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Looking Forward
2013 Annual Report

Table of contents

  • Page 1
    Looking Forward 2013 Annual Report

  • Page 2
    ... Indicators Group President and CEO's Message Chairman of the Board's Message MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL RESULTS Consolidated Financial Statements Notes to Consolidated Financial Statements Principal Subsidiaries Ten-Year Statistical Review Glossary Shareholder and Investor...

  • Page 3
    ... of total assets at Oct. 31, 2013 DIVIDENDS PER SHARE (Canadian dollars) TOTAL SHAREHOLDER RETURN (5-year CAGR) TD'S PREMIUM RETAIL EARNINGS MIX $3.5 3.0 2.5 9% 2.0 1.5 15.2% 09 10 11 12 13 1.0 TD's premium earnings mix is built on a North American retail focus - a lower-risk business...

  • Page 4
    ... Financial positions at year-end (billions) Total assets Total deposits Total loans net of allowance for loan losses Per common share (Canadian dollars) Diluted earnings - reported Diluted earnings - adjusted Dividend payout ratio - adjusted Total shareholder return (1 year) Closing market price...

  • Page 5
    ... compensation - Investing in training and development • • Employee engagement score was 4.17 in fall 2013 vs. 4.16 in fall 2012 • See TD's 2013 Corporate Responsibility Report available April 2014 COMMUNITY • Donate minimum of 1% of domestic pre-tax profits (five-year average) to...

  • Page 6
    ... of our common shares. TD's share price has increased 170% since the last stock split in 1999. THE BETTER BANK IN 2013 AND BEYOND TD's diverse mix of revenue streams enabled us to weather a bumpy operating environment this year, and our business model enabled us to continue to invest for the future...

  • Page 7
    Chairman of the Board's Message While 2013 presented a challenging environment, TD continued to deliver on its vision to be The Better Bank, thanks to strong leadership, a sound business model and a dedicated team of employees. TD reported strong results in Canadian retail banking and Wealth in 2013...

  • Page 8
    ... to the Board as part of the succession planning process for the position of CEO and periodically review TD's organization structure for alignment with business objectives and succession planning requirements; • Oversee the selection, evaluation, development and compensation of other members of...

  • Page 9
    ... 2012 FINANCIAL RESULTS OVERVIEW Summary of 2012 Performance 2012 Financial Performance by Business Line 8 12 13 17 19 20 22 25 28 32 35 38 39 40 GROUP FINANCIAL CONDITION Balance Sheet Review Credit Portfolio Quality Capital Position Securitization and Off-Balance Sheet Arrangements Related-Party...

  • Page 10
    ... billion in assets on October 31, 2013. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges. HOW THE BANK REPORTS The Bank prepares its Consolidated Financial Statements in accordance with IFRS, the current generally accepted accounting principles (GAAP...

  • Page 11
    ... to U.S. Personal and Commercial Banking acquisitions10 Fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses11 Integration charges, direct transaction costs, and changes in fair value of contingent consideration relating to the Chrysler Financial...

  • Page 12
    ... of note. This represents the impact of changes in the income tax statutory rate on net deferred income tax balances. In the third quarter of 2013, the Bank recorded a provision for credit losses of $65 million ($48 million after tax) for residential loan losses from Alberta flooding. In the fourth...

  • Page 13
    ... acquisition the Bank recorded the credit card receivables acquired at their fair value of $5.7 billion and intangible assets totalling $98 million. The gross amount of revenue and credit losses have been recorded on the Consolidated Statement of Income since that date. Target Corporation shares in...

  • Page 14
    ... Banking earnings and the Bank's share of earnings from TD Ameritrade are impacted by ï¬,uctuations in the U.S. dollar to Canadian dollar exchange rate compared with last year. Depreciation of the Canadian dollar had a favourable impact on consolidated earnings for the year ended October 31, 2013...

  • Page 15
    ...1 Effective 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts have been reclassified to conform with the current period presentation. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION...

  • Page 16
    ... personal Canada U.S. Credit card Canada U.S. Business and government4 Canada U.S. International Total interest-earning assets Interest-bearing liabilities Deposits Personal Canada U.S. Banks Canada U.S. Business and government5, 6 Canada U.S. Subordinated notes and debentures Obligations related...

  • Page 17
    ... personal Canada U.S. Credit card Canada U.S. Business and government3 Canada U.S. International Total interest-earning assets Interest-bearing liabilities Deposits Personal Canada U.S. Banks Canada U.S. Business and government4, 5 Canada U.S. Subordinated notes and debentures Obligations related...

  • Page 18
    ... 10 TRADING-RELATED INCOME 2013 2012 2011 (millions of Canadian dollars) Net interest income Trading income (loss) Financial instruments designated at fair value through profit or loss1 Total trading-related income (loss) By product Interest rate and credit portfolios Foreign exchange portfolios...

  • Page 19
    ... 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts, including certain ratios, have been recast to conform with the current period presentation. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 20
    ... 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts, including certain ratios, have been recast to conform with the current period presentation. 18 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 21
    ...relating to U.S. Personal and Commercial Banking acquisitions Fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses Integration charges, direct transaction costs, and changes in fair value of contingent consideration relating to the Chrysler Financial...

  • Page 22
    ... gains and capital market activity. The Bank's earnings have seasonal impacts, principally the second quarter being affected by fewer business days. The Bank's earnings are also impacted by market-driven events and changes in foreign exchange rates. 20 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 23
    ... of Canadian dollars, except as noted) Net interest income Non-interest income1 Total revenue Provision for credit losses Insurance claims and related expenses1 Non-interest expenses Provision for (recovery of) income taxes Equity in net income of an investment in associate, net of income taxes Net...

  • Page 24
    ... large Canadian businesses by offering a broad range of customized products and services to help business owners meet their financing, investment, cash management, international trade, and day-to-day banking needs. TD Auto Finance provides ï¬,exible financing options to customers at point-of-sale...

  • Page 25
    ... 2013 2012 U.S. Personal and Commercial Banking 2013 2012 2013 Wholesale Banking 2012 2013 (millions of Canadian dollars) Corporate 2012 2013 Total 2012 Net interest income (loss) $ 8,345 Non-interest income (loss)1 2,695 Provision for (reversal of) credit losses 929 Insurance claims and related...

  • Page 26
    ... this environment, the Bank of Canada is expected to keep short-term interest rates at current levels until mid-2015, at which time a gradual increase is likely to occur. After a challenging 2012, the Canadian export sector has been improving. A more notable increase is expected next year alongside...

  • Page 27
    ... Canadian Personal and Commercial Banking comprises the Bank's personal and business banking businesses in Canada, TD Auto Finance Canada and Canadian credit cards. Canadian Personal and Commercial Banking provides a full range of financial products and services to nearly 14 million customers...

