TD Bank Group Reports Third Quarter 2014 Results

Press Release –

This quarterly earnings news release should be read in conjunction with the Bank’s unaudited Third Quarter 2014 Report to Shareholders for the three and nine months ended July 31, 2014, prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), which is available on our website at http://www.td.com/investor/. This analysis is dated August 27, 2014. Unless otherwise indicated, all amounts are expressed in Canadian dollars, and have been primarily derived from the Bank’s Annual or Interim Consolidated Financial Statements prepared in accordance with IFRS. Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period. Additional information relating to the Bank is available on the Bank’s website at http://www.td.com, as well as on SEDAR at http://www.sedar.com and on the U.S. Securities and Exchange Commission’s (SEC) website at http://www.sec.gov (EDGAR filers section). The Bank implemented new and amended standards under IFRS (New IFRS Standards and Amendments) which required retrospective application, effective the first quarter of fiscal 2014. As a result, certain comparative amounts have been restated. For more information refer to Note 2 of the Interim Consolidated Financial Statements. Reported results conform to Generally Accepted Accounting Principles (GAAP), in accordance with IFRS. Adjusted measures are non-GAAP measures. Refer to the “How the Bank Reports” section of the Management’s Discussion and Analysis (MD&A) for an explanation of reported and adjusted results. Effective the first quarter of 2014, the results of the Canadian wealth and insurance businesses are reported in the Canadian Retail segment, and the results of the U.S. wealth business, as well as the Bank’s investment in TD Ameritrade, are reported in the U.S. Retail segment. Segmented results prior to the first quarter of 2014 have been restated accordingly. As previously announced on December 5, 2013, the Bank’s Board of Directors declared a stock dividend of one common share per each issued and outstanding common share on the payment date of January 31, 2014 (Stock Dividend). The effect on the Bank’s basic and diluted earnings per share has been presented as if the Stock Dividend was retrospectively applied to all comparative periods presented that occurred prior to the payment date of the Stock Dividend.

THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third quarter a year ago:

• Reported diluted earnings per share were $1.11, compared with $0.79.
• Adjusted diluted earnings per share were $1.15, compared with $0.82.
• Reported net income was $2,107 million, compared with $1,523 million.
• Adjusted net income was $2,167 million, compared with $1,584 million.

YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended July 31, 2014, compared with the corresponding period a year ago:

• Reported diluted earnings per share were $3.22, compared with $2.61.
• Adjusted diluted earnings per share were $3.29, compared with $2.77.
• Reported net income was $6,137 million, compared with $5,024 million.
• Adjusted net income was $6,265 million, compared with $5,321 million.

THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)

The third quarter reported earnings figures included the following items of note:

• Amortization of intangibles of $60 million after tax (3 cents per share), compared with $59 million after tax (3 cents per share) in the third quarter last year.
• Integration charges of $27 million after tax (2 cents per share) relating to the acquisition of the credit card portfolio of MBNA Canada, compared with$24 million after tax (1 cent per share) in the third quarter last year.
• A release of $19 million after tax (1 cent per share), due to the impact of the Alberta flood on the loan portfolio, compared with a loss of $48 millionafter tax (3 cents per share) in the third quarter last year.
• A gain of $24 million after tax (1 cent per share), due to the change in fair value of derivatives hedging the reclassified available-for-sale securities portfolio, compared with a gain of $70 million after tax (4 cents per share) in the third quarter last year.
• Set-up and conversion costs totalling $16 million after tax (1 cent per share) related to the affinity relationship with Aimia and the acquisition of 50% of CIBC’s existing Aeroplan Visa credit card accounts.

TORONTO, Aug. 28, 2014 /CNW/ – TD Bank Group (“TD” or the “Bank”) today announced its financial results for the third quarter ended July 31, 2014. Adjusted earnings were $2.2 billion, a 37% increase from the third quarter last year, reflecting strong earnings contributions from all business segments. Results from the third quarter in 2013 included additional charges taken in the insurance business.

“TD’s third quarter was especially strong, even after taking into account the additional charges in our insurance business last year,” said Ed Clark, Group President and Chief Executive Officer. “Our performance was fueled by good organic growth, support from recent acquisitions and continued favourable credit conditions. We’re very pleased that we achieved these results, while at the same time maintaining our investments in future growth.”

Canadian Retail
Canadian Retail delivered net income of $1.4 billion for the third quarter, representing a 54% increase in adjusted earnings over the same quarter last year. This solid performance was driven by good loan and deposit growth, good credit quality, Aeroplan contribution, higher wealth assets, and very strong operating leverage. Insurance earnings reflected a significant rebound from last year when the business was affected by a combination of severe weather-related impacts and increased general insurance claims.

“Canadian Retail delivered a strong third quarter with all business lines contributing,” said Tim Hockey, Group Head, Canadian Banking, Auto Finance and Wealth Management. “We were once again recognized as an industry leader in customer service and we will continue to focus on increasing our market share, driving efficiency and delivering industry-leading comfort and convenience through strategic investments in the business.”

U.S. Retail
U.S. Retail generated net income of US$518 million, an increase of 4% compared with the third quarter last year. Excluding the Bank’s investment in TD
Ameritrade, the segment generated net income of US$449 million, an increase of 4%. Earnings were driven by strong organic growth, expense management, and improved asset quality, partially offset by lower gains on sales of securities.

TD Ameritrade contributed US$69 million in earnings to the segment, an increase of 1% compared with the third quarter last year.

“U.S. Retail continued to deliver on our organic growth strategy,” said Mike Pedersen, Group Head, U.S. Banking. “Customer acquisition and deposit and lending growth were strong, with business lending especially good in the third quarter. The U.S. banking environment continues to face headwinds, but we remain focused on building the franchise and delivering legendary customer experiences.”

Wholesale Banking
Wholesale Banking net income for the quarter was $216 million, an increase of 46% compared with the third quarter last year. The increase in earnings was primarily due to broad-based revenue growth across core businesses and favourable credit quality, partially offset by higher non-interest expenses.

“We are pleased with our earnings this quarter, which saw good origination, robust capital markets, and trading activity,” said Bob Dorrance, Group Head, Wholesale Banking. “We will continue to attract new clients and expand existing relationships, and manage risks and expenses for the remainder of 2014.”

Capital
TD’s Common Equity Tier 1 Capital ratio on a Basel III fully phased-in basis was 9.3%, compared with 9.2% last quarter.

Conclusion
“These results exemplify the many strengths of TD: our franchise-driven model, relentless focus on the customer, and ability to grow our North American platform,” said Clark. “Our exceptional team remains committed to making us the Better Bank for all of our stakeholders.”

The foregoing contains forward-looking statements. Please see the “Caution Regarding Forward-Looking Statements” on page 3.

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