreciation
|
147
|
134
|
143
|
148
|
149
|
9.7
|
|||||||||||||
Property
tax
|
17
|
14
|
15
|
18
|
19
|
21.4
|
|||||||||||||
Other
|
139
|
111
|
137
|
109
|
101
|
25.2
|
|||||||||||||
Occupancy
total
|
676
|
612
|
656
|
605
|
592
|
10.5
|
|||||||||||||
Equipment
|
|||||||||||||||||||
Rent
|
192
|
165
|
185
|
170
|
159
|
16.4
|
|||||||||||||
Depreciation
|
175
|
160
|
175
|
164
|
169
|
9.4
|
|||||||||||||
Other
|
242
|
237
|
290
|
327
|
328
|
2.1
|
|||||||||||||
Equipment
total
|
609
|
562
|
650
|
661
|
656
|
8.4
|
|||||||||||||
Goodwill
impairment1/amortization
|
-
|
-
|
624
|
-
|
198
|
-
|
|||||||||||||
Amortization
of intangible assets
|
546
|
626
|
772
|
998
|
1,292
|
(12.8
|
)
|
||||||||||||
Restructuring
costs
|
43
|
(7
|
)
|
92
|
-
|
239
|
714.3
|
||||||||||||
Marketing
and business development
|
469
|
384
|
348
|
388
|
410
|
22.1
|
|||||||||||||
Brokerage
related fees
|
226
|
228
|
229
|
224
|
229
|
(.9
|
)
|
||||||||||||
Professional
and advisory services
|
494
|
446
|
372
|
366
|
322
|
10.8
|
|||||||||||||
Communications
|
205
|
207
|
208
|
225
|
205
|
(1.0
|
)
|
||||||||||||
Other
|
|||||||||||||||||||
Capital
and business taxes
|
167
|
141
|
133
|
107
|
106
|
18.4
|
|||||||||||||
Postage
|
108
|
100
|
91
|
96
|
115
|
8.0
|
|||||||||||||
Travel
and relocation
|
78
|
62
|
58
|
68
|
67
|
25.8
|
|||||||||||||
Other
|
943
|
866
|
373
|
448
|
515
|
8.9
|
|||||||||||||
Other
total
|
1,296
|
1,169
|
655
|
719
|
803
|
10.9
|
|||||||||||||
Total
expenses
|
$
|
8,782
|
$
|
8,007
|
$
|
8,364
|
$
|
7,752
|
$
|
8,654
|
9.7
|
%
|
|||||||
Efficiency
ratio - reported basis
|
73.8
|
%
|
75.1
|
%
|
84.8
|
%
|
77.0
|
%
|
81.1
|
%
|
(130)bps
|
||||||||
Efficiency
ratio - before amortization of intangibles
|
69.2
|
69.3
|
77.0
|
67.1
|
69.0
|
(10
|
)
|
22 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
10
|
TAXES
|
(millions
of Canadiandollars)
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||||||||
Income
tax expense (benefit) - before amortization of
intangibles
|
$
|
891
|
$
|
952
|
$
|
603
|
$
|
(81
|
)
|
$
|
646
|
|||||
Other
taxes
|
||||||||||||||||
Payroll
|
222
|
178
|
193
|
187
|
174
|
|||||||||||
Capital
|
161
|
133
|
125
|
97
|
98
|
|||||||||||
GST
and provincial
|
178
|
146
|
150
|
162
|
149
|
|||||||||||
Municipal
and business
|
84
|
85
|
86
|
93
|
91
|
|||||||||||
Total
other taxes
|
645
|
542
|
554
|
539
|
512
|
|||||||||||
Total
taxes
|
$
|
1,536
|
$
|
1,494
|
$
|
1,157
|
$
|
458
|
$
|
1,158
|
||||||
Effective
income tax rate - before amortization of
intangibles
|
24.7
|
%
|
26.0
|
%
|
28.9
|
%
|
-
|
%
|
27.0
|
%
|
||||||
Effective
total tax rate - before amortization of intangibles1
|
36.1
|
35.5
|
43.9
|
49.1
|
39.9
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
23
|
TABLE
11
|
QUARTERLY
RESULTS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||||||||
Quarter
ended
|
Quarter
ended
|
||||||||||||||||||||||||
October
31
|
July
31
|
April
30
|
January
31
|
October
31
|
July
31
|
April
30
|
January
31
|
||||||||||||||||||
Net
interest income
|
$
|
1,641
|
$
|
1,563
|
$
|
1,393
|
$
|
1,411
|
$
|
1,435
|
$
|
1,452
|
$
|
1,441
|
$
|
1,445
|
|||||||||
Other
income
|
1,442
|
1,535
|
1,517
|
1,395
|
1,118
|
1,181
|
1,284
|
1,300
|
|||||||||||||||||
Total
revenues
|
3,083
|
3,098
|
2,910
|
2,806
|
2,553
|
2,633
|
2,725
|
2,745
|
|||||||||||||||||
Provision
for (reversal of) credit losses
|
(15
|
)
|
40
|
20
|
10
|
(73
|
)
|
(17
|
)
|
(192
|
)
|
(104
|
)
|
||||||||||||
Non-interest
expenses
|
2,068
|
2,434
|
1,923
|
1,811
|
1,762
|
1,755
|
2,109
|
1,755
|
|||||||||||||||||
Provision
for income taxes
|
302
|
64
|
257
|
268
|
177
|
231
|
211
|
333
|
|||||||||||||||||
Non-controlling
interest in net income of subsidiaries
|
53
|
58
|
21
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Net
income before amortization of intangibles
|
675
|
502
|
689
|
717
|
687
|
664
|
597
|
761
|
|||||||||||||||||
Amortization
of intangibles, net of income taxes
|
86
|
91
|
90
|
87
|
92
|
99
|
107
|
179
|
|||||||||||||||||
Net
income available to common shareholders - reported basis
|
$
|
589
|
$
|
411
|
$
|
599
|
$
|
630
|
$
|
595
|
$
|
565
|
$
|
490
|
$
|
582
|
|||||||||
(Canadian
dollars)
|
|||||||||||||||||||||||||
Basic
earnings per share
|
|||||||||||||||||||||||||
-
reported basis
|
$
|
.83
|
$
|
.58
|
$
|
.87
|
$
|
.96
|
$
|
.91
|
$
|
.87
|
$
|
.75
|
$
|
.89
|
|||||||||
-
before amortization of intangibles
|
.95
|
.71
|
1.00
|
1.09
|
1.05
|
1.02
|
.91
|
1.16
|
|||||||||||||||||
Diluted
earnings per share
|
|||||||||||||||||||||||||
-
reported basis
|
.82
|
.58
|
.86
|
.95
|
.90
|
.86
|
.74
|
.88
|
|||||||||||||||||
-
before amortization of intangibles
|
.94
|
.70
|
.99
|
1.08
|
1.04
|
1.01
|
.90
|
1.15
|
|||||||||||||||||
Return
on common shareholders’ equity
|
|||||||||||||||||||||||||
-
reported basis
|
14.8
|
%
|
10.4
|
%
|
17.2
|
%
|
19.5
|
%
|
19.1
|
%
|
18.4
|
%
|
16.5
|
%
|
19.8
|
%
|
|||||||||
-
before amortization of intangibles
|
17.0
|
12.7
|
19.8
|
22.1
|
22.1
|
21.7
|
20.1
|
26.0
|
|||||||||||||||||
(billions
of
Canadian dollars)
|
|||||||||||||||||||||||||
Average
earning assets
|
$
|
304
|
$
|
302
|
$
|
279
|
$
|
267
|
$
|
257
|
$
|
258
|
$
|
258
|
$
|
248
|
|||||||||
Net
interest margin as a percentage of average earning assets
|
2.14
|
%
|
2.05
|
%
|
2.05
|
%
|
2.10
|
%
|
2.22
|
%
|
2.23
|
%
|
2.27
|
%
|
2.32
|
%
|
24 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
25
|
TABLE
12
|
RESULTS
BY SEGMENT
|
Canadian
Personal and
|
U.S.
Personal and
|
Wealth
|
||||||||||||||||||||||||||||||||||||||||||||
Commercial
Banking
|
Commercial
Banking
|
Wholesale
Banking
|
Management
|
Corporate
|
||||||||||||||||||||||||||||||||||||||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||||||||||||||||||||
Net
interest income
|
$
|
4,342
|
$
|
4,154
|
$
|
4,051
|
$
|
705
|
N/A
|
N/A
|
$
|
977
|
$
|
1,581
|
$
|
1,335
|
$
|
643
|
$
|
492
|
$
|
421
|
$
|
(659
|
)
|
$
|
(454
|
)
|
$
|
(370
|
)
|
|||||||||||||||
Other
income
|
2,361
|
2,066
|
1,803
|
299
|
1,011
|
615
|
701
|
2,103
|
2,098
|
1,873
|
115
|
104
|
47
|
|||||||||||||||||||||||||||||||||
Provision
for (reversal of) credit losses
|
373
|
373
|
460
|
4
|
52
|
41
|
15
|
-
|
-
|
-
|
(374
|
)
|
(800
|
)
|
(289
|
)
|
||||||||||||||||||||||||||||||
Non-interest
expenses before amortization of intangibles
|
3,773
|
3,650
|
3,463
|
549
|
1,325
|
1,289
|
1,689
|
2,083
|
2,047
|
2,234
|
506
|
395
|
206
|
|||||||||||||||||||||||||||||||||
Provision
for (benefit of) income taxes and non-controlling interest
|
855
|
747
|
689
|
293
|
189
|
278
|
92
|
231
|
191
|
145
|
(545
|
)
|
(264
|
)
|
(323
|
)
|
||||||||||||||||||||||||||||||
Net
income (loss) before amortization of intangibles
|
$
|
1,702
|
$
|
1,450
|
$
|
1,242
|
$
|
158
|
$
|
422
|
$
|
588
|
$
|
240
|
$
|
432
|
$
|
352
|
$
|
(85
|
)
|
$
|
(131
|
)
|
$
|
319
|
$
|
83
|
||||||||||||||||||
(billions
of Canadian dollars)
|
||||||||||||||||||||||||||||||||||||||||||||||
Risk-weighted
assets
|
$
|
60
|
$
|
58
|
$
|
56
|
$
|
25
|
$
|
33
|
$
|
30
|
$
|
40
|
$
|
9
|
$
|
9
|
$
|
6
|
$
|
2
|
$
|
3
|
$
|
7
|
26 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
27
|
28 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
13
|
CANADIAN
PERSONAL AND COMMERCIAL
BANKING
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest income
|
$
|
4,342
|
$
|
4,154
|
$
|
4,051
|
||||
Provision
for credit losses
|
373
|
373
|
460
|
|||||||
Other
income
|
2,361
|
2,066
|
1,803
|
|||||||
Non-interest
expenses before amortization of intangibles
|
3,773
|
3,650
|
3,463
|
|||||||
Income
before provision for income taxes
|
2,557
|
2,197
|
1931
|
|||||||
Provision
for income taxes
|
855
|
747
|
689
|
|||||||
Net
income - before amortization of intangibles
|
$
|
1,702
|
$
|
1,450
|
$
|
1,242
|
||||
Selected
volumes and ratios
|
||||||||||
Average
loans and acceptances (billions of Canadian dollars)
|
$
|
117
|
$
|
110
|
$
|
104
|
||||
Average
deposits (billions of Canadian dollars)
|
124
|
116
|
110
|
|||||||
Economic
profit (millions of Canadian dollars)
|
$
|
1,038
|
$
|
810
|
$
|
639
|
||||
Return
on invested capital - before amortization of intangibles
|
23.1
|
%
|
20.4
|
%
|
18.5
|
%
|
||||
Efficiency
ratio - before amortization of intangibles
|
56.3
|
%
|
58.7
|
%
|
59.2
|
%
|
||||
Margin
on average earning assets1
|
2.96
|
%
|
3.05
|
%
|
3.25
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
29
|
• |
To
maintain better than industry average margins, key priorities
will be to
maintain growth related to the group and non-group businesses,
further
develop information technology tools and operating systems, and
improve
business processes.
|
• |
Make
customers the number one priority for all employees and go beyond
expectations in resolving customer
complaints.
|
• |
Support
employee development by improving training, coaching and leadership,
enhance recruitment and orientation and better reflect the diverse
communities we serve.
|
• |
Develop
relationships with more Canadians and deepen relationships with
our
existing customers.
|
• |
Continue
to reduce business process complexity and increase productivity
levels.
|
• |
Maintain
industry leadership in direct insurance through TD Meloche Monnex
and TD
Insurance.
|
• |
Continue
growing under-penetrated
businesses.
|
30 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
31
|
• |
Earnings
before amortization of intangibles were $158 million for the
seven month
period March 1, 2005 to September 30, 2005.
|
• |
For
the period March 1, 2005 to September 30, 2005, total loans
averaged $24
billion, total deposits averaged $27 billion and the margin
on average
earning assets was 4.11%.
|
• |
The
annualized return on invested capital before amortization of
intangibles
was 5.4%.
|
• |
Continued
strong asset quality.
|
• |
Acquired
the naming rights to the TD Banknorth Garden, the home of the
Boston
Bruins and Boston Celtics.
|
• |
Margin
compression related to increasing short-term interest rates
and the
continued flattening of the yield
curve.
|
• |
Slowing
commercial loan growth.
|
• |
Deliver
superior customer service across all
channels.
|
• |
Unify
various brands under the single TD Banknorth
brand.
|
• |
Focus
organic banking growth on core chequing accounts and commercial
and small
business loans.
|
• |
Continue
to grow wealth management, investment planning and insurance
agency
businesses.
|
• |
Maintain
strong asset quality and expense
discipline.
|
• |
Continue
the acquisition strategy throughout New England and other niche
areas of
the United States.
|
32 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
The
U.S. economy, including the U.S. northeast, is expected to
deliver solid
economic growth in 2006, but the pace of expansion is expected
to slow
over the course of the year. However, after two years of outperforming
the
national average, the pace of expansion in New England is likely
to
underperform next year.
|
• |
Although
employment will likely rise at a modest pace, personal income
growth is
expected to accelerate next year and the personal savings rate
is expected
to rise. Corporate profit growth is expected to drop from the
double-digit
gains over the past couple of years, but should remain in positive
territory. These trends should be supportive to deposit growth.
|
• |
Commercial
loan growth is likely to be tempered by less stimulative monetary
policy.
However, while short-term rates will have risen significantly
from their
1% trough, the peak in rates will be low by historical standards.
The rise
in long-term borrowing costs will likely prove modest. Moreover,
strong
business investment and slower growth in corporate profits
could boost
demand for commercial loans.
|
• |
Personal
loan growth is vulnerable to a cooling in U.S. housing markets.
Over the
past few years, the wealth effects from booming real estate
markets has
been a powerful catalyst to consumer spending. However, the
recent trends
are not sustainable, and U.S. consumer outlays will lose momentum
if the
housing market declines. Even if the annual increase in home
prices were
to slow to roughly the pace of inflation, consumer spending
growth would
dip. Outlays on big-ticket items such as furniture, appliances
and autos
are the most vulnerable. If this moderation occurs, it would
dampen
personal loan growth.
|
• |
Complete
the pending acquisition and achieve a smooth integration of
Hudson United
into the TD Banknorth organization and complete re-branding
of all Hudson
United locations.
|
• |
Achieve
projected revenue growth and cost reduction targets for the
Hudson
acquisition.
|
• |
Regain
momentum in growing commercial loans and core deposits, while
keeping
strong credit quality and competitive
pricing.
|
• |
Continue
to deliver customer service that is above and beyond customer
expectations.
|
• |
Continue
to improve the efficiency
ratio.
|
TABLE
14
|
U.S.
PERSONAL AND COMMERCIAL
BANKING
|
(millions
of Canadian dollars)
|
2005
|
|||
Net
interest income
|
$
|
705
|
||
Provision
for credit losses
|
4
|
|||
Other
income
|
299
|
|||
Non-interest
expenses before amortization of intangibles
|
549
|
|||
Income
before provision for income taxes
|
451
|
|||
Provision
for income taxes
|
161
|
|||
Non-controlling
interest in subsidiaries
|
132
|
|||
Net
income - before amortization of intangibles
|
$
|
158
|
||
Selected
volumes and ratios
|
||||
Average
loans and acceptances (billions of Canadian dollars)
|
$
|
24
|
||
Average
deposits (billions of Canadian dollars)
|
27
|
|||
Economic
loss (millions of Canadian dollars)
|
$
|
(105
|
)
|
|
Return
on invested capital - before amortization of intangibles
|
5.4
|
%
|
||
Efficiency
ratio - before amortization of intangibles
|
54.7
|
%
|
||
Margin
on average earning assets
|
4.11
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
33
|
34 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
Strong
results from the domestic franchise driven partially by
improved market
share in areas such as block trading, where TD Securities
held the #1
market share for the year.
|
• |
Restructuring
activities undertaken in 2005 have improved the market
and operational
risk profile which should lead to increased profitability
in future
years.
|
• |
Continued
to use credit effectively by focusing on client profitability.
|
• |
Continued
to maintain a low credit risk
profile.
|
• |
Restructuring
activities in the global structured products businesses
had a negative
impact on earnings.
|
• |
Weaker
results in our equity investment portfolios compared to
2004.
|
• |
Reducing
run rate costs while maintaining business momentum and
operational
excellence.
|
• |
Tightening
lending margins.
|
• |
Deliver
a full suite of capital market services for Wholesale Banking’s
established and growing client base in Canada with a goal
to becoming a
top 3 relationship bank in Canada.
|
• |
Maintain
a strong international trading platform and global operations
to support
our domestic strategy.
|
• |
Selectively
use credit to support high return
relationships.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
35
|
• |
Corporate
banking, which includes corporate lending, trade finance
and related
activities, had a revenue decline of 12% from $303 million
in 2004 to $266
million in 2005. This decrease is largely a result of reduced
revenue from
lending activities. Lending revenue decreased because of
reduced lending
margins.
|
• |
Investment
banking and capital markets revenues decreased 8% from
$1,594 million in
2004 to $1,467 million in 2005. Capital markets revenue
includes the
impact of $153 million in losses related to the reduction
of the estimated
value and exit of certain structured derivative portfolios
noted above.
Excluding these items revenue is up 2% from last year.
This reflects
stronger investment banking, underwriting and equity facilitation
revenues
which are a result of both better market conditions and
increased market
share - shown by TD Securities’ #1 rank in block trading market share in
2005. These gains were partially offset by weaker trading
revenue in our
structured equity, interest rate and credit portfolios
as these portfolios
experienced difficult market
conditions.
|
• |
The
equity investment portfolios, comprised public and private
equity, had
weaker overall results in 2005 as revenue decreased by
15% from a very
strong result in 2004 of $299 million to $255 million.
This was a result
of lower interest and dividends partially offset by higher
security gains.
Although revenue was lower in 2005, the unrealized gains
in the portfolios
increased by $332 million to $750
million.
|
• |
Moderate
growth in client demand for wholesale banking services
is expected in
2006.
|
• |
Despite
the tightening in monetary policy, sustained low bond yields
and
relatively tight corporate spreads are likely to remain
supportive to
borrowing.
|
• |
Business
investment is expected to be a major engine for economic
growth in the
coming year, which should be positive for activity in investment
banking,
debt capital markets, institutional equities and private
equity.
|
• |
Continued
growth in corporate profits should also be beneficial for
business
confidence, and with profit growth slowing to a single
digit annual pace,
some firms may find it more difficult to finance outlays
with internally
generated funds.
|
• |
Demand
for foreign exchange services is expected to remain strong.
The U.S.
dollar is likely to lose ground in response to the massive
U.S. current
account deficit and the currency is expected to be weakened
by signs that
the U.S. economic expansion is slowing in reaction to a
cooling in U.S.
housing markets.
|
• |
This
outlook augurs for further volatility in the Canadian dollar
and suggests
that the exchange rate to the U.S. dollar could climb higher,
particularly
in early 2006. However, the gains in the currency may prove
fleeting, as a
future U.S. slowdown would result in a pullback in commodity
prices that
would reduce the international attractiveness of the Canadian
currency.
Nevertheless, any retreat in the Canadian dollar should
be limited and the
currency is expected to remain well above the U.S. $.80
mark.
|
• |
Complete
the restructuring of the global structured products businesses,
including
the right-sizing of the cost
structure.
|
• |
Continue
the momentum of increasing market share in the Canadian
franchise.
|
• |
Achieve
return on invested capital target of 15% to 22%.
|
TABLE
15
|
WHOLESALE
BANKING
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest income
|
$
|
977
|
$
|
1,581
|
$
|
1,335
|
||||
Provision
for credit losses
|
52
|
41
|
15
|
|||||||
Other
income
|
1,011
|
615
|
701
|
|||||||
Non-interest
expenses
|
1,325
|
1,289
|
1,689
|
|||||||
Income
before provision for income taxes
|
611
|
866
|
332
|
|||||||
Provision
for income taxes
|
189
|
278
|
92
|
|||||||
Net
income
|
$
|
422
|
$
|
588
|
$
|
240
|
||||
Selected
volumes and ratios
|
||||||||||
Risk-weighted
assets (billions of Canadian dollars)
|
$
|
33
|
$
|
30
|
$
|
40
|
||||
Economic
profit (loss) (millions of Canadian dollars)
|
$
|
100
|
$
|
278
|
$
|
(125
|
)
|
|||
Return
on invested capital
|
17.0
|
%
|
24.7
|
%
|
8.6
|
%
|
||||
Efficiency
ratio
|
66.6
|
%
|
58.7
|
%
|
83.0
|
%
|
36 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
37
|
• |
Wealth
management assets under administration increased $35
billion or 13% from
2004 due to growth in net new assets combined with market
growth. Assets
under management grew $14 billion or 12% over the prior
year due to net
asset growth and market
appreciation.
|
• |
The
2004 investment in under-penetrated businesses started
to pay off in 2005
with solid profitability growth in those channels.
|
• |
Exceeded
our goal of adding 125 net new client facing
advisors.
|
• |
TD
Mutual Funds had the best ever year of net fund sales
with $4.1 billion
including a 73% increase in sales to external
dealers.
|
• |
Discount
brokerage will expand operations through a proposed transaction
to sell TD
Waterhouse U.S.A. to Ameritrade Holding. The transaction
is subject to
shareholder and regulatory approval and is expected to
close in early
2006.
|
• |
Price
competition, particularly in the U.S., continued to negatively
impact
commission revenue.
|
• |
Canadian
markets generally improved in 2005, challenges continued
in the U.S.
markets, impacting average trades per day which declined
3% from 108,000
in 2004 to 105,000 in
2005.
|
• |
The
stronger Canadian dollar negatively impacted the TD Waterhouse
U.S.A.
results and produced lower commission revenue on U.S.
transactions for the
Canadian discount brokerage
operations.
|
• |
The
industry benefited from strong growth in long term mutual
fund sales.
|
• |
In
the U.S., discount brokerage revenues were hampered by
intense price
competition.
|
• |
In
Canada, the strength of the oil sector and income trusts
were factors in
the growth of Canadian markets and corresponding trading
activity.
|
• |
Develop
an integrated asset gathering client focused
organization.
|
• |
Continue
to grow under-penetrated businesses at above average
growth
rates.
|
• |
Retain
focus on the financial planning and private investment
advice
businesses.
|
• |
Leverage
the wealth brands of TD Waterhouse and TD Mutual Funds
as premier, trusted
advisors in investing for clients.
|
• |
Develop
a world class continuum of products, services and solutions
designed to
meet the needs of each client
segment.
|
• |
Leverage
technology to enhance the systems architecture supporting
the customer
experience and to increase operational
efficiency.
|
• |
Leverage
the strong client referral relationship with Canadian
Personal and
Commercial Banking to ensure clients are serviced in
the most appropriate
distribution channel within Wealth
Management.
|
38 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
A
leader in self-directed investing, serving customers
in Canada, the United
States and the United Kingdom.
|
• |
The
businesses continued to be challenged on trade volumes
which declined 3%
from 2004.
|
• |
Revenue
increased by $10 million as higher net interest income
due to higher
deposit balances combined with higher spread revenue
more than offset the
impact on revenue of declines in trade volumes, lower
commissions per
trade and the impact on U.S. results of the higher Canadian
dollar. The
decline in commissions per trade resulted from pricing
pressures in the
U.S. and lower commissions per trade on U.S. transactions
for the Canadian
discount brokerage operations.
|
• |
Expenses
before the amortization of intangibles declined by $49
million primarily
due to cost control in the face of declining volumes,
the impact of
foreign exchange on U.S. results partially offset by
higher marketing
expenses and the costs associated with call centre closures
in the U.S.
|
• |
TD
mutual funds is the sixth largest mutual fund family
in Canada with $42
billion in assets under management at October 31, 2005,
an increase of 20%
over 2004, resulting in record earnings for the year.
Revenue growth of
12% resulted from this growth in assets, offset by trailer
payments to
internal Wealth counterparties. Expenses before the amortization
of
intangibles increased $21 million also due to the increase
in assets as
trailer payments to the Bank and external sellers of
the Bank’s funds
increased over 2004. For the third year in a row, TD
mutual funds was
second in the industry in long term sales at $5.0
billion.
|
• |
TD
investment management is recognized as one of the largest
quantitative
managers in the country. Services provided include investment
management
to pension funds, corporations, institutions, endowments
and foundations.
Assets under management increased by 12% compared with
2004. Revenue
increased 14% as the growth in assets generated higher
management
fees.
|
• |
TD
Waterhouse Private Client Group includes trust services,
private banking
and private investment counsel. Increases in customer
assets were
responsible for a 12% or $20 million increase in revenue
year-over-year.
Expenses before the amortization of intangibles were
flat due to the
offsetting impacts of higher expenses due to growth in
assets and the
costs incurred in 2004 related to the rebranding of private
client
services under the TD Waterhouse
banner.
|
• |
TD
Waterhouse private investment advice provides full-service
brokerage
services to its retail customers throughout Canada. In
2005, assets under
administration continued to grow resulting in a $42 million
increase in
revenue. Expenses before the amortization of intangibles
grew at 14%
reflecting increases in investment advisor compensation
with the growth in
commissionable revenue.
|
• |
TD
Waterhouse financial planning continues to aggressively
grow its client
facing advisors with a 21% increase in the number of
planners and a 66%
increase in assets under administration in 2005. As a
result, revenues
increased $24 million in 2005 while expenses grew $17
million as the
investment in growing the number of financial planners
continues.
|
• |
Economic
conditions are expected to remain positive for Wealth
Management in 2006.
