TD Bank Group Reports First Quarter 2024 Results

Earnings News Release •Three months ended January 31, 2024

FIRST QUARTER FINANCIAL HIGHLIGHTS, compared with the first quarter last year:

• Reported diluted earnings per share were $1.55, compared with $0.82.
• Adjusted diluted earnings per share were $2.00, compared with $2.23.
• Reported net income was $2,824 million, compared with $1,581 million.
• Adjusted net income was $3,637 million, compared with $4,154 million.

FIRST QUARTER ADJUSTMENTS (ITEMS OF NOTE)

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

• Amortization of acquired intangibles of $94 million ($79 million after-tax or 4 cents per share), compared with $54 million ($46 million after-tax or 3 cents per share) in the first quarter last year.
• Acquisition and integration charges related to the Schwab transaction of $32 million ($26 million after-tax or 2 cents per share), compared with $34 million ($28 million after-tax or 2 cents per share) in the first quarter last year.
• Share of restructuring and other charges from investment in Schwab of $49 million (or 3 cents per share).
• Restructuring charges of $291 million ($213 million after-tax or 12 cents per share).
• Acquisition and integration charges related to the Cowen acquisition of $117 million ($93 million after-tax or 5 cents per share).
• Impact from the terminated FHN acquisition-related capital hedging strategy of $57 million ($43 million after-tax or 2 cents per share).
• FDIC special assessment of $411 million ($310 million after-tax or 17 cents per share).

TORONTO, Feb. 29, 2024 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the first quarter ended January 31, 2024. Reported earnings were $2.8 billion, up 79% compared with the first quarter last year, and adjusted earnings were $3.6 billion, down 12%.

"TD had a good start to the year, with revenue growth reflecting higher fee-income from our markets-driven businesses, including the contribution from TD Cowen, and higher volumes and deposit margins in the Canadian Personal and Commercial Bank," said Bharat Masrani, Group President and Chief Executive Officer, TD Bank Group. "Expense growth moderated from last quarter as we made progress on our restructuring initiatives, delivering efficiencies across the Bank."

Canadian Personal and Commercial Banking delivered a strong quarter supported by volume growth and margin expansion
Canadian Personal and Commercial Banking net income was $1,785 million, an increase of 3% compared to the first quarter last year. The increase reflects revenue growth, partially offset by higher non-interest expenses and provisions for credit losses (PCL). Revenue was $4,884 million, an increase of 6%, reflecting 8% growth in net interest income driven by volume growth and margin expansion.

Canadian Personal and Commercial Banking delivered another strong quarter for New to Canada account openings and continued momentum in credit cards. TD launched the Low Rate Visa card, further enhancing its award-winning line up of credit cards. In addition, TD Auto Finance delivered strong performance in prime retail auto lending and accelerated acquisition of dealer relationships in its commercial business year-over-year. Small Business Banking helped over 165,000 clients conveniently repay or refinance Canada Emergency Business Account loans.

The U.S. Retail Bank delivered loan growth and operating momentum in a challenging environment
U.S. Retail reported net income of $907 million, a decrease of 43% (43% in U.S. dollars) compared with the first quarter last year. On an adjusted basis, net income was $1,217 million, a decline of 27% (27% in U.S. dollars). TD Bank's investment in The Charles Schwab Corporation ("Schwab") contributed $194 million in earnings, a decrease of 36% (35% in U.S. dollars) compared with the first quarter last year.

The U.S. Retail Bank, which excludes the Bank's investment in Schwab, reported net income of $713 million (US$526 million), a decrease of 44% (45% in U.S. dollars) from the first quarter last year, primarily reflecting the Federal Deposit Insurance Corporation (FDIC) special assessment, lower revenue and higher PCL. On an adjusted basis net income was $1,023 million (US$752 million), a decrease of 25% (26% in U.S. dollars) from the first quarter last year.

The U.S. Retail Bank continued to deliver loan growth while maintaining its through-the-cycle underwriting standards, with total average loan balances up 9% compared with the first quarter last year and up 2% from last quarter. Average deposit volumes declined 9% year-over-year and 1% quarter-over-quarter. Excluding sweep deposits, total personal and business deposit average balances were down 2% year-over-year and flat quarter-over-quarter, reflecting competitive market conditions.

During the quarter, TD Bank, America's Most Convenient Bank® (TD AMCB) announced a three-year US$20 billion Community Impact Plan to support lending, philanthropy, and banking access in diverse and underserved communities across its footprint. TD AMCB continued to deliver innovative solutions to small business clients with the launch of Tap to Pay on iPhone and Zelle for Small Business, offering enhanced convenience and payment functionality.