  • Page 28
    ...#2 positions in deposit and loan market share. • Continued to focus on customer service and convenience by investing in mobile and online banking, and opening 19 new branches in 2013. • TD is the most visited banking website in Canada. TD holds the #1 position in the number of online banking and...

  • Page 29
    ... channels. Our commitment to invest across businesses positions us well for growth over the long term. We expect earnings growth to moderate in 2014 as credit loss rates stabilize. We expect the retail loan growth rate to generally be in line with current year levels. Business lending is expected to...

  • Page 30
    ... and the placing of trades on behalf of the clients (where the client has made their own investment selection). Excludes the Bank's investment in TD Ameritrade. Certain revenue lines are presented net of internal transfers. Effective 2013, Insurance revenue and Insurance claims and related expenses...

  • Page 31
    ...Life and Health insurance provider offering a range of affordable and simple insurance solutions, and through TD Canada Trust branches, offers bank authorized credit protection products as part of the lending process, and travel insurance. OVERALL BUSINESS STRATEGY Wealth • Global Direct Investing...

  • Page 32
    ...the sale of the U.S. Insurance business. The efficiency ratio for the year was 40.7%, relatively ï¬,at compared with last year. TD AMERITRADE HOLDING CORPORATION Refer to Note 11 of the Consolidated Financial Statements for further information on TD Ameritrade. 30 TD BANK GROUP ANNUAL REPORT 2013...

  • Page 33
    ...insurer in Canada and the national leader in the affinity market offering home and auto insurance to members of affinity groups such as professional associations, universities and employer groups, and other clients, through direct channels. • TD's life and health Insurance business offers credit...

  • Page 34
    ... brand name, TD Bank, America's Most Convenient Bank, U.S. Personal and Commercial Banking offers a full range of banking services to nearly 8 million customers including individuals, businesses, and governments. $1,527 Reported $1,627 Adjusted 63.8% Reported (percent) 62.1% Adjusted NET INCOME...

  • Page 35
    .... Return on invested capital, which was used as the return measure in prior periods, has not been restated to return on common equity. Margin on average earning assets exclude the impact related to the TD Ameritrade insured deposit accounts (IDA). TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 36
    ...products and loan products, including long term business mortgages, lines of credit, credit cards, and small business loans. The Small Business Banking group continues to be among the top ranked small business lenders in most of our markets. Merchant Services offer point-of-sale settlement solutions...

  • Page 37
    ... 13 TA B L E 22 REVENUE 2013 2012 2011 (millions of Canadian dollars) Investment banking and capital markets Corporate banking Equity investments Total $ 1,854 479 74 $ 2,407 $ 1,987 448 219 $ 2,654 $ 1,724 453 319 $ 2,496 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS...

  • Page 38
    ... to its business segments to align with the common equity capital requirements under Basel III inclusive of CVA capital at a 7% Common Equity Tier 1 rate. Prior to 2012, return on invested capital was used as the return measure. 36 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND...

  • Page 39
    .... Corporate Banking • Corporate banking revenue which includes corporate lending, trade finance and cash management services increased over last year driven by higher fee revenue and solid loan volumes. Equity Investments • The equity investment portfolio, which we are in the process of...

  • Page 40
    ...fied available-for-sale securities portfolio Fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses Integration charges, direct transaction costs, and changes in fair value of contingent consideration relating to the Chrysler Financial acquisition...

  • Page 41
    ... dividend income from taxable Canadian corporations. The Bank reports its investment in TD Ameritrade using the equity method of accounting. TD Ameritrade's tax expense of $131 million in the year, compared to $148 million in 2011, was not part of the Bank's tax rate reconciliation. BALANCE SHEET...

  • Page 42
    ... common share issuances through the dividend reinvestment plan and the exercise of stock options. 2012 FINANCIAL RESULTS OVERVIEW 2012 Financial Performance by Business Line Canadian Personal and Commercial Banking reported net income for the year of $3,304 million, an increase of $253 million, or...

  • Page 43
    ... core businesses, partially offset by reduced securities gains in the investment portfolio. The return on common equity for the year was 21.2%. Wholesale Banking revenue is derived primarily from capital markets services and corporate lending. Revenue for the year was $2,654 million, an increase of...

  • Page 44
    ... earnings. TA B L E 26 SELECTED CONSOLIDATED BALANCE SHEET ITEMS As at October 31 October 31 2013 2012 (millions of Canadian dollars) Interest-bearing deposits with banks Available-for-sale securities Held-to-maturity securities Loans (net of allowance for loan losses) Trading deposits Deposits...

  • Page 45
    ... 33 to the Consolidated Financial Statements. CONCENTRATION OF CREDIT RISK The Bank's loan portfolio continued to be dominated by Canadian and U.S. residential mortgages, consumer instalment and other personal loans, and credit cards, representing 72% of total loans net of counterparty-specific and...

  • Page 46
    ... geographic location of the customer's address. Certain comparative amounts have been reclassified to conform with the presentation adopted in the current period. Includes all FDIC covered loans and other acquired credit-impaired loans. 44 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION...

  • Page 47
    ... 6,377 19,434 $ 36,409 $ 387 539 1,140 3,738 5,070 5,982 17,409 $ 34,265 $ 425 624 1,258 3,951 5,046 5,792 16,074 $ 33,170 $ Personal loans used for business purposes are not included in these totals. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS 45

  • Page 48
    ... loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans designated at fair value through profit or loss for which no allowance is recorded. Percentage based on outstanding balance. 46 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION...

  • Page 49
    ... loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans designated at fair value through profit or loss for which no allowance is recorded. Based on house price at origination. 5 Home equity lines of credit loan-to-value includes first position...

  • Page 50
    ... 2013 Consolidated Financial Statements. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS 4 5 Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year. Does not include trading loans with a fair value of $10,219 million...

  • Page 51
    ...ficant loans, such as the Bank's personal and small business banking loans and credit cards, are collectively assessed for impairment. Allowances are calculated using a formula that incorporates recent loss experience, historical default rates, and the type of collateral pledged. During 2013, the...

  • Page 52
    ..., to a level that management considers adequate to absorb incurred credit-related losses in the Bank's loan portfolio. Provisions in the year are reduced by any recoveries in the year. The Bank recorded a total provision for credit losses of $1,631 million in 2013, compared with a total provision of...

  • Page 53
    ...personal HELOC Indirect Auto Other Credit card Total personal Real estate Residential Non-residential Total real estate Agriculture Automotive Financial Food, beverage, and tobacco Forestry Government, public sector entities, and education Health and social services Industrial construction and trade...

  • Page 54
    ...fined as the annual PCL divided by the average month-end loan balance, was approximately 3.38% on an annual basis (October 31, 2012 - 3.57%). The portfolio continues to perform as expected. These loans are recorded at amortized cost. 52 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND...