Rising personal income and low unemployment rates should
encourage
increased investing activity.
|
• |
The
return on money market instruments is likely to rise
in reaction to Bank
of Canada rate hikes in late 2005 and early
2006.
|
• |
Bond
yields may rise during the monetary policy tightening,
but they are likely
to retreat in reaction to slower economic growth in late
2006.
|
• |
Foreign
exchange volatility will continue, particularly with
respect to the U.S.
dollar, which may impact investment
strategies.
|
• |
Ensure
the successful closing and successful integration of
the TD Ameritrade
transaction, including the realization of revenue and
expense synergies
planned for the upcoming
year.
|
• |
Improve
Wealth Management’s new client asset growth by increasing the number of
client facing advisors, both through competitive hiring
and training
programs for new and experienced advisors.
|
• |
Increase
share of business with current customers by enhancing
and delivering new
products, services and
solutions.
|
• |
Introduce
an active-trader platform in Canada to target the frequent
trading
customers in Wealth Management’s discount brokerage
business.
|
• |
Maintain
a positive spread between revenue and expense growth
by aggressively
managing costs through technology investment and elimination
of
overlapping functions and
processes.
|
• |
Focus
on growing a more stable revenue base by targeting fee-based
and net
interest revenues.
|
TABLE
16
|
WEALTH
MANAGEMENT
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest income
|
$
|
643
|
$
|
492
|
$
|
421
|
||||
Other
income
|
2,103
|
2,098
|
1,873
|
|||||||
Non-interest
expenses before amortization of intangibles
|
2,083
|
2,047
|
2,234
|
|||||||
Income
before provision for income taxes
|
663
|
543
|
60
|
|||||||
Provision
for income taxes
|
231
|
191
|
145
|
|||||||
Net
income (loss) - before amortization of intangibles
|
$
|
432
|
$
|
352
|
$
|
(85
|
)
|
|||
Selected
volumes and ratios
|
||||||||||
Assets
under administration (billions of Canadian dollars)
|
$
|
314
|
$
|
279
|
$
|
259
|
||||
Assets
under management (billions of Canadian dollars)
|
130
|
117
|
107
|
|||||||
Economic
profit (loss) (millions of Canadian dollars)
|
$
|
116
|
$
|
25
|
$
|
(476
|
)
|
|||
Return
on invested capital - before amortization of intangibles
|
16.4
|
%
|
13.0
|
%
|
(3.6
|
)%
|
||||
Efficiency
ratio - before amortization of intangibles
|
75.9
|
%
|
79.0
|
%
|
97.4
|
%
|
||||
Average
trades per day (thousands)
|
105
|
108
|
98
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
39
|
TABLE
17
|
CORPORATE
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest loss
|
$
|
(659
|
)
|
$
|
(454
|
)
|
$
|
(370
|
)
|
|
Reversal
of credit losses
|
(374
|
)
|
(800
|
)
|
(289
|
)
|
||||
Other
income
|
115
|
104
|
47
|
|||||||
Non-interest
expenses
|
506
|
395
|
206
|
|||||||
Income
(loss) before benefit of income taxes
|
(676
|
)
|
55
|
(240
|
)
|
|||||
Benefit
of income taxes
|
(545
|
)
|
(264
|
)
|
(323
|
)
|
||||
Net
income (loss)
|
$
|
(131
|
)
|
$
|
319
|
$
|
83
|
40 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
18
|
REVIEW
OF 2004 FINANCIAL
PERFORMANCE
|
Canadian
Personal and
|
Wholesale
|
Wealth
|
Total
|
|||||||||||||
(millions
of Canadian dollars)
|
Commercial
Banking
|
Banking
|
Management
|
Corporate
|
Consolidated
|
|||||||||||
Net
interest income (loss)
|
$
|
4,154
|
$
|
1,581
|
$
|
492
|
$
|
(454
|
)
|
$
|
5,773
|
|||||
Other
income
|
2,066
|
615
|
2,098
|
104
|
4,883
|
|||||||||||
Total
revenue
|
6,220
|
2,196
|
2,590
|
(350
|
)
|
10,656
|
||||||||||
Provision
for (reversal of) credit losses
|
373
|
41
|
-
|
(800
|
)
|
(386
|
)
|
|||||||||
Non-interest
expenses before amortization of intangibles
|
3,650
|
1,289
|
2,047
|
395
|
7,381
|
|||||||||||
Income
before provision for income taxes
|
2,197
|
866
|
543
|
55
|
3,661
|
|||||||||||
Provision
for (benefit of) income taxes
|
747
|
278
|
191
|
(264
|
)
|
952
|
||||||||||
Net
income - before amortization of intangibles
|
$
|
1,450
|
$
|
588
|
$
|
352
|
$
|
319
|
$
|
2,709
|
||||||
Amortization
of intangibles, net of income taxes
|
477
|
|||||||||||||||
Net
income - reported basis
|
$
|
2,232
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
41
|
42 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
19
|
SELECTED
CONSOLIDATED BALANCE SHEET
ITEMS
|
As
at
|
As
at
|
||||||||||||
(millions
of Canadian dollars)
|
October
31, 2005
|
October
31, 2004
|
|||||||||||
TDBFG
excluding
|
TDBFG
|
TDBFG
|
|||||||||||
TD
Banknorth
|
TD
Banknorth
|
Consolidated
|
Consolidated
|
||||||||||
Securities
|
$
|
102,833
|
$
|
5,263
|
$
|
108,096
|
$
|
98,280
|
|||||
Securities
purchased under reverse repurchase agreements
|
26,375
|
-
|
26,375
|
21,888
|
|||||||||
Loans
(net of allowance for credit losses)
|
129,347
|
22,896
|
152,243
|
123,924
|
|||||||||
Deposits
|
220,926
|
26,055
|
246,981
|
206,893
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
43
|
• |
Loans
and acceptances portfolio net of allowances for credit
losses was $158
billion, up $29 billion or 22% from the prior
year.
|
• |
Impaired
loans after specific allowance were $196 million, down
$75 million or
28%.
|
• |
Provision
for credit losses was $55 million, compared with a reversal
of $386
million in 2004.
|
• |
Total
allowances for credit losses increased by $110 million
or 9%, to $1,293
million in 2005.
|
TABLE
20
|
LOANS
TO SMALL AND MID-SIZED BUSINESS
CUSTOMERS
|
(millions
of Canadian dollars)
|
Loans
authorized
|
Amount outstanding | |||||||||||||||||
Loan
amount
|
2005
|
2004
|
2003
|
2005 |
2004
|
2003
|
|||||||||||||
(thousands
of Canadian dollars)
|
|||||||||||||||||||
0
- 24
|
$
|
1,137
|
$
|
1,054
|
$
|
1,056
|
$
|
589
|
$
|
522
|
$
|
530
|
|||||||
25
- 49
|
1,000
|
768
|
745
|
648 |
445
|
434
|
|||||||||||||
50
- 99
|
1,582
|
1,308
|
1,298
|
931 |
727
|
745
|
|||||||||||||
100
- 249
|
3,251
|
2,701
|
2,682
|
1,988 |
1,608
|
1,626
|
|||||||||||||
250
- 499
|
3,100
|
2,484
|
2,409
|
1,798 |
1,452
|
1,421
|
|||||||||||||
500
- 999
|
3,235
|
2,537
|
2,478
|
1,653 |
1,286
|
1,271
|
|||||||||||||
1,000
- 4,999
|
9,735
|
6,969
|
6,769
|
4,457 |
3,185
|
3,112
|
|||||||||||||
Total1
|
$
|
23,040
|
$
|
17,821
|
$
|
17,437
|
$
|
12,064
|
$
|
9,225
|
$
|
9,139
|
44 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
21
|
LOANS
AND ACCEPTANCES, NET OF ALLOWANCE FOR CREDIT LOSSES BY
INDUSTRY
SECTOR1
|
Percentage
of total
|
|||||||||||||||||||
(millions
of Canadian dollars, except percentage amounts)
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
Canada
|
|||||||||||||||||||
Residential
mortgages
|
$
|
49,067
|
$
|
51,374
|
$
|
52,525
|
31.0
|
%
|
39.7
|
%
|
42.1
|
%
|
|||||||
Consumer
instalment and other personal
|
54,063
|
46,814
|
38,623
|
34.2
|
36.2
|
31.0
|
|||||||||||||
Total
residential and personal
|
103,130
|
98,188
|
91,148
|
65.2
|
75.9
|
73.1
|
|||||||||||||
Real
estate development
|
|||||||||||||||||||
Commercial
and
industrial
|
1,326
|
1,343
|
1,491
|
.9
|
1.0
|
1.2
|
|||||||||||||
Residential
|
1,608
|
1,395
|
1,247
|
1.0
|
1.1
|
1.0
|
|||||||||||||
Retail
|
388
|
346
|
352
|
.2
|
.3
|
.3
|
|||||||||||||
Real
estate services
|
267
|
251
|
300
|
.2
|
.2
|
.2
|
|||||||||||||
Total
real estate
|
3,589
|
3,335
|
3,390
|
2.3
|
2.6
|
2.7
|
|||||||||||||
Agriculture
|
2,187
|
2,155
|
2,428
|
1.4
|
1.7
|
1.9
|
|||||||||||||
Apparel
and textile
|
309
|
270
|
323
|
.2
|
.2
|
.3
|
|||||||||||||
Automotive
|
1,283
|
1,404
|
1,644
|
.8
|
1.1
|
1.3
|
|||||||||||||
Cable
|
386
|
543
|
417
|
.2
|
.4
|
.3
|
|||||||||||||
Chemical
|
424
|
435
|
415
|
.3
|
.3
|
.3
|
|||||||||||||
Construction
|
754
|
764
|
694
|
.5
|
.6
|
.6
|
|||||||||||||
Financial
|
3,745
|
1,983
|
1,960
|
2.4
|
1.5
|
1.6
|
|||||||||||||
Food,
beverage and tobacco
|
1,367
|
1,233
|
1,319
|
.9
|
1.0
|
1.1
|
|||||||||||||
Forestry
|
530
|
427
|
563
|
.3
|
.3
|
.5
|
|||||||||||||
Government
|
537
|
464
|
589
|
.3
|
.4
|
.5
|
|||||||||||||
Health
and social services
|
1,264
|
1,130
|
1,144
|
.8
|
.9
|
.9
|
|||||||||||||
Media
and entertainment
|
1,201
|
904
|
1,111
|
.8
|
.7
|
.9
|
|||||||||||||
Metals
and mining
|
451
|
464
|
600
|
.3
|
.4
|
.5
|
|||||||||||||
Oil
and gas
|
1,205
|
863
|
941
|
.8
|
.7
|
.7
|
|||||||||||||
Retail
|
1,020
|
1,071
|
1,072
|
.6
|
.8
|
.8
|
|||||||||||||
Sundry
manufacturing
|
810
|
905
|
910
|
.5
|
.7
|
.7
|
|||||||||||||
Telecommunications
|
21
|
60
|
92
|
-
|
-
|
.1
|
|||||||||||||
Transportation
|
520
|
448
|
600
|
.3
|
.3
|
.5
|
|||||||||||||
Utilities
|
558
|
613
|
665
|
.3
|
.5
|
.5
|
|||||||||||||
All
other loans
|
1,738
|
1,935
|
1,487
|
1.1
|
1.4
|
1.2
|
|||||||||||||
Total
business and government
|
23,899
|
21,406
|
22,364
|
15.1
|
16.5
|
17.9
|
|||||||||||||
Total
Canada
|
127,029
|
119,594
|
113,512
|
80.3
|
92.4
|
91.0
|
|||||||||||||
United
States
|
|||||||||||||||||||
Residential
mortgages
|
3,625
|
-
|
-
|
2.3
|
-
|
-
|
|||||||||||||
Consumer
instalment and other personal
|
11,258
|
4,294
|
4,272
|
7.1
|
3.3
|
3.4
|
|||||||||||||
Total
residential and personal
|
14,883
|
4,294
|
4,272
|
9.4
|
3.3
|
3.4
|
|||||||||||||
Real
estate development
|
|||||||||||||||||||
Residential
|
1,498
|
16
|
85
|
.9
|
-
|
.1
|
|||||||||||||
Real
estate services
|
6,009
|
-
|
4
|
3.8
|
-
|
-
|
|||||||||||||
Total
real estate
|
7,507
|
16
|
89
|
4.7
|
-
|
.1
|
|||||||||||||
Agriculture
|
103
|
-
|
-
|
.1
|
-
|
-
|
|||||||||||||
Apparel
and textile
|
39
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Automotive
|
317
|
52
|
91
|
.2
|
-
|
.1
|
|||||||||||||
Cable
|
161
|
145
|
363
|
.1
|
.1
|
.3
|
|||||||||||||
Chemical
|
208
|
-
|
24
|
.1
|
-
|
-
|
|||||||||||||
Construction
|
291
|
5
|
27
|
.2
|
-
|
-
|
|||||||||||||
Financial
|
1,280
|
772
|
264
|
.9
|
.6
|
.2
|
|||||||||||||
Food,
beverage and tobacco
|
198
|
103
|
106
|
.1
|
.1
|
.1
|
|||||||||||||
Forestry
|
178
|
68
|
209
|
.1
|
.1
|
.2
|
|||||||||||||
Government
|
290
|
328
|
151
|
.2
|
.3
|
.1
|
|||||||||||||
Health
and social services
|
369
|
-
|
57
|
.3
|
-
|
-
|
|||||||||||||
Media
and entertainment
|
448
|
183
|
351
|
.3
|
.1
|
.3
|
|||||||||||||
Metals
and mining
|
193
|
10
|
42
|
.1
|
-
|
-
|
|||||||||||||
Oil
and gas
|
192
|
152
|
451
|
.1
|
.1
|
.5
|
|||||||||||||
Retail
|
214
|
-
|
59
|
.1
|
-
|
-
|
|||||||||||||
Sundry
manufacturing
|
448
|
74
|
9
|
.3
|
-
|
-
|
|||||||||||||
Telecommunications
|
230
|
111
|
333
|
.1
|
.1
|
.3
|
|||||||||||||
Transportation
|
197
|
31
|
57
|
.1
|
-
|
-
|
|||||||||||||
Utilities
|
292
|
476
|
1,171
|
.2
|
.4
|
.9
|
|||||||||||||
All
other loans
|
1,491
|
207
|
247
|
1.0
|
.2
|
.2
|
|||||||||||||
Total
business and government
|
14,646
|
2,733
|
4,101
|
9.3
|
2.1
|
3.3
|
|||||||||||||
Total
United States
|
29,529
|
7,027
|
8,373
|
18.7
|
5.4
|
6.7
|
|||||||||||||
Other
International
|
|||||||||||||||||||
Residential
mortgages
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Consumer
instalment and other personal
|
9
|
11
|
13
|
-
|
-
|
-
|
|||||||||||||
Total
residential and personal
|
9
|
11
|
13
|
-
|
-
|
-
|
|||||||||||||
Real
estate development - retail
|
-
|
-
|
19
|
-
|
-
|
-
|
|||||||||||||
Apparel
and textile
|
-
|
-
|
38
|
-
|
-
|
-
|
|||||||||||||
Automotive
|
83
|
-
|
3
|
.1
|
-
|
-
|
|||||||||||||
Cable
|
-
|
77
|
298
|
-
|
.1
|
.3
|
|||||||||||||
Chemical
|
52
|
60
|
80
|
-
|
.1
|
.1
|
|||||||||||||
Construction
|
6
|
1
|
21
|
-
|
-
|
-
|
|||||||||||||
Financial
|
755
|
1,728
|
466
|
.5
|
1.3
|
.4
|
|||||||||||||
Food,
beverage and tobacco
|
97
|
102
|
141
|
.1
|
.1
|
.1
|
|||||||||||||
Forestry
|
3
|
18
|
27
|
-
|
-
|
-
|
|||||||||||||
Government
|
14
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Media
and entertainment
|
199
|
252
|
255
|
.1
|
.2
|
.2
|
|||||||||||||
Metals
and mining
|
110
|
18
|
10
|
.1
|
-
|
-
|
|||||||||||||
Oil
and gas
|
-
|
-
|
278
|
-
|
-
|
.2
|
|||||||||||||
Sundry
manufacturing
|
1
|
22
|
2
|
-
|
-
|
-
|
|||||||||||||
Telecommunications
|
51
|
140
|
309
|
-
|
.1
|
.3
|
|||||||||||||
Transportation
|
52
|
47
|
50
|
-
|
-
|
.1
|
|||||||||||||
Utilities
|
217
|
182
|
652
|
.1
|
.2
|
.5
|
|||||||||||||
All
other loans
|
25
|
152
|
156
|
-
|
.1
|
.1
|
|||||||||||||
Total
business and government
|
1,665
|
2,799
|
2,805
|
1.0
|
2.2
|
2.3
|
|||||||||||||
Total
Other International
|
1,674
|
2,810
|
2,818
|
1.0
|
2.2
|
2.3
|
|||||||||||||
Total
|
$
|
158,232
|
$
|
129,431
|
$
|
124,703
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||||
Percentage
change
|
22.3
|
%
|
3.8
|
%
|
(4.3
|
)%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
45
|
TABLE
22
|
LOANS
AND ACCEPTANCES, NET OF ALLOWANCE FOR CREDIT LOSSES BY
LOCATION OF
ULTIMATE RISK
|
Percentage
of total
|
|||||||||||||||||||||||||
(millions
of Canadian dollars,
|
|||||||||||||||||||||||||
except
percentage amounts)
|
2005
|
2004
|
2003
|
2002
|
2005
|
2004
|
2003
|
2002
|
|||||||||||||||||
Canada
|
|||||||||||||||||||||||||
Atlantic
|
$
|
3,637
|
$
|
3,463
|
$
|
3,445
|
$
|
3,342
|
2.3
|
%
|
2.7
|
%
|
2.8
|
%
|
2.6
|
%
|
|||||||||
Québec
|
8,312
|
7,570
|
6,822
|
6,663
|
5.3
|
5.9
|
5.5
|
5.1
|
|||||||||||||||||
Ontario
|
75,673
|
72,334
|
71,914
|
70,219
|
47.8
|
55.9
|
57.6
|
53.9
|
|||||||||||||||||
Prairies
|
19,150
|
18,424
|
16,667
|
16,286
|
12.1
|
14.2
|
13.4
|
12.5
|
|||||||||||||||||
British
Columbia
|
19,074
|
17,780
|
15,054
|
15,310
|
12.1
|
13.7
|
12.1
|
11.7
|
|||||||||||||||||
Total
Canada
|
125,846
|
119,571
|
113,902
|
111,820
|
79.5
|
92.4
|
91.4
|
85.8
|
|||||||||||||||||
United
States
|
28,609
|
6,131
|
7,731
|
11,714
|
18.1
|
4.7
|
6.2
|
9.0
|
|||||||||||||||||
Other
International
|
|||||||||||||||||||||||||
United
Kingdom
|
1,039
|
904
|
434
|
1,118
|
.7
|
.7
|
.3
|
.8
|
|||||||||||||||||
Europe
- other
|
1,095
|
962
|
854
|
1,838
|
.7
|
.8
|
.7
|
1.4
|
|||||||||||||||||
Australia
and New Zealand
|
638
|
665
|
746
|
1,328
|
.4
|
.5
|
.6
|
1.0
|
|||||||||||||||||
Japan
|
-
|
-
|
42
|
138
|
-
|
-
|
-
|
.1
|
|||||||||||||||||
Asia
- other
|
573
|
894
|
488
|
1,254
|
.4
|
.7
|
.4
|
1.0
|
|||||||||||||||||
Latin
America and Caribbean
|
431
|
303
|
503
|
1,123
|
.3
|
.2
|
.4
|
.9
|
|||||||||||||||||
Middle
East and Africa
|
1
|
1
|
3
|
13
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Total
Other International
|
3,777
|
3,729
|
3,070
|
6,812
|
2.4
|
2.9
|
2.4
|
5.2
|
|||||||||||||||||
Total
|
$
|
158,232
|
$
|
129,431
|
$
|
124,703
|
$
|
130,346
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||||||
Percentage
change over previous year
|
|||||||||||||||||||||||||
Canada
|
5.2
|
%
|
5.0
|
%
|
1.9
|
%
|
5.4
|
%
|
|||||||||||||||||
United
States
|
366.6
|
(20.7
|
)
|
(34.0
|
)
|
(25.7
|
)
|
||||||||||||||||||
Other
International
|
1.3
|
21.5
|
(54.9
|
)
|
(2.4
|
)
|
|||||||||||||||||||
Total
|
22.3
|
%
|
3.8
|
%
|
(4.3
|
)%
|
1.2
|
%
|
TABLE
23
|
IMPACT
ON NET INTEREST INCOME DUE
TO IMPAIRED LOANS |
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Reduction
in net interest income due to impaired loans
|
$
|
35
|
$
|
49
|
$
|
111
|
||||
Recoveries
|
(26
|
)
|
(8
|
)
|
(11
|
)
|
||||
Net
reduction
|
$
|
9
|
$
|
41
|
$
|
100
|
46 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
24
|
IMPAIRED
LOANS LESS ALLOWANCE FOR CREDIT LOSSES BY INDUSTRY
SECTOR1
|
Percentage
of total
|
|||||||||||||||||||
(millions
of Canadian dollars, except percentage amounts)
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
Canada
|
|||||||||||||||||||
Residential
mortgages
|
$
|
8
|
$
|
15
|
$
|
43
|
4.1
|
%
|
5.5
|
%
|
4.8
|
%
|
|||||||
Consumer
instalment and other personal
|
63
|
41
|
52
|
32.2
|
15.2
|
5.9
|
|||||||||||||
Total
residential and personal
|
71
|
56
|
95
|
36.3
|
20.7
|
10.7
|
|||||||||||||
Real
estate development
|
|||||||||||||||||||
Commercial
and
industrial
|
2
|
4
|
9
|
1.0
|
1.4
|
1.0
|
|||||||||||||
Residential
|
1
|
1
|
2
|
.5
|
.4
|
.2
|
|||||||||||||
Total
real estate
|
3
|
5
|
11
|
1.5
|
1.8
|
1.2
|
|||||||||||||
Agriculture
|
49
|
46
|
73
|
25.0
|
17.0
|
8.4
|
|||||||||||||
Apparel
and textile
|
1
|
(2
|
)
|
(1
|
)
|
.5
|
(.7
|
)
|
(.1
|
)
|
|||||||||
Automotive
|
9
|
13
|
20
|
4.6
|
4.8
|
2.3
|
|||||||||||||
Chemical
|
11
|
1
|
6
|
5.6
|
.4
|
.7
|
|||||||||||||
Construction
|
1
|
4
|
2
|
.5
|
1.4
|
.2
|
|||||||||||||
Financial
|
-
|
-
|
2
|
-
|
-
|
.2
|
|||||||||||||
Food,
beverage and tobacco
|
1
|
(8
|
)
|
2
|
.5
|
(3.0
|
)
|
.2
|
|||||||||||
Forestry
|
-
|
1
|
11
|
-
|
.4
|
1.2
|
|||||||||||||
Health
and social services
|
-
|
1
|
2
|
-
|
.4
|
.2
|
|||||||||||||
Media
and entertainment
|
-
|
3
|
9
|
-
|
1.1
|
1.0
|
|||||||||||||
Metals
and mining
|
-
|
2
|
23
|
-
|
.7
|
2.6
|
|||||||||||||
Oil
and gas
|
-
|
3
|
-
|
-
|
1.1
|
-
|
|||||||||||||
Retail
|
1
|
1
|
2
|
.5
|
.4
|
.2
|
|||||||||||||
Sundry
manufacturing
|
-
|
9
|
1
|
-
|
3.3
|
.1
|
|||||||||||||
Telecommunications
|
-
|
-
|
2
|
-
|
-
|
.2
|
|||||||||||||
Transportation
|
-
|
1
|
6
|
-
|
.4
|
.7
|
|||||||||||||
Utilities
|
-
|
-
|
44
|
-
|
-
|
5.0
|
|||||||||||||
All
other loans
|
-
|
3
|
5
|
-
|
1.1
|
.6
|
|||||||||||||
Total
business and government
|
76
|
83
|
220
|
38.7
|
30.6
|
24.9
|
|||||||||||||
Total
Canada
|
147
|
139
|
315
|
75.0
|
51.3
|
35.6
|
|||||||||||||
United
States
|
|||||||||||||||||||
Residential
mortgages
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Consumer
instalment and other personal
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Total
residential and personal
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Real
estate development
|
|||||||||||||||||||
Commercial
and
industrial
|
23
|
-
|
-
|
11.8
|
-
|
-
|
|||||||||||||
Residential
|
1
|
-
|
-
|
.5
|
-
|
-
|
|||||||||||||
Shopping
Centres
|
1
|
-
|
-
|
.5
|
-
|
-
|
|||||||||||||
Real
Estate Services
|
4
|
-
|
-
|
2.0
|
-
|
-
|
|||||||||||||
Total
real estate
|
29
|
-
|
-
|
14.8
|
-
|
-
|
|||||||||||||
Automotive
|
-
|
-
|
1
|
-
|
-
|
.1
|
|||||||||||||
Cable
|
-
|
-
|
146
|
-
|
-
|
16.5
|
|||||||||||||
Chemical
|
-
|
-
|
9
|
-
|
-
|
1.0
|
|||||||||||||
Construction
|
3
|
-
|
-
|
1.5
|
-
|
-
|
|||||||||||||
Financial
|
-
|
15
|
20
|
-
|
5.5
|
2.3
|
|||||||||||||
Food,
beverage and tobacco
|
1
|
-
|
-
|
.5
|
-
|
-
|
|||||||||||||
Forestry
|
1
|
-
|
-
|
.5
|
-
|
-
|
|||||||||||||
Media
and entertainment
|
1
|
-
|
-
|
.5
|
-
|
-
|
|||||||||||||
Metals
and mining
|
4
|
-
|
(2
|
)
|
2.1
|
-
|
(.2
|
)
|
|||||||||||
Sundry
manufacturing
|
6
|
-
|
-
|
3.1
|
-
|
-
|
|||||||||||||
Telecommunications
|
-
|
-
|
41
|
-
|
-
|
4.7
|
|||||||||||||
Transportation
|
1
|
-
|
8
|
.5
|
-
|
.9
|
|||||||||||||
Utilities
|
1
|
88
|
259
|
.5
|
32.5
|
29.3
|
|||||||||||||
All
other loans
|
2
|
12
|
3
|
1.0
|
4.4
|
.3
|
|||||||||||||
Total
business and government
|
49
|
115
|
485
|
25.0
|
42.4
|
54.9
|
|||||||||||||
Total
United States
|
49
|
115
|
485
|
25.0
|
42.4
|
54.9
|
|||||||||||||
Other
International
|
|||||||||||||||||||
Residential
mortgages
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Consumer
instalment and other personal
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Total
residential and personal
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Automotive
|
-
|
-
|
6
|
-
|
-
|
.7
|
|||||||||||||
Cable
|
-
|
17
|
22
|
-
|
6.3
|
2.5
|
|||||||||||||
Media
and entertainment
|
-
|
-
|
1
|
-
|
-
|
.1
|
|||||||||||||
Telecommunications
|
-
|
-
|
20
|
-
|
-
|
2.3
|
|||||||||||||
Utilities
|
-
|
-
|
35
|
-
|
-
|
3.9
|
|||||||||||||
Total
business and government
|
-
|
17
|
84
|
-
|
6.3
|
9.5
|
|||||||||||||
Total
Other International
|
-
|
17
|
84
|
-
|
6.3
|
9.5
|
|||||||||||||
Total
net impaired loans before general and sectoral
allowances
|
196
|
271
|
884
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||
Less:
general allowances
|
1,140
|
917
|
984
|
||||||||||||||||
sectoral
allowances
|
-
|
-
|
541
|
||||||||||||||||
Total
net impaired loans
|
$
|
(944
|
)
|
$
|
(646
|
)
|
$
|
(641
|
)
|
||||||||||
Net
impaired loans as a % of common equity
|
(6.0
|
)%
|
(5.1
|
)%
|
(5.5
|
)%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
47
|
TABLE
25
|
IMPAIRED
LOANS LESS ALLOWANCE FOR CREDIT LOSSES BY LOCATION1
|
(millions
of Canadian dollars,
|
Percentage
of total
|
||||||||||||||||||||||||
except
percentage amounts)
|
2005
|
2004
|
2003
|
2002
|
2005
|
2004
|
2003
|
2002
|
|||||||||||||||||
Canada
|
|||||||||||||||||||||||||
Atlantic
|
$
|
2
|
$
|
2
|
$
|
4
|
$
|
5
|
1.0
|
%
|
.7
|
%
|
.5
|
%
|
.4
|
%
|
|||||||||
Québec
|
7
|
3
|
9
|
18
|
3.6
|
1.1
|
1.0
|
1.2
|
|||||||||||||||||
Ontario
|
99
|
91
|
223
|
345
|
50.5
|
33.6
|
25.2
|
23.8
|
|||||||||||||||||
Prairies
|
33
|
36
|
62
|
60
|
16.8
|
13.3
|
7.0
|
4.1
|
|||||||||||||||||
British
Columbia
|
6
|
7
|
17
|
21
|
3.1
|
2.6
|
1.9
|
1.5
|
|||||||||||||||||
Total
Canada
|
147
|
139
|
315
|
449
|
75.0
|
51.3
|
35.6
|
31.0
|
|||||||||||||||||
United
States
|
49
|
115
|
485
|
929
|
25.0
|
42.4
|
54.9
|
64.0
|
|||||||||||||||||
Other
International
|
-
|
17
|
84
|
73
|
-
|
6.3
|
9.5
|
5.0
|
|||||||||||||||||
Total
net impaired loans before general and sectoral
allowances
|
196
|
271
|
884
|
1,451
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||||||||||
Less:
general allowances
|
1,140
|
917
|
984
|
1,141
|
|||||||||||||||||||||
sectoral
allowances
|
-
|
-
|
541
|
1,285
|
|||||||||||||||||||||
Total
net impaired loans
|
$
|
(944
|
)
|
$
|
(646
|
)
|
$
|
(641
|
)
|
$
|
(975
|
)
|
|||||||||||||
Net
impaired loans as a % of net loans2
|
(.6
|
)%
|
(.5
|
)%
|
(.5
|
)%
|
(.7
|
)%
|
48 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
26
|
PROVISION
FOR CREDIT LOSSES
|
(millions
of
Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
New
provisions
|
$
|
352
|
$
|
459
|
$
|
543
|
||||
Reversal
of sectoral provision
|
-
|
(505
|
)
|
(23
|
)
|
|||||
Reversal
of general provision
|
||||||||||
TD
Bank
|
(35
|
)
|
(67
|
)
|
(157
|
)
|
||||
TD
Banknorth
|
(17
|
)
|
-
|
-
|
||||||
Recoveries
|
||||||||||
Sectoral
|
(229
|
)
|
(150
|
)
|
(57
|
)
|
||||
Specific
|
(16
|
)
|
(123
|
)
|
(120
|
)
|
||||
Total
provision for credit losses
|
$
|
55
|
$
|
(386
|
)
|
$
|
186
|
TABLE
27
|
PROVISION
FOR CREDIT LOSSES BY LOCATION1
|
(millions
of Canadian dollars,
|
Percentage
of total
|
||||||||||||||||||||||||
except
percentage amounts)
|
2005
|
2004
|
2003
|
2002
|
2005
|
2004
|
2003
|
2002
|
|||||||||||||||||
Canada
|
|||||||||||||||||||||||||
Atlantic
|
$
|
11
|
$
|
11
|
$
|
10
|
$
|
11
|
20.0
|
%
|
(2.8
|
)%
|
5.4
|
%
|
.4
|
%
|
|||||||||
Québec
|
29
|
15
|
16
|
18
|
52.7
|
(3.9
|
)
|
8.6
|
.6
|
||||||||||||||||
Ontario
|
227
|
238
|
372
|
348
|
412.7
|
(61.6
|
)
|
200.0
|
11.9
|
||||||||||||||||
Prairies
|
36
|
38
|
73
|
57
|
65.5
|
(9.8
|
)
|
39.2
|
2.0
|
||||||||||||||||
British
Columbia
|
29
|
37
|
33
|
83
|
52.7
|
(9.7
|
)
|
17.7
|
2.8
|
||||||||||||||||
Total
Canada
|
332
|
339
|
504
|
517
|
603.6
|
(87.8
|
)
|
270.9
|
17.7
|
||||||||||||||||
United
States
|
(205
|
)
|
39
|
276
|
1,006
|
(372.7
|
)
|
(10.1
|
)
|
148.4
|
34.4
|
||||||||||||||
Other
International
|
|||||||||||||||||||||||||
United
Kingdom
|
(13
|
)
|
(43
|
)
|
206
|
132
|
(23.7
|
)
|
11.1
|
110.8
|
4.5
|
||||||||||||||
Australia
|
-
|
9
|
8
|
2
|
-
|
(2.3
|
)
|
4.3
|
.1
|
||||||||||||||||
Asia
|
(7
|
)
|
(2
|
)
|
6
|
3
|
(12.7
|
)
|
.5
|
3.2
|
.1
|
||||||||||||||
Total
Other International
|
(20
|
)
|
(36
|
)
|
220
|
137
|
(36.4
|
)
|
9.3
|
118.3
|
4.7
|
||||||||||||||
General
provision
|
(52
|
)
|
(67
|
)
|
(157
|
)
|
-
|
(94.5
|
)
|
17.4
|
(84.4
|
)
|
-
|
||||||||||||
Sectoral
provision (net of transfer to specifics)
|
-
|
(661
|
)
|
(657
|
)
|
1,265
|
-
|
171.2
|
(353.2
|
)
|
43.2
|
||||||||||||||
Total
|
$
|
55
|
$
|
(386
|
)
|
$
|
186
|
$
|
2,925
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||
Provision
for credit losses as a % of net average loans2
|
|||||||||||||||||||||||||
Canada
|
|||||||||||||||||||||||||
Residential
mortgages
|
.02
|
%
|
.01
|
%
|
-
|
%
|
.01
|
%
|
|||||||||||||||||
Personal
|
.64
|
.73
|
.94
|
1.09
|
|||||||||||||||||||||
Business
and
other
|
(.01
|
)
|
.12
|
.74
|
.71
|
||||||||||||||||||||
Total
Canada
|
.27
|
.29
|
.45
|
.48
|
|||||||||||||||||||||
United
States
|
(.98
|
)
|
.50
|
2.43
|
6.37
|
||||||||||||||||||||
Other
International
|
(.94
|
)
|
(1.30
|
)
|
5.16
|
2.30
|
|||||||||||||||||||
General
provision
|
(.04
|
)
|
(.05
|
)
|
(.12
|
)
|
-
|
||||||||||||||||||
Sectoral
provision
|
-
|
(.52
|
)
|
.52
|
.97
|
||||||||||||||||||||
Total
|
.04
|
%
|
(.30
|
)%
|
.15
|
%
|
2.24
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
49
|
TABLE
28
|
PROVISION
FOR CREDIT LOSSES BY INDUSTRY SECTOR1
|
(millions
of Canadian dollars,
|
Percentage
of total
|
||||||||||||||||||
except
percentage amounts)
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
Canada
|
|||||||||||||||||||
Residential
mortgages
|
$
|
12
|
$
|
3
|
$
|
2
|
11.2
|
%
|
.9
|
%
|
.2
|
%
|
|||||||
Consumer
instalment and other personal
|
323
|
311
|
332
|
301.9
|
90.9
|
33.2
|
|||||||||||||
Total
residential and personal
|
335
|
314
|
334
|
313.1
|
91.8
|
33.4
|