Wealth Management and Insurance delivered good performance reflecting the strength of its diversified businesses
Wealth Management and Insurance net income was $555 million, relatively flat compared with the first quarter last year, as positive top-line momentum was partially offset by higher insurance service expenses. This quarter's revenue growth of 8% reflected insurance premium growth and higher fee-based revenue in the asset management and advice-based businesses.

This quarter, Wealth Management and Insurance's investments in client-centric innovation continued to drive momentum and gain recognition.TD Direct Investing ranked as the #1 Direct Investing Brokerage in Canada by the Globe and Mail for the second consecutive year. Eighteen mutual funds and ETFs managed by TD Asset Management received 2023 FundGrade A+ Awards by Fundata Canada Inc. for demonstrating strong risk-adjusted performance relative to industry peers, underscoring the expertise of the Bank's investment teams.

Wholesale Banking delivered record revenue
Wholesale Banking reported net income for the quarter was $205 million, a decrease of $126 million compared with the first quarter last year, reflecting higher non-interest expenses which include integration-related costs of $117 million and a provision of $102 million taken in connection with the industry-wide U.S. record keeping matter, partially offset by higher revenues. On an adjusted basis, net income was $298 million, a decrease of $49 million or 14%. Revenue for the quarter was $1,780 million, an increase of $435 million, or 32%, compared with the first quarter last year, reflecting the segment's expanded capabilities from the inclusion of TD Cowen and strong performance across Global Markets and Corporate and Investment Banking.

This quarter, the Wholesale Bank continued to demonstrate its leadership in Environmental, Social, and Governance (ESG). TD Securities was joint lead manager on a 3-year (US$1.5 billion) Social Bond for the International Finance Corporation (IFC) to support low-income communities in emerging markets. The transaction represents IFC's largest social bond ever issued. TD Securities was also joint lead manager on a new (AUD$1.5 billion) Green Bond issued by KFW Development Bank, the issuer's largest ever transaction in the Australian market.

Continuing to innovate for customers
The Bank continued to enhance TD Invent, its enterprise approach to innovation, including reaching a milestone with over 700 patents across Canada and the U.S. as of this quarter. For the third consecutive year, the Bank was recognized by the Business Intelligence Group's annual BIG Innovation Awards, ranking highest in the Organization and Product categories for the TD Accessibility Adapter, a colleague-developed browser plug-in that helps to make online experiences more inclusive.

Capital
TD's Common Equity Tier 1 Capital ratio was 13.9%.

Conclusion
"Looking ahead, TD is well-positioned from both a capital and funding perspective, with the capacity to continue to invest in our business and return capital to shareholders," said Masrani. "I want to thank our more than 95,000 TD bankers who continue to deliver for our customers, communities, and shareholders."

a) Restructuring Charges
The Bank continued to undertake certain measures in the first quarter of 2024 to reduce its cost base and achieve greater efficiency. In connection with these measures, the Bank incurred $291 million of restructuring charges which primarily relate to employee severance and other personnel-related costs and real estate optimization. The Bank continues to expect to incur restructuring charges in the first half of calendar 2024 that are of a similar magnitude to the restructuring charges incurred in the fourth quarter of 2023.

b) Federal Deposit Insurance Corporation Special Assessment
On November 16, 2023, the FDIC announced a final rule that implements a special assessment to recover the losses to the Deposit Insurance Fund arising from the protection of uninsured depositors during the U.S. bank failures in the spring of 2023. The FDIC special assessment resulted in the recognition of $411 million (US$300 million) pre-tax in non-interest expenses in the first quarter of the Bank's fiscal 2024. On February 23, 2024, the FDIC notified all institutions subject to the special assessment that its estimate of total losses has increased compared to the amount communicated with the final rule in November 2023. The FDIC plans to provide institutions subject to the special assessment an updated estimate with its first quarter 2024 special assessment invoice, to be released in June 2024. At this time, it is not known what the final FDIC special assessment will be, but the Bank expects the FDIC special assessment to increase.

HOW THE BANK REPORTS
The Bank prepares its Interim Consolidated Financial Statements in accordance with IFRS and refers to results prepared in accordance with IFRS as "reported" results.