  • Page 55
    ... Total Net Exposure by Country and Counterparty As at Loans and Commitments1 Derivatives, Repos and Securities Lending2 Financial Trading and Investment Portfolio3,4 Financial Total Sovereign Financial Total Corporate Sovereign Total Corporate Sovereign Total Exposure5 (millions of Canadian dollars...

  • Page 56
    ... interest-bearing deposits with banks, funded loans and banker's acceptances. Includes undrawn commitments and letters of credit. Of the Bank's European exposure, approximately 98% (October 31, 2012 - 97%) is to counterparties in countries rated AAA/AA+ by either Moody's Investor Services (Moody...

  • Page 57
    ... owed net of charge-offs since acquisition of the loan. Other includes the ACI loan portfolios of Chrysler Financial and the credit card portfolios of MBNA Canada and Target. During the year ended October 31, 2013, the Bank recorded $49 million of provision for credit losses on ACI loans (2012...

  • Page 58
    ... in a net gain on sale of US$106 million reported in Other income on the Bank's Consolidated Statement of Income. During the second quarter of 2009, the Bank re-securitized a portion of the non-agency CMO portfolio. As part of the on-balance sheet re-securitization, new credit ratings were obtained...

  • Page 59
    ...to changes in own credit risk on fair valued liabilities Defined benefit pension fund net assets (net of related tax liability) Investment in own shares Significant investments in the common stock of banking, financial and insurance entities that are outside the scope of regulatory consolidation...

  • Page 60
    ..., the Bank's investment in TD Ameritrade was translated using the period-end foreign exchange rate of the Bank. 5 6 When expected loss as calculated within the Internal Risk Based (IRB) approach exceeds total allowance for credit losses, the difference is deducted 50% from Tier 1 capital and 50...

  • Page 61
    ... of both riskbased capital required to fund losses that could occur under extremely adverse economic or operational conditions and investment capital that has been used to fund acquisitions or investments in fixed assets to support future earnings growth. The Bank uses internal models to determine...

  • Page 62
    ... the Bank Act (Canada) and the requirements of OSFI. See Note 21 to the Consolidated Financial Statements for further details on dividend restrictions. CAPITAL RATIOS Capital ratios are measures of financial strength and ï¬,exibility. The Bank's capital ratios are calculated using OSFI's guidelines...

  • Page 63
    ...credit risk related to asset value correlation for financial institutions to be added, all of which increased RWA from Basel II. (billions of Canadian dollars) RWA, balance as at July 31, 2013 Movement in risk levels Model updates Methodology and policy Acquisitions and disposals Foreign exchange...

  • Page 64
    ... Rate Risk in the Banking Book), additional credit risk due to concentration (commercial and wholesale portfolios), and risks classified as "Other, " namely business risk, insurance risk, and the Bank's investment in TD Ameritrade. Economic capital is also assessed at a higher confidence level...

  • Page 65
    ... by making them more risk sensitive and limiting over reliance on rating agencies. The proposal would generally increase the risk weights of investments in securitization exposures. In June 2013, the BCBS issued an update to the Basel III leverage ratio framework and related disclosure requirements...

  • Page 66
    .... See Note 2 to the Consolidated Financial Statements for further information regarding the accounting for SPEs. Securitization of Bank-Originated Assets The Bank securitizes residential mortgages, business and government loans, personal loans, automobile loans, and credit card loans to enhance its...

  • Page 67
    ... weighted-average life of the assets for amortizing pools. As at October 31, 2013, the Bank held $1,717 million of ABCP issued by Bank-sponsored multi-seller conduits within the Available-for-sale securities and Trading loans, securities, and other categories on its Consolidated Balance Sheet...

  • Page 68
    ... of Canadian dollars) Personal loans, including mortgages Business loans Total 3 181 $ 184 $ 6 201 $ 207 $ In addition, the Bank offers deferred share and other plans to nonemployee directors, executives, and certain other key employees. See Note 25 to the Consolidated Financial Statements for...

  • Page 69
    ...countries. As a result, the Bank's earnings are significantly affected by the general business and economic conditions in these regions. These conditions include short-term and long-term interest rates, inï¬,ation, ï¬,uctuations in the debt and capital markets, real estate prices, employment levels...

  • Page 70
    ...has project teams in place and is in the process of implementing compliance plans based on the U.S. FATCA regulations published in 2013 as well as existing expectations of the content of a U.S.-Canada IGA. Basel III The Basel III Liquidity standards require banks to meet the Liquidity Coverage Ratio...

  • Page 71
    ... Bank has established governance processes for the Senior Executive Team (SET) and the Risk Committee of the Board to review and update the framework annually. Acquisitions and Strategic Plans The Bank regularly explores opportunities to acquire other companies, or parts of their businesses directly...

  • Page 72
    ...risk communication programs, employee orientation and training, and participation in internal risk management conferences. These activities further strengthen the risk culture by increasing awareness and knowledge of TD's expectations for risk taking. 70 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 73
    ... the activities of the Bank's Global AML and Compliance groups. Chief Executive Officer and Senior Executive Team The CEO and the SET develop TD's long-term strategic plan and direction and also develop and recommend for Board approval TD's risk appetite. The SET manage enterprise risk in accordance...

  • Page 74
    ... Head, Insurance, Credit Cards, and Enterprise Strategy, oversees directly and through its standing subcommittees the Risk Capital Committee, Global Liquidity Forum and Enterprise Investment Committee, the management of TD's non-trading market risk and each of its consolidated liquidity, funding...

  • Page 75
    ... in the 2013 program, TD's businesses performed within acceptable levels and the Bank remained adequately capitalized with management actions. Results of the scenarios are reviewed by senior executives, incorporated in TD's planning process and presented to the Risk Committee and the Board. Separate...

  • Page 76
    ... the Board. The Enterprise Strategy group, under the leadership of the Group Head, Insurance, Credit Cards and Enterprise Strategy is charged with developing TD's overall long-term and short-term strategy with input and support from senior executives across TD. In addition, each member of the SET is...

  • Page 77
    .... Unanticipated economic or political changes in a foreign country could affect cross-border payments for goods and services, loans, dividends, trade-related finance, as well as repatriation of the Bank's capital in that country. The Bank currently has credit exposure in a number of countries, with...

  • Page 78
    ...range Exposure at Default Average PD Average LGD RWAs Average risk weighting (millions of Canadian dollars, except as noted) October 31, 2013 Low Risk Normal Risk Medium Risk High Risk Default Total 1 2 3 ....65 6.38 29.69% 76 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS

  • Page 79
    ... and management and are used to set exposure limits and loan pricing. Internal risk ratings are also used in the calculation of regulatory capital, economic capital, and incurred but not identified allowance for credit losses. Consistent with the IRB approach to measure capital adequacy at a 1-year...

  • Page 80
    ... - By Obligor Grade - Corporate As at Internal ratings grade (BRR) PD range Exposure at Default Average PD Average LGD RWAs Average risk External rating weighting equivalent October 31, 2013 (millions of Canadian dollars, except as noted) Investment Grade Non Investment Grade Watch and Classi...

