Mr. Ed Clark reports

TD BANK GROUP REPORTS SECOND QUARTER 2013 RESULTS

Toronto-Dominion Bank has released its financial results for the second quarter ended April 30, 2013. Results for the quarter reflected good earnings contributions from TD's personal and commercial banking operations in Canada and the United States.

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

• Reported diluted earnings per share were $1.78, compared with $1.78.
• Adjusted diluted earnings per share were $1.90, compared with $1.82.
• Reported net income was $1,723-million, compared with $1,693-million.
• Adjusted net income was $1,833-million, compared with $1,736-million.

Year-to-date financial highlights, six months ended April 30, 2013, compared with the corresponding period a year ago:

• Reported diluted earnings per share were $3.65, compared with $3.33.
• Adjusted diluted earnings per share were $3.90, compared with $3.68.
• Reported net income was $3,513-million, compared with $3,171-million.
• Adjusted net income was $3,749-million, compared with $3,498-million.

Second-quarter adjustments (items of note)

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

• Amortization of intangibles of $58-million after tax (six cents per share), compared with $59-million after tax (six cents per share) in the second quarter last year;
• A loss of $22-million after tax (three cents per share), due to the change in fair value of derivatives hedging the reclassified available-for-sale securities portfolio, compared with a loss of $9-million after tax (one cent per share) in the second quarter last year;
• Integration charges and direct transaction costs of $30-million after tax (three cents per share) relating to the acquisition of the credit card portfolio of MBNA Canada, compared with $30-million after tax (three cents per share) in the second quarter last year.

"TD had a solid second quarter, delivering adjusted earnings of $1.8-billion, up 6 per cent from a year ago," said Ed Clark, group president and chief executive officer. "We feel positive about these results in the context of a challenging operating environment. We remain confident that our customer-focused, retail-driven business model will help us manage through a period of slower growth and low interest rates."

Canadian personal and commercial banking

Canadian personal and commercial banking posted reported net income of $847-million in the second quarter. On an adjusted basis, net income was $877-million, up 5 per cent compared with the second quarter last year. These earnings reflect continued good loan and deposit growth, stable margins, favourable credit performance and effective cost management.

"Canadian personal and commercial banking businesses generated good results in a continued slow growth environment," said Tim Hockey, group head, Canadian banking, auto finance and credit cards. "We are pleased with our results to date in 2013, and we believe that our continued focus on providing industry-leading customer service and convenience, as well as ongoing improvements in productivity, will position us well for the future."

Wealth and insurance

Wealth and insurance delivered net income of $364-million in the quarter, flat to last year. Increased wealth earnings were driven by strong performance in the bank's advice-based and asset management businesses and good growth in client assets. During the quarter, TD acquired Epoch Investment Partners Inc., a successful New York-based asset management firm, which will further advance the growth strategy for the wealth business. In insurance, good premium growth was more than offset by higher claims due to a more severe winter and increased investments in the business. TD Ameritrade contributed $53-million in earnings to the segment, an increase of 13 per cent compared with the second quarter last year.

"In our wealth business we have strong momentum, and we look forward to working with Epoch to drive further growth," said Mike Pedersen, group head, wealth management, insurance and corporate shared services. "In insurance, we expect good premium growth but face increased uncertainty, including the impact of past and future Ontario auto reforms."

U.S. personal and commercial banking

U.S. personal and commercial banking generated $392-million (U.S.) in net income for the quarter, an increase of 9 per cent compared with the second quarter last year. Results were driven by strong loan and deposit volume growth, partially offset by lower margins. During the second quarter, TD acquired leading retailer Target's U.S. Visa and private label credit card portfolio, adding $6-billion of high-quality assets to TD's balance sheet.

"TD Bank, America's most convenient bank, had a good second quarter, with strong volume growth in both loans and deposits," said Bharat Masrani, group head, U.S. personal and commercial banking. "Although we continue to feel the impact of margin pressure, we remain focused on delivering legendary customer service and convenience and achieving productivity improvements."

Wholesale banking

Wholesale banking net income for the quarter was $220-million, an increase of 12 per cent compared with the second quarter last year, driven by higher trading-related revenue, improved client activity and lower non-interest expenses.

"We are pleased with our second-quarter results and the continued performance of our strong franchise businesses in a difficult trading environment," said Bob Dorrance, group head, wholesale banking. "We are encouraged by the gradual improvement in capital markets, and we expect to capitalize on increased market activity as macroeconomic conditions stabilize."

Capital

TD's common equity Tier 1 ratio on a Basel III fully phased-in basis was 8.8 per cent, having absorbed the Target U.S. credit card and Epoch acquisitions in the quarter. In view of the bank's demonstrated ability to generate capital, TD is announcing today a 12-million-share buyback program which translates to roughly $1-billion in capital.

Conclusion

"We are pleased with our results for the quarter, given the backdrop of low interest rates and slower economic growth. At the half-year mark, we are very pleased with our 7-per-cent adjusted earnings growth on a year-to-date basis, driven by our retail businesses," said Mr. Clark. "We will continue to build our businesses and focus on managing our expenses prudently while delivering value for our customers, employees, communities and shareholders."

                                              FINANCIAL HIGHLIGHTS 
                                   (millions of dollars, except as noted)

                                                            For the three months ended  For the six months ended 
                                                        April 30,    Jan. 31, April 30,   April 30,     April 30,
                                                            2013        2013      2012        2013          2012 
Results of operations                                                                                            
Total revenue                                            $ 6,000  $    5,971  $  5,750  $   11,971    $   11,392 
                                                         -------- ----------- --------- -----------   -----------
Provision for credit losses                                  417         385       388         802           792 
Non-interest expenses                                      3,626       3,495     3,372       7,121         6,921 
                                                         -------- ----------- --------- -----------   -----------
Net income -- reported                                   $ 1,723  $    1,790  $  1,693  $    3,513    $    3,171 
                                                         ======== =========== ========= ===========   ===========
Net income -- adjusted                                     1,833       1,916     1,736       3,749         3,498 
Economic profit                                              756         832       762       1,586         1,546 
Common share information -- reported (dollars)                                                                    
Per share earnings                                                                                               
Basic                                                    $  1.79  $     1.87  $   1.79  $     3.66    $     3.35 
Diluted                                                     1.78        1.86      1.78        3.65          3.33 
Dividends per share                                         0.81        0.77      0.72        1.58          1.40 
Common share information -- adjusted (dollars)                                                                    
Per share earnings                                                                                               
Basic                                                       1.91        2.01      1.84        3.92          3.71 
Diluted                                                     1.90        2.00      1.82        3.90          3.68 

We seek Safe Harbor.