Non-GAAP and Other Financial Measures
In addition to reported results, the Bank also presents certain financial measures, including non-GAAP financial measures that are historical, non-GAAP ratios, supplementary financial measures and capital management measures, to assess its results. Non-GAAP financial measures, such as "adjusted" results, are utilized to assess the Bank's businesses and to measure the Bank's overall performance. To arrive at adjusted results, the Bank adjusts for "items of note" from reported results. Items of note are items which management does not believe are indicative of underlying business performance and are disclosed in Table 3. Non-GAAP ratios include a non-GAAP financial measure as one or more of its components. Examples of non-GAAP ratios include adjusted basic and diluted earnings per share (EPS), adjusted dividend payout ratio, adjusted efficiency ratio, net of ISE, and adjusted effective income tax rate. The Bank believes that non-GAAP financial measures and non-GAAP ratios provide the reader with a better understanding of how management views the Bank's performance. Non-GAAP financial measures and non-GAAP ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers. Supplementary financial measures depict the Bank's financial performance and position, and capital management measures depict the Bank's capital position, and both are explained in this document where they first appear.

U.S. Strategic Cards
The Bank's U.S. strategic cards portfolio is comprised of agreements with certain U.S. retailers pursuant to which TD is the U.S. issuer of private label and co-branded consumer credit cards to their U.S. customers. Under the terms of the individual agreements, the Bank and the retailers share in the profits generated by the relevant portfolios after credit losses. Under IFRS, TD is required to present the gross amount of revenue and PCL related to these portfolios in the Bank's Interim Consolidated Statement of Income. At the segment level, the retailer program partners' share of revenues and credit losses is presented in the Corporate segment, with an offsetting amount (representing the partners' net share) recorded in Non-interest expenses, resulting in no impact to Corporate's reported net income (loss). The net income (loss) included in the U.S. Retail segment includes only the portion of revenue and credit losses attributable to TD under the agreements.

Investment in The Charles Schwab Corporation and IDA Agreement
On October 6, 2020, the Bank acquired an approximately 13.5% stake in The Charles Schwab Corporation ("Schwab") following the completion of Schwab's acquisition of TD Ameritrade Holding Corporation ("TD Ameritrade") of which the Bank was a major shareholder (the "Schwab transaction"). On August 1, 2022, the Bank sold 28.4 million non-voting common shares of Schwab, at a price of US$66.53 per share for proceeds of $2.5 billion (US$1.9 billion), which reduced the Bank's ownership interest in Schwab to approximately 12.0%.

The Bank accounts for its investment in Schwab using the equity method. The U.S. Retail segment reflects the Bank's share of net income from its investment in Schwab. The Corporate segment net income (loss) includes amounts for amortization of acquired intangibles, the acquisition and integration charges related to the Schwab transaction, and the Bank's share of restructuring and other charges incurred by Schwab. The Bank's share of Schwab's earnings available to common shareholders is reported with a one-month lag. For further details, refer to Note 7 of the Bank's first quarter 2024 Interim Consolidated Financial Statements.

On November 25, 2019, the Bank and Schwab signed an insured deposit account agreement (the "2019 Schwab IDA Agreement"), with an initial expiration date of July 1, 2031. Under the 2019 Schwab IDA Agreement, starting July 1, 2021, Schwab had the option to reduce the deposits by up to US$10 billion per year (subject to certain limitations and adjustments), with a floor of US$50 billion. In addition, Schwab requested some further operational flexibility to allow for the sweep deposit balances to fluctuate over time, under certain conditions and subject to certain limitations.

On May 4, 2023, the Bank and Schwab entered into an amended insured deposit account agreement (the "2023 Schwab IDA Agreement"), which replaced the 2019 Schwab IDA Agreement. Pursuant to the 2023 Schwab IDA Agreement, the Bank continues to make sweep deposit accounts available to clients of Schwab. Schwab designates a portion of the deposits with the Bank as fixed-rate obligation amounts (FROA). Remaining deposits over the minimum level of FROA are designated as floating-rate obligations. In comparison to the 2019 Schwab IDA Agreement, the 2023 Schwab IDA Agreement extends the initial expiration date by three years to July 1, 2034 and provides for lower deposit balances in its first six years, followed by higher balances in the later years. Specifically, until September 2025, the aggregate FROA will serve as the floor. Thereafter, the floor will be set at US$60 billion. In addition, Schwab has the option to buy down up to $6.8 billion (US$5 billion) of FROA by paying the Bank certain fees in accordance with the 2023 Schwab IDA Agreement, subject to certain limits. Refer to the "Related Party Transactions" section in the 2023 MD&A for further details.