  • Page 81
    ...As at Internal ratings grade (BRR) PD range Exposure at Default Average PD Average LGD RWAs Average risk External rating weighting equivalent October 31, 2013 (millions of Canadian dollars, except as noted) Investment Grade Non Investment Grade Watch and Classified Impaired/Default Total 0 1A...

  • Page 82
    ... credit risk in accordance with credit policies established by Risk Management. 0%1 20%1 35% or 75%2 75% 100% The risk weight may vary according to the external risk rating. 35% applied when loan to value 80%. 80 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 83
    ...cantly from the average for the market area. We have specific risk management guidelines addressing the circumstances when they may be used and processes to periodically validate AVMs including obtaining third party appraisals. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS...

  • Page 84
    ...the risk of loss in financial instruments, the balance sheet or in earnings, or the risk of volatility in earnings from non-trading activities such as asset-liability management or investments, predominantly from interest rate, foreign exchange and equity risks. We are exposed to market risk in our...

  • Page 85
    ... rate Equity, interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Interest rate Other assets and liabilities related to retirement benefits, insurance and special purpose entity liabilities. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 86
    ... market value of the current portfolio using historical simulation. TD values the current portfolio using the market price and rate changes (for equity, interest rate, foreign exchange, credit, and commodity products) of the most recent 259 trading days. GMR is computed as the threshold level that...

  • Page 87
    ... at Average High 2012 Low (millions of Canadian dollars) Interest rate risk Credit spread risk Equity risk Foreign exchange risk Commodity risk Idiosyncratic debt specific risk Diversification effect1 Total Value-at-Risk Stressed Value-at-Risk (one day) Incremental Risk Capital Charge (one year...

  • Page 88
    ... Group Head Insurance, Credit Cards and Enterprise Strategy, and includes other senior executives. The Risk Committee of the Board periodically reviews and approves key asset/liability management and non-trading market risk policies and receives reports on compliance with approved risk limits. HOW...

  • Page 89
    ...of factors such as interest rate movements, equity market movements and changes to customer liquidity preferences. To manage product option exposures we purchase options or use a dynamic hedging process designed to replicate the payoff of a purchased option. We also model the margin compression that...

  • Page 90
    ...environment, balance sheet mix, actual and anticipated loan demand, funding opportunities and the overall interest rate sensitivity of the Bank. The Risk Committee reviews and approves the Enterprise Investment Policy that sets out limits for TD's own portfolio. WHY MARGINS ON AVERAGE EARNING ASSETS...

  • Page 91
    ... policies and procedures guiding employee activities, training is available to all staff regarding specific types of operational risks and their role in helping to protect the interests and assets of TD. HOW WE MANAGE OPERATIONAL RISK The Operational Risk Management Framework outlines the internal...

  • Page 92
    ... business assumed is managed through a policy that limits exposure to certain types of business and countries. The vast majority of treaties are annually renewable, which minimizes long term risk. Pandemic exposure is reviewed and estimated annually. 90 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 93
    ...reference rates for all derivative contracts; and • Coverage of maturities related to Bank-sponsored funding programs, such as the bankers' acceptances we issue on behalf of clients and short-term revolving asset-backed commercial paper (ABCP) channels. TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT...

  • Page 94
    ... held within TD's insurance businesses as these assets are dedicated to cover insurance liabilities and are not considered available to meet the Bank's general liquidity requirements: TA B L E 64 SUMMARY OF LIQUID ASSETS BY TYPE AND CURRENCY 1, 2 (billions of Canadian dollars, except as noted...

  • Page 95
    ... Average for the year ended Total liquid assets Encumbered Unencumbered liquid assets liquid assets2 October 31, 2013 Canadian government obligations NHA MBS Provincial government obligations Corporate issuer obligations Equities Other marketable securities and/or loans Total Canadian dollar...

  • Page 96
    ... on market price or suitability for a particular investor. Ratings are subject to revision or withdrawal at any time by the rating organization. We regularly review the level of increased collateral our trading counterparties would require in the event of a downgrade of TD's credit rating. We...

  • Page 97
    ...utilized in practice. Assets on the Bank's Consolidated Balance Sheet that cannot be used to support funding or collateral requirements in their current form. This category includes those assets that are potentially eligible as funding program collateral (for example, CMHC insured mortgages that can...

  • Page 98
    ... expected maturity profile of its balance sheet. We also raise shorter-term unsecured wholesale deposits to fund trading assets based on our internal estimates of liquidity of these assets under stressed market conditions. 96 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS

  • Page 99
    ... repurchase agreements Loans Residential mortgages Consumer instalment and other personal Credit card Business and government Debt securities classified as loans Total loans Allowance for loan losses Loans, net of allowance for loan losses Customers' liability under acceptances Investment in TD...

  • Page 100
    ... repurchase agreements Loans Residential mortgages Consumer instalment and other personal Credit card Business and government Debt securities classified as loans Total loans Allowance for loan losses Loans, net of allowance for loan losses Customers' liability under acceptances Investment in TD...

  • Page 101
    ... to the required confidence level so that the Bank will be able to meet its obligations, even after absorbing worst case unexpected losses over a one year period, associated with management's target debt rating. In addition, the Bank has a Capital Contingency Plan that is designed to prepare...

  • Page 102
    ... the Risk Committee of the Board. This policy sets out the framework under which each business unit is required to implement a reputational risk policy and procedures. These include designating a business-level committee to review reputational risk issues and to identify issues to be brought to the...

  • Page 103
    ...the Board. TD monitors the risk management process at TD Ameritrade through its participation in TD Ameritrade's board and management governance and protocols. Pursuant to the Stockholders Agreement in relation to the Bank's equity investment in TD Ameritrade, the Bank designated five of 12 members...

  • Page 104
    ... incorporated into the model calculation. Changes in these assumptions would have a direct impact on the provision for incurred but not identified credit losses and may result in a change in the related allowance for credit losses. 102 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND...

  • Page 105
    ... expected long-term return on plan assets, compensation increases, health care cost trend rate, mortality rate, and discount rate are management's best estimates and are reviewed annually with the Bank's actuaries. The Bank develops each assumption using relevant historical experience of the Bank in...

  • Page 106
    ... projects that are relevant to the Bank's financial reporting and accounting policies. Issued standards which are effective for the Bank in the future are discussed in Note 4 to the Bank's Consolidated Financial Statements. 104 TD BANK GROUP ANNUAL REPORT 2013 MANAGEMENT'S DISCUSSION AND ANALYSIS

  • Page 107
    ... also audited the Consolidated Financial Statements of the Bank as of and for the year ended October 31, 2013. Their Report on Internal Controls under Standards of the Public Company Accounting Oversight Board (United States), included in the Consolidated Financial Statements, expresses an unquali...