|||||||||||||
Real
estate development
|
|||||||||||||||||||
Commercial
and
industrial
|
-
|
-
|
7
|
-
|
-
|
.7
|
|||||||||||||
Residential
|
-
|
-
|
2
|
-
|
-
|
.2
|
|||||||||||||
Total
real estate
|
-
|
-
|
9
|
-
|
-
|
.9
|
|||||||||||||
Agriculture
|
-
|
(5
|
)
|
27
|
-
|
(1.5
|
)
|
2.7
|
|||||||||||
Apparel
and textile
|
(1
|
)
|
1
|
1
|
(.9
|
)
|
.3
|
.1
|
|||||||||||
Automotive
|
(1
|
)
|
7
|
8
|
(.9
|
)
|
2.0
|
.8
|
|||||||||||
Chemical
|
3
|
(2
|
)
|
6
|
2.8
|
(.6
|
)
|
.6
|
|||||||||||
Construction
|
-
|
3
|
(2
|
)
|
-
|
.9
|
(.2
|
)
|
|||||||||||
Financial
|
-
|
-
|
2
|
-
|
-
|
.2
|
|||||||||||||
Food,
beverage and tobacco
|
-
|
2
|
2
|
-
|
.6
|
.2
|
|||||||||||||
Forestry
|
-
|
-
|
4
|
-
|
-
|
.4
|
|||||||||||||
Health
and social services
|
-
|
1
|
2
|
-
|
.3
|
.2
|
|||||||||||||
Media
and entertainment
|
(1
|
)
|
2
|
14
|
(.9
|
)
|
.6
|
1.4
|
|||||||||||
Metals
and mining
|
-
|
3
|
19
|
-
|
.9
|
1.9
|
|||||||||||||
Oil
and gas
|
-
|
3
|
1
|
-
|
.9
|
.1
|
|||||||||||||
Retail
|
-
|
2
|
2
|
-
|
.6
|
.2
|
|||||||||||||
Sundry
manufacturing
|
1
|
3
|
11
|
.9
|
.9
|
1.1
|
|||||||||||||
Telecommunications
|
(4
|
)
|
7
|
-
|
(3.8
|
)
|
2.0
|
-
|
|||||||||||
Transportation
|
-
|
(1
|
)
|
48
|
-
|
(.3
|
)
|
4.8
|
|||||||||||
Utilities
|
-
|
-
|
13
|
-
|
-
|
1.3
|
|||||||||||||
All
other loans
|
-
|
(1
|
)
|
3
|
-
|
(.3
|
)
|
.3
|
|||||||||||
Total
business and government
|
(3
|
)
|
25
|
170
|
(2.8
|
)
|
7.3
|
17.0
|
|||||||||||
Total
Canada
|
332
|
339
|
504
|
310.3
|
99.1
|
50.4
|
|||||||||||||
United
States
|
|||||||||||||||||||
Residential
mortgages
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Consumer
instalment and other personal
|
12
|
1
|
1
|
11.2
|
.3
|
.1
|
|||||||||||||
Total
residential and personal
|
12
|
1
|
1
|
11.2
|
.3
|
.1
|
|||||||||||||
Real
estate development
|
|||||||||||||||||||
Commercial
and industrial
|
1
|
-
|
-
|
.9
|
-
|
-
|
|||||||||||||
Total
real estate
|
1
|
-
|
-
|
.9
|
-
|
-
|
|||||||||||||
Apparel
and textile
|
-
|
-
|
11
|
-
|
-
|
1.1
|
|||||||||||||
Cable
|
-
|
(30
|
)
|
(2
|
)
|
-
|
(8.8
|
)
|
(.2
|
)
|
|||||||||
Chemical
|
-
|
7
|
4
|
-
|
2.0
|
.4
|
|||||||||||||
Construction
|
(1
|
)
|
-
|
(6
|
)
|
(.9
|
)
|
-
|
(.6
|
)
|
|||||||||
Food,
beverage and tobacco
|
1
|
-
|
-
|
.9
|
-
|
-
|
|||||||||||||
Health
and social services
|
-
|
-
|
(1
|
)
|
-
|
-
|
(.1
|
)
|
|||||||||||
Media
and entertainment
|
-
|
-
|
23
|
-
|
-
|
2.3
|
|||||||||||||
Metals
and mining
|
2
|
(2
|
)
|
4
|
1.9
|
(.6
|
)
|
.4
|
|||||||||||
Retail
|
1
|
-
|
-
|
.9
|
-
|
-
|
|||||||||||||
Sundry
manufacturing
|
1
|
-
|
(5
|
)
|
.9
|
-
|
(.5
|
)
|
|||||||||||
Telecommunications
|
(14
|
)
|
(20
|
)
|
26
|
(13.1
|
)
|
(5.8
|
)
|
2.6
|
|||||||||
Utilities
|
(202
|
)
|
78
|
221
|
(188.7
|
)
|
22.8
|
22.1
|
|||||||||||
All
other loans
|
(6
|
)
|
5
|
-
|
(5.6
|
)
|
1.5
|
-
|
|||||||||||
Total
business and government
|
(217
|
)
|
38
|
275
|
(202.8
|
)
|
11.1
|
27.5
|
|||||||||||
Total
United States
|
(205
|
)
|
39
|
276
|
(191.6
|
)
|
11.4
|
27.6
|
|||||||||||
Other
International
|
|||||||||||||||||||
Residential
mortgages
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Consumer
instalment and other personal
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Total
residential and personal
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Automotive
|
-
|
(4
|
)
|
8
|
-
|
(1.2
|
)
|
.8
|
|||||||||||
Cable
|
(9
|
)
|
2
|
97
|
(8.4
|
)
|
.6
|
9.7
|
|||||||||||
Construction
|
-
|
-
|
1
|
-
|
-
|
.1
|
|||||||||||||
Financial
|
(11
|
)
|
(11
|
)
|
-
|
(10.3
|
)
|
(3.2
|
)
|
-
|
|||||||||
Media
and entertainment
|
-
|
-
|
9
|
-
|
-
|
.9
|
|||||||||||||
Telecommunications
|
-
|
2
|
11
|
-
|
.6
|
1.1
|
|||||||||||||
Utilities
|
-
|
(25
|
)
|
94
|
-
|
(7.3
|
)
|
9.4
|
|||||||||||
Total
business and government
|
(20
|
)
|
(36
|
)
|
220
|
(18.7
|
)
|
(10.5
|
)
|
22.0
|
|||||||||
Total
Other International
|
(20
|
)
|
(36
|
)
|
220
|
(18.7
|
)
|
(10.5
|
)
|
22.0
|
|||||||||
Total
before general and sectoral provisions
|
$
|
107
|
$
|
342
|
$
|
1,000
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||||
General
provision (reversal)
|
(52
|
)
|
(67
|
)
|
(157
|
)
|
|||||||||||||
Sectoral
provision (reversal) (including transfer to specifics)
|
-
|
(661
|
)
|
(657
|
)
|
||||||||||||||
Total
|
$
|
55
|
$
|
(386
|
)
|
$
|
186
|
50 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
29
|
CAPITAL
STRUCTURE AND RATIOS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Tier
1 capital
|
||||||||||
Retained
earnings
|
$
|
10,650
|
$
|
9,540
|
$
|
8,518
|
||||
Foreign
currency translation adjustments
|
(696
|
)
|
(
265
|
)
|
(130
|
)
|
||||
Common
shares
|
5,872
|
3,373
|
3,179
|
|||||||
Additional
adjustment for dealer holding TD shares
|
(29
|
)
|
(121
|
)
|
-
|
|||||
Qualifying
preferred shares
|
895
|
1,310
|
1,535
|
|||||||
Contributed
surplus
|
40
|
20
|
9
|
|||||||
Qualifying
non-controlling interest in subsidiaries
|
1,632
|
-
|
-
|
|||||||
Capital
Trust Securities
|
1,250
|
1,250
|
1,250
|
|||||||
Less:
goodwill and intangibles in excess of 5% limit
|
(6,508
|
)
|
(2,467
|
)
|
(
3,035
|
)
|
||||
Total
Tier 1 capital
|
13,106
|
12,640
|
11,326
|
|||||||
Tier
2 capital
|
||||||||||
Subordinated
notes and debentures
|
5,138
|
5,644
|
5,887
|
|||||||
General
allowance for credit losses included in capital
|
1,137
|
878
|
947
|
|||||||
Less:
amortization of subordinated notes and debentures
|
(39
|
)
|
(212
|
)
|
(
241
|
)
|
||||
Total
Tier 2 capital
|
6,236
|
6,310
|
6,593
|
|||||||
Investment
in regulated insurance subsidiaries
|
(1,043
|
)
|
(819
|
)
|
(594
|
)
|
||||
Substantial
investments in unconsolidated subsidiaries
|
(1,072
|
)
|
(1,036
|
)
|
(325
|
)
|
||||
First
loss protection
|
(44
|
)
|
(189
|
)
|
(145
|
)
|
||||
Total
regulatory capital
|
$
|
17,183
|
$
|
16,906
|
$
|
16,855
|
||||
Regulatory
capital ratios
|
||||||||||
Tier
1 capital
|
10.1
|
%
|
12.6
|
%
|
10.5
|
%
|
||||
Total
capital
|
13.2
|
16.9
|
15.6
|
|||||||
Assets
to capital multiple1
|
19.9
|
17.1
|
15.2
|
|||||||
Tangible
common equity
|
$
|
9,567
|
$
|
9,000
|
$
|
7,417
|
||||
Tangible
common equity as a percentage of risk-weighted assets
|
7.4
|
%
|
9.0
|
%
|
6.9
|
%
|
• |
Provide
enough capital to maintain the confidence of investors
and depositors,
while providing the Bank’s common shareholders with a satisfactory return.
|
• |
Be
an appropriately capitalized institution, as measured
internally, defined
by regulatory authorities and compared with the Bank’s
peers.
|
• |
Achieve
the lowest overall cost of capital consistent with preserving
the
appropriate mix of capital elements to meet target capitalization
levels.
|
• |
Maintain
strong ratings.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
51
|
• |
The
Tier 1 capital ratio is defined as Tier 1 capital divided
by risk-weighted
assets. OSFI has established a target Tier 1 capital
requirement of
7%.
|
• |
The
total capital ratio is defined as total regulatory capital
divided by
risk-weighted assets. OSFI has established a target total
capital
requirement of 10%.
|
TABLE
30
|
RISK-WEIGHTED
ASSETS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
||||||||||||||||
Risk-
|
Risk-
|
Risk-
|
|||||||||||||||||
weighted
|
weighted
|
weighted
|
|||||||||||||||||
Balance
|
balance
|
Balance
|
balance
|
Balance
|
balance
|
||||||||||||||
Balance
sheet assets
|
|||||||||||||||||||
Cash
resources and other
|
$
|
13,418
|
$
|
2,435
|
$
|
9,038
|
$
|
1,582
|
$
|
7,719
|
$
|
1,344
|
|||||||
Securities
|
108,096
|
4,955
|
98,280
|
4,155
|
79,665
|
3,686
|
|||||||||||||
Securities
purchased under reverse repurchase agreements
|
26,375
|
559
|
21,888
|
589
|
17,475
|
235
|
|||||||||||||
Loans
(net)
|
152,243
|
82,713
|
123,924
|
61,251
|
118,058
|
59,273
|
|||||||||||||
Customers’
liability under acceptances
|
5,989
|
5,896
|
5,507
|
5,414
|
6,645
|
6,400
|
|||||||||||||
Other
assets
|
59,089
|
7,695
|
52,390
|
6,208
|
43,970
|
5,885
|
|||||||||||||
Total
balance sheet assets
|
$
|
365,210
|
$
|
104,253
|
$
|
311,027
|
$
|
79,199
|
$
|
273,532
|
$
|
76,823
|
|||||||
Off-balance
sheet assets
|
|||||||||||||||||||
Credit
instruments
|
13,419
|
9,031
|
10,937
|
||||||||||||||||
Derivative
financial instruments
|
7,201
|
6,268
|
5,987
|
||||||||||||||||
Total
off-balance sheet assets
|
20,620
|
15,299
|
16,924
|
||||||||||||||||
Total
risk-weighted asset equivalent - credit risk
|
124,873
|
94,498
|
93,747
|
||||||||||||||||
-
market
risk
|
5,109
|
5,808
|
14,470
|
||||||||||||||||
Total
risk-weighted assets
|
$
|
129,982
|
$
|
100,306
|
$
|
108,217
|
52 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
53
|
54 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
31
|
CONTRACTUAL
OBLIGATIONS BY REMAINING
MATURITY
|
2005
|
||||||||||||||||
Within
1
|
1
to 3
|
3
to 5
|
Over
5
|
|||||||||||||
(millions
of Canadian dollars)
|
year
|
years
|
years
|
years
|
Total
|
|||||||||||
Deposits1
|
$
|
189,972 |
$
|
30,364 |
$
|
24,021 |
$
|
2,624 |
$
|
246,981 | ||||||
Subordinated
notes and debentures
|
|
153
|
|
1
|
|
-
|
|
4,984
|
|
5,138
|
||||||
Operating
lease commitments
|
319
|
534
|
396
|
580
|
1,829
|
|||||||||||
Capital
trust securities
|
-
|
-
|
900
|
-
|
900
|
|||||||||||
Network
service agreements
|
141
|
393
|
123
|
-
|
657
|
|||||||||||
Automated
banking machines
|
66
|
181
|
124
|
-
|
371
|
|||||||||||
Total
|
$
|
190,651
|
$
|
31,473
|
$
|
25,564
|
$
|
8,188
|
$
|
255,876
|
||||||
2004
|
||||||||||||||||
Deposits1 |
$
|
171,155 |
$
|
18,919 |
$
|
15,767 |
$
|
1,052 |
$
|
206,893 | ||||||
Subordinated
notes and debentures
|
|
5
|
|
3
|
|
663
|
|
4,973
|
|
5,644
|
||||||
Operating
lease commitments
|
299
|
468
|
346
|
455
|
1,568
|
|||||||||||
Capital
trust securities
|
-
|
-
|
-
|
1,250
|
1,250
|
|||||||||||
Network
service agreements
|
118
|
331
|
203
|
-
|
652
|
|||||||||||
Automated
banking machines
|
66
|
190
|
181
|
-
|
437
|
|||||||||||
Total
|
$
|
171,643
|
$
|
19,911
|
$
|
17,160
|
$
|
7,730
|
$
|
216,444
|
||||||
2003
|
||||||||||||||||
Deposits1,2 |
$
|
182,880 |
$
|
- |
$
|
- |
$
|
- |
$
|
182,880 | ||||||
Subordinated
notes and debentures
|
|
157
|
|
5
|
|
396
|
|
5,329
|
|
5,887
|
||||||
Operating
lease commitments
|
314
|
492
|
329
|
505
|
1,640
|
|||||||||||
Capital
trust securities
|
-
|
-
|
-
|
1,250
|
1,250
|
|||||||||||
Network
service agreements
|
116
|
216
|
200
|
188
|
720
|
|||||||||||
Total
|
$
|
183,467
|
$
|
713
|
$
|
925
|
$
|
7,272
|
$
|
192,377
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
55
|
56 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
Executive
Committees
|
||||||
Business
Performance Review
Committee
• Chaired
by the President and Chief
Executive Officer. • Reviews
overall strategies and operating performance.
|
Operational
Risk Oversight
Committee
• Chaired
by the Vice Chair and Chief
Risk Officer. • Responsible
for the oversight of all operational risk management
and legislative
compliance activities of the Bank.
|
Investment
Committee
• Chaired
by the Vice Chair and Chief
Risk Officer. • Reviews
the performance of all significant investments, including
the Bank’s own
portfolio and client mandates, managed by internal
and external portfolio
managers.
|
Asset/Liability
Committee
• Chaired
by the Vice Chair and Chief
Risk Officer. • Responsible
for the oversight of the Bank’s non-trading market risk, consolidated
liquidity and funding position and consolidated capital
position including
foreign exchange capital hedging.
|
|||
Reputational
Risk Committee
• Chaired
by the Vice Chair and Chief
Risk Officer. • Reviews
and approves reputational risk issues as well as complex
structured
product transactions, and establishes and monitors
policy involving
reputational risk.
|
Disclosure
Committee
• Chaired
by the Executive Vice President and Chief Financial
Officer.
• Responsible
for ensuring appropriate controls and procedures are
in place to permit
timely, reliable and compliant disclosure to regulators,
shareholders and
the market.
|
Enterprise
Committee
• Chaired
by the President and Chief
Executive Officer. • Responsible
for coordinating enterprise wide corporate functions
and execution of
merger & acquisition transactions.
|
Domestic
Shared Services
Committee
• Chaired
by the Vice Chair, Corporate
Operations. • Responsible
for effectively leveraging services shared by the Canadian-based
businesses.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
57
|
• |
The
Board of Directors and its Risk Committee are responsible
for overseeing
the formation and nurturing by management of an effective
risk management
culture throughout the organization. This includes setting
the Bank’s
appetite for risk through the review and approval of
appropriate risk
management policies.
|
• |
The
Senior Executive Team of the Bank, chaired by the President
and Chief
Executive Officer is responsible for monitoring, evaluating
and managing
risk across the Bank as a whole. The President and Chief
Executive Officer
and the Vice Chair and Chief Risk Officer, with the support
of other
members of the Senior Executive Team, are accountable
for identifying
significant risks and communicating them to the Board
of Directors.
|
• |
Executive
Committees provide enterprise-level oversight for key
risks and exposures
through the review and endorsement of risk management
policies, strategies
and control activities. The Executive Committees ensure
there are
sufficient and qualified risk management resources across
the Bank to meet
our risk management objectives.
|
• |
The
corporate risk management function, headed by the Vice
Chair and Chief
Risk Officer, is responsible for setting enterprise-level
policies and
practices that reflect the risk appetite of the Bank.
Risk Management also
monitors and reports on discrete business and enterprise-level
risks that
could have a significant impact on the Bank’s well being. The Vice Chair
and Chief Risk Officer either chairs or is a member of
the risk focussed
Executive Committees.
|
• |
The
Audit and Compliance functions independently monitor
and report to
management and the Board of Directors on the effectiveness
of risk
management policies, procedures and internal
controls.
|
• |
Each
business unit owns and is accountable for managing risk
within the
business unit. Business management and risk management
professionals in
each business unit ensure that policies, processes and
internal controls
are in place to manage not only the business but also
the risks inherent
in that business.
|
• |
Maintaining
appropriate enterprise-wide risk management policies
and practices
including guidelines, requirements and limits to ensure
risks are managed
to acceptable levels.
|
• |
Subjecting
risk management policies to regular review and evaluation
by the Executive
Committees and review and approval by the Risk Committee
of the Board.
|
• |
An
integrated enterprise-wide risk monitoring and reporting
process that
communicates key elements of the Bank’s risk profile, both quantitatively
and qualitatively, to senior management, the executive
and the Board of
Directors.
|
• |
Maintaining
risk measurement methodologies that support risk quantification,
including
Value-at-Risk analysis, scenario analysis and
stress-testing.
|
• |
Annual
self-assessments by significant business units and corporate
oversight
functions of their key risks and internal
controls.
|
• |
Supporting
appropriate performance measurement that allocates risk-based
economic
capital to businesses and charges a cost against that
capital.
|
• |
Actively
monitoring internal and external risk events to assess
whether our
internal controls are effective.
|
• |
Independent
and comprehensive reviews conducted by the Internal Audit
department of
the quality of the internal control environment and compliance
with
established risk management policies and
procedures.
|
58 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
Setting
standards for measuring credit exposure and limits for
the amount of
credit an officer may extend.
|
• |
Approving
all significant policies relating to Bank products that
entail credit
risk.
|
• |
Setting
criteria for rating risk on business accounts based on
a 21-category
rating system.
|
• |
Approving
the “scoring” techniques used in extending personal
credit.
|
• |
The
centralized approval of credit risk policies and discretionary
limits by
Risk Management.
|
• |
Joint
reporting of business unit credit risk control groups
to the business head
and Risk Management.
|
• |
Guidelines
to monitor and limit concentrations in the
portfolios.
|
• |
The
dynamic management of country, industry and borrower
risk
ratings.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
59
|
• |
Interest
rates;
|
• |
Foreign
exchange rates;
|
• |
Equity
and commodity prices;
|
• |
Credit
spreads.
|
• |
Market
making. We provide markets for a large number of securities
and other
traded products. We keep an inventory of these securities
to buy from and
sell to investors, profiting from the spread between
bid and ask prices.
Profitability is driven by trading
volumes.
|
• |
Sales.
We provide a wide variety of financial products to meet
the needs of our
clients, earning money on these products from mark ups
and commissions.
Profitability is driven by sales
volumes.
|
• |
Arbitrage.
We take positions in certain markets or products and
offset the risk in
other markets or products. Our knowledge of various markets
and products
and how they relate to one another allows us to identify
and benefit from
pricing anomalies.
|
• |
Positioning.
We aim to make profits by taking positions in certain
financial markets in
anticipation of changes in those markets. This is the
riskiest of our
trading activities and we use it
selectively.
|
60 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
Evaluating
and managing the impact of rising or falling interest
rates on net
interest income and economic value.
|
• |
Measuring
the contribution of each Bank product on a risk-adjusted,
fully hedged
basis, including the impact of financial options, such
as mortgage
commitments, that are granted to
customers.
|
• |
Developing
and implementing strategies to stabilize net income from
all personal and
commercial banking products.
|
• |
An
assumed maturity profile for the Bank’s core deposit
portfolio.
|
• |
The
Bank’s targeted investment profile on its net equity
position.
|
• |
Liquidation
assumptions on mortgages other than from imbedded pre-payment
options.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
61
|
• |
Margins
earned on new and renewing fixed-rate products relative
to the margin
previously earned on matured products will impact on
the existing
portfolio margin.
|
• |
The
weighted average margin on average earning assets will
shift due to
changes in the mix of business.
|
• |
Changes
in the prime-Bankers’ Acceptances basis and the lag in changing product
prices in response to changes in wholesale rates may
have an impact on
margins earned.
|
• |
The
general level of interest rates will impact the return
the Bank generates
on its modeled maturity profile for core deposits and
the investment
profile for its net equity position as it evolves over
time. The general
level of interest rates is also a key driver of some
modeled option
exposures, and will affect the cost of hedging such
exposures.
|
62 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
The
Treasury and Balance Sheet Management department is responsible
for
consolidating and reporting the Bank’s global liquidity risk position and
for managing the Canadian Personal and Commercial Banking
liquidity
position.
|
• |
Wholesale
Banking is responsible for managing the liquidity risks
inherent in the
wholesale and corporate banking
portfolios.
|
• |
TD
Waterhouse Bank is responsible for managing its liquidity
position.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
63
|
64 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
Communicating
regulatory requirements and emerging compliance risks
to each business
unit.
|
• |
Ensuring
that business units have appropriate policies and procedures
in place and
that staff are trained to meet regulatory requirements.
|
• |
Independently
monitoring the business units for adherence to the policies,
procedures
and requirements.
|
• |
Tracking,
escalating and reporting significant issues and findings
to senior
management and the Board.
|
• |
Use
of appropriate experts and external
counsel.
|
• |
Regular
review of matters by the Legal department with the business
involved and
others as needed.
|
• |
With
respect to the effect of litigation on the Bank’s financial condition and
related reporting, quarterly review of matters by the
Legal department and
General Counsel with the Finance department and other
areas of management,
the shareholders’ auditors and, if material, the Audit
Committee.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
65
|
66 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
• |
Future
tax assets are assessed for recoverability. The Bank
records a valuation
allowance when it believes based on all available evidence,
that it
is more likely than not that all of the future tax assets
recognized
will not be realized prior to their expiration. The amount
of the future
income tax asset recognized and considered realizable
could, however, be
reduced if projected income is not achieved due to various
factors such as
unfavourable business conditions. If projected income
is not expected to
be achieved, the Bank would record an additional valuation
allowance to
reduce its future tax assets to the amount that it believes
can be
realized in its future tax returns. The magnitude of
the valuation
allowance is significantly influenced by the Bank’s forecast of future
profit generation, which drives the extent to which it
will be able to
utilize the future tax assets.
|
• |
Future
tax assets are calculated based on tax rates expected
to be in effect in
future periods. Previously recorded tax assets and liabilities
need to be
adjusted when the expected date of the future event is
revised based on
current information.
|
• |
The
Bank has not recognized a future income tax liability
for undistributed
earnings of certain operations as it does not plan to
repatriate them.
Estimated taxes payable on such earnings in the event
of repatriation
would be $264 million at October 31, 2005.
|
• |
All
of the Bank’s segments are impacted by this accounting
policy.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
67
|
(millions
of Canadian dollars)
|
Obligation
|
Expense
|
|||||
Impact
of a change of 1.0% in key assumptions
|
|||||||
Discount
rate
|
5.20
|
%
|
6.40
|
%
|
|||
Decrease
in
assumption
|
337
|
38
|
|||||
Increase
in
assumption
|
(264
|
)
|
(21
|
)
|
|||
Expected
long
term return on assets
|
6.75
|
%
|
6.75
|
%
|
|||
Decrease
in
assumption
|
N/A
|
16
|
|||||
Increase
in
assumption
|
N/A
|
(16
|
)
|
||||
Rate
of
compensation increase
|
3.50
|
%
|
3.50
|
%
|
|||
Decrease
in
assumption
|
(70
|
)
|
(11
|
)
|
|||
Increase
in
assumption
|
79
|
14
|
68 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
TABLE
32
|
NON-TRADING
DERIVATIVES
|
Non-trading
derivatives
|
Non-trading
derivatives not
|
||||||
(millions
of Canadian dollars)
|
qualifying
for hedge accounting
|
qualifying
for hedge accounting
|
|||||
Net
interest income (loss)
|
$
|
162
|
$
|
(35
|
)
|
||
Other
income
|
1
|
(19
|
)
|
• |
Other
comprehensive income will be a new component of shareholders’ equity and a
new statement entitled Statement of Comprehensive Income
will be added to
the Bank’s primary Consolidated Financial Statements.
|
• |
Financial
assets will be required to be classified as available
for sale, held to
maturity, trading or loans and receivables.
|
• |
For
fair value hedges, where the Bank is hedging changes
in the fair value of
assets, liabilities or firm commitments, the change in
the value of
derivatives and hedged items will be recorded in the
Consolidated
Statement of Income.
|
• |
For
cash flow hedges where the Bank is hedging the variability
in cash flows
related to variable rate assets, liabilities or forecasted
transactions,
the effective portion of the changes in the fair values
of the derivative
instruments will be recorded through other comprehensive
income until the
hedged items are recognized in the Consolidated Statement
of Income.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
69
|
TABLE
33
|
FEES
PAID TO THE BANK’S
AUDITORS
|
(thousands
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Audit
fees
|
$
|
13,741
|
$
|
10,464
|
$
|
7,773
|
||||
Audit
related fees
|
3,276
|
5,023
|
605
|
|||||||
Tax
fees
|
3,373
|
2,866
|
3,457
|
|||||||
All
other fees
|
1,987
|
3,867
|
6,368
|
|||||||
Total
|
$
|
22,377
|
$
|
22,220
|
$
|
18,203
|
70 |
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s
Discussion and Analysis
|
W.