During the first quarter of 2024, Schwab exercised its option to buy down the remaining $0.7 billion (US$0.5 billion) of the US$5 billion FROA buydown allowance and paid $32 million (US$23 million) in termination fees to the Bank in accordance with the 2023 Schwab IDA Agreement. The fees are intended to compensate the Bank for losses incurred this quarter from discontinuing certain hedging relationships, and for lost revenues. The net impact is recorded in net interest income.

The following table provides the operating results on a reported basis for the Bank.

The following table provides a reconciliation between the Bank's adjusted and reported results. For further details refer to the "Significant Events" section.

Return on Common Equity
The consolidated Bank ROE is calculated as reported net income available to common shareholders as a percentage of average common equity. The consolidated Bank adjusted ROE is calculated as adjusted net income available to common shareholders as a percentage of average common equity. Adjusted ROE is a non-GAAP financial ratio and can be utilized in assessing the Bank's use of equity.

ROE for the business segments is calculated as the segment net income attributable to common shareholders as a percentage of average allocated capital. The Bank's methodology for allocating capital to its business segments is largely aligned with the common equity capital requirements under Basel III. Capital allocated to the business segments was increased to 11.5% Common Equity Tier 1 (CET1) Capital effective the first quarter of 2024, compared with 11% in fiscal 2023.

Return on Tangible Common Equity
Tangible common equity (TCE) is calculated as common shareholders' equity less goodwill, imputed goodwill and intangibles on the investments in Schwab and other acquired intangible assets, net of related deferred tax liabilities. ROTCE is calculated as reported net income available to common shareholders after adjusting for the after–tax amortization of acquired intangibles, which are treated as an item of note, as a percentage of average TCE. Adjusted ROTCE is calculated using reported net income available to common shareholders, adjusted for all items of note, as a percentage of average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in assessing the Bank's use of equity. TCE is a non-GAAP financial measure, and ROTCE and adjusted ROTCE are non-GAAP ratios.

For management reporting purposes, the Bank's business operations and activities are organized around the following four key business segments: Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results of each business segment reflect revenue, expenses, assets, and liabilities generated by the businesses in that segment. Where applicable, the Bank measures and evaluates the performance of each segment based on adjusted results and ROE, and for those segments, the Bank indicates that the measure is adjusted. For further details, refer to the "How We Performed" section of this document, the "Business Focus" section in the Bank's 2023 MD&A, and Note 28 of the Bank's Consolidated Financial Statements for the year ended October 31, 2023. Effective the first quarter of 2024, certain asset management businesses which were previously reported in the U.S. Retail segment are now reported in the Wealth Management and Insurance segment. Comparative period information has been adjusted to reflect the new alignment.

PCL related to performing (Stage 1 and Stage 2) and impaired (Stage 3) financial assets, loan commitments, and financial guarantees is recorded within the respective segment.

Net interest income within Wholesale Banking is calculated on a taxable equivalent basis (TEB), which means that the value of non-taxable or tax-exempt income, including certain dividends, is adjusted to its equivalent pre-tax value. Using TEB allows the Bank to measure income from all securities and loans consistently and makes for a more meaningful comparison of net interest income with similar institutions. The TEB increase to net interest income and provision for income taxes reflected in Wholesale Banking results is reversed in the Corporate segment. The TEB adjustment for the quarter was $29 million, compared with $44 million in the prior quarter and $57 million in the first quarter last year.

Share of net income from investment in Schwab is reported in the U.S. Retail segment. Amounts for amortization of acquired intangibles, the acquisition and integration charges related to the Schwab transaction, and the Bank's share of restructuring and other charges incurred by Schwab are recorded in the Corporate segment.

Quarterly comparison – Q1 2024 vs. Q1 2023
Canadian Personal and Commercial Banking net income for the quarter was $1,785 million, an increase of $56 million, or 3%, compared with the first quarter last year, reflecting higher revenue, partially offset by higher non-interest expenses and PCL. The annualized ROE for the quarter was 34.6%, compared with 39.9% in the first quarter last year.

Revenue for the quarter was $4,884 million, an increase of $295 million, or 6%, compared with the first quarter last year.

Net interest income was $3,833 million, an increase of $294 million, or 8%, compared with the first quarter last year, primarily reflecting volume growth. Average loan volumes increased $36 billion, or 7%, reflecting 7% growth in personal loans and 8% growth in business loans. Average deposit volumes increased $14 billion, or 3%, reflecting 6% growth in personal deposits, partially offset by 2% decline in business deposits. Net interest margin was 2.84%, an increase of 4 basis points (bps), primarily due to higher margins on deposits, partially offset by lower margins on loans.