  • Page 108
    ... current year. TA B L E 74 LOAN PORTFOLIO - Loans Maturity As at Remaining term to maturity Under 1 year 1 to 5 years Over 5 years Total October 31, 2013 (millions of Canadian dollars) Canada Residential mortgages Consumer instalment and other personal HELOC Indirect Auto Other Credit card Total...

  • Page 109
    ... 1 year 1 to 5 years Over 5 years Total October 31, 2012 (millions of Canadian dollars) Canada Residential mortgages Consumer instalment and other personal HELOC Indirect Auto Other Credit card Total personal Real estate Residential Non-residential Total real estate Total business and government...

  • Page 110
    ... 1 year 1 to 5 years Over 5 years Total October 31, 2011 (millions of Canadian dollars) Canada Residential mortgages Consumer instalment and other personal HELOC Indirect Auto Other Credit card Total personal Real estate Residential Non-residential Total real estate Total business and government...

  • Page 111
    ... FOR CREDIT LOSSES 2013 2012 2011 (millions of Canadian dollars, except as noted) Allowance for loan losses - Balance at beginning of year Provision for credit losses Write-offs Canada Residential mortgages Consumer instalment and other personal HELOC Indirect Auto Other Credit card Total personal...

  • Page 112
    ... Covered Loans" section in Note 7 of the Bank's Consolidated Financial Statements. The allowance for credit losses for off-balance sheet instruments is recorded in Provisions on the Consolidated Balance Sheet. TA B L E 77 AVERAGE DEPOSITS For the year ended October 31, 2013 Average balance Total...

  • Page 113
    ... 79 SHORT-TERM BORROWINGS As at October 31 October 31 2012 October 31 2011 (millions of Canadian dollars, except as noted) 2013 Obligations related to securities sold under repurchase agreements Balance at year-end Average balance during the year Maximum month-end balance Weighted-average rate at...

  • Page 114
    ... of the Consolidated Financial Statements of the Bank and related financial information as presented. International Financial Reporting Standards as issued by the International Accounting Standards Board, as well as the requirements of the Bank Act (Canada) ("Bank Act") and related regulations have...

  • Page 115
    ... Balance Sheet as at October 31, 2013 and 2012, and the Consolidated Statements of Income, Comprehensive Income, Changes in Equity, and Cash Flows for the years ended October 31, 2013, 2012, and 2011, and a summary of significant accounting policies and other explanatory information. Management...

  • Page 116
    ... generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheet of The Toronto-Dominion Bank as at October 31, 2013 and 2012, and the Consolidated Statements of Income, Comprehensive Income, Changes in Equity...

  • Page 117
    Consolidated Balance Sheet (millions of Canadian dollars, except as noted) October 31 2013 As at October 31 2012 ASSETS Cash and due from banks Interest-bearing deposits with banks Trading loans, securities, and other (Notes 5, 6) Derivatives (Notes 5, 10) Financial assets designated at fair value ...

  • Page 118
    ... income Investment and securities services Credit fees Net securities gains (losses) (Note 6) Trading income (losses) (Note 23) Service charges Card services Insurance revenue (Note 24) Trust fees Other income (loss) Total revenue Provision for credit losses (Note 7) Insurance claims and related...

  • Page 119
    Consolidated Statement of Comprehensive Income For the years ended October 31 (millions of Canadian dollars) 2013 2012 2011 Net income Other comprehensive income (loss), net of income taxes Change in unrealized gains (losses) on available-for-sale securities1 Reclassification to earnings of net ...

  • Page 120
    Consolidated Statement of Changes in Equity For the years ended October 31 (millions of Canadian dollars) 2013 2012 2011 Common shares (Note 21) Balance at beginning of year Proceeds from shares issued on exercise of stock options Shares issued as a result of dividend reinvestment plan Purchase of ...

  • Page 121
    ... losses (gains) (Note 6) Equity in net income of an investment in associate (Note 11) Deferred taxes (Note 27) Changes in operating assets and liabilities Interest receivable and payable (Notes 15, 17) Securities sold short Trading loans and securities Loans net of securitization and sales Deposits...

  • Page 122
    ... and Future Changes in Accounting Policies 132 Fair Value of Financial Instruments 134 Securities 142 Loans, Impaired Loans and Allowance for Credit Losses 146 Transfers of Financial Assets 149 Special Purpose Entities 151 Derivatives 152 Investment in TD Ameritrade Holding Corporation 159 Signi...

  • Page 123
    ...the current year. The Consolidated Financial Statements were prepared under a historical cost basis, except for certain items carried at fair value as discussed below. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF CONSOLIDATION The Consolidated Financial Statements include the assets...

  • Page 124
    ... fair value through profit or loss, held-to-maturity or loans, are classified as available-for-sale and include equity securities and debt securities. Available-for-sale securities are recognized on a trade date basis and are carried at fair value on the Consolidated Balance Sheet with changes in...

  • Page 125
    ... the balance sheet date. The allowance for loan losses, which includes credit-related allowances for residential mortgages, consumer instalment and other personal, credit card, business and government loans, and debt securities classified as loans, is deducted from Loans on the Consolidated Balance...

  • Page 126
    ... pertaining to the loss share agreements. FDIC covered loans are recorded in Loans on the Consolidated Balance Sheet. The indemnification assets are recorded in Other assets on the Consolidated Balance Sheet. At the end of each loss share period, the Bank may be required to make a payment to the...

  • Page 127
    ... rate, foreign exchange, equity, commodity and credit derivative contracts. The Bank uses these instruments for trading and non-trading purposes to manage the risks associated with its funding and investment strategies. Derivatives are carried at their fair value on the Consolidated Balance Sheet...

  • Page 128
    ... at the balance sheet date and all income and expenses are translated at average exchange rates for the period. Unrealized translation gains and losses relating to these operations, net of gains or losses arising from net investment hedges of these positions and applicable income taxes, are included...

  • Page 129
    ... Balance Sheet, plus accrued interest. Interest earned on reverse repurchase agreements and interest incurred on repurchase agreements is determined using the EIRM and is included in Interest income and Interest expense, respectively, on the Consolidated Statement of Income. TD BANK GROUP ANNUAL...

  • Page 130
    ... The Bank's intangible assets consist primarily of core deposit intangibles, credit card related intangibles and software intangibles. Intangible assets are initially recognized at fair value and are amortized over their estimated useful lives (3 to 20 years) proportionate to their expected economic...

  • Page 131
    ... on service and management's best estimates of expected long-term return on plan assets, compensation increases, health care cost trend rate, mortality rate, and discount rate, which are reviewed annually with the Bank's actuaries. The expense recognized includes the cost of benefits for employee...

  • Page 132
    ... procedures to ensure that accounting policies are applied consistently and that the processes for changing methodologies for determining estimates are well controlled and occur in an appropriate and systematic manner. IMPAIRMENT OF FINANCIAL ASSETS Available-for-Sale Securities Impairment losses...