Edmund Clark
|
Colleen
M. Johnston
|
President
and
|
Executive
Vice President and
|
Chief
Executive Officer
|
Chief
Financial Officer
|
Ernst
& Young LLP
|
PricewaterhouseCoopers
LLP
|
Chartered
Accountants
|
Chartered
Accountants
|
Toronto,
Canada
|
|
November
22, 2005
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
71
|
As
at October 31
|
|||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
ASSETS
|
|||||||
Cash
and due from banks
|
$
|
1,673
|
$
|
1,404
|
|||
Interest-bearing
deposits with banks
|
11,745
|
7,634
|
|||||
Securities
(Note 2)
|
|||||||
Investment
|
42,321
|
31,387
|
|||||
Trading
|
65,775
|
66,893
|
|||||
108,096
|
98,280
|
||||||
Securities
purchased under reverse repurchase agreements
|
26,375
|
21,888
|
|||||
Loans
(Note 3)
|
|||||||
Residential
mortgage
|
52,740
|
51,420
|
|||||
Consumer
instalment and other personal
|
62,754
|
48,857
|
|||||
Credit
card
|
2,998
|
2,566
|
|||||
Business
and government
|
35,044
|
22,264
|
|||||
153,536
|
125,107
|
||||||
Allowance
for credit losses
|
(1,293
|
)
|
(1,183
|
)
|
|||
Loans
(net of allowance for credit losses)
|
152,243
|
123,924
|
|||||
Other
|
|||||||
Customers’
liability under acceptances
|
5,989
|
5,507
|
|||||
Trading
derivatives’ market revaluation (Note
17)
|
33,651
|
33,697
|
|||||
Goodwill
(Note
5)
|
6,518
|
2,225
|
|||||
Other
intangibles (Note
5)
|
2,124
|
2,144
|
|||||
Land,
buildings and equipment (Note
7)
|
1,801
|
1,330
|
|||||
Other
assets (Note
9)
|
14,995
|
12,994
|
|||||
65,078
|
57,897
|
||||||
Total
assets
|
$
|
365,210
|
$
|
311,027
|
|||
LIABILITIES
|
|||||||
Deposits
(Note 8)
|
|||||||
Personal
|
$
|
131,783
|
$
|
111,360
|
|||
Banks
|
11,505
|
11,459
|
|||||
Business
and government
|
103,693
|
84,074
|
|||||
246,981
|
206,893
|
||||||
Other
|
|||||||
Acceptances
|
5,989
|
5,507
|
|||||
Obligations
related to securities sold short
|
24,406
|
17,671
|
|||||
Obligations
related to securities sold under repurchase agreements
|
11,284
|
9,846
|
|||||
Trading
derivatives’ market revaluation (Note
17)
|
33,498
|
33,873
|
|||||
Other
liabilities (Note
10)
|
18,545
|
16,365
|
|||||
93,722
|
83,262
|
||||||
Subordinated
notes and debentures (Note 11)
|
5,138
|
5,644
|
|||||
Liabilities
for preferred shares and capital trust securities (Note
12)
|
1,795
|
2,560
|
|||||
Non-controlling
interest in subsidiaries (Note 23)
|
1,708
|
-
|
|||||
Contingent
liabilities, commitments and guarantees (Note
20)
|
|||||||
SHAREHOLDERS’
EQUITY
|
|||||||
Common
shares (millions of shares issued and outstanding: 2005
- 711.8 and 2004 -
655.9) (Note
13)
|
5,872
|
3,373
|
|||||
Contributed
surplus
|
40
|
20
|
|||||
Foreign
currency translation adjustments
|
(696
|
)
|
(265
|
)
|
|||
Retained
earnings
|
10,650
|
9,540
|
|||||
15,866
|
12,668
|
||||||
Total
liabilities and shareholders’ equity
|
$
|
365,210
|
$
|
311,027
|
W.
Edmund Clark
|
Hugh
J. Bolton
|
President
and
|
Chair,
Audit Committee
|
Chief
Executive Officer
|
72
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
For
the years ended October 31
|
||||||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Interest
income
|
||||||||||
Loans
|
$
|
8,322
|
$
|
6,958
|
$
|
7,542
|
||||
Securities
|
||||||||||
Dividends
|
927
|
859
|
721
|
|||||||
Interest
|
3,112
|
2,798
|
2,727
|
|||||||
Deposits
with banks
|
415
|
517
|
212
|
|||||||
12,776
|
11,132
|
11,202
|
||||||||
Interest
expense
|
||||||||||
Deposits
|
5,129
|
3,853
|
4,202
|
|||||||
Subordinated
notes and debentures
|
328
|
312
|
259
|
|||||||
Distributions
from liabilities for preferred shares and capital trust
securities
(Note
12)
|
147
|
170
|
179
|
|||||||
Other
obligations
|
1,164
|
1,024
|
1,125
|
|||||||
6,768
|
5,359
|
5,765
|
||||||||
Net
interest income
|
6,008
|
5,773
|
5,437
|
|||||||
Provision
for (reversal of) credit losses (Note 3)
|
55
|
(386
|
)
|
186
|
||||||
Net
interest income after provision for (reversal of) credit
losses
|
5,953
|
6,159
|
5,251
|
|||||||
Other
income
|
||||||||||
Investment
and securities services
|
2,417
|
2,296
|
2,132
|
|||||||
Credit
fees
|
343
|
343
|
415
|
|||||||
Net
investment securities gains (Note
2)
|
242
|
192
|
23
|
|||||||
Trading
income (loss) (Note
24)
|
147
|
(153
|
)
|
104
|
||||||
Service
charges
|
787
|
673
|
641
|
|||||||
Loan
securitizations (Note
4)
|
414
|
390
|
250
|
|||||||
Card
services
|
279
|
172
|
252
|
|||||||
Insurance,
net of claims
|
826
|
593
|
420
|
|||||||
Trust
fees
|
111
|
78
|
70
|
|||||||
Write-down
of investment in joint ventures
|
-
|
-
|
(39
|
)
|
||||||
Other
|
323
|
299
|
156
|
|||||||
5,889
|
4,883
|
4,424
|
||||||||
Net
interest and other income
|
11,842
|
11,042
|
9,675
|
|||||||
Non-interest
expenses
|
||||||||||
Salaries
and employee benefits (Note
15)
|
4,218
|
3,780
|
3,758
|
|||||||
Occupancy
including depreciation
|
676
|
612
|
656
|
|||||||
Equipment
including depreciation
|
609
|
562
|
650
|
|||||||
Goodwill
impairment (Note
5)
|
-
|
-
|
624
|
|||||||
Amortization
of other intangibles (Note
5)
|
546
|
626
|
772
|
|||||||
Restructuring
costs (reversal) (Note
24)
|
43
|
(7
|
)
|
92
|
||||||
Marketing
and business development
|
469
|
384
|
348
|
|||||||
Brokerage
related fees
|
226
|
228
|
229
|
|||||||
Professional
and advisory services
|
494
|
446
|
372
|
|||||||
Communications
|
205
|
207
|
208
|
|||||||
Other
(Note
20)
|
1,296
|
1,169
|
655
|
|||||||
8,782
|
8,007
|
8,364
|
||||||||
Income
before provision for income taxes
|
3,060
|
3,035
|
1,311
|
|||||||
Provision
for income taxes (Note
16)
|
699
|
803
|
322
|
|||||||
Income
before non-controlling interest in subsidiaries
|
2,361
|
2,232
|
989
|
|||||||
Non-controlling
interest in net income of subsidiaries
|
132
|
-
|
-
|
|||||||
Net
income to common shares
|
$
|
2,229
|
$
|
2,232
|
$
|
989
|
||||
Average
number of common shares outstanding (millions) (Note
25)
|
||||||||||
-
basic
|
691.3
|
654.5
|
649.8
|
|||||||
-
diluted
|
696.9
|
659.4
|
653.9
|
|||||||
Earnings
per share (Note
25)
|
||||||||||
-
basic
|
$
|
3.22
|
$
|
3.41
|
$
|
1.52
|
||||
-
diluted
|
3.20
|
3.39
|
1.51
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
73
|
For
the years ended October 31
|
||||||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Common
shares (Note 13)
|
||||||||||
Balance
at beginning of year
|
$
|
3,373
|
$
|
3,179
|
$
|
2,846
|
||||
Proceeds
from shares issued on exercise of options
|
125
|
99
|
47
|
|||||||
Proceeds
from shares issued as a result of dividend reinvestment
plan
|
380
|
174
|
286
|
|||||||
Impact
of shares (acquired) sold in Wholesale Banking
|
6
|
(41
|
)
|
-
|
||||||
Repurchase
of common shares
|
-
|
(38
|
)
|
-
|
||||||
Issued
on acquisition of TD Banknorth (Note
23)
|
1,988
|
-
|
-
|
|||||||
Balance
at end of year
|
5,872
|
3,373
|
3,179
|
|||||||
Contributed
surplus
|
||||||||||
Balance
at beginning of year
|
20
|
9
|
-
|
|||||||
Stock
option expense (Note
14)
|
20
|
11
|
9
|
|||||||
Balance
at end of year
|
40
|
20
|
9
|
|||||||
Foreign
currency translation adjustments
|
||||||||||
Balance
at beginning of year
|
(265
|
)
|
(130
|
)
|
418
|
|||||
Foreign
exchange losses from investments in subsidiaries and
other
items
|
(718
|
)
|
(739
|
)
|
(1,595
|
)
|
||||
Foreign
exchange gains from hedging activities
|
428
|
1,004
|
1,528
|
|||||||
Provision
for income taxes (Note
16)
|
(141
|
)
|
(400
|
)
|
(481
|
)
|
||||
Balance
at end of year
|
(696
|
)
|
(265
|
)
|
(130
|
)
|
||||
Retained
earnings
|
||||||||||
Balance
at beginning of year
|
9,540
|
8,518
|
8,292
|
|||||||
Net
income
|
2,229
|
2,232
|
989
|
|||||||
Common
dividends
|
(1,098
|
)
|
(890
|
)
|
(754
|
)
|
||||
Termination
of equity based compensation plan
|
-
|
(24
|
)
|
-
|
||||||
Premium
paid on repurchase of common shares (Note
13)
|
-
|
(312
|
)
|
-
|
||||||
Other
|
(21
|
)
|
16
|
(9
|
)
|
|||||
Balance
at end of year
|
10,650
|
9,540
|
8,518
|
|||||||
Total
shareholders’ equity
|
$
|
15,866
|
$
|
12,668
|
$
|
11,576
|
74
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
For
the years ended October 31
|
||||||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Cash
flows from (used in) operating activities
|
||||||||||
Net
income
|
$
|
2,229
|
$
|
2,232
|
$
|
989
|
||||
Adjustments
to determine net cash from (used in) operating activities
|
||||||||||
Provision
for
(reversal of) credit losses
|
55
|
(386
|
)
|
186
|
||||||
Depreciation
(Note
7)
|
322
|
294
|
318
|
|||||||
Goodwill
impairment
|
-
|
-
|
624
|
|||||||
Amortization
of
other intangibles
|
546
|
626
|
772
|
|||||||
Stock
option expense
|
20
|
11
|
9
|
|||||||
Write-down
of
investment in joint ventures
|
-
|
-
|
39
|
|||||||
Net
investment securities gains
|
(242
|
)
|
(192
|
)
|
(23
|
)
|
||||
Gain
on
securitizations
|
(166
|
)
|
(134
|
)
|
(49
|
)
|
||||
Non-controlling
interest
|
132
|
-
|
-
|
|||||||
Changes
in operating assets and liabilities
|
||||||||||
Future
income taxes (Note
16)
|
(261
|
)
|
128
|
(74
|
)
|
|||||
Current
income taxes payable
|
2
|
(440
|
)
|
669
|
||||||
Interest
receivable and payable (Note
9, 10)
|
588
|
(141
|
)
|
145
|
||||||
Trading
securities
|
1,118
|
(12,003
|
)
|
(1,495
|
)
|
|||||
Unrealized
gains and amounts receivable on derivatives contracts
|
46
|
(5,246
|
)
|
(2,712
|
)
|
|||||
Unrealized
losses and amounts payable on derivatives contracts
|
(375
|
)
|
5,873
|
2,046
|
||||||
Other
|
1,248
|
370
|
3,622
|
|||||||
Net
cash from (used in) operating activities
|
5,262
|
(9,008
|
)
|
5,066
|
||||||
Cash
flows from (used in) financing activities
|
||||||||||
Deposits
|
11,169
|
24,013
|
(6,310
|
)
|
||||||
Securities
sold under repurchase agreements
|
1,438
|
2,001
|
(810
|
)
|
||||||
Securities
sold short
|
5,305
|
2,325
|
(1,712
|
)
|
||||||
Issuance
of subordinated notes and debentures
|
270
|
3
|
1,904
|
|||||||
Repayment
of subordinated notes and debentures
|
(1,419
|
)
|
(158
|
)
|
(218
|
)
|
||||
Subordinated
notes and debentures (acquired) sold in Wholesale Banking
|
(3
|
)
|
(26
|
)
|
-
|
|||||
Liabilities
for preferred shares and capital trust securities
|
(765
|
)
|
(225
|
)
|
73
|
|||||
Translation
adjustment on subordinated notes and debentures issued
in a foreign
currency
|
(24
|
)
|
(62
|
)
|
(142
|
)
|
||||
Common
shares issued on exercise of options
|
125
|
99
|
47
|
|||||||
Common
shares issued as a result of dividend reinvestment plan
|
380
|
174
|
286
|
|||||||
Common
shares (acquired) sold in Wholesale Banking
|
6
|
(41
|
)
|
-
|
||||||
Repurchase
of common shares
|
-
|
(350
|
)
|
-
|
||||||
Dividends
paid on common shares
|
(1,098
|
)
|
(890
|
)
|
(754
|
)
|
||||
Other
|
-
|
-
|
(23
|
)
|
||||||
Net
cash from (used in) financing activities
|
15,384
|
26,863
|
(7,659
|
)
|
||||||
Cash
flows from (used in) investing activities
|
||||||||||
Interest-bearing
deposits with banks
|
(4,111
|
)
|
(1,383
|
)
|
(1,615
|
)
|
||||
Activity
in investment securities
|
||||||||||
Purchases
|
(23,158
|
)
|
(30,877
|
)
|
(25,199
|
)
|
||||
Proceeds
from
maturities
|
6,388
|
4,688
|
9,110
|
|||||||
Proceeds
from
sales
|
12,413
|
19,769
|
20,139
|
|||||||
Activity
from lending activities
|
||||||||||
Origination
and
acquisitions
|
(78,655
|
)
|
(77,827
|
)
|
(143,064
|
)
|
||||
Proceeds
from
maturities
|
62,956
|
63,457
|
138,126
|
|||||||
Proceeds
from
sales
|
4,541
|
3,326
|
1,694
|
|||||||
Proceeds
from
loan securitizations
|
7,365
|
5,564
|
7,627
|
|||||||
Land,
buildings and equipment
|
(814
|
)
|
(207
|
)
|
(101
|
)
|
||||
Securities
purchased under reverse repurchase agreements
|
(4,487
|
)
|
(4,413
|
)
|
(4,415
|
)
|
||||
TD
Banknorth share repurchase program (Note
23)
|
(603
|
)
|
-
|
-
|
||||||
Acquisitions
and dispositions less cash and cash equivalents acquired
(Note
23)
|
(2,184
|
)
|
-
|
-
|
||||||
Net
cash from (used in) investing activities
|
(20,349
|
)
|
(17,903
|
)
|
2,302
|
|||||
Effect
of exchange rate changes on cash and cash equivalents
|
(28
|
)
|
(16
|
)
|
(143
|
)
|
||||
Net
changes in cash and cash equivalents
|
269
|
(64
|
)
|
(434
|
)
|
|||||
Cash
and cash equivalents at beginning of year
|
1,404
|
1,468
|
1,902
|
|||||||
Cash
and cash equivalents at end of year represented by cash
and due from
banks
|
$
|
1,673
|
$
|
1,404
|
$
|
1,468
|
||||
Supplementary
disclosure of cash flow information
|
||||||||||
Amount
of interest paid during the year
|
$
|
6,433
|
$
|
5,468
|
$
|
6,040
|
||||
Amount
of income taxes paid during the year
|
968
|
1,509
|
306
|
|||||||
Dividends
per common share
|
$
|
1.58
|
$
|
1.36
|
$
|
1.16
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
75
|
NOTE
1
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
Note
|
Topic
|
Page
|
2
|
Securities
|
77
|
3
|
Loans,
Impaired Loans and Allowance for Credit Losses
|
79
|
4
|
Loan
Securitizations
|
80
|
5
|
Goodwill
and Other Intangibles
|
82
|
6
|
Variable
Interest Entities
|
83
|
7
|
Land,
Buildings and Equipment
|
83
|
8
|
Deposits
|
84
|
9
|
Other
Assets
|
84
|
10
|
Other
Liabilities
|
84
|
11
|
Subordinated
Notes and Debentures
|
84
|
12
|
Liabilities
for Preferred Shares and Capital Trust Securities
|
85
|
13
|
Share
Capital
|
87
|
14
|
Stock-based
Compensation
|
88
|
15
|
Employee
Future Benefits
|
89
|
16
|
Income
Taxes
|
93
|
17
|
Fair
Value of Financial Instruments
|
94
|
18
|
Interest
Rate Risk
|
95
|
19
|
Derivative
Financial Instruments
|
97
|
20
|
Contingent
Liabilities, Commitments and Guarantees
|
99
|
21
|
Concentration
of Credit Risk
|
101
|
22
|
Segmented
Information
|
101
|
23
|
Acquisitions
and Dispositions
|
103
|
24
|
Restructuring
Costs
|
104
|
25
|
Earnings
Per Share
|
105
|
26
|
Related
Party Transactions
|
105
|
27
|
Reconciliation
of Canadian and United States Generally
Accepted Accounting Principles
|
106
|
28
|
Subsequent
Events
|
109
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest income - prior to restatement
|
$
|
6,155
|
$
|
5,943
|
$
|
5,616
|
||||
Less:
Preferred dividends
|
79
|
78
|
87
|
|||||||
Non-controlling
interest in innovative capital structures
|
68
|
92
|
92
|
|||||||
Total
|
$
|
6,008
|
$
|
5,773
|
$
|
5,437
|
76
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
2
|
SECURITIES
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
77
|
(millions
of Canadian dollars)
|
Remaining
term to maturity1
|
||||||||||||||||||||||||
With
no
|
|||||||||||||||||||||||||
Within
|
1
to 3
|
3
to 5
|
5
to 10
|
Over
10
|
specific
|
2005
|
2004
|
||||||||||||||||||
1
year
|
years
|
years
|
years
|
years
|
maturity
|
Total
|
Total
|
||||||||||||||||||
Investment
securities
|
|||||||||||||||||||||||||
Government
and government-insured securities
|
|||||||||||||||||||||||||
Canada
|
$
|
5,583
|
$
|
930
|
$
|
376
|
$
|
160
|
$
|
25
|
$
|
-
|
$
|
7,074
|
$
|
3,954
|
|||||||||
Mortgage-backed
securities
|
705
|
9,532
|
5,830
|
-
|
-
|
-
|
16,067
|
12,482
|
|||||||||||||||||
Total
Canada
|
6,288
|
10,462
|
6,206
|
160
|
25
|
-
|
23,141
|
16,436
|
|||||||||||||||||
Provinces
|
45
|
123
|
140
|
46
|
5
|
-
|
359
|
289
|
|||||||||||||||||
Total
|
6,333
|
10,585
|
6,346
|
206
|
30
|
-
|
23,500
|
16,725
|
|||||||||||||||||
Other
debt securities
|
|||||||||||||||||||||||||
Canadian
issuers
|
62
|
201
|
304
|
191
|
62
|
-
|
820
|
658
|
|||||||||||||||||
U.S.
federal government
|
3,170
|
579
|
290
|
90
|
88
|
-
|
4,217
|
4,464
|
|||||||||||||||||
Other
foreign governments
|
1,140
|
1,095
|
860
|
2
|
-
|
-
|
3,097
|
3,748
|
|||||||||||||||||
Other
issuers
|
386
|
1,519
|
665
|
319
|
4,638
|
-
|
7,527
|
2,932
|
|||||||||||||||||
Total
|
4,758
|
3,394
|
2,119
|
602
|
4,788
|
-
|
15,661
|
11,802
|
|||||||||||||||||
Equity
securities
|
|||||||||||||||||||||||||
Preferred
shares
|
150
|
109
|
53
|
-
|
-
|
606
|
918
|
935
|
|||||||||||||||||
Common
shares
|
-
|
-
|
-
|
-
|
13
|
2,229
|
2,242
|
1,925
|
|||||||||||||||||
Total
|
150
|
109
|
53
|
-
|
13
|
2,835
|
3,160
|
2,860
|
|||||||||||||||||
Total
investment securities
|
11,241
|
14,088
|
8,518
|
808
|
4,831
|
2,835
|
42,321
|
31,387
|
|||||||||||||||||
Trading
securities
|
|||||||||||||||||||||||||
Government
and government-insured securities
|
|||||||||||||||||||||||||
Canada
|
1,813
|
1,774
|
1,040
|
941
|
1,789
|
-
|
7,357
|
5,825
|
|||||||||||||||||
Provinces
|
399
|
209
|
811
|
701
|
1,371
|
-
|
3,491
|
3,033
|
|||||||||||||||||
Total
|
2,212
|
1,983
|
1,851
|
1,642
|
3,160
|
-
|
10,848
|
8,858
|
|||||||||||||||||
Other
debt securities
|
|||||||||||||||||||||||||
Canadian
issuers
|
298
|
432
|
481
|
850
|
1,016
|
-
|
3,077
|
2,881
|
|||||||||||||||||
U.S.
federal government
|
166
|
149
|
238
|
71
|
26
|
-
|
650
|
796
|
|||||||||||||||||
Other
foreign governments
|
1,710
|
583
|
559
|
489
|
200
|
-
|
3,541
|
4,140
|
|||||||||||||||||
Other
issuers
|
4,764
|
3,429
|
3,768
|
4,492
|
2,301
|
-
|
18,754
|
21,565
|
|||||||||||||||||
Total
|
6,938
|
4,593
|
5,046
|
5,902
|
3,543
|
-
|
26,022
|
29,382
|
|||||||||||||||||
Equity
securities
|
|||||||||||||||||||||||||
Preferred
shares
|
-
|
-
|
-
|
12
|
113
|
199
|
324
|
379
|
|||||||||||||||||
Common
shares
|
-
|
-
|
-
|
-
|
-
|
28,581
|
28,581
|
28,274
|
|||||||||||||||||
Total
|
-
|
-
|
-
|
12
|
113
|
28,780
|
28,905
|
28,653
|
|||||||||||||||||
Total
trading securities
|
9,150
|
6,576
|
6,897
|
7,556
|
6,816
|
28,780
|
65,775
|
66,893
|
|||||||||||||||||
Total
securities
|
$
|
20,391
|
$
|
20,664
|
$
|
15,415
|
$
|
8,364
|
$
|
11,647
|
$
|
31,615
|
$
|
108,096
|
$
|
98,280
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||||||||
Gross
|
Gross
|
Estimated
|
Gross
|
Gross
|
Estimated
|
||||||||||||||||||||
Book
|
unrealized
|
unrealized
|
market
|
Book
|
unrealized
|
unrealized
|
market
|
||||||||||||||||||
value
|
gains
|
losses
|
value
|
value
|
gains
|
losses
|
value
|
||||||||||||||||||
Investment
securities
|
|||||||||||||||||||||||||
Government
and government-insured securities
|
|||||||||||||||||||||||||
Canada
|
$
|
7,074
|
$
|
22
|
$
|
16
|
$
|
7,080
|
$
|
3,954
|
$
|
11
|
$
|
5
|
$
|
3,960
|
|||||||||
Mortgage-backed
securities
|
16,067
|
24
|
42
|
16,049
|
12,482
|
42
|
34
|
12,490
|
|||||||||||||||||
Total
Canada
|
23,141
|
46
|
58
|
23,129
|
16,436
|
53
|
39
|
16,450
|
|||||||||||||||||
Provinces
|
359
|
5
|
1
|
363
|
289
|
3
|
1
|
291
|
|||||||||||||||||
Total
|
23,500
|
51
|
59
|
23,492
|
16,725
|
56
|
40
|
16,741
|
|||||||||||||||||
Other
debt securities
|
|||||||||||||||||||||||||
Canadian
issuers
|
820
|
10
|
2
|
828
|
658
|
11
|
2
|
667
|
|||||||||||||||||
U.S.
