TD Bank Group Reports Fourth Quarter and Fiscal 2011 Results

This quarterly earnings release should be read in conjunction with our unaudited fourth quarter 2011 consolidated financial results ended October 31, 2011 included in this Earnings News Release and with our audited 2011 Consolidated Financial Statements, which is available on our website at http://www.td.com/investor/. This analysis is dated November 30, 2011. 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 Canadian generally accepted accounting principles (GAAP). The accounting policies used in the preparation of these consolidated financial results are consistent with those used in the Bank's October 31, 2011 Consolidated Financial Statements. 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 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).

FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth quarter last year:

• Reported diluted earnings per share were $1.69, compared with $1.07.
• Adjusted diluted earnings per share were $1.77, compared with $1.38.
• Reported net income was $1,566 million, compared with $994 million.
• Adjusted net income was $1,634 million, compared with $1,260 million.

FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year:

• Reported diluted earnings per share were $6.41, compared with $5.10.
• Adjusted diluted earnings per share were $6.82, compared with $5.77.
• Reported net income was $5,889 million, compared with $4,644 million.
• Adjusted net income was $6,251 million, compared with $5,228 million.

Adjusted measures are non-GAAP measures. Refer to the "How the Bank Reports" section of the Management's Discussion and Analysis for an explanation of reported and adjusted results.

FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE)

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

• Amortization of intangibles of $104 million after tax (12 cents per share), compared with $115 million after tax (14 cents per share) in the fourth quarter last year.
• A gain of $44 million after tax (5 cents per share), due to the change in fair value of derivatives hedging the reclassified available-for-sale debt securities portfolio, compared with a loss of $8 million after tax (1 cent per share) in the fourth quarter last year.
• Integration and restructuring charges of $12 million after tax (1 cent per share), relating to the U.S. Personal and Commercial Banking acquisitions, compared with $18 million after tax (2 cents per share) in the fourth quarter last year.
• A gain of $9 million after tax (1 cent per share), 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 loss of $4 million after tax in the fourth quarter last year.
• Integration charges of $5 million after tax (1 cent per share), relating to the Chrysler Financial acquisition.

TORONTO, Dec. 1, 2011 /CNW/ - TD Bank Group (TD or the Bank) today announced its financial results for the fourth quarter ended October 31, 2011. Overall results for the quarter reflected strong performances from all of TD's businesses.

"This was a record quarter, with all of our businesses delivering double-digit earnings growth - a truly excellent finish to the year for TD. Our North American retail businesses once again showed why we're well positioned to grow regardless of the macroeconomic environment," said Ed Clark, Group President and Chief Executive Officer, TD. "TD's record full-year adjusted earnings broke the $6 billion mark for the first time, validating our strategy of focusing on steady, reliable retail earnings, which helped us outperform despite the weak and volatile economic picture."

Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking posted earnings of $905 million in the fourth quarter, up 17% from the same period last year. Revenue growth was driven by strong volume growth in real estate secured lending, auto lending, business loans and deposits, and insurance. PCL declined 11%. Operating leverage for the quarter was strong.

"Canadian Personal and Commercial Banking had a very strong fourth quarter and a great 2011, with record earnings in personal and business banking, as well as in insurance. We opened 24 branches during the year, continuing to expand our network for our customers," said Tim Hockey, Group Head, Canadian Banking, Auto Finance, and Credit Cards, TD. "For 2012, we expect earnings growth to moderate as the momentum in the business bank and the contribution from MBNA Canada will be partially offset by lower margins and slower personal banking growth. Overall, we're confident that the resilience of our business model, our focus on delivering great customer service and the investments we've made in our franchise leave us well positioned for the future."

Wealth Management
Global Wealth net income, which excludes TD's reported investment in TD Ameritrade, was $139 million in the quarter, up 18% from the same period last year, driven by increased fee-based revenue from higher client assets, direct investing transaction volumes and higher net interest margin. TD Ameritrade contributed $54 million in earnings to the segment, up 64% from the same period last year.