  • Page 133
    ... expected long-term return on plan assets, compensation increases, health care cost trend rate, mortality rate, and discount rate are management's best estimates and are reviewed annually with the Bank's actuaries. The Bank develops each assumption using relevant historical experience of the Bank in...

  • Page 134
    ..., cash ï¬,ows or earnings of the Bank. FUTURE CHANGES IN ACCOUNTING POLICIES The following standards have been issued, but are not yet effective on the date of issuance of the Bank's Consolidated Financial Statements. The Bank is currently assessing the impact of the application of these standards...

  • Page 135
    ...and losses in other comprehensive income. Net interest expense or income is calculated by applying the discount rate to the net defined benefit asset or liability, and will be recorded in the Consolidated Statement of Income, along with present and past service costs for the period. Plan amendment...

  • Page 136
    ... based on quoted market prices for similar securities or through valuation techniques, including discounted cash ï¬,ow analysis, and multiples of earnings before taxes, depreciation, and amortization, and other relevant valuation techniques. 134 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS

  • Page 137
    ...interest rates currently offered for deposits with similar terms. For deposits with no defined maturities, the Bank considers fair value to equal carrying value, which is equivalent to the amount payable on the balance sheet date. For trading deposits, fair value is determined using discounted cash...

  • Page 138
    ... and government-related securities Other debt securities Total held-to-maturity securities Securities purchased under reverse repurchase agreements Loans Customers' liability under acceptances Other assets FINANCIAL LIABILITIES Trading deposits Derivatives Securitization liabilities at fair value...

  • Page 139
    ... and agencies debt Other OECD government guaranteed debt Mortgage-backed securities Other debt securities Canadian issuers Other issuers Equity securities Common shares Preferred shares Trading loans Commodities Retained interests Derivatives Interest rate contracts Foreign exchange contracts Credit...

  • Page 140
    ... interests Financial assets designated at fair value through profit or loss Loans Available-for-sale securities Government and governmentrelated securities Other OECD government guaranteed debt Other debt securities Corporate and other debt Equity securities Common shares Preferred shares Debt...

  • Page 141
    ... Common shares Trading loans Retained interests Financial assets designated at fair value through profit or loss Loans Available-for-sale securities Government and governmentrelated securities Other OECD government guaranteed debt Other debt securities Corporate and other debt Equity securities...

  • Page 142
    ...net assets Increase in fair value FINANCIAL ASSETS Trading loans, securities, and other Equity securities Common shares Preferred shares Retained interests Derivatives Interest rate contracts Foreign exchange contracts Equity contracts Available-for-sale securities Government and government related...

  • Page 143
    ... 31, 2013 the income (loss) representing net changes in the fair value of financial assets and liabilities designated at fair value through profit or loss was $(129) million (2012 - $(5) million). Balance as at beginning of year New transactions Recognized in the Consolidated Statement of Income...

  • Page 144
    ..., net interest income of $62 million after tax (year ended October 31, 2012 - $90 million after tax) was recorded relating to the reclassified debt securities. The decrease in fair value of these securities during the year ended October 31, 2013 of $25 million after tax (October 31, 2012 - increase...

  • Page 145
    ...debt securities Asset-backed securities Non-agency CMO Corporate and other debt Equity securities Common shares Preferred shares Debt securities reclassified from trading Total available-for-sale securities Held-to-maturity securities Government and government-related securities Canadian government...

  • Page 146
    ... 2 Includes the foreign exchange translation of amortized cost balances at the period-end spot rate. Includes the fair value of corporate and other debt securities, as at October 31, 2013 of $905 million (October 31, 2012 - $1,264 million). 144 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS

  • Page 147
    ... of Canadian dollars) Less than 12 months Gross Fair unrealized value losses 12 months or longer Gross Fair unrealized value losses As at October 31, 2013 Total Gross Fair unrealized value losses Available-for-sale securities Government and government-related securities Canadian government debt...

  • Page 148
    ...2013 (October 31, 2012 - $254 million) and was recorded in Other assets on the Consolidated Balance Sheet. The following table presents information related to the Bank's impaired loans. As at October 31, 2013 Unpaid principal balance2 Related allowance for credit losses Average gross impaired loans...

  • Page 149
    ... of the accounting for FDIC covered loans. For additional information, see the "FDIC Covered Loans" section in this Note. The allowance for credit losses for off-balance sheet positions is recorded in Provisions on the Consolidated Balance Sheet. TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS...

  • Page 150
    ... other personal Credit card Business and government Total 1 $ 1,370 4,752 695 1,186 $ 8,003 821 705 144 289 $ 1,959 $ $ 164 188 83 55 $ 490 $ 2,355 5,645 922 1,530 $ 10,452 Excludes all ACI loans and debt securities classified as loans. 148 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS

  • Page 151
    ... loss sharing agreement. Includes Chrysler Financial, MBNA, and Target. FDIC COVERED LOANS As at October 31, 2013, the balance of FDIC covered loans was $787 million (October 31, 2012 - $1,002 million) and was recorded in Loans on the Consolidated Balance Sheet. As at October 31, 2013, the balance...

  • Page 152
    ... if the Bank retains any contractual rights or obligations subsequent to the transfer of financial assets. Certain business and government loans securitized by the Bank are derecognized from the Bank's Consolidated Balance Sheet. In instances 150 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS

  • Page 153
    ... related to the Bank's significant consolidated SPEs. Significant Consolidated SPEs (millions of Canadian dollars) Personal loans Fair value Carrying amount Fair value Credit cards Carrying amount Fair value As at October 31, 2013 Other Carrying amount Assets reported as loans1,2 Associated...

  • Page 154
    ... forward contracts but differ in that they are in standard currency amounts with standard settlement dates and are transacted on an exchange. Credit Derivatives The Bank uses credit derivatives such as credit default swaps (CDS) and total return swaps in managing risks of the Bank's corporate loan...

  • Page 155
    ... (millions of Canadian dollars) Average fair value for the year1 Positive Negative October 31, 2013 Fair value as at balance sheet date Positive Negative October 31, 2012 Fair value as at balance sheet date Positive Negative Derivatives held or issued for trading purposes Interest rate contracts...

  • Page 156
    ... contracts Foreign exchange contracts Forward contracts Swaps Cross-currency interest rate swaps Total foreign exchange contracts Credit derivatives Credit default swaps - protection purchased Total credit derivatives Other contracts Equity contracts Total other contracts Fair value - non-trading...

  • Page 157
    ...Amounts are recorded in net interest income. Amounts are recorded in non-interest income. Includes non-derivative instruments designated as hedging instruments in qualifying hedge accounting relationships (such as, foreign denominated liabilities). TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS...

  • Page 158
    ...related non-derivative instruments. Gains (Losses) on Non-Trading Derivatives not Designated in Qualifying Hedge Accounting Relationships1 (millions of Canadian dollars) For the years ended October 31 2013 2012 2011 Interest rate contracts Foreign exchange contracts Credit derivatives Equity Total...

