Mr. Ed Clark reports

TD BANK GROUP REPORTS SECOND QUARTER 2012 RESULTS

TD Bank Group has released its financial results for the second quarter ended April 30, 2012. Results for the quarter reflected record North American retail earnings and a solid performance from wholesale banking.

Toronto-Dominion Bank's quarterly earnings release should be read in conjunction with its unaudited second quarter 2012 report to shareholders for the three and six months ended April 30, 2012, prepared in accordance with international financial reporting standards, which is available on its website. This analysis is dated May 23, 2012. Unless otherwise indicated, all amounts are expressed in Canadian dollars, and have been primarily derived from the bank's annual consolidated financial statements prepared in accordance with Canadian generally accepted accounting principles. Interim amounts derived from the bank's internal consolidated financial statements have been prepared in accordance with IFRS. Additional information relating to the bank is available on the bank's website, as well as on SEDAR and on the U.S. Securities and Exchange Commission's website.

The bank transitioned from Canadian GAAP to IFRS effective for interim and annual periods beginning the first quarter of fiscal 2012. The interim consolidated financial statements for the period ended April 30, 2012, reflect the bank's second set of financial statements prepared under IFRS. Comparative periods in 2011 have also been prepared under IFRS.

Reported results conform to GAAP, in accordance with IFRS. Adjusted measures are non-GAAP measures.

Effective the first quarter of 2012, the insurance business was transferred from Canadian personal and commercial banking to wealth and insurance (formerly called wealth management). The prior period results have been restated accordingly.

Second quarter financial highlights, compared with the second quarter a year ago:

• Reported diluted earnings per share were $1.78, compared with $1.50.

• Adjusted diluted earnings per share were $1.82, compared with $1.63.

• Reported net income was $1,693-million, compared with $1,404-million.

• Adjusted net income was $1,736-million, compared with $1,524-million.

Year-to-date financial highlights, six months ended April 30, 2012, compared with the corresponding period a year ago:

• Reported diluted earnings per share were $3.33, compared with $3.17.

• Adjusted diluted earnings per share were $3.68, compared with $3.36.

• Reported net income was $3,171-million, compared with $2,966-million.

• Adjusted net income was $3,498-million, compared with $3,141-million.

Second quarter adjustments (items of note)

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

• Amortization of intangibles of $59-million after tax (six cents per share), compared with $99-million after tax (11 cents per share) in the second quarter last year;

• A loss of $9-million after tax (one 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 $7-million after tax (one cent per share) in the second quarter last year;

• A loss of $1-million after tax, due to the change in fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses (PCL), compared with a gain of $2-million after tax in the second quarter last year;

• Integration charges relating to the Chrysler Financial acquisition of $3-million after tax, compared with $10-million after tax (one cent per share) in the second quarter last year;

• Integration charges of $30-million after tax (three cents per share), relating to the acquisition of the MBNA Canada credit card portfolio;

• Reduction of allowance for incurred but not identified credit losses of $59-million after tax (six cents per share).

"TD's adjusted quarterly earnings were up 14 per cent over the same period last year, with our North American retail businesses driving that growth, with a new record in adjusted earnings," said Ed Clark, group president and chief executive officer. "While we expect the second half of 2012 to remain challenging due to slowing loan growth, persistent low rates and regulatory headwinds, we're still working to deliver adjusted EPS growth in the 7- to 10-per-cent range this year."

Canadian personal and commercial banking

Canadian personal and commercial banking posted a very good quarter, with reported net income of $808-million. Adjusted net income was $838-million, up 14 per cent from the same period last year. Results for the quarter were driven by good core volume growth, favourable credit performance and the contribution from MBNA.

"The ongoing low interest rate environment continues to present a challenge, as does slowing personal loan growth, but we will earn through it by focusing on delivering legendary service and convenience, managing expense growth prudently, and identifying opportunities to invest in and grow businesses," said Tim Hockey, group head, Canadian banking, auto finance and credit cards.