federal government
|
4,217
|
-
|
2
|
4,215
|
4,464
|
-
|
-
|
4,464
|
|||||||||||||||||
Other
foreign governments
|
3,097
|
30
|
7
|
3,120
|
3,748
|
39
|
4
|
3,783
|
|||||||||||||||||
Other
issuers
|
7,527
|
39
|
61
|
7,505
|
2,932
|
23
|
1
|
2,954
|
|||||||||||||||||
Total
|
15,661
|
79
|
72
|
15,668
|
11,802
|
73
|
7
|
11,868
|
|||||||||||||||||
Equity
securities
|
|||||||||||||||||||||||||
Preferred
shares
|
918
|
93
|
1
|
1,010
|
935
|
80
|
2
|
1,013
|
|||||||||||||||||
Common
shares
|
2,242
|
749
|
53
|
2,938
|
1,925
|
428
|
40
|
2,313
|
|||||||||||||||||
Total
|
3,160
|
842
|
54
|
3,948
|
2,860
|
508
|
42
|
3,326
|
|||||||||||||||||
Total
investment securities
|
42,321
|
972
|
185
|
43,108
|
31,387
|
637
|
89
|
31,935
|
|||||||||||||||||
Trading
securities
|
65,775
|
-
|
-
|
65,775
|
66,893
|
-
|
-
|
66,893
|
|||||||||||||||||
Total
securities
|
$
|
108,096
|
$
|
972
|
$
|
185
|
$
|
108,883
|
$
|
98,280
|
$
|
637
|
$
|
89
|
$
|
98,828
|
78
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Realized
gains
|
$
|
293
|
$
|
268
|
$
|
446
|
||||
Realized
losses
|
(15
|
)
|
(29
|
)
|
(153
|
)
|
||||
Write-downs
|
(36
|
)
|
(47
|
)
|
(270
|
)
|
||||
Total
|
$
|
242
|
$
|
192
|
$
|
23
|
NOTE
3
|
LOANS,
IMPAIRED LOANS AND ALLOWANCE FOR CREDIT
LOSSES
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
79
|
(millions
of Canadian dollars)
|
|
|
||||||||||||||||||||
Impaired
|
Total | |||||||||||||||||||||
Gross
|
Gross
|
loans
net
|
allowance
|
Net
|
||||||||||||||||||
amount
of
|
impaired
|
Specific
|
of
specific
|
General
|
for
credit
|
amount
|
||||||||||||||||
loans
|
loans
|
allowance
|
allowance
|
allowance
|
losses
|
of
loans
|
||||||||||||||||
2005
|
||||||||||||||||||||||
Residential
mortgages
|
$
|
52,740
|
$
|
19
|
$
|
11
|
$
|
8
|
$
|
37
|
$
|
48
|
$
|
52,692
|
||||||||
Consumer
instalment and other personal
|
62,754
|
125
|
62
|
63
|
302
|
364
|
62,390
|
|||||||||||||||
Credit
card
|
2,998
|
-
|
-
|
-
|
58
|
58
|
2,940
|
|||||||||||||||
Business
and government
|
35,044
|
205
|
80
|
125
|
743
|
823
|
34,221
|
|||||||||||||||
Total
|
$
|
153,536
|
$
|
349
|
$
|
153
|
$
|
196
|
$
|
1,140
|
$
|
1,293
|
$
|
152,243
|
||||||||
2004
|
||||||||||||||||||||||
Residential
mortgages
|
$
|
51,420
|
$
|
21
|
$
|
6
|
$
|
15
|
$
|
40
|
$
|
46
|
$
|
51,374
|
||||||||
Consumer
instalment and other personal
|
48,857
|
90
|
49
|
41
|
199
|
248
|
48,609
|
|||||||||||||||
Credit
card
|
2,566
|
-
|
-
|
-
|
56
|
56
|
2,510
|
|||||||||||||||
Business
and government
|
22,264
|
426
|
211
|
215
|
622
|
833
|
21,431
|
|||||||||||||||
Total
|
$
|
125,107
|
$
|
537
|
$
|
266
|
$
|
271
|
$
|
917
|
$
|
1,183
|
$
|
123,924
|
||||||||
2005
|
2004
|
|||||||||||||||||||||
Average
gross impaired loans during the year
|
$
|
455
|
$
|
946
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
||||||||||||||||||||||
Specific
|
General
|
Specific
|
General
|
Sectoral
|
|||||||||||||||||||||
allowance
|
allowance
|
Total
|
allowance
|
allowance
|
allowance
|
Total
|
Total
|
||||||||||||||||||
Balance
at beginning of year
|
$
|
266
|
$
|
917
|
$
|
1,183
|
$
|
487
|
$
|
984
|
$
|
541
|
$
|
2,012
|
$
|
3,500
|
|||||||||
Acquisition
of TD Banknorth
|
27
|
289
|
316
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Provision
for (reversal of) credit losses
|
107
|
(52
|
)
|
55
|
336
|
(67
|
)
|
(655
|
)
|
(386
|
)
|
186
|
|||||||||||||
Transfer
from sectoral to specific
|
-
|
-
|
-
|
6
|
-
|
(6
|
)
|
-
|
-
|
||||||||||||||||
Write-offs1
|
(487
|
)
|
-
|
(487
|
)
|
(687
|
)
|
-
|
-
|
(687
|
)
|
(1,601
|
)
|
||||||||||||
Recoveries2
|
245
|
-
|
245
|
123
|
-
|
150
|
273
|
177
|
|||||||||||||||||
Other3
|
(5
|
)
|
(14
|
)
|
(19
|
)
|
1
|
-
|
(30
|
)
|
(29
|
)
|
(250
|
)
|
|||||||||||
Allowance
for credit losses at end of year
|
$
|
153
|
$
|
1,140
|
$
|
1,293
|
$
|
266
|
$
|
917
|
$
|
-
|
$
|
1,183
|
$
|
2,012
|
NOTE
4
|
LOAN
SECURITIZATIONS
|
80
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||||||||||||||||||||||||||
Residential
|
Credit
|
Commercial
|
Residential
|
Credit
|
Commercial
|
|||||||||||||||||||||||||||||
mortgage
|
Personal
|
card
|
mortgage
|
mortgage
|
Personal
|
card
|
mortgage
|
|||||||||||||||||||||||||||
loans
|
loans
|
loans
|
loans
|
Total
|
loans
|
loans
|
loans
|
loans
|
Total
|
Total
|
||||||||||||||||||||||||
Gross
proceeds
|
$
|
5,928
|
$
|
4,208
|
$
|
5,200
|
$
|
661
|
$
|
15,997
|
$
|
5,605
|
$
|
2,673
|
$
|
5,600
|
$
|
720
|
$
|
14,598
|
$
|
14,093
|
||||||||||||
Retained
interests
|
131
|
30
|
95
|
-
|
256
|
131
|
-
|
102
|
3
|
236
|
221
|
|||||||||||||||||||||||
Cash
flows received on retained interests
|
197
|
50
|
167
|
4
|
418
|
151
|
43
|
185
|
7
|
386
|
263
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||||||||||||||||||||||||||
Residential
|
Credit
|
Commercial
|
Residential
|
Credit
|
Commercial
|
|||||||||||||||||||||||||||||
mortgage
|
Personal
|
card
|
mortgage
|
mortgage
|
Personal
|
card
|
mortgage
|
|||||||||||||||||||||||||||
loans
|
loans
|
loans
|
loans
|
Total
|
loans
|
loans
|
loans
|
loans
|
Total
|
Total
|
||||||||||||||||||||||||
Gain
on sale1
|
$
|
42
|
$
|
22
|
$
|
90
|
$
|
12
|
$
|
166
|
$
|
29
|
$
|
-
|
$
|
95
|
$
|
10
|
$
|
134
|
$
|
49
|
||||||||||||
Servicing
income
|
122
|
50
|
76
|
-
|
248
|
123
|
43
|
90
|
-
|
256
|
201
|
2005
|
2004
|
2003
|
|||||||||||||||||||||||||||||||||||
Residential
|
Credit
|
Commercial
|
Residential
|
Credit
|
Commercial
|
Residential
|
Credit
|
Commercial
|
|||||||||||||||||||||||||||||
mortgage
|
Personal
|
card
|
mortgage
|
mortgage
|
Personal
|
card
|
mortgage
|
mortgage
|
Personal
|
card
|
mortgage
|
||||||||||||||||||||||||||
loans
|
loans
|
loan
|
loans
|
loans
|
loans
|
loans
|
loans
|
loans
|
loans
|
loan
|
loan
|
||||||||||||||||||||||||||
Prepayment
rate1
|
20.0
|
%
|
5.9
|
%
|
41.6
|
%
|
2.1
|
%
|
20.0
|
%
|
5.9
|
%
|
40.0
|
%
|
3.3
|
%
|
20.0
|
%
|
5.9
|
%
|
39.4
|
%
|
5.0
|
%
|
|||||||||||||
Excess
spread2
|
.7
|
1.1
|
13.2
|
-
|
.7
|
1.1
|
12.4
|
-
|
.8
|
1.2
|
12.0
|
-
|
|||||||||||||||||||||||||
Discount
rate
|
5.2
|
3.2
|
4.0
|
9.8
|
5.1
|
2.8
|
4.4
|
9.8
|
6.7
|
3.3
|
4.4
|
4.8
|
|||||||||||||||||||||||||
Expected
credit losses3
|
-
|
-
|
2.9
|
.1
|
-
|
-
|
3.0
|
.1
|
-
|
-
|
3.2
|
.1
|
(millions
of
Canadian dollars)
|
Residential
|
Commercial
|
|||||||||||
mortgage
|
Personal
|
Credit
card
|
mortgage
|
||||||||||
loans
|
loans
|
loans
|
loans
|
||||||||||
2005
|
|||||||||||||
Fair
value of retained
|
|||||||||||||
interests
|
$
|
273
|
$
|
32
|
$
|
24
|
$
|
3
|
|||||
Discount
rate
|
5.2
|
%
|
3.2
|
%
|
4.0
|
%
|
9.8
|
%
|
|||||
+10%
|
$
|
(2
|
)
|
$
|
(3
|
)
|
$
|
-
|
$
|
-
|
|||
+20%
|
(4
|
)
|
(6
|
)
|
-
|
(1
|
)
|
||||||
Prepayment
rate
|
20.0
|
%
|
5.9
|
%
|
41.6
|
%
|
2.1
|
%
|
|||||
+10%
|
$
|
(8
|
)
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
+20%
|
(15
|
)
|
(1
|
)
|
-
|
-
|
|||||||
Expected
credit losses
|
-
|
%
|
-
|
%
|
2.9
|
%
|
.1
|
%
|
|||||
+10%
|
$
|
-
|
$
|
(3
|
)
|
$
|
-
|
$
|
-
|
||||
+20%
|
-
|
(6
|
)
|
-
|
-
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||
Loans1
|
impaired
loans
|
write
offs
|
Loans1
|
impaired
loans
|
write
offs
|
||||||||||||||
Type
of loan
|
|||||||||||||||||||
Residential
mortgage loans
|
$
|
68,168
|
$
|
19
|
$
|
7
|
$
|
64,445
|
$
|
21
|
$
|
5
|
|||||||
Personal
loans
|
71,430
|
131
|
294
|
56,443
|
96
|
367
|
|||||||||||||
Other
loans
|
36,519
|
205
|
(23
|
)
|
23,249
|
426
|
84
|
||||||||||||
Total
loans reported and securitized
|
176,117
|
355
|
278
|
144,137
|
543
|
456
|
|||||||||||||
Less:
loans securitized
|
23,874
|
6
|
36
|
20,213
|
6
|
42
|
|||||||||||||
Total
loans reported on the Consolidated Balance Sheet
|
$
|
152,243
|
$
|
349
|
$
|
242
|
$
|
123,924
|
$
|
537
|
$
|
414
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
81
|
NOTE
5
|
GOODWILL
AND OTHER INTANGIBLES
|
(millions
of Canadian dollars)
|
Canadian
Personal
|
U.S.
Personal
|
||||||||||||||
and
Commercial
|
and
Commercial
|
Wholesale
|
Wealth
|
|||||||||||||
Banking
|
Banking
|
Banking
|
Management
|
Total
|
||||||||||||
2005
|
||||||||||||||||
Carrying
value of goodwill at beginning of year
|
$
|
884
|
$
|
-
|
$
|
146
|
$
|
1,195
|
$
|
2,225
|
||||||
Goodwill
acquired during the year
|
-
|
4,642
|
-
|
-
|
4,642
|
|||||||||||
Foreign
currency translation adjustments
|
-
|
(314
|
)
|
-
|
(35
|
)
|
(349
|
)
|
||||||||
Carrying
value of goodwill at end of year
|
$
|
884
|
$
|
4,328
|
$
|
146
|
$
|
1,160
|
$
|
6,518
|
||||||
2004
|
||||||||||||||||
Carrying
value of goodwill at beginning of year
|
$
|
841
|
N/A
|
$
|
146
|
$
|
1,276
|
$
|
2,263
|
|||||||
Goodwill
acquired during the year
|
43
|
-
|
-
|
43
|
||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
(81
|
)
|
(81
|
)
|
||||||||||
Carrying
value of goodwill at end of year
|
$
|
884
|
$
|
146
|
$
|
1,195
|
$
|
2,225
|
||||||||
2003
|
||||||||||||||||
Carrying
value of goodwill at beginning of year
|
$
|
841
|
N/A
|
$
|
526
|
$
|
1,767
|
$
|
3,134
|
|||||||
Goodwill
impairment
|
-
|
(350
|
)
|
(274
|
)
|
(624
|
)
|
|||||||||
Foreign
currency translation adjustments
|
-
|
(30
|
)
|
(217
|
)
|
(247
|
)
|
|||||||||
Carrying
value of goodwill at end of year
|
$
|
841
|
$
|
146
|
$
|
1,276
|
$
|
2,263
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||
Carrying
|
Accumulated
|
Net
carrying
|
Net
carrying
|
||||||||||
value
|
amortization
|
value
|
value
|
||||||||||
Core
deposit intangible assets
|
$
|
2,399
|
$
|
1,445
|
$
|
954
|
$
|
777
|
|||||
Other
intangible assets
|
3,959
|
2,789
|
1,170
|
1,367
|
|||||||||
Total
intangible assets
|
$
|
6,358
|
$
|
4,234
|
$
|
2,124
|
$
|
2,144
|
82
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
6
|
VARIABLE
INTEREST ENTITIES
|
NOTE
7
|
LAND,
BUILDINGS AND EQUIPMENT
|
Asset
|
Depreciation
rate and method
|
Buildings
|
5%
or 10%, declining balance
|
Computer
equipment
|
30%,
declining balance
|
Computer
software
|
3
to 7 years, straight-line
|
Furniture,
fixtures and other equipment
|
20%,
declining balance
|
Leasehold
improvements
|
estimated
useful life, straight-line
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||
Accumulated
|
Net
book
|
Net
book
|
|||||||||||
Cost
|
depreciation
|
value
|
value
|
||||||||||
Land
|
$
|
180
|
$
|
-
|
$
|
180
|
$
|
139
|
|||||
Buildings
|
668
|
310
|
358
|
240
|
|||||||||
Computer
equipment and software
|
1,144
|
662
|
482
|
387
|
|||||||||
Furniture,
fixtures and other equipment
|
866
|
490
|
376
|
257
|
|||||||||
Leasehold
improvements
|
738
|
333
|
405
|
307
|
|||||||||
Total
|
$
|
3,596
|
$
|
1,795
|
$
|
1,801
|
$
|
1,330
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
83
|
NOTE
8
|
DEPOSITS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
||||||||||||||
Demand
|
Notice
|
Term
|
Total
|
Total
|
||||||||||||
Personal
|
$
|
18,771
|
$
|
54,270
|
$
|
58,742
|
$
|
131,783
|
$
|
111,360
|
||||||
Banks
|
2,663
|
55
|
8,787
|
11,505
|
11,459
|
|||||||||||
Business
and government
|
18,063
|
23,795
|
61,835
|
103,693
|
84,074
|
|||||||||||
Total
|
$
|
39,497
|
$
|
78,120
|
$
|
129,364
|
$
|
246,981
|
$
|
206,893
|
||||||
Non-interest-bearing
deposits included above
|
||||||||||||||||
In
domestic offices
|
$
|
6,459
|
$
|
6,121
|
||||||||||||
In
foreign offices
|
3,067
|
3
|
||||||||||||||
Interest-bearing
deposits included above
|
||||||||||||||||
In
domestic offices
|
162,640
|
148,756
|
||||||||||||||
In
foreign offices
|
73,577
|
51,306
|
||||||||||||||
U.S.
federal funds deposited
|
1,238
|
707
|
||||||||||||||
Total
|
$
|
246,981
|
$
|
206,893
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||||||||
Within
|
1
to 2
|
2
to 3
|
3
to 4
|
4
to 5
|
Over
5
|
||||||||||||||||||||
1
year
|
years
|
years
|
years
|
years
|
years
|
Total
|
Total
|
||||||||||||||||||
Personal
|
$
|
13,835
|
$
|
23,441
|
$
|
4,594
|
$
|
1,695
|
$
|
15,089
|
$
|
88
|
$
|
58,742
|
$
|
51,919
|
|||||||||
Banks
|
8,233
|
49
|
45
|
222
|
21
|
217
|
8,787
|
10,816
|
|||||||||||||||||
Business
and government
|
50,287
|
1,434
|
801
|
839
|
6,155
|
2,319
|
61,835
|
52,275
|
|||||||||||||||||
Total
|
$
|
72,355
|
$
|
24,924
|
$
|
5,440
|
$
|
2,756
|
$
|
21,265
|
$
|
2,624
|
$
|
129,364
|
$
|
115,010
|
NOTE
9
|
OTHER
ASSETS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Amounts
receivable from brokers, dealers and clients
|
$
|
7,484
|
$
|
7,725
|
|||
Accrued
interest
|
1,199
|
1,452
|
|||||
Accounts
receivable, prepaid expenses and other items
|
4,692
|
2,311
|
|||||
Insurance
related assets, excluding investments
|
1,014
|
1,037
|
|||||
Prepaid
pension expense
|
606
|
469
|
|||||
Total
|
$
|
14,995
|
$
|
12,994
|
NOTE
10
|
OTHER
LIABILITIES
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Amounts
payable to brokers, dealers and clients
|
$
|
6,677
|
$
|
6,815
|
|||
Accrued
interest
|
1,867
|
1,532
|
|||||
Accounts
payable, accrued expenses and other items
|
3,740
|
3,853
|
|||||
Insurance
related liabilities
|
2,681
|
2,374
|
|||||
Accrued
benefit liability
|
503
|
515
|
|||||
Accrued
salaries and employee benefits
|
1,089
|
629
|
|||||
Cheques
and other items in transit
|
1,988
|
647
|
|||||
Total
|
$
|
18,545
|
$
|
16,365
|
NOTE
11
|
SUBORDINATED
NOTES AND DEBENTURES
|
84
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
||||||||||||||||
Maturity
date
|
Interest
rate (%)
|
Earliest
redemption date
|
Foreign
currency amount
|
2005
|
2004
|
|||||||||||
January
2004 to September 2007
|
Various1
|
-
|
$
|
4
|
$
|
8
|
||||||||||
August
20083
|
6.50
|
-
|
|
US$
149 million
|
-
|
182
|
||||||||||
October
20083
|
6.15
|
-
|
|
US$
146 million
|
-
|
178
|
||||||||||
November
20083
|
6.13
|
-
|
|
US$
100 million
|
-
|
122
|
||||||||||
January
20093
|
6.45
|
-
|
|
US$
149 million
|
-
|
181
|
||||||||||
April
20105
|
6.60
|
April
2005
|
-
|
741
|
||||||||||||
December
20102
|
8.40
|
December
2005
|
150
|
148
|
||||||||||||
June
20114
|
7.63
|
-
|
|
US$
200 million
|
232
|
-
|
||||||||||
July
2011
|
6.00
|
July
2006
|
796
|
798
|
||||||||||||
July
2012
|
6.55
|
July
2007
|
500
|
494
|
||||||||||||
September
2012
|
5.20
|
September
2007
|
547
|
550
|
||||||||||||
September
2013
|
4.54
|
September
2008
|
984
|
1,004
|
||||||||||||
August
2014
|
10.05
|
-
|
149
|
149
|
||||||||||||
June
2018
|
5.69
|
June
2013
|
900
|
893
|
||||||||||||
September
20224
|
4.64
|
September
2017
|
270
|
-
|
||||||||||||
May
2025
|
9.15
|
-
|
196
|
196
|
||||||||||||
February
20274
|
9.06
|
February
2017
|
|
US$
65 million
|
75
|
-
|
||||||||||
May
20274
|
10.52
|
May
2017
|
|
US$
31 million
|
36
|
-
|
||||||||||
July
20304
|
11.30
|
July
2020
|
|
US$
13 million
|
15
|
-
|
||||||||||
October
20304
|
10.88
|
October
2010
|
|
US$
28 million
|
33
|
-
|
||||||||||
February
20314
|
10.20
|
February
2021
|
|
US$
4 million
|
5
|
-
|
||||||||||
July
20314
|
7.27
|
July
2011
|
|
US$
5 million
|
6
|
-
|
||||||||||
April
20324
|
8.00
|
April
2007
|
|
US$
206 million
|
240
|
-
|
||||||||||
$
|
5,138
|
$
|
5,644
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Within
1 year
|
$
|
153
|
$
|
5
|
|||
Over
1 to 2 years
|
1
|
3
|
|||||
Over
3 to 4 years
|
-
|
360
|
|||||
Over
4 to 5 years
|
-
|
303
|
|||||
Over
5 years
|
4,984
|
4,973
|
|||||
Total
|
$
|
5,138
|
$
|
5,644
|
NOTE
12
|
LIABILITIES
FOR PREFERRED SHARES AND CAPITAL TRUST
SECURITIES
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
interest income - prior to restatement
|
$
|
6,155
|
$
|
5,943
|
$
|
5,616
|
||||
Less:Preferred
dividends
|
79
|
78
|
87
|
|||||||
Non-controlling interest in innovative capital structures
|
68
|
92
|
92
|
|||||||
Total
|
$
|
6,008
|
$
|
5,773
|
$
|
5,437
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Preferred
Shares
|
|||||||
Preferred
shares issued by the Bank (thousands of shares):
|
|||||||
Class
A
- 16 Series I
|
$
|
-
|
$
|
-
|
|||
Class
A
- 16,384 Series J
|
-
|
410
|
|||||
Class
A
- 14,000 Series M
|
350
|
350
|
|||||
Class
A
- 8,000 Series N
|
200
|
200
|
|||||
550
|
960
|
||||||
Preferred
shares issued by TD Mortgage
|
|||||||
Investment
Corporation (thousands of shares): 350 non-cumulative
preferred shares,
Series A
|
345
|
350
|
|||||
Total
Preferred shares
|
895
|
1,310
|
|||||
Capital
Trust Securities
|
|||||||
Trust
units issued by TD Capital Trust 900,000 Capital Trust
Securities - Series
2009
|
900
|
900
|
|||||
Trust
units issued by TD Capital Trust II 350,000 Capital Trust
Securities -
Series 2012
|
-
|
350
|
|||||
Total
Capital Trust Securities
|
900
|
1,250
|
|||||
Total
Preferred Shares and Capital Trust Securities
|
$
|
1,795
|
$
|
2,560
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
85
|
(per
share)
|
Distribution
frequency
|
Interest
rate
|
|||||
Series
G (redeemed 2003)
|
Quarterly
|
|
US$
.33750
|
||||
Series
H (redeemed 2004)
|
Quarterly
|
|
$
.44375
|
||||
Series
I
|
Quarterly
|
|
$
.01000
|
||||
Series
J (redeemed 2005)
|
Quarterly
|
|
$
.31875
|
||||
Series
K (redeemed 2003)
|
Quarterly
|
|
.45940
|
||||
Series
L (redeemed 2003)
|
Quarterly
|
|
US$
.40000
|
||||
Series
M
|
Quarterly
|
|
$
.29375
|
||||
Series
N
|
Quarterly
|
|
$
.28750
|
||||
TDMIC,
Series A
|
Semi-annually
|
|
$
32.30
|
86
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
13
|
SHARE
CAPITAL
|
(millions
of shares and millions of Canadian dollars)
|
2005
|
2004
|
2003
|
||||||||||||||||
Number
|
Number
|
Number
|
|||||||||||||||||
of
shares
|
Amount
|
of
shares
|
Amount
|
of
shares
|
Amount
|
||||||||||||||
Common:
|
|||||||||||||||||||
Balance
at beginning of year
|
655.9
|
$
|
3,373
|
656.3
|
$
|
3,179
|
645.4
|
$
|
2,846
|
||||||||||
Issued
on exercise of options
|
4.3
|
125
|
4.4
|
99
|
2.9
|
47
|
|||||||||||||
Issued
as a result of dividend reinvestment plan
|
7.3
|
380
|
3.8
|
174
|
8.0
|
286
|
|||||||||||||
Impact
of shares (acquired) sold in Wholesale Banking
|
-
|
6
|
(1.0
|
)
|
(41
|
)
|
-
|
-
|
|||||||||||
Issued
on the acquisition of TD Banknorth
|
44.3
|
1,988
|
-
|
-
|
-
|
-
|
|||||||||||||
Purchased
for cancellation
|
-
|
-
|
(7.6
|
)
|
(38
|
)
|
-
|
-
|
|||||||||||
Balance
at end of year
|
711.8
|
$
|
5,872
|
655.9
|
$
|
3,373
|
656.3
|
$
|
3,179
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
87
|
NOTE
14
|
STOCK-BASED
COMPENSATION
|
Weighted
|
Weighted
|
Weighted
|
|||||||||||||||||
average
|
average
|
average
|
|||||||||||||||||
exercise
|
exercise
|
exercise
|
|||||||||||||||||
(millions
of shares)
|
2005
|
price
|
2004
|
price
|
2003
|
price
|
|||||||||||||
Number
outstanding, beginning of year
|
22.1
|
$
|
35.21
|
24.4
|
$
|
32.28
|
23.9
|
$
|
30.35
|
||||||||||
Granted
|
2.2
|
49.41
|
2.4
|
40.95
|
4.0
|
33.42
|
|||||||||||||
Exercised
|
(4.3
|
)
|
28.95
|
(4.4
|
)
|
22.12
|
(2.9
|
)
|
16.25
|
||||||||||
Forfeited/cancelled
|
(.1
|
)
|
38.46
|
(.3
|
)
|
37.79
|
(.6
|
)
|
40.00
|
||||||||||
Number
outstanding, end of year
|
19.9
|
$
|
38.08
|
22.1
|
$
|
35.21
|
24.4
|
$
|
32.28
|
||||||||||
Exercisable,
end of year
|
13.2
|
$
|
36.30
|
14.1
|
$
|
33.44
|
14.8
|
$
|
28.87
|
Options
outstanding
|
Options
exercisable
|
|||||||||||||||
Weighted
|
||||||||||||||||
Number
outstanding
|
average
remaining
|
Weighted
average
|
Number
exercisable
|
Weighted
average
|
||||||||||||
(millions
of shares)
|
contractual
life (years)
|
exercise
price
|
(millions
of shares)
|
exercise
price
|
||||||||||||
$10.13
- $11.81
|
.1
|
1.00
|
$
|
11.81
|
.1
|
$
|
11.81
|
|||||||||
$17.45
- $25.43
|
1.5
|
2.77
|
23.63
|
1.5
|
23.63
|
|||||||||||
$29.80
- $40.43
|
7.4
|
5.50
|
34.33
|
5.5
|
34.61
|
|||||||||||
$40.92
- $44.30
|
8.7
|
5.45
|
41.23
|
6.1
|
41.34
|
|||||||||||
$49.40
- $55.90
|
2.2
|
6.00
|
49.41
|
-
|
-
|
Weighted
average
|
|||||||
(millions
of shares)
|
2005
|
exercise
price
|
|||||
Number
outstanding, beginning of year
|
6.3
|
$
|
28.36
|
||||
Granted
|
2.2
|
36.31
|
|||||
Exercised
|
(.4
|
)
|
29.11
|
||||
Forfeited/cancelled
|
(.1
|
)
|
35.95
|
||||
Number
outstanding, end of year
|
8.0
|
$
|
30.38
|
||||
Exercisable,
end of year
|
5.0
|
$
|
28.14
|
88
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
15
|
EMPLOYEE
FUTURE BENEFITS
|
Security
|
2005
|
2004
|
2003
|
|||||||
Equity
|
60
|
%
|
56
|
%
|
52
|
%
|
||||
Debt
|
39
|
43
|
48
|
|||||||
Cash
equivalents
|
1
|
1
|
-
|
|||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
89
|
Security
|
Acceptable
range
|
|||
Equity
|
50%-65
|
%
|
||
Debt
|
33%-48
|
%
|
||
Cash
equivalents
|
0%-4
|
%
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Accumulated
benefit obligation at end of period
|
$
|
1,810
|
$
|
1,446
|
$
|
1,331
|
||||
Change
in projected benefit obligation
|
||||||||||
Projected
benefit obligation at beginning of period
|
1,535
|
1,418
|
1,271
|
|||||||
Service
cost - benefits earned
|
46
|
38
|
31
|
|||||||
Interest
cost on projected benefit obligation
|
101
|
94
|
90
|
|||||||
Members’
contributions
|
26
|
26
|
25
|
|||||||
Benefits
paid
|
(93
|
)
|
(95
|
)
|
(92
|
)
|
||||
Actuarial
(gains) losses
|
(9
|
)
|
2
|
7
|
||||||
Change
in actuarial assumptions
|
318
|
44
|
86
|
|||||||
Plan
amendments
|
54
|
8
|
-
|
|||||||
Projected
benefit obligation at end of period
|
1,978
|
1,535
|
1,418
|
|||||||
Change
in plan assets
|
||||||||||
Plan
assets at fair market value at beginning of period
|
1,650
|
1,507
|
1,164
|
|||||||
Actual
income on plan assets
|
78
|
61
|
55
|
|||||||
Gain
on disposal of investments
|
286
|
204
|
80
|
|||||||
Members’
contributions
|
26
|
26
|
25
|
|||||||
Employer’s
contributions
|
64
|
46
|
291
|
|||||||
Decrease
in unrealized gains on investments
|
(95
|
)
|
(86
|
)
|
(11
|
)
|
||||
Benefits
paid
|
(93
|
)
|
(95
|
)
|
(92
|
)
|
||||
General
and administrative expenses
|
(9
|
)
|
(14
|
)
|
(9
|
)
|
||||
Other
|
-
|
1
|
4
|
|||||||
Plan
assets at fair market value at end of period
|
1,907
|
1,650
|
1,507
|
|||||||
Excess
(deficit) of plan assets over projected benefit
obligation
|
(71
|
)
|
115
|
89
|
||||||
Unrecognized
net loss from past experience, different from that assumed,
and effects of
changes in assumptions
|
416
|
265
|
299
|
|||||||
Unrecognized
prior service costs
|
62
|
14
|
7
|
|||||||
Employer’s
contributions
|
15
|
22
|
13
|
|||||||
Prepaid
pension expense
|
$
|
422
|
$
|
416
|
$
|
408
|
||||
Annual
expense
|
||||||||||
Net
pension expense includes the following components:
|
||||||||||
Service
cost - benefits earned
|
$
|
46
|
$
|
38
|
$
|
31
|
||||
Interest
cost on projected benefit obligation
|
101
|
94
|
90
|
|||||||
Actual
return on plan assets
|
(260
|
)
|
(165
|
)
|
(115
|
)
|
||||
Actuarial
losses
|
309
|
46
|
93
|
|||||||
Plan
amendments
|
54
|
8
|
-
|
|||||||
Difference
between costs arising in the period and costs recognized
in the period in
respect of:
|
||||||||||
Return
on plan assets1
|
149
|
64
|
30
|
|||||||
Actuarial
gains2
|
(300
|
)
|
(31
|
)
|
(80
|
)
|
||||
Plan
amendments3
|
(48
|
)
|
(7
|
)
|
1
|
|||||
Pension
expense
|
$
|
51
|
$
|
47
|
$
|
50
|
||||
Actuarial
assumptions used to determine the annual expense
|
||||||||||
Weighted
average discount rate for projected benefit obligation
|
6.40
|
%
|
6.50
|
%
|
7.00
|
%
|
||||
Weighted
average rate of compensation increase
|
3.50
|
3.50
|
3.50
|
|||||||
Weighted
average expected long term rate of return on plan assets4
|
6.75
|
6.75
|
6.75
|
|||||||
Actuarial
assumptions used to determine the benefit obligation
at end of
period
|
||||||||||
Weighted
average discount rate for projected benefit obligation
|
5.20
|
%
|
6.40
|
%
|
6.50
|
%
|
||||
Weighted
average rate of compensation increase
|
3.50
|
3.50
|
3.50
|
|||||||
Weighted
average expected long term rate of return on plan assets4
|
6.75
|
6.75
|
6.75
|
90
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Projected
benefit obligation at end of period
|
$
|
352
|
$
|
308
|
$
|
307
|
||||
Plan
assets at fair market value at end of period
|
365
|
308
|
309
|
|||||||
Prepaid
pension expense
|
79
|
53
|
54
|
|||||||
Pension
expense
|
5
|
4
|
3
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Projected
benefit obligation at end of period
|
$
|
278
|
N/A
|
N/A
|
||||||
Plan
assets at fair market value at end of period
|
307
|
|||||||||
Prepaid
pension expense
|
112
|
|||||||||
Pension
expense1
|
5
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Projected
benefit obligation at end of period
|
$
|
328
|
$
|
289
|
$
|
267
|
||||
Plan
assets at fair market value at end of period
|
5
|
9
|
11
|
|||||||
Accrued
benefit liability
|
226
|
205
|
187
|
|||||||
Pension
expense
|
29
|
28
|
25
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Other
Assets
|
|||||||
CT
Pension Defined Benefit Plan
|
$
|
79
|
$
|
53
|
|||
Principal
Pension Plan
|
422
|
416
|
|||||
TD
Banknorth Defined Benefit Plan and others-net
|
105
|
-
|
|||||
Prepaid
pension expense
|
606
|
469
|
|||||
Other
Liabilities
|
|||||||
Non-Pension
Post Retirement Benefit Plan
|
277
|
252
|
|||||
Supplemental
Employee Retirement Plan
|
226
|
205
|
|||||
Other
employee future benefits
|
-
|
58
|
|||||
Accrued
benefit liability
|
503
|
515
|
|||||
Net
amount recognized as at October 31
|
$
|
103
|
$
|
(46
|
)
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
91
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Change
in projected benefit obligation
|
||||||||||
Projected
benefit obligation at beginning of period
|
$
|
302
|
$
|
268
|
$
|
220
|
||||
Service
cost - benefits earned
|
10
|
9
|
8
|
|||||||
Interest
cost on projected benefit obligation
|
20
|
19
|
16
|
|||||||
Benefits
paid
|
(7
|
)
|
(8
|
)
|
(5
|
)
|
||||
Actuarial
losses
|
111
|
14
|
29
|
|||||||
Projected
benefit obligation at end of period
|
436
|
302
|
268
|
|||||||
Unrecognized
net loss from past experience, different from that assumed,
and effects of
changes in assumptions
|
157
|
48
|
34
|
|||||||
Employer’s
contributions
|
2
|
2
|
1
|
|||||||
Accrued
benefit liability
|
$
|
277
|
$
|
252
|
$
|
233
|
||||
Annual
expense
|
||||||||||
Net
non-pension post-retirement benefit expense includes
the following
components:
|
||||||||||
Service
cost - benefits earned
|
$
|
10
|
$
|
9
|
$
|
8
|
||||
Interest
cost on projected benefit obligation
|
20
|
19
|
16
|
|||||||
Actuarial
losses
|
111
|
14
|
29
|
|||||||
Difference
between costs arising in the period and costs recognized
in the period in
respect of:
|
||||||||||
Actuarial
gains1
|
(110
|
)
|
(14
|
)
|
(29
|
)
|
||||
Non-pension
post-retirement benefit expense
|
$
|
31
|
$
|
28
|
$
|
24
|
||||
Actuarial
assumptions used to determine the annual expense
|
||||||||||
Weighted
average discount rate for projected benefit obligation
|
6.60
|
%
|
6.75
|
%
|
7.00
|
%
|
||||
Weighted
average rate of compensation increase
|
3.50
|
3.50
|
3.50
|
|||||||
Actuarial
assumptions used to determine the benefit obligation
at end of
period
|
||||||||||
Weighted
average discount rate for projected benefit obligation
|
5.30
|
%
|
6.60
|
%
|
6.75
|
%
|
||||
Weighted
average rate of compensation increase
|
3.50
|
3.50
|
3.50
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Principal
pension plan
|
$
|
57
|
$
|
55
|
$
|
152
|
||||
CT
Defined Benefit Pension Plan
|
31
|
2
|
40
|
|||||||
Supplemental
employee retirement plans
|
8
|
8
|
8
|
|||||||
Non-pension
post-retirement benefit plans
|
7
|
8
|
7
|
|||||||
Total
|
$
|
103
|
$
|
73
|
$
|
207
|
92
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
16
|
INCOME
TAXES
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Provision
for (benefit of) income taxes - Consolidated Statement
of
Income
|
||||||||||
Current
income taxes
|
$
|
960
|
$
|
675
|
$
|
392
|
||||
Future
income taxes
|
(261
|
)
|
128
|
(70
|
)
|
|||||
699
|
803
|
322
|
||||||||
Provision
for (benefit of) income taxes - Consolidated Balance
Sheet
|
||||||||||
Current
income taxes
|
961
|
399
|
481
|
|||||||
Future
income taxes
|
-
|
-
|
(4
|
)
|
||||||
96
|
399
|
477
|
||||||||
Total
|
$
|
795
|
$
|
1,202
|
$
|
799
|
||||
Current
income taxes
|
||||||||||
Federal
|
$
|
454
|
$
|
586
|
$
|
582
|
||||
Provincial
|
230
|
289
|
229
|
|||||||
Foreign
|
372
|
199
|
62
|
|||||||
1,056
|
1,074
|
873
|
||||||||
Future
income taxes
|
||||||||||
Federal
|
(220
|
)
|
62
|
(56
|
)
|
|||||
Provincial
|
(105
|
)
|
35
|
(16
|
)
|
|||||
Foreign
|
64
|
31
|
(2
|
)
|
||||||
(261
|
)
|
128
|
(74
|
)
|
||||||
Total
|
$
|
795
|
$
|
1,202
|
$
|
799
|
1 |
Includes
current income tax expenses provided through the Consolidated
Balance
Sheet at October 31, 2005 of $141 million recorded through
the foreign
currency translation adjustments. Also a benefit of $45
million for the TD
Banknorth currency hedging loss is recorded in
goodwill.