  • Page 159
    ...compensating upfront cash payments, generally have no market value at inception. They obtain value, positive or negative, as relevant interest rates, foreign exchange rates, equity, commodity or credit prices or indices change, such that the previously contracted terms of the derivative transactions...

  • Page 160
    ... debt ratings; and (ii) funding totalling $4 million (October 31, 2012 - $6 million) following the termination and settlement of outstanding derivative contracts in the event of a one-notch or two notch downgrade in the Bank's senior debt ratings. 158 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL...

  • Page 161
    ... the New York Stock Exchange. On May 14, 2013, the Bank completed a private sale of 15 million shares of its investment in TD Ameritrade. The shares were sold at a price of US$21.72, a 4.5% discount to the closing market price of US$22.74. The Bank realized a gain on the sale of these shares on the...

  • Page 162
    ... acquisition the Bank recorded the credit card receivables acquired at their fair value of $5.7 billion and intangible assets totalling $98 million. The gross amount of revenue and credit losses have been recorded on the Consolidated Statement of Income since that date. Target Corporation shares in...

  • Page 163
    ... results of Chrysler Financial in Canada are reported in the Canadian Personal and Commercial Banking segment. Subsequent to the acquisition date, goodwill increased by $45 million to $197 million, primarily due to the finalization of the fair values in the purchase price equation. The total amount...

  • Page 164
    ... $ 12,311 Discount rates have been updated to reflect pre-tax amounts. OTHER INTANGIBLES The following table presents details of the Bank's other intangibles as at October 31, 2013 and October 31, 2012. Other Intangibles (millions of Canadian dollars) Core deposit intangibles Credit card related...

  • Page 165
    ...OTHER ASSETS Other Assets (millions of Canadian dollars) October 31 2013 As at October 31 2012 Amounts receivable from brokers, dealers and clients Accounts receivable, prepaid expenses and other items1 Prepaid pension expense Insurance-related assets, excluding investments Accrued interest Total...

  • Page 166
    ...xed date of maturity purchased by customers to earn interest over a fixed period. The terms are from one day to 10 years. Accrued interest on deposits, calculated using the EIRM, is included in Other liabilities on the Consolidated Balance Sheet. Deposits by Type (millions of Canadian dollars) The...

  • Page 167
    ... Liabilities (millions of Canadian dollars) October 31 2013 As at October 31 2012 Amounts payable to brokers, dealers and clients Accounts payable, accrued expenses and other items Special purpose entity liabilities Insurance-related liabilities Accrued interest Accrued salaries and employee bene...

  • Page 168
    ...interest payment date in respect of which certain events have occurred, holders of TD CaTS IV Notes will be required to invest interest paid on such TD CaTS IV Notes in a new series of non-cumulative Class A First Preferred Shares of the Bank. 166 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS

  • Page 169
    ...unlimited number of Class A First Preferred Shares, without nominal or par value. Under Basel III, all the Bank's current preferred shares are considered non-qualifying capital instruments subject to phase-out over 10 years commencing January 2013. TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS...

  • Page 170
    ... and millions of Canadian dollars) October 31, 2013 Number of shares Amount Number of shares October 31, 2012 Amount Common Shares Balance as at beginning of year Proceeds from shares issued on exercise of stock options Shares issued as a result of dividend reinvestment plan Purchase of shares for...

  • Page 171
    ... on any other date on or after July 31, 2013. 5-Year Rate Reset Preferred Shares, Series Y On July 16, 2008, the Bank issued 10 million non-cumulative 5-Year Rate Reset Preferred Shares, Series Y for gross cash consideration of $250 million. Quarterly non-cumulative cash dividends, if declared, will...

  • Page 172
    ... the Bank's treasury at an average market price based on the last five trading days before the date of the dividend payment, with a discount of between 0% to 5% at the Bank's discretion, or from the open market at market price. During the year, a total of 3.3 million common shares were issued from...

  • Page 173
    ... accounting policy. See Note 2 to the Bank's Consolidated Financial Statements for further details. Sound product design is an essential element of managing risk. The Bank's exposure to insurance risk is generally short term in nature as the principal underwriting risk relates to automobile and home...

  • Page 174
    ... credit policy. To minimize interest rate and liquidity risks, investments supporting the net provision for unpaid claims are matched in interest rate exposure. INSURANCE REVENUE AND EXPENSES The Bank is engaged in insurance businesses relating to property and casualty insurance, life and health...

  • Page 175
    ... are calculated using the Canadian Asset Liability Method (CALM). A sensitivity analysis for possible movements in the life and health insurance business assumptions was performed and the impact is not significant to the Bank's Consolidated Financial Statements. TD BANK GROUP ANNUAL REPORT 2013...

  • Page 176
    ... for terms of seven or ten years and vest over a fouryear period. These options provide holders with the right to purchase common shares of the Bank at a fixed price equal to the closing market price of the shares on the day prior to the date the options were issued. Under this plan, 14.1 million...

  • Page 177
    ...pro-rated on service and management's best estimates of expected long-term return on plan assets, compensation increases, health care cost trend rate and discount rate, which are reviewed annually by the Bank's actuaries. The discount rate used to value liabilities is based on long-term corporate AA...

  • Page 178
    ...year. As at October 31, 2013, the Society's net assets included private equity investments in the Bank and its affiliates which had a fair value of $1 million (2012 - $1 million). The objective of the investment policy of the TDPP is a balanced portfolio. The TDPP is not permitted to invest in debt...

  • Page 179
    ... 31 Change in plan assets Plan assets at fair value at beginning of year Assets acquired upon acquisition of Chrysler Financial Expected return on plan assets4 Actuarial gains (losses) Members' contributions Employer's contributions Change in foreign currency exchange rate Benefits paid General and...

  • Page 180
    ... in the Consolidated Balance Sheet (millions of Canadian dollars) October 31 2013 As at October 31 2012 Other assets Principal pension plans Other pension and retirement plans CT defined benefit pension plan TD Auto Finance retirement plans Other employee benefits - net Prepaid pension expense...

  • Page 181
    ... to Statutory Income Tax Rate (millions of Canadian dollars, except as noted) 2013 2012 2011 Income taxes at Canadian statutory income tax rate Increase (decrease) resulting from: Dividends received Rate differentials on international operations Tax rate changes Other - net Provision for income...

  • Page 182
    ... 2013 Consolidated Statement of Income Other Comprehensive Income Business Combinations and Other 2012 Total Total Deferred income tax expense (recovery) Allowance for credit losses Land, buildings, equipment, and other depreciable assets Deferred (income) expense Trading loans Derecognition...

  • Page 183
    ... presents the Bank's basic and diluted earnings per share. Basic and Diluted Earnings Per Share (millions of Canadian dollars, except as noted) 2013 For the years ended October 31 2012 2011 Basic earnings per share Net income attributable to common shareholders Weighted-average number of common...