Non-interest income was $1,051 million, relatively flat compared with the first quarter last year.

PCL for the quarter was $423 million, an increase of $96 million, compared with the first quarter last year. PCL – impaired for the quarter was $364 million, an increase of $144 million, or 65%, reflecting further normalization of credit performance in the consumer lending portfolios, and credit migration in the commercial lending portfolios. PCL – performing was $59 million, a decrease of $48 million, reflecting a lower build in the current quarter. The performing provisions this quarter largely reflect credit conditions, including some continued normalization of credit performance in the consumer lending portfolios, credit migration in the commercial lending portfolios, and volume growth. Total PCL as an annualized percentage of credit volume was 0.30%, an increase of 5 bps compared with the first quarter last year.

Non-interest expenses for the quarter were $1,984 million, an increase of $121 million, or 6%, compared with the first quarter last year, reflecting higher spend supporting business growth including employee-related expenses and technology costs.

The efficiency ratio for the quarter was 40.6%, flat compared with the first quarter last year.

Quarterly comparison – Q1 2024 vs. Q4 2023
Canadian Personal and Commercial Banking net income for the quarter was $1,785 million, an increase of $106 million, or 6%, compared with the prior quarter, reflecting higher revenue and lower non-interest expenses, partially offset by higher PCL. The annualized ROE for the quarter was 34.6%, compared with 35.1%, in the prior quarter.

Revenue increased $130 million, or 3%, compared with the prior quarter. Net interest income increased $128 million, or 3%, reflecting volume growth and higher margins. Average loan volumes increased $7 billion, or 1%, reflecting 1% growth in personal loans and 2% growth in business loans. Average deposit volumes increased $8 billion, or 2%, reflecting 3% growth in personal deposits, partially offset by 1% decline in business deposits. Net interest margin was 2.84%, an increase of 6 bps, primarily due to higher deposit margins.

Non-interest income increased $2 million, relatively flat compared with the prior quarter.

PCL for the quarter was $423 million, an increase of $33 million compared with the prior quarter. PCL – impaired was $364 million, an increase of $90 million, or 33%, reflecting further normalization of credit performance in the consumer lending portfolios, and credit migration in the commercial lending portfolios. PCL – performing was $59 million, a decrease of $57 million, reflecting a lower build in the current quarter. The performing provisions this quarter largely reflect credit conditions including some continued normalization of credit performance in the consumer lending portfolios, credit migration in the commercial lending portfolios, and volume growth. Total PCL as an annualized percentage of credit volume was 0.30%, an increase of 2 bps compared with the prior quarter.

Non-interest expenses decreased $55 million, or 3% compared with the prior quarter, primarily reflecting higher non-credit provisions in the prior quarter and lower operating expenses within our support functions, partially offset by higher employee-related expenses in Branch Banking.

The efficiency ratio was 40.6%, compared with 42.9%, in the prior quarter.

Quarterly comparison – Q1 2024 vs. Q1 2023
U.S. Retail reported net income for the quarter was $907 million (US$670 million), a decrease of $677 million (US$503 million), or 43% (43% in U.S. dollars), compared with the first quarter last year. On an adjusted basis, net income for the quarter was $1,217 million (US$896 million), a decrease of $447 million (US$336 million), or 27% (27% in U.S. dollars). The reported and adjusted annualized ROE for the quarter were 8.5% and 11.3%, respectively, compared with 15.5% and 16.3%, respectively, in the first quarter last year.

U.S. Retail net income includes contributions from the U.S. Retail Bank and the Bank's investment in Schwab. Reported net income for the quarter from the Bank's investment in Schwab was $194 million (US$144 million), a decrease of $107 million (US$78 million), or 36% (35% in U.S. dollars).

U.S. Retail Bank reported net income was $713 million (US$526 million), a decrease of $570 million (US$425 million), or 44% (45% in U.S. dollars), compared with the first quarter last year, primarily reflecting the FDIC special assessment in non-interest expenses, lower revenue and higher PCL. U.S. Retail Bank adjusted net income was $1,023 million (US$752 million), a decrease of $340 million (US$258 million), or 25% (26% in U.S. dollars), compared with the first quarter last year, reflecting lower revenue, higher PCL and higher non-interest expenses.

Revenue for the quarter was US$2,587 million, a decrease of US$176 million, or 6%, compared with the first quarter last year. Net interest income of US$2,141 million, decreased US$207 million, or 9%, driven by lower deposit volumes and margins, partially offset by higher loan volumes. Net interest margin of 3.03%, decreased 26 bps, due to lower deposit margins reflecting higher deposit costs and lower margins on loans. Non-interest income of US$446 million increased US$31 million, or 7%, compared with the first quarter last year, primarily reflecting fee income growth from increased customer activity.