|
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
||||||||||||||||
Income
taxes at Canadian statutory income tax rate
|
$
|
1,072
|
35.0
|
%
|
$
|
1,065
|
35.1
|
%
|
$
|
477
|
36.4
|
%
|
|||||||
Increase
(decrease) resulting from:
|
|||||||||||||||||||
Goodwill
impairment
|
-
|
-
|
-
|
-
|
114
|
8.7
|
|||||||||||||
Dividends
received
|
(232
|
)
|
(7.6
|
)
|
(205
|
)
|
(6.8
|
)
|
(179
|
)
|
(13.7
|
)
|
|||||||
Rate
differentials on international operations
|
(215
|
)
|
(7.0
|
)
|
(215
|
)
|
(7.1
|
)
|
(146
|
)
|
(11.1
|
)
|
|||||||
Internal
restructuring
|
163
|
5.3
|
8
|
.2
|
-
|
-
|
|||||||||||||
Future
federal and provincial tax rate increases (reductions)
|
-
|
-
|
52
|
1.7
|
(3
|
)
|
(.2
|
)
|
|||||||||||
Federal
large corporations tax
|
9
|
.3
|
12
|
.4
|
13
|
1.0
|
|||||||||||||
Other
-
net
|
(98
|
)
|
(3.2
|
)
|
86
|
2.9
|
46
|
3.5
|
|||||||||||
Provision
for income taxes and effective income tax rate
|
$
|
699
|
22.8
|
%
|
$
|
803
|
26.4
|
%
|
$
|
322
|
24.6
|
%
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
93
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Future
income tax assets
|
|||||||
Allowance
for credit losses
|
$
|
333
|
$
|
339
|
|||
Premises
and equipment
|
251
|
267
|
|||||
Deferred
income
|
20
|
28
|
|||||
Securities
|
201
|
185
|
|||||
Goodwill
|
85
|
109
|
|||||
Employee
benefits
|
361
|
170
|
|||||
Other
|
382
|
275
|
|||||
Total
future income tax assets
|
1,633
|
1,373
|
|||||
Valuation
allowance
|
(58
|
)
|
(68
|
)
|
|||
Future
income tax assets
|
1,575
|
1,305
|
|||||
Future
income tax liabilities
|
|||||||
Intangible
assets
|
(711
|
)
|
(701
|
)
|
|||
Employee
benefits
|
(146
|
)
|
(144
|
)
|
|||
Other
|
(198
|
)
|
(202
|
)
|
|||
Future
income tax liabilities
|
(1,055
|
)
|
(1,047
|
)
|
|||
Net
future income tax asset1
|
$
|
520
|
$
|
258
|
1 |
Included
in
the October 31, 2005 net future income tax asset are
future income tax
assets (liabilities) of $254 million (2004 - $(72) million)
in Canada,
$247 million (2004 - $277 million) in the United States
and $ 19 million
(2004 - $53 million) in International
jurisdictions.
|
NOTE
17
|
FAIR
VALUE OF FINANCIAL
INSTRUMENTS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
||||||||||
Consolidated
Balance Sheet
|
value
|
fair
value
|
value
|
fair
value
|
|||||||||
Assets
|
|||||||||||||
Securities
|
$
|
108,096
|
$
|
108,883
|
$
|
98,280
|
$
|
98,828
|
|||||
Loans
|
152,243
|
152,359
|
123,924
|
124,224
|
|||||||||
Liabilities
|
|||||||||||||
Deposits
|
246,981
|
247,009
|
206,893
|
207,198
|
|||||||||
Subordinated
notes and debentures
|
5,138
|
5,497
|
5,644
|
5,920
|
94
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||
Average
fair value for the year1
|
Year
end fair value
|
Year
end fair value
|
|||||||||||||||||
Positive
|
Negative
|
Positive
|
Negative
|
Positive
|
Negative
|
||||||||||||||
Derivative
financial instruments held or issued for trading
purposes:
|
|||||||||||||||||||
Interest
rate contracts
|
|||||||||||||||||||
Forward
rate agreements
|
$
|
34
|
$
|
40
|
$
|
28
|
$
|
19
|
$
|
33
|
$
|
51
|
|||||||
Swaps
|
14,521
|
15,081
|
11,683
|
12,032
|
13,563
|
13,990
|
|||||||||||||
Options
written
|
-
|
1,556
|
-
|
1,567
|
-
|
1,196
|
|||||||||||||
Options
purchased
|
1,018
|
-
|
1,014
|
-
|
798
|
-
|
|||||||||||||
Total
interest rate contracts
|
15,573
|
16,677
|
12,725
|
13,618
|
14,394
|
15,237
|
|||||||||||||
Foreign
exchange contracts
|
|||||||||||||||||||
Forward
contracts
|
6,468
|
5,066
|
4,656
|
3,727
|
6,780
|
6,093
|
|||||||||||||
Swaps
|
2,278
|
466
|
2,786
|
525
|
1,653
|
356
|
|||||||||||||
Cross-currency
interest rate swaps
|
5,589
|
6,306
|
5,118
|
6,573
|
5,771
|
5,803
|
|||||||||||||
Options
written
|
-
|
949
|
-
|
986
|
-
|
1,025
|
|||||||||||||
Options
purchased
|
896
|
-
|
869
|
-
|
908
|
-
|
|||||||||||||
Total
foreign exchange contracts
|
15,231
|
12,787
|
13,429
|
11,811
|
15,112
|
13,277
|
|||||||||||||
Credit
derivatives
|
737
|
672
|
484
|
674
|
719
|
581
|
|||||||||||||
Other
contracts2
|
4,143
|
5,265
|
7,013
|
7,395
|
3,472
|
4,778
|
|||||||||||||
Fair
value - trading
|
$
|
35,684
|
$
|
35,401
|
$
|
33,651
|
$
|
33,498
|
$
|
33,697
|
$
|
33,873
|
|||||||
Derivative
financial instruments held or issued for non-trading
purposes:
|
|||||||||||||||||||
Interest
rate contracts
|
|||||||||||||||||||
Forward
rate agreements
|
$
|
-
|
$
|
-
|
$
|
2
|
$
|
1
|
|||||||||||
Swaps
|
506
|
361
|
720
|
783
|
|||||||||||||||
Options
written
|
-
|
-
|
-
|
-
|
|||||||||||||||
Options
purchased
|
32
|
-
|
45
|
-
|
|||||||||||||||
Total
interest rate contracts
|
538
|
361
|
767
|
784
|
|||||||||||||||
Foreign
exchange contracts
|
|||||||||||||||||||
Forward
contracts
|
697
|
59
|
546
|
301
|
|||||||||||||||
Cross-currency
interest rate swaps
|
6
|
612
|
-
|
779
|
|||||||||||||||
Total
foreign exchange contracts
|
703
|
671
|
546
|
1,080
|
|||||||||||||||
Credit
derivatives
|
35
|
42
|
4
|
63
|
|||||||||||||||
Other
contracts2
|
539
|
-
|
276
|
2
|
|||||||||||||||
Fair
value - non-trading
|
1,815
|
1,074
|
1,593
|
1,929
|
|||||||||||||||
Total
fair value
|
$
|
35,466
|
$
|
34,572
|
$
|
35,290
|
$
|
35,802
|
NOTE
18
|
INTEREST
RATE RISK
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
95
|
(billions
of Canadian dollars)
|
|||||||||||||||||||||||||
|
Total
|
Non-
|
|||||||||||||||||||||||
Floating
|
Within
|
3
months
|
within
|
1
year to
|
|
Over
|
|
interest
|
|||||||||||||||||
2005
|
rate
|
3
months
|
to
1 year
|
1
year
|
5
years
|
|
5
years
|
|
sensitive
|
|
Total
|
||||||||||||||
Assets
|
|||||||||||||||||||||||||
Cash
resources and other
|
$
|
.1
|
$
|
8.3
|
$
|
.1
|
$
|
8.5
|
$
|
-
|
$
|
-
|
$
|
4.9
|
$
|
13.4
|
|||||||||
Effective
yield
|
3.9
|
%
|
4.7
|
%
|
|||||||||||||||||||||
Investment
securities
|
$
|
.5
|
$
|
10.1
|
$
|
6.7
|
$
|
17.3
|
$
|
19.0
|
$
|
3.6
|
$
|
2.4
|
$
|
42.3
|
|||||||||
Effective
yield
|
3.5
|
%
|
4.1
|
%
|
3.9
|
%
|
4.1
|
%
|
|||||||||||||||||
Trading
securities
|
$
|
65.8
|
$
|
-
|
$
|
-
|
$
|
65.8
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
65.8
|
|||||||||
Securities
purchased under resale
|
|||||||||||||||||||||||||
agreements
|
$
|
5.4
|
$
|
15.1
|
$
|
3.6
|
$
|
24.1
|
$
|
-
|
$
|
-
|
$
|
2.3
|
$
|
26.4
|
|||||||||
Effective
yield
|
2.7
|
%
|
3.8
|
%
|
|||||||||||||||||||||
Loans
|
$
|
21.2
|
$
|
67.4
|
$
|
15.7
|
$
|
104.3
|
$
|
42.5
|
$
|
4.1
|
$
|
1.3
|
$
|
152.2
|
|||||||||
Effective
yield
|
5.0
|
%
|
5.3
|
%
|
5.4
|
%
|
5.6
|
%
|
|||||||||||||||||
Other
|
$
|
40.1
|
$
|
-
|
$
|
-
|
$
|
40.1
|
$
|
-
|
$
|
-
|
$
|
25.0
|
$
|
65.1
|
|||||||||
Total
assets
|
$
|
133.1
|
$
|
100.9
|
$
|
26.1
|
$
|
260.1
|
$
|
61.5
|
$
|
7.7
|
$
|
35.9
|
$
|
365.2
|
|||||||||
Liabilities
and shareholders’ equity
|
|||||||||||||||||||||||||
Deposits
|
$
|
30.4
|
$
|
108.8
|
$
|
39.6
|
$
|
178.8
|
$
|
29.3
|
$
|
.8
|
$
|
38.1
|
$
|
247.0
|
|||||||||
Effective
yield
|
1.7
|
%
|
3.2
|
%
|
2.9
|
%
|
6.4
|
%
|
|||||||||||||||||
Obligations
related to securities sold short
|
$
|
24.4
|
$
|
-
|
$
|
-
|
$
|
24.4
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
24.4
|
|||||||||
Obligations
related to securities sold under repurchase agreements
|
$
|
2.0
|
$
|
5.6
|
$
|
1.2
|
$
|
8.8
|
$
|
-
|
$
|
1.8
|
$
|
.7
|
$
|
11.3
|
|||||||||
Effective
yield
|
2.4
|
%
|
4.9
|
%
|
2.8
|
%
|
|||||||||||||||||||
Subordinated
notes and debentures
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
.3
|
$
|
4.8
|
$
|
-
|
$
|
5.1
|
|||||||||
Effective
yield
|
5.1
|
%
|
5.7
|
%
|
|||||||||||||||||||||
Other
|
$
|
39.5
|
$
|
-
|
$
|
-
|
$
|
39.5
|
$
|
.3
|
$
|
1.4
|
$
|
20.3
|
$
|
61.5
|
|||||||||
Shareholders’
equity
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15.9
|
$
|
15.9
|
|||||||||
Total
liabilities and shareholders’ equity
|
$
|
96.3
|
$
|
114.4
|
$
|
40.8
|
$
|
251.5
|
$
|
29.9
|
$
|
8.8
|
$
|
75.0
|
$
|
365.2
|
|||||||||
On-balance
sheet position
|
$
|
36.8
|
$
|
(13.5
|
)
|
$
|
(14.7
|
)
|
$
|
8.6
|
$
|
31.6
|
$
|
(1.1
|
)
|
$
|
(39.1
|
)
|
$
|
-
|
|||||
Total
pay side instruments1
|
$
|
-
|
$
|
(91.3
|
)
|
$
|
(3.2
|
)
|
$
|
(94.5
|
)
|
$
|
(51.4
|
)
|
$
|
(3.4
|
)
|
$
|
-
|
$
|
(149.3
|
)
|
|||
Effective
yield
|
3.3
|
%
|
2.8
|
%
|
2.6
|
%
|
5.9
|
%
|
|||||||||||||||||
Total
receive side instruments1
|
$
|
-
|
$
|
69.5
|
$
|
24.8
|
$
|
94.3
|
$
|
50.7
|
$
|
4.3
|
$
|
-
|
$
|
149.3
|
|||||||||
Effective
yield
|
3.5
|
%
|
3.3
|
%
|
3.7
|
%
|
6.2
|
%
|
|||||||||||||||||
Off-balance
sheet position
|
$
|
-
|
$
|
(21.8
|
)
|
$
|
21.6
|
$
|
(.2
|
)
|
$
|
(.7
|
)
|
$
|
.9
|
$
|
-
|
$
|
-
|
||||||
Net
position
|
$
|
36.8
|
$
|
(35.3
|
)
|
$
|
6.9
|
$
|
8.4
|
$
|
30.9
|
$
|
(.2
|
)
|
$
|
(39.1
|
)
|
$
|
-
|
(billions
of Canadian dollars)
|
|||||||||||||||||||||||||
Total
|
Non-
|
||||||||||||||||||||||||
Floating
|
Within
|
3
months
|
within
|
1
year to
|
Over
|
interest
|
|||||||||||||||||||
2005
|
rate
|
3
months
|
to
1 year
|
1
year
|
5
years
|
5
years
|
sensitive
|
Total
|
|||||||||||||||||
Canadian
currency on-balance sheet position
|
$
|
29.3
|
$
|
(.4
|
)
|
$
|
(4.4
|
)
|
$
|
24.5
|
$
|
19.5
|
$
|
(2.4
|
)
|
$
|
(44.8
|
)
|
$
|
(3.2
|
)
|
||||
Foreign
currency on-balance sheet position
|
7.5
|
(13.1
|
)
|
(10.3
|
)
|
(15.9
|
)
|
12.1
|
1.3
|
5.7
|
3.2
|
||||||||||||||
On-balance
sheet position
|
36.8
|
(13.5
|
)
|
(14.7
|
)
|
8.6
|
31.6
|
(1.1
|
)
|
(39.1
|
)
|
-
|
|||||||||||||
Canadian
currency off-balance sheet position
|
-
|
(21.8
|
)
|
9.4
|
(12.4
|
)
|
3.4
|
1.2
|
-
|
(7.8
|
)
|
||||||||||||||
Foreign
currency off-balance sheet position
|
-
|
-
|
12.2
|
12.2
|
(4.1
|
)
|
(.3
|
)
|
-
|
7.8
|
|||||||||||||||
Off-balance
sheet position
|
-
|
(21.8
|
)
|
21.6
|
(.2
|
)
|
(.7
|
)
|
.9
|
-
|
-
|
||||||||||||||
Net
position
|
$
|
36.8
|
$
|
(35.3
|
)
|
$
|
6.9
|
$
|
8.4
|
$
|
30.9
|
$
|
(.2
|
)
|
$
|
(39.1
|
)
|
$
|
-
|
(billions
of Canadian dollars)
|
|||||||||||||||||||||||||
Total
|
Non-
|
||||||||||||||||||||||||
Floating
|
Within
|
3
months
|
within
|
1
year to
|
Over
|
interest
|
|||||||||||||||||||
2004
|
rate
|
3
months
|
to
1 year
|
1
year
|
5
years
|
5
years
|
sensitive
|
Total
|
|||||||||||||||||
Total
assets
|
$
|
156.7
|
$
|
48.2
|
$
|
22.1
|
$
|
227.0
|
$
|
54.3
|
$
|
7.4
|
$
|
22.3
|
$
|
311.0
|
|||||||||
Total
liabilities and shareholders’ equity
|
99.5
|
88.6
|
27.0
|
215.1
|
32.1
|
5.6
|
58.2
|
311.0
|
|||||||||||||||||
On-balance
sheet position
|
57.2
|
(40.4
|
)
|
(4.9
|
)
|
11.9
|
22.2
|
1.8
|
(35.9
|
)
|
-
|
||||||||||||||
Off-balance
sheet position
|
-
|
(18.4
|
)
|
6.6
|
(11.8
|
)
|
4.0
|
7.8
|
-
|
-
|
|||||||||||||||
Net
position
|
$
|
57.2
|
$
|
(58.8
|
)
|
$
|
1.7
|
$
|
.1
|
$
|
26.2
|
$
|
9.6
|
$
|
(35.9
|
)
|
$
|
-
|
96
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
19
|
DERIVATIVE
FINANCIAL INSTRUMENTS
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
97
|
(billions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||
Trading
|
|||||||||||||||||||
Over-the-
|
Exchange
|
||||||||||||||||||
Notional
principal
|
counter
|
traded
|
Total
|
Non-trading
|
Total
|
Total
|
|||||||||||||
Interest
rate contracts
|
|||||||||||||||||||
Futures
|
$
|
-
|
$
|
267.9
|
$
|
267.9
|
$
|
-
|
$
|
267.9
|
$
|
271.3
|
|||||||
Forward
rate agreements
|
102.9
|
-
|
102.9
|
1.0
|
103.9
|
129.0
|
|||||||||||||
Swaps
|
903.2
|
-
|
903.2
|
114.3
|
1,017.5
|
866.2
|
|||||||||||||
Options
written
|
88.2
|
1.5
|
89.7
|
-
|
89.7
|
72.7
|
|||||||||||||
Options
purchased
|
62.0
|
.9
|
62.9
|
20.9
|
83.8
|
76.9
|
|||||||||||||
Total
interest rate contracts
|
1,156.3
|
270.3
|
1,426.6
|
136.2
|
1,562.8
|
1,416.1
|
|||||||||||||
Foreign
exchange contracts
|
|||||||||||||||||||
Futures
|
-
|
.4
|
.4
|
-
|
.4
|
-
|
|||||||||||||
Forward
contracts
|
310.0
|
-
|
310.0
|
21.2
|
331.2
|
337.9
|
|||||||||||||
Swaps
|
14.2
|
-
|
14.2
|
-
|
14.2
|
10.7
|
|||||||||||||
Cross-currency
interest rate swaps
|
150.6
|
-
|
150.6
|
10.0
|
160.6
|
127.1
|
|||||||||||||
Options
written
|
35.2
|
-
|
35.2
|
-
|
35.2
|
45.0
|
|||||||||||||
Options
purchased
|
44.9
|
-
|
44.9
|
-
|
44.9
|
44.2
|
|||||||||||||
Total
foreign exchange contracts
|
554.9
|
.4
|
555.3
|
31.2
|
586.5
|
564.9
|
|||||||||||||
Credit
derivatives
|
101.0
|
-
|
101.0
|
3.4
|
104.4
|
83.6
|
|||||||||||||
Other
contracts1
|
100.4
|
81.7
|
182.1
|
2.6
|
184.7
|
105.2
|
|||||||||||||
Total
|
$
|
1,912.6
|
$
|
352.4
|
$
|
2,265.0
|
$
|
173.4
|
$
|
2,438.4
|
$
|
2,169.8
|
(billions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||
Remaining
term to maturity
|
|||||||||||||||||||
Within
|
1
to 3
|
3
to 5
|
Over
5
|
||||||||||||||||
Notional
principal
|
1
year
|
years
|
years
|
years
|
Total
|
Total
|
|||||||||||||
Interest
rate contracts
|
|||||||||||||||||||
Futures
|
$
|
185.4
|
$
|
82.3
|
$
|
.2
|
$
|
-
|
$
|
267.9
|
$
|
271.3
|
|||||||
Forward
rate agreements
|
100.4
|
3.4
|
-
|
.1
|
103.9
|
129.0
|
|||||||||||||
Swaps
|
380.5
|
290.7
|
139.8
|
206.5
|
1,017.5
|
866.2
|
|||||||||||||
Options
written
|
38.1
|
26.6
|
10.6
|
14.4
|
89.7
|
72.7
|
|||||||||||||
Options
purchased
|
36.0
|
26.1
|
7.6
|
14.1
|
83.8
|
76.9
|
|||||||||||||
Total
interest rate contracts
|
740.4
|
429.1
|
158.2
|
235.1
|
1,562.8
|
1,416.1
|
|||||||||||||
Foreign
exchange contracts
|
|||||||||||||||||||
Futures
|
.4
|
-
|
-
|
-
|
.4
|
-
|
|||||||||||||
Forward
contracts
|
294.2
|
27.1
|
9.7
|
.2
|
331.2
|
337.9
|
|||||||||||||
Swaps
|
1.7
|
2.5
|
3.1
|
6.9
|
14.2
|
10.7
|
|||||||||||||
Cross-currency
interest rate swaps
|
44.7
|
43.1
|
25.1
|
47.7
|
160.6
|
127.1
|
|||||||||||||
Options
written
|
26.8
|
4.8
|
3.3
|
.3
|
35.2
|
45.0
|
|||||||||||||
Options
purchased
|
35.4
|
4.1
|
3.2
|
2.2
|
44.9
|
44.2
|
|||||||||||||
Total
foreign exchange contracts
|
403.2
|
81.6
|
44.4
|
57.3
|
586.5
|
564.9
|
|||||||||||||
Credit
derivatives
|
13.2
|
24.3
|
39.2
|
27.7
|
104.4
|
83.6
|
|||||||||||||
Other
contracts1
|
118.1
|
47.8
|
14.7
|
4.1
|
184.7
|
105.2
|
|||||||||||||
Total
|
$
|
1,274.9
|
$
|
582.8
|
$
|
256.5
|
$
|
324.2
|
$
|
2,438.4
|
$
|
2,169.8
|
98
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||
Current
|
Credit
|
Risk-
|
Current
|
Credit
|
Risk-
|
||||||||||||||
replace-
|
equivalent
|
weighted
|
replace-
|
equivalent
|
weighted
|
||||||||||||||
ment
cost1
|
amount
|
amount
|
ment
cost1
|
amount
|
amount
|
||||||||||||||
Interest
rate contracts
|
|||||||||||||||||||
Forward
rate agreements
|
$
|
28
|
$
|
47
|
$
|
10
|
$
|
34
|
$
|
116
|
$
|
24
|
|||||||
Swaps
|
12,429
|
17,468
|
4,077
|
14,283
|
19,294
|
4,787
|
|||||||||||||
Options
purchased
|
1,030
|
1,409
|
297
|
797
|
1,092
|
222
|
|||||||||||||
Total
interest rate contracts
|
13,487
|
18,924
|
4,384
|
15,114
|
20,502
|
5,033
|
|||||||||||||
Foreign
exchange contracts
|
|||||||||||||||||||
Forward
contracts
|
5,217
|
9,618
|
2,154
|
7,248
|
11,558
|
2,582
|
|||||||||||||
Swaps
|
2,786
|
3,603
|
1,032
|
1,653
|
2,336
|
665
|
|||||||||||||
Cross-currency
interest rate swaps
|
5,111
|
12,543
|
2,761
|
5,772
|
11,952
|
2,682
|
|||||||||||||
Options
purchased
|
857
|
1,725
|
358
|
908
|
1,580
|
341
|
|||||||||||||
Total
foreign exchange contracts
|
13,971
|
27,489
|
6,305
|
15,581
|
27,426
|
6,270
|
|||||||||||||
Credit
derivatives
|
332
|
5,994
|
1,329
|
719
|
7,396
|
1,327
|
|||||||||||||
Other
contracts2
|
5,426
|
10,378
|
3,050
|
2,444
|
5,222
|
1,668
|
|||||||||||||
Total
derivative financial instruments
|
$
|
33,216
|
$
|
62,785
|
$
|
15,068
|
$
|
33,858
|
$
|
60,546
|
$
|
14,298
|
|||||||
Less
impact of master netting agreements and collateral
|
19,282
|
31,145
|
7,900
|
21,849
|
32,439
|
8,030
|
|||||||||||||
Total
|
$
|
13,934
|
$
|
31,640
|
$
|
7,168
|
$
|
12,009
|
$
|
28,107
|
$
|
6,268
|
1 |
Exchange
traded instruments and forward foreign exchange contracts
with an original
maturity of 14 days or less are excluded in accordance
with the guidelines
of the Office of the Superintendent of Financial Institutions
Canada.