Wealth and insurance

Wealth and insurance delivered net income of $365-million in the quarter, up 16 per cent from the same period last year. This was driven by strong premium growth and claims performance in the insurance business, improved results in TD's wealth business despite difficult markets, partially offset by lower earnings from TD Ameritrade due to decreased trading levels.

"This was a record quarter for both our wealth and insurance businesses, despite market volatility and lower trading volumes," said Mike Pedersen, group head, wealth management, insurance and corporate shared services. "Insurance is on track for a strong year. Wealth has performed well so far in 2012, partly through expense management, and we continue to expect earnings growth in the second half of the year despite uncertain markets and slow trading levels."

U.S. personal and commercial banking

U.S. personal and commercial banking delivered a record quarter, with reported and adjusted net income of $358-million (U.S.), up 9 per cent, on an adjusted basis, from the same period last year, driven primarily by strong volume growth.

"Strong growth in loans and deposits this quarter again helped mitigate the impact of the Durbin amendment for TD Bank, America's most convenient bank," said Bharat Masrani, group head, U.S. personal and commercial banking. "Despite a challenging economic and regulatory environment, we will continue to invest in our future growth and remain on track to open 35 new stores in 2012."

Wholesale banking

Wholesale banking recorded net income of $197-million for the quarter, up 5 per cent compared with the same period last year. The increase was due to higher revenues across a number of business lines, most notably investment banking. Revenues were reduced by the impact of late quarter trading conditions primarily in fixed income markets.

"Our business delivered good results despite the resurgence of European-related concerns," said Bob Dorrance, group head, wholesale banking. "Strong performance across a number of businesses more than offset the declining market volumes that affected our trading businesses. Although the negative trends are concerning, we remain confident that our diversified, client-focused business model will achieve target return levels through the cycle."

Capital

TD's Tier 1 capital ratio was 12.0 per cent in the quarter. Capital quality remained very high, with tangible common equity comprising more than 85 per cent of Tier 1 capital. TD continues to exceed the 7-per-cent Basel III requirement on a fully phased-in basis.

Conclusion

"We're pleased with our results this quarter," said Mr. Clark. "We continue to see a steady but modest recovery in the U.S. The low interest rate environment continues to impact our business, but we are also looking at the long-term horizon, which means executing on organic growth opportunities. We will continue to strategically invest in our businesses, manage our expense growth, and leverage our competitive advantage in service and convenience to win customers and take market share."

TD Bank Group will host an earnings conference call in Toronto, Ont., on May 24, 2012. The call will be webcast live via TD's website at 3 p.m. ET. The call and webcast will feature presentations by TD executives on the bank's financial results for the second quarter, followed by a question-and-answer period with analysts. The presentation material referenced during the call will be available on the TD website on May 24, 2012, by approximately 12 p.m. ET. A listen-only telephone line is available at 416-644-3415 or 1-877-974-0445 (toll-free).

The webcast and presentations will be archived at the bank's website. Replay of the teleconference will be available from 6 p.m. ET on May 24, 2012, until June 25, 2012, by calling 416-640-1917 or 1-877-289-8525 (toll-free). The passcode is 4536563, followed by the number sign.

                           FINANCIAL HIGHLIGHTS                                                                              
         (in millions of Canadian dollars, except per share amounts)

                                          Three months ended         Six months ended 
                                April 30,  Jan. 31, April 30,   April 30,    April 30,
                                    2012      2012      2011        2012         2011 
Results of operations                                                                                      
Total revenue                     $5,750    $5,642    $5,156     $11,392      $10,615  
Provision for credit losses          388       404       349         792          770  
Non-interest expenses              3,372     3,549     3,163       6,921        6,353  
Net income -- reported             1,693     1,478     1,404       3,171        2,966  
Net income -- adjusted             1,736     1,762     1,524       3,498        3,141  
Common share information 
-- reported (dollars)                                                              
Per share earnings                                                                                         
Basic                               1.79      1.56      1.52        3.35         3.21  
Diluted                             1.78      1.55      1.50        3.33         3.17  
Dividends per share                 0.72      0.68      0.66        1.40         1.27  

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