Average loan volumes increased US$16 billion, or 9%, compared with the first quarter last year. Personal loans increased 11%, reflecting lower mortgage prepayments in the higher rate environment and strong auto originations. Business loans increased 7%, reflecting good originations from new customer growth and slower payment rates. Average deposit volumes decreased US$33 billion, or 9%, reflecting a 23% decrease in sweep deposits, a 4% decrease in business deposits, and a 1% decrease in personal deposit volumes.

Assets under administration (AUA) were US$40 billion as at January 31, 2024, an increase of US$2 billion, or 5%, compared with the first quarter last year, reflecting net asset growth. After giving effect to realignment of certain asset management businesses from U.S. Retail to Wealth Management and Insurance, Assets under Management (AUM) were US$7 billion as at January 31, 2024, flat compared with the first quarter last year.

PCL for the quarter was US$285 million, an increase of US$136 million compared with the first quarter last year. PCL – impaired was US$279 million, an increase of US$121 million, or 77%, primarily reflecting further normalization of credit performance in the consumer lending portfolios and credit migration in the commercial lending portfolios, largely related to commercial real estate. PCL – performing was a build of US$6 million, compared with a recovery of US$9 million in the prior year. U.S. Retail PCL including only the Bank's share of PCL in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 0.61%, an increase of 27 bps, compared with the first quarter last year.

Reported non-interest expenses for the quarter were US$1,779 million, an increase of US$267 million, or 18%, compared with the first quarter last year, reflecting the FDIC special assessment, and higher employee-related expenses, partially offset by acquisition and integration-related charges for the terminated First Horizon transaction in the first quarter last year. On an adjusted basis, non-interest expenses increased US$45 million, or 3%, reflecting higher employee-related expenses.

The reported and adjusted efficiency ratios for the quarter were 68.8% and 57.2%, respectively, compared with 54.7% and 51.9%, respectively, in the first quarter last year.

Quarterly comparison – Q1 2024 vs. Q4 2023
U.S. Retail reported net income of $907 million (US$670 million), a decrease of $362 million (US$267 million), or 29% (28% in U.S. dollars), compared with the prior quarter. On an adjusted basis, net income for the quarter was $1,217 million (US$896 million), a decrease of $52 million (US$41 million), or 4% (4% in U.S. dollars). The reported and adjusted annualized ROE for the quarter were 8.5% and 11.3%, respectively, compared with 12.2%, respectively, in the prior quarter.

The contribution from Schwab of $194 million (US$144 million) decreased $3 million (US$2 million), or 2% (1% in U.S. dollars).

U.S. Retail Bank reported net income was $713 million (US$526 million), a decrease of $359 million (US$265 million), or 33% (34% in U.S. dollars), compared with the prior quarter, primarily reflecting the FDIC special assessment in non-interest expenses and higher PCL. U.S. Retail Bank adjusted net income was $1,023 million (US$752 million), a decrease of $49 million (US$39 million), or 5% (5% in U.S. dollars), primarily reflecting higher PCL, partially offset by lower non-interest expenses.

Revenue for the quarter was US$2,587 million, a decrease of US$9 million, relatively flat compared with the prior quarter. Net interest income of US$2,141 million decreased US$34 million, or 2%, primarily reflecting lower deposit volumes, partially offset by higher loan volumes. Net interest margin of 3.03% decreased 4 bps quarter over quarter due to lower deposit margins reflecting higher deposit costs, partially offset by the benefit of higher reinvestment rates. Non-interest income of US$446 million increased US$25 million, or 6%, primarily reflecting higher deposit-related fees.

Average loan volumes increased US$3 billion, or 2%, compared with the prior quarter. Personal loans increased 2%, reflecting lower mortgage prepayments, strong auto originations, and seasonal credit card growth. Business loans increased 1%, reflecting good originations from new customer growth and slower payment rates. Average deposit volumes decreased US$5 billion, or 1%, compared with the prior quarter, reflecting a 5% decrease in sweep deposits and a 1% decrease in business deposits, partially offset by a 1% increase in personal deposit volume.

AUA were US$40 billion as at January 31, 2024, flat compared with the prior quarter. After giving effect to realignment of certain asset management businesses from U.S. Retail to Wealth Management and Insurance, AUM were US$7 billion, flat compared with the prior quarter.