|
The
total positive fair value of the excluded contracts at
October 31, 2005
was $2,250 million (2004 - $1,432
million).
|
2 |
Includes
equity and commodity derivatives.
|
(millions
of Canadian dollars)
|
Canada1
|
United
States1
|
Other
international1
|
Total
|
|||||||||||||||||||||
By
sector
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
|||||||||||||||||
Financial
|
$
|
13,724
|
$
|
13,693
|
$
|
97
|
$
|
132
|
$
|
13,806
|
$
|
14,606
|
$
|
27,627
|
$
|
28,431
|
|||||||||
Government
|
2,320
|
2,094
|
-
|
-
|
234
|
263
|
2,554
|
2,357
|
|||||||||||||||||
Other
|
1,888
|
1,585
|
121
|
183
|
1,026
|
1,302
|
3,035
|
3,070
|
|||||||||||||||||
Current
replacement cost
|
$
|
17,932
|
$
|
17,372
|
$
|
218
|
$
|
315
|
$
|
15,066
|
$
|
16,171
|
$
|
33,216
|
$
|
33,858
|
|||||||||
Less
impact
of master netting agreements and collateral
|
19,282
|
21,849
|
|||||||||||||||||||||||
Total
|
$
|
13,934
|
$
|
12,009
|
2005
|
2004
|
||||||||||||
By
location of ultimate risk2
|
2005
|
2004
|
%
mix
|
%
mix
|
|||||||||
Canada
|
$
|
6,020
|
$
|
5,015
|
43.2
|
41.8
|
|||||||
United
States
|
2,189
|
1,873
|
15.7
|
15.6
|
|||||||||
Other
international
|
|||||||||||||
United
Kingdom
|
1,285
|
703
|
9.2
|
5.9
|
|||||||||
Europe
- other
|
3,367
|
2,982
|
24.2
|
24.8
|
|||||||||
Australia
and
New Zealand
|
685
|
1,012
|
4.9
|
8.4
|
|||||||||
Japan
|
80
|
106
|
.6
|
.9
|
|||||||||
Asia
-
other
|
43
|
56
|
.3
|
.5
|
|||||||||
Latin
America and Caribbean
|
90
|
76
|
.6
|
.6
|
|||||||||
Middle
East and Africa
|
175
|
186
|
1.3
|
1.5
|
|||||||||
Total
other international
|
5,725
|
5,121
|
41.1
|
42.6
|
|||||||||
Total
current replacement cost
|
$
|
13,934
|
$
|
12,009
|
100.0
|
100.0
|
NOTE
20
|
CONTINGENT
LIABILITIES, COMMITMENTS AND
GUARANTEES
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
99
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Financial
and performance standby letters of credit
|
$
|
6,077
|
$
|
5,429
|
|||
Documentary
and commercial letters of credit
|
695
|
691
|
|||||
Commitments
to extend credit:
|
|||||||
Original
term
to maturity of one year or less
|
32,004
|
29,900
|
|||||
Original
term
to maturity of more than one year
|
18,652
|
11,232
|
|||||
Total
|
$
|
57,428
|
$
|
47,252
|
100
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Financial
and performance standby letters of credit
|
$
|
6,077
|
$
|
5,429
|
|||
Assets
sold with recourse
|
1,174
|
1,869
|
|||||
Credit
enhancements
|
117
|
117
|
|||||
Total
|
$
|
7,368
|
$
|
7,415
|
NOTE
21
|
CONCENTRATION
OF CREDIT RISK
|
(millions
of Canadian dollars)
|
On-balance
sheet assets1
|
Off-balance
sheet financial instruments
|
|||||||||||||||||
Derivative
|
|||||||||||||||||||
Credit
|
financial
|
||||||||||||||||||
instruments2,3
|
instruments4,5
|
||||||||||||||||||
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
||||||||||||||
Canada
|
80
|
%
|
92
|
%
|
60
|
%
|
70
|
%
|
28
|
%
|
27
|
%
|
|||||||
United
States
|
19
|
6
|
37
|
24
|
27
|
26
|
|||||||||||||
United
Kingdom
|
-
|
1
|
2
|
3
|
10
|
8
|
|||||||||||||
Europe
- excluding the United Kingdom
|
-
|
-
|
-
|
-
|
28
|
29
|
|||||||||||||
Other
International
|
1
|
1
|
1
|
3
|
7
|
10
|
|||||||||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|||||||
$
|
152,243
|
$
|
123,924
|
$
|
57,428
|
$
|
47,252
|
$
|
33,216
|
$
|
33,858
|
1 |
The
real estate industry segment accounted for 7% (2004 -
2.6%) of the total
loans and customers' liability under
acceptances.
|
2 |
At
October 31, 2005, the Bank had commitments and contingent
liability
contracts in the amount of $57,428 million (2004 - $47,252
million).
Included are commitments to extend credit totaling $50,656
million (2004 -
$41,132 million), of which the credit risk is dispersed
as detailed in the
table above.
|
3 |
Of
the commitments to extend credit, industry segments which
equaled or
exceeded 5% of the total concentration were as follows
at October 31,
2005: Financial institutions 45% (2004 - 53%); Real estate
residential 8%
(2004 - 1%).
|
4 |
At
October 31, 2005, the current replacement cost of derivative
financial
instruments amounted to $33,216 million (2004 - $33,858
million). Based on
the location of ultimate counterparty, the credit risk
was allocated as
detailed in the table above.
|
5 |
The
largest concentration by counterparty type was with financial
institutions, which accounted for 83% of the total (2004
- 84%). The
second largest concentration was with governments which
accounted for 7%
of the total. No other industry segment exceeded 4% of
the total.
|
NOTE
22
|
SEGMENTED
INFORMATION
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
101
|
(millions
of Canadian dollars)
|
Canadian
|
|
U.S.
|
||||||||||||||||
Personal
and
|
|
Personal
and
|
|||||||||||||||||
Commercial
|
|
Commercial
|
|
Wholesale
|
|
Wealth
|
|||||||||||||
2005
|
Banking
|
|
Banking
|
|
Banking1
|
|
Management
|
|
Corporate1
|
|
Total
|
||||||||
Net
interest income
|
$
|
4,342
|
$
|
705
|
$
|
977
|
$
|
643
|
$
|
(659
|
)
|
$
|
6,008
|
||||||
Provision
for (reversal of) credit losses
|
373
|
4
|
52
|
-
|
(374
|
)
|
55
|
||||||||||||
Other
income
|
2,361
|
299
|
1,011
|
2,103
|
115
|
5,889
|
|||||||||||||
Non-interest
expenses before amortization of intangibles
|
3,773
|
549
|
1,325
|
2,083
|
506
|
8,236
|
|||||||||||||
Income
(loss) before income taxes
|
2,557
|
451
|
611
|
663
|
(676
|
)
|
3,606
|
||||||||||||
Provision
for (benefit of) income taxes
|
855
|
161
|
189
|
231
|
(545
|
)
|
891
|
||||||||||||
Non-controlling
interest
|
-
|
132
|
-
|
-
|
-
|
132
|
|||||||||||||
Net
income (loss) before amortization of intangibles
|
$
|
1,702
|
$
|
158
|
$
|
422
|
$
|
432
|
$
|
(131
|
)
|
$
|
2,583
|
||||||
Amortization
of intangibles, net of income taxes
|
354
|
||||||||||||||||||
Net
income reported basis
|
$
|
2,229
|
|||||||||||||||||
Total
assets
|
$
|
131,000
|
$
|
35,700
|
$
|
156,700
|
$
|
25,600
|
$
|
16,210
|
$
|
365,210
|
|||||||
2004
|
|||||||||||||||||||
Net
interest income
|
$
|
4,154
|
N/A
|
$
|
1,581
|
$
|
492
|
$
|
(454
|
)
|
$
|
5,773
|
|||||||
Provision
for (reversal of) credit losses
|
373
|
41
|
-
|
(800
|
)
|
(386
|
)
|
||||||||||||
Other
income
|
2,066
|
615
|
2,098
|
104
|
4,883
|
||||||||||||||
Non-interest
expenses before amortization of intangibles
|
3,650
|
1,289
|
2,047
|
395
|
7,381
|
||||||||||||||
Income
before income taxes
|
2,197
|
866
|
543
|
55
|
3,661
|
||||||||||||||
Provision
for (benefit of) income taxes
|
747
|
278
|
191
|
(264
|
)
|
952
|
|||||||||||||
Non-controlling
interest
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
Net
income before amortization of intangibles
|
$
|
1,450
|
$
|
588
|
$
|
352
|
$
|
319
|
$
|
2,709
|
|||||||||
Amortization
of intangibles, net of income taxes
|
477
|
||||||||||||||||||
Net
income reported basis
|
$
|
2,232
|
|||||||||||||||||
Total
assets
|
$
|
123,200
|
$
|
148,100
|
$
|
24,900
|
$
|
14,827
|
$
|
311,027
|
|||||||||
2003
|
|||||||||||||||||||
Net
interest income
|
$
|
4,051
|
N/A
|
$
|
1,335
|
$
|
421
|
$
|
(370
|
)
|
$
|
5,437
|
|||||||
Provision
for (reversal of) credit losses
|
460
|
15
|
-
|
(289
|
)
|
186
|
|||||||||||||
Other
income
|
1,803
|
701
|
1,873
|
47
|
4,424
|
||||||||||||||
Non-interest
expenses before amortization of intangibles
|
3,463
|
1,689
|
2,234
|
206
|
7,592
|
||||||||||||||
Income
(loss) before income taxes
|
1,931
|
332
|
60
|
(240
|
)
|
2,083
|
|||||||||||||
Provision
for (benefit of) income taxes
|
689
|
92
|
145
|
(323
|
)
|
603
|
|||||||||||||
Non-controlling
interest
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
Net
income (loss) before amortization of intangibles
|
$
|
1,242
|
$
|
240
|
$
|
(85
|
)
|
$
|
83
|
$
|
1,480
|
||||||||
Amortization
of intangibles, net of income taxes
|
491
|
||||||||||||||||||
Net
income reported basis
|
$
|
989
|
|||||||||||||||||
Total
assets
|
$
|
115,700
|
$
|
123,400
|
$
|
21,100
|
$
|
13,332
|
$
|
273,532
|
102
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
|||||||||||||
Income
(loss) before pro-
|
|||||||||||||
vision
for income taxes and
|
|||||||||||||
Total
revenue
|
non-controlling
interest
|
Net
income (loss)
|
Total
assets
|
||||||||||
2005
|
|||||||||||||
Canada
|
$
|
8,410
|
$
|
1,408
|
$
|
1,117
|
$
|
232,783
|
|||||
United
States
|
2,624
|
1,246
|
639
|
74,306
|
|||||||||
International
|
863
|
406
|
473
|
58,121
|
|||||||||
Total
|
$
|
11,897
|
$
|
3,060
|
$
|
2,229
|
$
|
365,210
|
|||||
2004
|
|||||||||||||
Canada
|
$
|
7,967
|
$
|
1,940
|
$
|
1,368
|
$
|
216,110
|
|||||
United
States
|
1,559
|
434
|
259
|
41,506
|
|||||||||
International
|
1,130
|
661
|
605
|
53,411
|
|||||||||
Total
|
$
|
10,656
|
$
|
3,035
|
$
|
2,232
|
$
|
311,027
|
|||||
2003
|
|||||||||||||
Canada
|
$
|
7,202
|
$
|
916
|
$
|
674
|
$
|
191,817
|
|||||
United
States
|
1,588
|
(11
|
)
|
(23
|
)
|
38,222
|
|||||||
International
|
1,071
|
406
|
338
|
43,493
|
|||||||||
Total
|
$
|
9,861
|
$
|
1,311
|
$
|
989
|
$
|
273,532
|
NOTE
23
|
ACQUISITIONS
AND DISPOSITIONS
|
(millions
of Canadian dollars)
|
||||
Fair
value of assets acquired
|
||||
Cash
and cash equivalents
|
$
|
928
|
||
Securities
|
6,335
|
|||
Loans
|
24,581
|
|||
Intangible
assets
|
||||
Core
deposit intangibles
|
420
|
|||
Other
identifiable intangibles
|
137
|
|||
Other
assets
|
1,683
|
|||
$
|
34,084
|
|||
Less
liabilities assumed
|
||||
Deposits
|
28,919
|
|||
Obligations
related to securities sold under repurchase agreements
|
1,430
|
|||
Other
liabilities
|
198
|
|||
Future
tax liability on intangible assets
|
189
|
|||
Subordinated
notes, debentures and other debt
|
670
|
|||
$
|
31,406
|
|||
Less
cash used in share repurchase program by TD Banknorth
|
603
|
|||
Fair
value of identifiable net assets acquired
|
$
|
2,075
|
||
Non-controlling
interest1
|
1,617
|
|||
458
|
||||
Goodwill
|
4,642
|
|||
Total
purchase consideration
|
$
|
5,100
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
103
|
For
the twelve months ended1
|
||||
(millions
of Canadian dollars)
|
October
31, 2005
|
|||
Net
interest income
|
$
|
6,469
|
||
Provision
for credit losses
|
(78
|
)
|
||
Other
income
|
5,976
|
|||
Non-interest
expenses
|
(9,307
|
)
|
||
Income
before provision for income taxes
|
3,060
|
|||
Provision
for income taxes
|
(707
|
)
|
||
Income
before non-controlling interest
|
2,353
|
|||
Non-controlling
interest
|
(137
|
)
|
||
Net
income available to common shares
|
$
|
2,216
|
||
Earnings
per share ($)
|
||||
Basic
|
$
|
3.14
|
||
Diluted
|
3.11
|
NOTE
24
|
RESTRUCTURING
COSTS
|
104
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
2005
|
2004
|
2003
|
||||||||||||||
Human
|
Real
|
|||||||||||||||
(millions
of Canadian dollars)
|
Resources
|
Estate
|
Total
|
Total
|
Total
|
|||||||||||
Balance
at beginning of year
|
$
|
-
|
$
|
7
|
$
|
7
|
$
|
19
|
$
|
36
|
||||||
Restructuring
costs arising (reversed) during the year:
|
||||||||||||||||
Wholesale
Banking
|
43
|
-
|
43
|
(7
|
)
|
72
|
||||||||||
Wealth
Management
|
-
|
-
|
-
|
-
|
26
|
|||||||||||
Amount
utilized during the year:
|
||||||||||||||||
Personal
and
Commercial Banking
|
-
|
-
|
-
|
-
|
28
|
|||||||||||
Wholesale
Banking
|
24
|
1
|
25
|
4
|
62
|
|||||||||||
Wealth
Management
|
-
|
-
|
-
|
1
|
25
|
|||||||||||
Balance
at end of year
|
$
|
19
|
$
|
6
|
$
|
25
|
$
|
7
|
$
|
19
|
NOTE
25
|
EARNINGS
PER SHARE
|
2005
|
2004
|
2003
|
||||||||
Basic
Earnings per Share
|
||||||||||
Net
income available to common shares ($ millions)
|
$
|
2,229
|
$
|
2,232
|
$
|
989
|
||||
Average
number of common shares outstanding (millions)
|
691.3
|
654.5
|
649.8
|
|||||||
Basic
earnings per share ($)
|
$
|
3.22
|
$
|
3.41
|
$
|
1.52
|
||||
Diluted
Earnings per Share
|
||||||||||
Net
income available to common shares ($ millions)
|
$
|
2,229
|
$
|
2,232
|
$
|
989
|
||||
Average
number of common shares outstanding (millions)
|
691.3
|
654.5
|
649.8
|
|||||||
Stock
options1
|
5.6
|
4.9
|
4.1
|
|||||||
Average
number of common shares outstanding - diluted (millions)
|
696.9
|
659.4
|
653.9
|
|||||||
Diluted
earnings per share1
($)
|
$
|
3.20
|
$
|
3.39
|
$
|
1.51
|
1 |
For
2005, the computation of diluted earnings per share excluded
weighted
average options outstanding of 271 thousand with a weighted
average
exercise price of $49.40 as the options price was greater
than the average
market price of the Bank's common shares. For 2003, the
computation of
diluted earnings per share excluded weighted average
options outstanding
of 10.9 million with a weighted exercise price of $39.40
as the options’
price was greater than the average market price of the
Bank’s common
shares. For 2004, all options outstanding were included
in the computation
of diluted earnings per share.
|
NOTE
26
|
RELATED
PARTY TRANSACTIONS
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Personal
Loans
|
$
|
6
|
$
|
5
|
|||
Business
Loans
|
45
|
280
|
|||||
Total
|
$
|
51
|
$
|
285
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
105
|
NOTE
27
|
RECONCILIATION
OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
|
For
the years ended October 31
|
||||||||||
(millions
of Canadian dollars)
|
20051
|
2004
|
2003
|
|||||||
Net
income based on Canadian GAAP
|
$
|
2,229
|
$
|
2,232
|
$
|
989
|
||||
Employee
future benefitsa
|
7
|
(3
|
)
|
(11
|
)
|
|||||
Securitizationsb
|
(4
|
)
|
(17
|
)
|
(16
|
)
|
||||
Available
for sale securitiesc
|
21
|
2
|
128
|
|||||||
Derivative
instruments and hedging activitiesd
|
(287
|
)
|
(475
|
)
|
142
|
|||||
Guaranteese
|
(22
|
)
|
(13
|
)
|
(20
|
)
|
||||
Asset
retirement obligations
|
-
|
(6
|
)
|
(30
|
)
|
|||||
Liabilities
and equityf
|
147
|
146
|
179
|
|||||||
Amortization
of intangible assetsg
|
(35
|
)
|
-
|
-
|
||||||
Restructuring
costsh
|
-
|
-
|
(28
|
)
|
||||||
Other
|
17
|
(10
|
)
|
-
|
||||||
Income
taxes and net change in income taxes due to the above
itemsi
|
128
|
118
|
(56
|
)
|
||||||
Non-controlling
interestg
|
(57
|
)
|
(93
|
)
|
(115
|
)
|
||||
Net
income based on U.S. GAAP
|
2,144
|
1,881
|
1,162
|
|||||||
Preferred
dividends
|
55
|
53
|
64
|
|||||||
Net
income available to common shares based on U.S.
GAAP
|
$
|
2,089
|
$
|
1,828
|
$
|
1,098
|
||||
Average
number of common shares outstanding (millions)
|
||||||||||
Basic -
U.S. GAAP
|
691.3
|
654.5
|
649.8
|
|||||||
-
Canadian GAAP
|
691.3
|
654.5
|
649.8
|
|||||||
Diluted
- U.S. GAAP
|
696.9
|
659.4
|
653.9
|
|||||||
- Canadian GAAP
|
696.9
|
659.4
|
653.9
|
|||||||
Basic
earnings per share - U.S. GAAP
|
$
|
3.02
|
$
|
2.79
|
$
|
1.69
|
||||
-
Canadian GAAP
|
3.22
|
3.41
|
1.52
|
|||||||
Diluted
earnings per share - U.S. GAAP
|
$
|
3.00
|
$
|
2.77
|
$
|
1.68
|
||||
-
Canadian
GAAP
|
3.20
|
3.39
|
1.51
|
1 |
For
fiscal 2005, the effect of U.S. GAAP adjustments to the
Canadian GAAP
Consolidated Statement of Income is as follows: $297
million increase to
net interest income, $400 million decrease to other income
and $110
million increase to non-interest
expenses.
|
For
the years ended October 31
|
||||||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
2003
|
|||||||
Net
income based on U.S. GAAP
|
$
|
2,144
|
$
|
1,881
|
$
|
1,162
|
||||
Other
comprehensive income (loss), net of income taxes
|
||||||||||
Net
change in unrealized gains and losses on available for
sale
securities1
|
(14
|
)
|
16
|
16
|
||||||
Reclassification
to earnings in respect of available for sale securities2
|
(4
|
)
|
5
|
(78
|
)
|
|||||
Change
in unrealized foreign currency translation gains and
losses3,7
|
(431
|
)
|
(135
|
)
|
(548
|
)
|
||||
Change
in gains and losses on derivative instruments designated
as cash flow
hedges4
|
(325
|
)
|
141
|
126
|
||||||
Reclassification
to earnings of gains and losses on cash flow hedges5
|
10
|
40
|
46
|
|||||||
Minimum
pension liability adjustment6
|
(33
|
)
|
(5
|
)
|
114
|
|||||
Comprehensive
income
|
$
|
1,347
|
$
|
1,943
|
$
|
838
|
1 |
Net
of income
taxes (benefit) of $40 million (2004 - $31 million; 2003
- $7
million).
|
2 |
Net
of income
taxes (benefit) of $2 million (2004 - $2 million; 2003
- $(45)
million).
|
3 |
Net
of income
taxes (benefit) of $141 million (2004 - $400 million;
2003 - $481
million).
|
4 |
Net
of income
taxes (benefit) of $149 million (2004 - $76 million;
2003 - $72
million).
|
5 |
Net
of income
taxes (benefit) of $5 million (2004 - $21 million; 2003
- $27
million).
|
6 |
Net
of income
taxes (benefit) of $(17) million (2004 - $(2) million;
2003 - $72
million).
|
7 |
Fiscal
2005
includes $250 million (2004 - $659 million; 2003 - $971
million) of
after-tax gains arising from hedges of the Bank’s investment positions in
foreign operations.
|
106
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
As
at October 31
|
|||||||||||||||||||
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||||||||||||||
Canadian
|
Adjust-
|
U.S.
|
Canadian
|
Adjust-
|
U.S.
|
||||||||||||||
GAAP
|
ments
|
GAAP
|
GAAP
|
ments
|
GAAP
|
||||||||||||||
Assets
|
|||||||||||||||||||
Cash
resources and other
|
$
|
13,418
|
$
|
-
|
$
|
13,418
|
$
|
9,038
|
$
|
297
|
$
|
9,335
|
|||||||
Securities
|
|||||||||||||||||||
Investmentc,g
|
42,321
|
3,898
|
46,219
|
31,387
|
3,917
|
35,304
|
|||||||||||||
Trading
|
65,775
|
-
|
65,775
|
66,893
|
216
|
67,109
|
|||||||||||||
Securities
purchased under reverse repurchase agreements
|
26,375
|
-
|
26,375
|
21,888
|
-
|
21,888
|
|||||||||||||
Loans
(net)
|
152,243
|
-
|
152,243
|
123,924
|
46
|
123,970
|
|||||||||||||
Trading
derivatives’ market revaluationd
|
33,651
|
674
|
34,325
|
33,697
|
1,827
|
35,524
|
|||||||||||||
Goodwilla,g
|
6,518
|
1,604
|
8,122
|
2,225
|
64
|
2,289
|
|||||||||||||
Other
intangiblesa,g
|
2,124
|
338
|
2,462
|
2,144
|
33
|
2,177
|
|||||||||||||
Other
assetsa,g
|
22,785
|
22
|
22,807
|
19,831
|
67
|
19,898
|
|||||||||||||
Total
assets
|
$
|
365,210
|
$
|
6,536
|
$
|
371,746
|
$
|
311,027
|
$
|
6,467
|
$
|
317,494
|
|||||||
Liabilities
|
|||||||||||||||||||
Depositsd
|
$
|
246,981
|
$
|
21
|
$
|
247,002
|
$
|
206,893
|
$
|
350
|
$
|
207,243
|
|||||||
Trading
derivatives’ market revaluationd
|
33,498
|
598
|
34,096
|
33,873
|
1,138
|
35,011
|
|||||||||||||
Other
liabilitiesa,c,d,e,g,h,j
|
60,224
|
4,037
|
64,261
|
49,389
|
4,640
|
54,029
|
|||||||||||||
Subordinated
notes, debentures and other debt
|
5,138
|
-
|
5,138
|
5,644
|
82
|
5,726
|
|||||||||||||
Liabilities
for preferred shares and capital trust securitiesf
|
1,795
|
(1,795
|
)
|
-
|
2,560
|
(2,560
|
)
|
-
|
|||||||||||
Total
liabilities
|
347,636
|
2,861
|
350,497
|
298,359
|
3,650
|
302,009
|
|||||||||||||
Non-controlling
interest in subsidiariesf,g
|
1,708
|
3,149
|
4,857
|
-
|
1,368
|
1,368
|
|||||||||||||
Shareholders’
equity
|
|||||||||||||||||||
Preferred
sharesf
|
-
|
545
|
545
|
-
|
960
|
960
|
|||||||||||||
Common
sharesj
|
5,872
|
39
|
5,911
|
3,373
|
37
|
3,410
|
|||||||||||||
Contributed
surplusj
|
40
|
-
|
40
|
20
|
2
|
22
|
|||||||||||||
Foreign
currency translation adjustmentsk
|
(696
|
)
|
696
|
-
|
(265
|
)
|
265
|
-
|
|||||||||||
Retained
earningsa,b,c,d,e,g,h,j
|
10,650
|
(246
|
)
|
10,404
|
9,540
|
(104
|
)
|
9,436
|
|||||||||||
Accumulated
other comprehensive income
|
|||||||||||||||||||
Net
unrealized gains on available for sale securitiesc
|
-
|
280
|
280
|
-
|
298
|
298
|
|||||||||||||
Foreign
currency translation adjustmentsk
|
-
|
(696
|
)
|
(696
|
)
|
-
|
(265
|
)
|
(265
|
)
|
|||||||||
Derivative
instrumentsd
|
-
|
(54
|
)
|
(54
|
)
|
-
|
261
|
261
|
|||||||||||
Minimum
pension liability adjustmenta
|
-
|
(38
|
)
|
(38
|
)
|
-
|
(5
|
)
|
(5
|
)
|
|||||||||
Total
shareholders’ equity
|
15,866
|
526
|
16,392
|
12,668
|
1,449
|
14,117
|
|||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
365,210
|
$
|
6,536
|
$
|
371,746
|
$
|
311,027
|
$
|
6,467
|
$
|
317,494
|
(millions
of Canadian dollars)
|
2005
|
2004
|
|||||
Prepaid
pension expense (accrued benefit liability)
|
$
|
299
|
$
|
180
|
|||
Other
intangibles
|
23
|
33
|
|||||
Accumulated
other comprehensive income before income taxes
|
57
|
7
|
|||||
Net
amount recognized
|
$
|
379
|
$
|
220
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
107
|
108
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
NOTE
28
|
SUBSEQUENT
EVENTS
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
109
|
(millions
of Canadian dollars)
|
As
at October 31, 2005
|
||||||
Carrying
value of shares
|
|||||||
Canada
|
Head
office
|
owned
by the Bank
|
|||||
CT
Financial Assurance Company
|
Toronto, Canada |
$
|
122
|
||||
First
Nations Bank of Canada (89%)
|
Walpole Island, Canada |
8
|
|||||
Meloche
Monnex Inc.
|
Montreal, Canada |
924
|
|||||
Security
National Insurance Company
|
Montreal, Canada | ||||||
Primmum
Insurance Company
|
Toronto, Canada | ||||||
TD
Direct Insurance Inc.
|
Toronto, Canada | ||||||
TD
General Insurance Company
|
Toronto, Canada | ||||||
TD
Home
and Auto Insurance Company
|
Toronto, Canada | ||||||
TD
Asset Finance Corp.
|
Toronto, Canada |
132
|
|||||
TD
Asset Management Inc.
|
Toronto, Canada |
111
|
|||||
TD
Waterhouse Private Investment Counsel Inc.
|
Toronto, Canada | ||||||
TD
Capital Canadian Private Equity Partners Ltd.
|
Toronto, Canada | ||||||
TD
Capital Funds Management Ltd.
|
Toronto, Canada | ||||||
TD
Capital Group Limited
|
Toronto, Canada |
350
|
|||||
TD
Capital Trust
|
Toronto, Canada |
485
|
|||||
TD
Investment Services Inc.
|
Toronto, Canada |
8
|
|||||
TD
Life Insurance Company
|
Toronto, Canada |
26
|
|||||
TD
Mortgage Corporation
|
Toronto, Canada |
9,643
|
|||||
The
Canada Trust Company
|
Toronto, Canada | ||||||
Canada
Trustco International Limited
|
Bridgetown, Barbados | ||||||
TD
Waterhouse Bank N.V.
|
Amsterdam, The Netherlands | ||||||
Truscan
Property Corporation
|
Toronto, Canada | ||||||
TD
Pacific Mortgage Corporation
|
Toronto, Canada | ||||||
TD
Mortgage Investment Corporation
|
Calgary, Canada |
112
|
|||||
TD
Nordique Inc.
|
Vancouver, Canada |
421
|
|||||
TD
Parallel Private Equity Investors Ltd.