  • Page 184
    ... is to make funds available for the financing needs of customers. The Bank's policy for requiring collateral security with respect to these contracts and the types of collateral security held is generally the same as for loans made by the Bank. Financial and performance standby letters of credit...

  • Page 185
    ... to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank's discretion at any time. In addition, the Bank is committed to fund $82 million (October 31, 2012 - $249 million) of private equity investments. Long-term Commitments or...

  • Page 186
    ... on market terms and conditions with the exception of banking products and services for key management personnel, which are subject to approved policy guidelines that govern all employees. Loans to Key Management Personnel, their Close Family Members and their Related Entities (millions of Canadian...

  • Page 187
    ...Wealth Management, Insurance and Corporate Shared Services became Group Head, U.S. Personal and Commercial Banking. Executive responsibilities for the Wealth Management business will be moved to the Group Head, Canadian Banking and Auto Finance, TD, and the Credit Cards and Insurance businesses will...

  • Page 188
    ... credit losses Insurance claims and related expenses1 Non-interest expenses Income (loss) before income taxes Provision for (recovery of) income taxes Equity in net income of an investment in associate, net of income taxes Net income (loss) Total assets as at October 31 (billions of Canadian dollars...

  • Page 189
    ...ï¬,oating rate category. The Bank's risk management policies and procedures relating to credit, market, and liquidity risks as required under IFRS 7 are outlined in the shaded sections of the "Managing Risk" section of the MD&A in this report. TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL RESULTS 187

  • Page 190
    ... purchased under reverse repurchase agreements Effective yield Loans Effective yield Other Total assets Liabilities and equity Trading deposits Effective yield Other deposits Effective yield Securitization liabilities at fair value Effective yield Obligations related to securities sold short...

  • Page 191
    ... by Category (billions of Canadian dollars) Total within 1 year Over 1 year to 5 years Noninterest sensitive As at October 31, 2013 Floating rate Within 3 months 3 months to 1 year Over 5 years Total Canadian currency Foreign currency Net position $ (177.4) (32.2) $ (209.6) $ 110.7 40.9 $ 151...

  • Page 192
    ... external credit assessments. These assets relate primarily to the Bank's U.S. Personal and Commercial Banking portfolio. Refer to the Managing Risk - Credit Risk section of the MD&A for a discussion on the risk rating for the standardized approach. 190 TD BANK GROUP ANNUAL REPORT 2013 FINANCIAL...

  • Page 193
    ... and other personal Credit card Business and government Debt securities classified as loans Total loans Held-to-maturity Securities purchased under reverse repurchase agreements Customers' liability under acceptances Other assets1 Total assets Off-balance sheet credit instruments Total 1 $ 160...

  • Page 194
    ...instalment and other personal1 Business and government Debt securities classified as loans Total loans Held-to-maturity Securities purchased under reverse repurchase agreements Customers' liability under acceptances Other assets2 Total assets Off-balance sheet credit instruments Total $ 107,232 26...

  • Page 195
    ...and Tier 2 capital. Total capital ratio is calculated as Total capital divided by RWA. The ACM is calculated as total assets plus off-balance sheet credit instruments, such as certain letters of credit and guarantees, less investments in associated corporations, goodwill and net intangibles, divided...

  • Page 196
    ...TD Bank US Holding Company Epoch Investment Partners, Inc.3 TD Bank USA, National Association TD Bank, National Association TD Auto Finance LLC TD Equipment Finance, Inc. TD Private Client Wealth LLC TD Wealth Management Services Inc. TD Vermillion Holdings ULC TD Financial International Ltd. Canada...

  • Page 197
    ... estate leasing and closed-end funds. The Bank's involvement includes transferring assets to the entities, entering into derivative contracts with them, providing credit enhancement and liquidity facilities, providing investment management and administrative services, and holding ownership or other...

  • Page 198
    ...TD Bank US Holding Company Epoch Investment Partners, Inc.3 TD Bank USA, National Association TD Bank, National Association TD Auto Finance LLC TD Equipment Finance, Inc. TD Private Client Wealth LLC TD Wealth Management Services Inc. TD Vermillion Holdings ULC TD Financial International Ltd. Canada...

  • Page 199
    ... Personal Financial Management Limited (50%) NatWest Stockbrokers Limited (50%) TD Bank International S.A. TD Bank N.V. TD Ireland TD Global Finance TD Luxembourg International Holdings TD Ameritrade Holding Corporation (42.22%)3 TD Wealth Holdings (UK) Limited TD Direct Investing (Europe) Limited...

  • Page 200
    ...Reported (millions of Canadian dollars) Net interest income Non-interest income3 Total revenue3 Provision for credit losses Insurance claims and related expenses3 Non-interest expenses Income before income taxes and equity in net income of an investment in associate Provision for income taxes Equity...

  • Page 201
    ...current period presentation. 6 Dividends paid during the year divided by average of high and low common share prices for the year. The price earnings ratio is computed using diluted net income per common share. Includes customers' liability under acceptances. Excludes acquired credit-impaired loans...

  • Page 202
    Ten-year Statistical Review - Canadian GAAP Condensed Consolidated Balance Sheet (millions of Canadian dollars) ASSETS Cash resources and other Securities Securities purchased under reverse repurchase agreements Loans (net of allowance for loan losses) Other Total assets LIABILITIES Deposits Other ...

  • Page 203
    ... results (excluding "items of note", net of income taxes, from reported results) and related terms are not defined terms under GAAP and therefore, may not be comparable to similar terms used by other issuers. For further explanation, see "How the Bank Reports" in the accompanying MD&A. Adjusted...

  • Page 204
    ... restructuring charges relating to U.S. P&C Banking acquisitions Decrease/(Increase) in fair value of credit default swaps hedging the corporate loan book Other tax items1 Provision for (release of) insurance claims General allowance increase (release) in Canadian Personal and Commercial Banking and...

  • Page 205
    ... expenses. Dividends paid during the year divided by average of high and low common share prices for the year. The price earnings ratio is computed using diluted net income per common share. Includes customers' liability under acceptances. Excludes acquired credit-impaired loans and debt securities...

  • Page 206
    ... equity cost of capital calculated using the capital asset pricing model. Average Earnings Assets: The average carrying value of deposits with banks, loans and securities based on daily balances for the period ending October 31 in each fiscal year. Average Invested Capital: Average invested capital...

  • Page 207
    ... funds by contacting the Bank's transfer agent. Dividends will be exchanged into U.S. funds at the Bank of Canada noon rate on the fifth business day after the record date, or as otherwise advised by the Bank. Dividend information for 2013 is available at www.td.com under Investor Relations/Share...

  • Page 208
    FSC Logo ® The TD logo and other trade-marks are the property of The Toronto-Dominion Bank or a wholly-owned subsidiary, in Canada and/or other countries.