PCL for the quarter was US$285 million, an increase of US$72 million compared with the prior quarter. PCL – impaired was US$279 million, an increase of US$52 million, or 23%, reflecting further normalization of credit performance in the consumer lending portfolios, including seasonal trends in the credit card and auto portfolios. PCL – performing was a build of US$6 million, compared with a recovery of US$14 million in the prior quarter. U.S. Retail PCL including only the Bank's share of PCL in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 0.61%, an increase of 15 bps, compared with the prior quarter.

Reported non-interest expenses for the quarter were US$1,779 million, an increase of US$274 million, or 18%, compared to the prior quarter, primarily reflecting the FDIC special assessment. On an adjusted basis, non-interest expenses decreased US$26 million, or 2%, reflecting higher legal costs in the prior quarter, partially offset by higher employee-related expenses.

The reported and adjusted efficiency ratios for the quarter were 68.8% and 57.2%, respectively, compared with 58.0%, respectively, in the prior quarter.

Quarterly comparison – Q1 2024 vs. Q1 2023
Wealth Management and Insurance net income for the quarter was $555 million, an increase of $1 million, or relatively flat compared with the first quarter last year, reflecting higher revenue, offset by higher insurance service expenses and non-interest expenses. The annualized ROE for the quarter was 37.5%, compared with 39.1% in the first quarter last year.

Revenue for the quarter was $3,135 million, an increase of $220 million, or 8%, compared with the first quarter last year. Non-interest income was $2,850 million, an increase of $218 million, or 8%, reflecting higher insurance premiums, and higher fee-based revenue in the wealth management business. Net interest income was $285 million, an increase of $2 million, or 1%, compared with the first quarter last year.

AUA were $576 billion as at January 31, 2024, an increase of $35 billion, or 6%, compared with the first quarter last year, reflecting market appreciation and net asset growth. AUM were $479 billion as at January 31, 2024, an increase of $27 billion, or 6%, compared with the first quarter last year, reflecting market appreciation.

Insurance service expenses for the quarter were $1,366 million, an increase of $202 million, or 17%, compared with the first quarter last year, reflecting increased claims severity and less favourable prior years' claims development.

Non-interest expenses for the quarter were $1,047 million, an increase of $38 million, or 4%, compared with the first quarter last year, reflecting higher variable compensation commensurate with higher revenues, and technology costs.

The efficiency ratio for the quarter was 33.4%, compared with 34.6% in the first quarter last year. The efficiency ratio, net of ISE for the quarter was 59.2%, compared with 57.6% in the first quarter last year.

Quarterly comparison – Q1 2024 vs. Q4 2023
Wealth Management and Insurance net income for the quarter was $555 million, an increase of $63 million, or 13%, compared with the prior quarter, reflecting higher revenue, partially offset by higher non-interest expenses. The annualized ROE for the quarter was 37.5%, compared with 33.9%, in the prior quarter.

Revenue increased $179 million, or 6%, compared with the prior quarter. Non-interest income increased $159 million, or 6%, reflecting higher insurance premiums, as well as higher fee-based and transaction revenue in the wealth management business. Net interest income increased $20 million, or 8%, reflecting higher deposit margins.

AUA increased $45 billion, or 8%, and AUM increased $38 billion, or 9%, compared with the prior quarter, both primarily reflecting market appreciation and net asset growth.

Insurance service expenses for the quarter increased $20 million, or 1%, compared with the prior quarter, reflecting less favourable prior years' claims development, partially offset by fewer severe weather-related events.

Non-interest expenses increased $90 million, or 9%, compared with the prior quarter, primarily reflecting higher employee-related expenses including variable compensation commensurate with higher revenues.

The efficiency ratio for the quarter was 33.4%, compared with 32.4% in the prior quarter. The efficiency ratio, net of ISE for the quarter was 59.2%, compared with 59.4% in the prior quarter.

Quarterly comparison – Q1 2024 vs. Q1 2023
Wholesale Banking reported net income for the quarter was $205 million, a decrease of $126 million, or 38%, compared with the first quarter last year, primarily reflecting higher non-interest expenses, partially offset by higher revenues. On an adjusted basis, net income was $298 million, a decrease of $49 million or 14%.

Revenue for the quarter, including TD Cowen, was $1,780 million, an increase of $435 million, or 32%, compared with the first quarter last year. Higher revenue primarily reflects higher equity commissions, lending revenue primarily from syndicated and leveraged finance, underwriting fees, and trading-related revenue.