|
Toronto, Canada |
60
|
|||||
TD
Realty Limited
|
Toronto, Canada |
143
|
|||||
TD
Securities Inc.
|
Toronto, Canada |
524
|
|||||
TD
Timberlane Investments Limited
|
Vancouver, Canada |
2,065
|
|||||
TD
Redpath Investments Limited
|
Vancouver, Canada | ||||||
TD
Riverside Investments Limited
|
Vancouver, Canada | ||||||
TD
Waterhouse Canada Inc.
|
Toronto, Canada |
673
|
|||||
1390018
Ontario Limited
|
Toronto, Canada |
50
|
|||||
TD
Asset Management USA Inc.
|
Toronto, Canada |
3
|
110
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
(millions
of Canadian dollars)
|
As
at October 31, 2005
|
||||||
Carrying
value of shares
|
|||||||
United
States
|
Head
Office
|
owned
by the Bank
|
|||||
TD
Banknorth Inc. (55.4%)
|
Maine, U.S.A. |
$
|
4,890
|
||||
TD
Banknorth, National Association
|
Maine, U.S.A. | ||||||
Northgroup
Asset Management Company
|
Maine, U.S.A. | ||||||
TD
North America Limited Partnership
|
Delaware, U.S.A. |
628
|
|||||
TD
Waterhouse Bank, N.A.
|
New Jersey, U.S.A. |
778
|
|||||
TD
Waterhouse Group, Inc.
|
New York, U.S.A. |
3,642
|
|||||
National
Investor Services Corp.
|
New York, U.S.A. | ||||||
TD
Waterhouse Capital Markets, Inc.
|
New Jersey, U.S.A. | ||||||
TD
Waterhouse European Acquisition Corporation
|
New York, U.S.A. | ||||||
TD
Waterhouse Investor Services, Inc.
|
New York, U.S.A | ||||||
TD
Waterhouse Canadian Call Center Inc.
|
Toronto, Canada | ||||||
Toronto
Dominion Holdings (U.S.A.), Inc.
|
Houston, U.S.A. |
1,668
|
|||||
TD
Equity Options, Inc.
|
Chicago, U.S.A. | ||||||
Edge
Trading Systems LLC
|
Chicago, U.S.A. | ||||||
TD
Options LLC
|
Chicago, U.S.A. | ||||||
TD
Holdings II Inc.
|
Delaware, U.S.A. | ||||||
TD
Securities (USA) LLC
|
New York, U.S.A. | ||||||
TD
Professional Execution, Inc.
|
Chicago, U.S.A. | ||||||
Toronto
Dominion (Texas) LLC
|
Houston, U.S.A. | ||||||
TD
USA
Insurance, Inc.
|
New York, U.S.A. | ||||||
Toronto
Dominion Capital (U.S.A.), Inc.
|
New York, U.S.A. | ||||||
Toronto
Dominion Investments, Inc.
|
Houston, U.S.A. | ||||||
Toronto
Dominion (New York) LLC
|
New York, U.S.A. | ||||||
Other
International
|
|||||||
NatWest
Personal Financial Management Limited (50%)
|
London, England |
62
|
|||||
NatWest
Stockbrokers Limited
|
London, England | ||||||
TD
Financial International Ltd.
|
Hamilton, Bermuda |
4,366
|
|||||
TD
Reinsurance (Barbados) Inc.
|
St. Michael, Barbados | ||||||
TD
Haddington Services B.V.
|
Amsterdam, The Netherlands |
9
|
|||||
TD
Ireland
|
Dublin, Ireland |
952
|
|||||
TD
Global Finance
|
Dublin, Ireland | ||||||
TD
Securities (Japan) Inc.
|
St. Michael, Barbados |
55
|
|||||
TD
Waterhouse Investor Services (UK) Limited
|
Leeds, England |
14
|
|||||
TD
Waterhouse Investor Services (Europe) Limited
|
Leeds, England | ||||||
Toronto
Dominion Australia Limited
|
Sydney, Australia |
152
|
|||||
Toronto
Dominion International Inc.
|
St. Michael, Barbados |
661
|
|||||
Toronto
Dominion Investments B.V.
|
Amsterdam, The Netherlands |
1,277
|
|||||
TD
Bank
Europe Limited
|
London, England | ||||||
Toronto
Dominion Holdings (U.K.) Limited
|
London, England | ||||||
TD
Securities Limited
|
London, England | ||||||
Toronto
Dominion Jersey Holdings Limited
|
St. Helier, Jersey CI |
1,457
|
|||||
TD
Guernsey Services Limited
|
St. Peter Port, Guernsey CI | ||||||
TD
European Funding Limited (60.99%)
|
St. Peter Port, Guernsey CI | ||||||
Toronto
Dominion (South East Asia) Limited
|
Singapore, Singapore |
723
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Financial
Results
|
111
|
• |
We
have a strong, independent Chairman with a clear leadership
mandate in
corporate governance.
|
• |
The
Board oversees management and approves strategic plans
and major policy
decisions for TDBFG.
|
• |
The
Board is responsible for setting the tone for a culture
of integrity and
compliance throughout
TDBFG.
|
• |
The
Board, its committees, the committee Chairs and the
Chairman of the Board
operate under written charters setting out their
responsibilities.
|
• |
The
Board continuously renews itself with high calibre
candidates with diverse
skills and experience.
|
• |
The
Audit Committee of the Board, not management, is responsible
for the
relationship with the shareholders’
auditors.
|
• |
Read
our Chairman of the Board’s Message to Shareholders page
2.
|
• |
Go
to the Corporate Governance section of our web site
-www.td.com/governance
- there you will find, among other things, a summary
of significant
differences between our governance practices and those
required of U.S.
domestic issuers listed on the New York Stock
Exchange.
|
• |
Read
our Proxy Circular - in February 2006 it will be mailed
to shareholders
and be available on our web site.
|
• |
Attend
our Annual Meeting - March 30, 2006 in Vancouver, British
Columbia, Canada
- or watch the webcast through our web site -
www.td.com/investor.
|
• |
Manage
the affairs of the Board, including ensuring the Board
is organized
properly, functions effectively and meets its obligations
and
responsibilities.
|
• |
Facilitate
the functioning of the Board independently of management
and maintain and
enhance the quality of the Board’s governance and that of
TDBFG.
|
• |
Regular
interaction with the President and Chief Executive
Officer on governance
and performance issues including providing feedback
of other Board members
as well as acting as a ‘sounding board’ for the President and Chief
Executive Officer.
|
• |
Lead
a formal evaluation of the Chief Executive Officer’s performance at least
annually.
|
• |
In
conjunction with the Chief Executive Officer and Secretary,
develop and
approve the agendas for Board
meetings.
|
• |
Lead
the Board in the execution of its responsibilities
to
shareholders.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Statement
of Corporate Gover nance Practices
|
9
|
William
E. Bennett
|
Pierre
H. Lessard
|
Corporate
Director and Retired
|
President
and
Chief Executive Officer
|
President
and
|
METRO
INC.
|
Chief
Executive Officer
|
Montréal,
Québec
|
Draper
&
Kramer, Inc.
|
Harold
H. MacKay
|
Chicago,
Illinois
|
Counsel
|
Hugh
J. Bolton
|
MacPherson
Leslie & Tyerman LLP
|
Chair
of the
Board
|
Regina,
Saskatchewan
|
EPCOR
Utilities Inc.
|
Brian
F. MacNeill
|
Edmonton,
Alberta
|
Chairman
of
the Board
|
John
L. Bragg
|
Petro-Canada
|
Chairman,
President and
|
Calgary,
Alberta
|
Co-Chief
Executive Officer
|
Roger
Phillips
|
Oxford
Frozen
Foods Limited
|
Corporate
Director and Retired
|
Oxford,
Nova
Scotia
|
President
and
Chief Executive Officer
|
W.
Edmund Clark
|
IPSCO
Inc.
|
President
and
|
Regina,
Saskatchewan
|
Chief
Executive Officer
|
Wilbur
J. Prezzano
|
The
Toronto-Dominion Bank
|
Corporate
Director and
|
Toronto,
Ontario
|
Retired
Vice
Chairman
|
Marshall
A. Cohen
|
Eastman
Kodak
Company
|
Counsel
|
Charleston,
South Carolina
|
Cassels
Brock
& Blackwell LLP
|
William
R. Ryan
|
Toronto,
Ontario
|
Chairman,
President and
|
Wendy
K. Dobson
|
Chief
Executive Officer
|
Professor
and
Director
|
TD
Banknorth
|
Institute
for
International Business
|
Portland,
Maine
|
Joseph
L.
Rotman School of
|
Vice
Chair
and Group Head, U.S.
|
Management,
University of Toronto
|
Personal
and
Commercial Banking,
|
Toronto,
Ontario
|
The
Toronto-Dominion Bank
|
Darren
Entwistle
|
Toronto,
Ontario
|
President
and
|
Helen
K. Sinclair
|
Chief
Executive Officer
|
Chief
Executive Officer
|
TELUS
Corporation
|
BankWorks
Trading Inc.
|
Vancouver,
British Columbia
|
Toronto,
Ontario
|
Donna
M. Hayes
|
John
M. Thompson
|
Publisher
and
Chief Executive Officer
|
Chairman
of
the Board
|
Harlequin
Enterprises Limited
|
The
Toronto-Dominion Bank
|
Toronto,
Ontario
|
Toronto,
Ontario
|
Henry
H. Ketcham
|
|
Chairman
of
the Board, President
|
*as
of
December 1, 2005
|
and
Chief
Executive Officer
|
|
West
Fraser
Timber Co. Ltd.
|
|
Vancouver,
British Columbia
|
•
|
The
shareholders depend on the Board to get them the right
information.
|
•
|
The
Board must understand and approve where TDBFG is going,
be kept current on
its progress towards those objectives and be part of
and approve any major
decisions.
|
•
|
The
Board must be sure that the key roles have the right
people, that they are
monitored and evaluated by the Board and that they
are appropriately
compensated to encourage TDBFG’s long-term
success.
|
•
|
The
Board must be satisfied that the assets of TDBFG are
protected and that
there are sufficient internal checks and
balances.
|
•
|
To
excel in their duties, the Board needs to be functioning
properly as a
Board - strong members with the right skills and the
right
information.
|
• |
Meet
the highest ethical and fiduciary
standards;
|
• |
Demonstrate
independence from management;
|
• |
Be
knowledgeable and inquisitive about the issues facing
TDBFG;
|
• |
Apply
good sense and sound judgment to help make wise decisions;
and
|
• |
Display
commitment through attendance at, preparation for and
participation in
meetings.
|
• |
The
director’s record of attendance.
|
• |
Whether
the director has had a material change in his or her
circumstances, such
as a change of principal occupation, in which case
the director must
resign (the Board will decide to accept or reject the
director’s
resignation).
|
• |
Other
significant changes in the ability of a director to
contribute to the
Board.
|
10
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Statement
of Corporate Gover nance
Practices
|
COMMITTEE
|
MEMBERS*
|
KEY
RESPONSIBILITIES
|
||
Corporate
Governance
Committee
|
John
M. Thompson
(Chair)
Wendy
K. Dobson
Darren
Entwistle
Harold
H. MacKay
Brian
F. MacNeill
|
Responsibility
for corporate governance of TDBFG:
• Set
the criteria for selecting new directors and the Board’s approach to
director independence;
• Identify
individuals qualified to become Board members and recommend
to the Board
the director
nominees for the next annual
meeting of shareholders; • Develop
and recommend to the Board a set of corporate governance
principles aimed
at fostering
a healthy governance culture
at TDBFG; • Review
and recommend the compensation of the directors of
TDBFG;
• Satisfy
itself that TDBFG communicates effectively with its
shareholders, other
interested parties and
the public through a responsive
communication policy; • Oversee
the evaluation of the Board and committees.
|
||
Management
Resources
Committee
|
Brian
F. MacNeill
(Chair)
Marshall
A. Cohen
Pierre
H. Lessard
Wilbur
J. Prezzano
Helen
K. Sinclair
John
M. Thompson
|
Responsibility
for management’s performance evaluation,
compensation
and succession planning:
• Discharge,
and assist the Board in discharging, the responsibility
of the Board
relating to executive compensation as set out in this
Committee’s charter; • Set
performance objectives for the CEO, which encourage
TDBFG’s long-term
financial success and regularly measure the CEO’s
performance against these objectives; • Determine
the recommended compensation for the CEO and certain
executive officers in
consultation with independent advisors who
help us set competitive compensation for the CEO that meets TDBFG’s hiring, retention and performance objectives; • Review
candidates for CEO and recommend the best candidate
to the Board as part
of the succession planning process for the
position of CEO; • Oversee
the selection, evaluation, development and compensation
of other members
of senior management;
• Produce
a report on executive compensation for the benefit
of shareholders, which
is published in TDBFG’s annual proxy circular and
review, as appropriate, any other major public disclosures concerning executive compensation. |
||
Risk
Committee
|
Roger
Phillips
(Chair)
William
E. Bennett
Hugh
J. Bolton
Marshall
A. Cohen
Harold
H. MacKay
Wilbur
J. Prezzano
|
Supervising
the management of risk of TDBFG:
• Identify
and monitor the key risks of TDBFG and evaluate their
management;
• Approve
risk management policies that establish the appropriate
approval levels
for decisions and other checks and balances to
manage risk; • Satisfy
itself that policies are in place to manage the risks
to which TDBFG is
exposed, including market, operational, liquidity,
credit,
regulatory and reputational risk; • Provide
a forum for “big-picture” analysis of future risks including considering
trends;
• Critically
assess TDBFG’s business strategies and plans from a risk
perspective
|
||
Audit
Committee
|
Hugh
J. Bolton
(Chair)
William
E. Bennett
John
L. Bragg
Donna
M. Hayes
Henry
H. Ketcham
Helen
K. Sinclair
|
Supervising
the quality and integrity of TDBFG’s financial
reporting:
• Oversee
reliable, accurate and clear financial reporting to
shareholders;
• Oversee
internal controls - the necessary checks and balances
must be in
place;
• Be
directly responsible for the selection, compensation,
retention and
oversight of the work of the shareholders’ auditors - the
shareholders’ auditors report directly to this Committee; • Listen
to the shareholders’ auditors and internal auditor and the chief
compliance officer, and evaluate the effectiveness
and
independence of each; • Oversee
the establishment and maintenance of processes that
ensure TDBFG is in
compliance with the laws and regulations that
apply to it as well as its own policies; • Act
as the Audit Committee and Conduct Review Committee
for certain
subsidiaries of TDBFG that are federally-regulated
financial
institutions and insurance companies; • Receive
reports on and approve, if appropriate, transactions
with related
parties.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Statement
of Corporate Gover nance Practices
|
11
|
• |
The
Board and its committees may, at their election, meet
independently of
management at any time.
|
• |
The
Board and its committees have the authority to engage
their own
independent advisors.
|
• |
The
non-management directors annually appoint a strong,
independent Chairman
of the Board with a clear mandate to provide leadership
for the
independent directors.
|
• |
There
is a policy requiring all directors to acquire, over
a set period of time,
common shares of the Bank with a value equivalent to
at least six times
their respective annual retainer.
|
• |
The
Board Charter requires, among other things, the provision
of high-quality
information for directors - a comprehensive educational
session for new
directors (also serving as a refresher for current
directors), periodic
educational presentations on topics of importance to
particular committees
and the Board as a whole, access to management, and
sufficient time to
review material in advance of
meetings.
|
12
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 Statement
of Corporate Gover nance
Practices
|
W.
Edmund Clark
Toronto
President and
Chief
Executive Officer
|
Bharat
B. Masrani
Toronto
Vice
Chair
and
Chief Risk Officer
|
Fredric
J. Tomczyk
Toronto
Vice
Chair
Corporate
Operations
|
Theresa
L. Currie1
Oakville
Executive
Vice President
Human
Resources
|
Colleen
M. Johnston1
Toronto
Executive
Vice President
and
Chief Financial Officer
|
Daniel
A. Marinangeli
Toronto
Executive
Vice President
Corporate
Development
|
Christopher
A.
Montague
Oakville
Executive
Vice President
and
General Counsel
|
Corporate Office Senior Vice Presidents: | |||||
Riaz
Ahmed
Oakville
Corporate
Development
Robert
M. Aziz1
Oakville
Legal
Mark
R. Chauvin
Burlington
Credit
Risk Management
Barbara
I. Cromb
Toronto
Corporate
Development
|
John
T. Davies
Mississauga
Enterprise
Technology
Solutions
D.
Suzanne Deuel
Toronto
Operational
Risk and
Insurance
Management
Donald
E. Drummond
Toronto
TD
Economics
|
David
M. Fisher
Burlington
Office
of the Ombudsman
William
R. Gazzard1
Toronto
Compliance
Phillip
D. Ginn
Richmond
Hill
Computing
Services
Paul
W. Huyer
Toronto
Finance
|
Alan
J. Jette
Toronto
Treasury
and Balance
Sheet
Management
Nico
Meijer
Toronto
Global
Risk
Management
Strategy
Dominic
J. Mercuri
Burlington
Chief
Marketing Officer
|
David
W. McCaw
Oakville
Human
Resources
Kerry
A. Peacock
Toronto
Corporate
and Public
Affairs
S.
Kenneth Pustai
Ancaster
Human
Resources
|
Chakravarthi
Raghunathan1
Hoboken,
New Jersey
Trading
Risk
J.
David Sloan
Toronto
Audit
Steven
L. Tennyson
Toronto
Chief
Information Officer
Alan
E. Wheable
Oakville
Taxation
|
Bernard
T. Dorval
Toronto
Group
Head
Business
Banking and
Insurance
Co-Chair
TD
Canada Trust
|
Timothy
D. Hockey
Mississauga
Group
Head
Personal
Banking
Co-Chair
TD
Canada Trust
|
Paul
C. Douglas
Burlington
Executive
Vice President
Commercial
Banking
|
Brian
J. Haier
Toronto
Executive
Vice President
Retail
Distribution
|
Alain
P. Thibault
Outremont
Executive
Vice President
Property
and Casualty
Insurance
and Chief
Executive
Officer
TD
Meloche Monnex Inc.
|
Cathy
L. Backman
Toronto
e.Bank
Joan
D. Beckett
Toronto
Greater
Toronto Area
Suburban
Region
Retail
Distribution
John
A. Capozzolo
Toronto
Retail
Sales & Service
Retail
Distribution
Paul
M. Clark
Toronto
Small
Business Banking
and
Merchant Services
|
James
E. Coccimiglio
Pickering
Greater
Toronto Area
Commercial
Banking
Susan
A. Cummings1
Richmond
Hill
Human
Resources
Alan
H. Desnoyers
Kirkland
Quebec
District
Commercial
Banking
Alexandra
P.
Dousmanis-Curtis
London
Ontario
South
West
Region
Retail
Distribution
|
Lisa
A. Driscoll-Biggs
Bedford
Atlantic
Region
Retail
Distribution
Christopher
D. Dyrda
Calgary
Western
District
Commercial
Banking
Charles
A. Hounsell
Oakville
Ontario
Central Region
Retail
Distribution
Sean
E. Kilburn
Toronto
TD
Life Group
Christine
Marchildon1
Pointe
Claire
Québec
Region
Retail
Distribution
|
Margo
M. McConvey
Mississauga
Core
Banking and Term
Products
Damian
J. McNamee
Pickering
Finance
Ronald
J. McInnis
Manotick
Ontario
North and East
Region
Retail
Distribution
David
I. Morton
Oakville
Sales
and Service
Commercial
Banking
Dwight
P. O’Neill
Toronto
Chief
Risk Officer
Personal
Banking
|
Suzanne
E. Poole
Vancouver
Pacific
Region
Retail
Distribution
Lisa
A. Reikman
Toronto
Commercial
National
Accounts
Heather
D. Ross1
Toronto
Retail
Transformation
Bruce
M. Shirreff
Toronto
Real
Estate Secured
Lending
and Credit
Administration
R.
Iain Strump
Calgary
Prairie
Region
Retail
Distribution
|
Ian
B. Struthers
Toronto
Ontario
District
Commercial
Banking
Paul
I.Verwymeren
Burlington
Commercial
Credit Risk
Management
Paul
J. Vessey1
Toronto
VISA
and Unsecured
Lending
Products
M.
Suellen Wiles
Mississauga
Greater
Toronto Area
Central
Region
Retail
Distribution
|
118
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 More About
Us
|
William
J. Ryan1
Falmouth,
Maine
Group
Head
US
Personal and
Commerical
Banking
Chairman,
Chief Executive
Officer
and President
TD
Banknorth and
Vice
Chair
TD
Bank Financial Group
|
Peter
J.Verrill1
Falmouth,
Maine
Senior
Executive Vice
President
and Chief
Operating
Officer
TD
Banknorth
|
WHOLESALE
BANKING
|
INVESTMENT
MANAGEMENT
|
||||
Robert
E. Dorrance
Toronto
Group
Head
Wholesale
Banking
Chairman
and Chief
Executive
Officer
TD
Securities and
Vice
Chair
TD
Bank Financial Group
|
Michael
W. MacBain
Toronto
Executive
Vice President
and
President
TD
Securities
|
Robert
F. MacLellan
Toronto
Executive
Vice President
and
Chief Investment
Officer
|
Wholesale
Banking Senior Vice Presidents:
|
Investment
Management Senior Vice Presidents:
|
||||
Sinan
Akdeniz
Mississauga
Operations
Rod
F. Ashtaryeh
New
York, New York
U.S.
Media
Communications
Warren
W. Bell
Oakville
Human
Resources
|
John
F. Coombs
Toronto
Credit
Management
Martine
M. Irman
Toronto
Global
Foreign Exchange
and
Money Markets
Paul
N. Langill
Toronto
Finance
|
Jason
A. Marks
Toronto
Energy
Trading and
International
Proprietary
Equity
Trading
Patrick
B. Meneley
Toronto
Investment
Banking
|
Brendan
O’Halloran
New
Canaan
Connecticut
TD
Securities USA
Robbie
J. Pryde
Toronto
Institutional
Equities
|
Barbara
F. Palk
Toronto
TD
Asset Management
John
R. Pepperell
Toronto
TD
Asset Management
|
Satish
C. Rai
Pickering
TD
Asset Management
|
WEALTH
MANAGEMENT
|
WEALTH
MANAGEMENT - USA
|
||||
William
H. Hatanaka1
Toronto
Group
Head
Chairman
and
Chief
Executive Officer
TD
Waterhouse Canada
|
Michael
A. Foulkes
Leeds,
United Kingdom
Executive
Vice President
TD
U.K. Brokerage
|
John
G. See
Oakville
Executive
Vice President
Discount
Brokerage and
Financial
Planning
|
T.
Christian Armstrong
New
York, New York
Executive
Vice President
and
Acting President
TD
Waterhouse USA
|
Diane
E. Walker
New
York, New York
Executive
Vice President
and
Chief Administrative
Officer
TD
Waterhouse USA
|
Wealth
Management Senior Vice Presidents:
|
Wealth
Management - USA Senior Vice Presidents:
|
||||
William
R. Fulton1
Toronto
Private
Client Services
Robert
A. Hamilton
Edinburgh,
Scotland
NatWest
Stockbrokers
|
Gerard
J. O’Mahoney
Oakville
TD
Waterhouse
Operations
David
P. Pickett1
Toronto
Practice
Management
|
Timothy
P.
Pinnington
Toronto
TD
Mutual Funds
Michael
E. Reilly1
Oakville
TD
Waterhouse
Investment
Advice
|
Rudy
J. Sankovic1
Pickering
Finance
Kevin
J. Whyte1
Oakville
Technology
Solutions
|
J.
Thomas Bradley Jr.
Essex
Fells, New Jersey
Institutional
Services
TD
Waterhouse USA
Janet
M. Hawkins
New
York, New York
Marketing
TD
Waterhouse USA
|
Richard
J. Rzasa
Hoboken,
New Jersey
Technology
Solutions
TD
Waterhouse USA
|
All
of the senior officers listed have held management
or senior management
positions with the Bank for the past five years. The
list of senior
officers above includes their municipality of residence.
The listing is as
of December 1, 2005.
|
1 |
These
senior
officers have not been with the Bank for the past
five years. Each has
previously held management or senior management positions
with another
financial institution, investment counsellor, public
relations firm,
information technology company, government regulator
or law firm during
the past five years.
|
Andrea
Rosen, Vice Chair TD Bank Financial Group, currently
on leave of
absence.
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 More About
Us
|
119
|
• |
Involved
in our communities: TDBFG
donated over $27.5 million to charities and community
causes last year,
with an emphasis on three key areas: children’s health; education and
literacy; and the environment. Our employees volunteered
countless hours
and raised money through fundraising events to benefit
the well-being of
others.
|
• |
Making
diversity a business priority: Implementing
an enhanced strategy on diversity was a key business
priority. Management
structures were put in place, steps were taken to make
our workplace more
inclusive and accommodating, and through participation
in external
programs like The Mentoring Partnership and Passages
to Canada we
supported diversity initiatives in the
community.
|
• |
Respecting
the environment: We
continued to incorporate sound environmental management
processes in our
operations and supported over 900 community-based initiatives
through the
TD Friends of the Environment
Foundation.
|
• |
Developing
and recognizing our people: To
support our employees, we launched a number of initiatives
including new
career planning resources and a recognition and rewards
program linked to
TDBFG’s Guiding Principles.
|
• |
Ensuring
customer protection and accessibility: Maintaining and improving
the accessibility, security, and safety of our facilities
and services
remained an ongoing focus in
2005.
|
OUR
GUIDING PRINCIPLES:
|
||
Be
customer driven
|
||
Respect
each other
|
||
Execute
with excellence
|
||
Know
our business
|
||
Enhance
our brand
|
||
Increase
shareholder value
|
||
OUR
LEADERSHIP PRINCIPLES:
|
||
Make
an impact
|
||
Build
for the future
|
||
Inspire
the will to win
|
||
Work
effectively in teams
|
||
Live
transparency
|
||
Show
excellent judgment
|
||
Demonstrate
integrity
|
120
|
TD
BANK FINANCIAL GROUP ANNUAL REPORT 2005 More About
Us
|
/s/
Ernst &
Young LLP
|
|
/s/
PricewaterhouseCoopers LLP
|
Chartered
Accountants
|
|
Chartered
Accountants
|
Toronto,
Canada
December 12,
2005
|
|
1.
|
I
have reviewed this annual report on Form 40-F of The
Toronto-Dominion
Bank;
|
2.
|
Based
on my knowledge, this report does not contain any untrue
statement of a
material fact or omit to state a material fact necessary
to make the
statements made, in light of the circumstances under
which such statements
were made, not misleading with respect to the period
covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other
financial information
included in this report, fairly present in all material
respects the
financial condition, results of operations and cash flows
of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and
procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the registrant
and have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such
disclosure
controls and procedures to be designed under our supervision,
to ensure
that material information relating to the registrant,
including its
consolidated subsidiaries, is made known to us by others
within those
entities, particularly during the period in which this
report is being
prepared;
|
b)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the
effectiveness of
the disclosure controls and procedures, as of the end
of the period
covered by this report based on such evaluation;
and
|
c)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the period covered
by the annual
report that has materially affected, or is reasonably
likely to materially
affect, the registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial
reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
All
significant deficiencies and material weaknesses in the
design or
operation of internal control over financial reporting
which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
Any
fraud, whether or not material, that involves management
or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
|
December
12, 2005
|
/s/
W. EDMUND CLARK
|
|
Name:
|
W.
Edmund Clark
|
Title:
|
President
and Chief Executive Officer
|
2.
|
Based
on my knowledge, this report does not contain any untrue
statement of a
material fact or omit to state a material fact necessary
to make the
statements made, in light of the circumstances under
which such statements
were made, not misleading with respect to the period
covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other
financial information
included in this report, fairly present in all material
respects the
financial condition, results of operations and cash flows
of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and
procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the registrant
and have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such
disclosure
controls and procedures to be designed under our supervision,
to ensure
that material information relating to the registrant,
including its
consolidated subsidiaries, is made known to us by others
within those
entities, particularly during the period in which this
report is being
prepared;
|
b)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the
effectiveness of
the disclosure controls and procedures, as of the end
of the period
covered by this report based on such evaluation;
and
|
c)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the period covered
by the annual
report that has materially affected, or is reasonably
likely to materially
affect, the registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial
reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
All
significant deficiencies and material weaknesses in the
design or
operation of internal control over financial reporting
which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
Any
fraud, whether or not material, that involves management
or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
|
December
12, 2005
|
/s/
COLLEEN JOHNSTON
|
|
Name:
|
Colleen
Johnston
|
Title:
|
Executive
Vice President and Chief Financial
Officer
|
1.
|
The
Report fully complies with the requirements of Section
13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
2.
|
The
information contained in the Report fairly presents,
in all material
respects, the financial condition and results of operations
of the
Bank.
|
Date:
|
December
12, 2005
|
/s/
W. EDMUND CLARK
|
|
Name:
|
W.
Edmund Clark
|
Title:
|
President
and Chief Executive Officer
|
1.
|
The
Report fully complies with the requirements of Section
13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
2.
|
The
information contained in the Report fairly presents,
in all material
respects, the financial condition and results of operations
of the
Bank.
|
Date:
|
December
12, 2005
|
/s/
COLLEEN JOHNSTON
|
|
Name:
|
Colleen
Johnston
|
Title:
|
Executive
Vice President and Chief Financial
Officer
|