PCL for the quarter was $10 million, a decrease of $22 million compared with the first quarter last year. PCL – impaired was $5 million. PCL – performing was $5 million, a decrease of $26 million due to prior period build.

Reported non-interest expenses for the quarter, including TD Cowen, were $1,500 million, an increase of $617 million, or 70%, compared with the first quarter last year, primarily reflecting TD Cowen and the associated acquisition and integration-related costs and higher variable compensation commensurate with higher revenues as well as a provision of $102 million taken in connection with the U.S. record keeping matter. On an adjusted basis, non-interest expenses were $1,383 million, an increase of $521 million, or 60%.

Quarterly comparison – Q1 2024 vs. Q4 2023
Wholesale Banking reported net income for the quarter was $205 million, an increase of $188 million compared with the prior quarter, primarily reflecting higher revenues, partially offset by higher non-interest expenses. On an adjusted basis, net income was $298 million, an increase of $120 million, or 67%.

Revenue for the quarter increased $292 million, or 20%, compared with the prior quarter. Higher revenue primarily reflects higher trading-related revenue, lending revenue, and underwriting fees.

PCL for the quarter was $10 million, a decrease of $47 million compared with the prior quarter. PCL – impaired was $5 million. PCL – performing was $5 million, a decrease of $52 million due to prior quarter build.

Reported non-interest expenses for the quarter, increased $59 million, or 4%, compared with the prior quarter, primarily reflecting a provision of $102 million taken in connection with the U.S. record keeping matter, partially offset by lower acquisition and integration related costs. On an adjusted basis, non-interest expenses increased $139 million or 11%.

Quarterly comparison – Q1 2024 vs. Q1 2023
Corporate segment's reported net loss for the quarter was $628 million, compared with a reported net loss of $2,617 million in the first quarter last year. The lower net loss primarily reflects the impact of the Stanford litigation settlement in the prior year, the net effect of the terminated FHN acquisition-related capital hedging strategy, and prior year recognition of a provision for income taxes in connection with the CRD and increase in the Canadian federal tax rate for fiscal 2022, partially offset by restructuring charges in the current quarter. Net corporate expenses increased $63 million compared to the prior year, mainly reflecting investments in our risk and control infrastructure. The adjusted net loss for the quarter was $218 million, compared with an adjusted net loss of $140 million in the first quarter last year.

Quarterly comparison – Q1 2024 vs. Q4 2023
Corporate segment's reported net loss for the quarter was $628 million, compared with a reported net loss of $591 million in the prior quarter. The higher net loss reflects lower revenue in treasury and balance sheet management activities and higher risk and control expenses, partially offset by lower restructuring charges. Net corporate expenses increased $27 million compared to the prior quarter, mainly reflecting investments in our risk and control infrastructure. The adjusted net loss for the quarter was $218 million, compared with an adjusted net loss of $133 million in the prior quarter.

Shareholder Services

For all other shareholder inquiries, please contact TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or email tdshinfo@td.com. Please note that by leaving us an e-mail or voicemail message, you are providing your consent for us to forward your inquiry to the appropriate party for response.

Access to Quarterly Results Materials
Interested investors, the media and others may view the first quarter earnings news release, results slides, supplementary financial information, and the Report to Shareholders on the TD Investor Relations website at www.td.com/investor/.

Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on February 29, 2024. The call will be audio webcast live through TD's website at 8:30 a.m. ET. The call will feature presentations by TD executives on the Bank's financial results for first quarter and discussions of related disclosures, followed by a question-and-answer period with analysts. The presentation material referenced during the call will be available on the TD website at www.td.com/investor on February 29, 2024, in advance of the call. A listen-only telephone line is available at 416–641–6150 or 1-866-696-5894 (toll free) and the passcode is 2727354#.

The audio webcast and presentations will be archived at www.td.com/investor. Replay of the teleconference will be available from 5:00 p.m. ET on February 29, 2024, until 11:59 p.m. ET on March 15, 2024, by calling 905-694-9451 or 1-800-408-3053 (toll free). The passcode is 7300743#.

Annual Meeting
Thursday, April 18, 2024
Toronto, Ontario

About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the sixth largest bank in North America by assets and serves over 27.5 million customers in four key businesses operating in a number of locations in financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Auto Finance Canada; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; Wealth Management and Insurance, including TD Wealth (Canada), TD Direct Investing, and TD Insurance; and Wholesale Banking, including TD Securities and TD Cowen. TD also ranks among the world's leading online financial services firms, with more than 17 million active online and mobile customers. TD had $1.91 trillion in assets on January 31, 2024. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

SOURCE TD Bank Group

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