"This was a strong finish to a record year for the Wealth business, which continued to perform well in the face of volatile and challenging equity markets," said Mike Pedersen, Group Head, Wealth Management, Insurance and Corporate Shared Services, TD. "The environment remains difficult to predict, but we're confident the business is well positioned given its strong business fundamentals, increased client satisfaction and steady inflows of new client assets."

U.S. Personal and Commercial Banking
U.S. Personal and Commercial Banking generated US$313 million in reported net income for the quarter. On an adjusted basis, the segment earned US$325 million, up 18% from the fourth quarter last year. Revenue in U.S. dollar terms grew 23% from the same period a year earlier, driven by organic loan and deposit growth and acquisitions. Overall credit quality continued to improve compared to last year.
"TD Bank, America's Most Convenient Bank delivered a good fourth quarter, with strong loan and deposit growth, positive momentum in residential mortgages and healthy levels of new account openings," said Bharat Masrani, Group Head, U.S. Personal and Commercial Banking, TD. "These results complete a record year for our business, with more than US$1.3 billion in adjusted earnings. Looking into next year, we're confident we will continue to outgrow the competition, despite the impact of the Durbin Amendment. However, we also remain cautious about the impact of the weak economy on our customers, as well as the uncertainty surrounding the U.S. regulatory landscape."

Wholesale Banking
Wholesale Banking recorded net income of $288 million for the quarter, up 203% on a reported basis and 33% on an adjusted basis, compared with the same period last year. The increase was due to improved equity and foreign exchange trading, higher security gains, and lower PCL.

"I'm pleased with the results that our diversified business model delivered." said Bob Dorrance, Group Head, Wholesale Banking, TD. "Trading conditions remained challenging, particularly in fixed income and credit markets. However, good performance in other core businesses including equities, foreign exchange and investment banking was augmented by significant gains in our investment portfolio, making for an overall strong quarter. While the outlook in a number of key international markets remains concerning, we will continue to meet the investment, liquidity and funding requirements of our franchise clients and will be well positioned when economies stabilize and capital markets activity improves."

Corporate
The Corporate segment, which includes the Bank's other activities, recorded a net loss of $136 million, down $154 million, on a reported basis, and a net loss of $80 million, down $83 million, on an adjusted basis, from the same period last year. The lower adjusted net loss was due to lower net corporate expenses and segment transfers implemented during 2011.

Capital
TD's Tier 1 capital ratio was 13.0% in the quarter. Capital quality remained very high, with tangible common equity comprising more than 80% of Tier 1 capital. TD expects to comfortably surpass the 7% Basel III requirement on a fully phased-in basis by the second quarter of fiscal 2012.

Conclusion
"TD had a record year in 2011, and we were able to succeed because of the strength of our retail-focused strategy and its proven track record during tough times, as well as the client-driven franchise model of our Wholesale bank. A number of factors still makes us cautious about the future, including low interest rates, sluggish economic growth and an uncertain regulatory environment," Clark said. "However, our businesses are flexible enough to adapt to changing economic conditions without having to fundamentally shift their strategy, and that ability - combined with the quality of our earnings - makes us confident we'll continue to deliver growth in 2012 and beyond. As always, our employees and their dedication to the needs of our customers and clients were the driving force behind our success and I want to thank them for their tremendous contribution."

The foregoing contains forward-looking statements.

This document was reviewed by the Bank's Audit Committee and was approved by the Bank's Board of Directors, on the Audit Committee's recommendation, prior to its release.

HOW WE PERFORMED

How the Bank Reports
The Bank prepares its Consolidated Financial Statements in accordance with GAAP and refers to results prepared in accordance with GAAP as "reported" results. The Bank also utilizes non-GAAP financial measures to arrive at "adjusted" results to assess each of its businesses and to measure overall Bank performance. To arrive at adjusted results, the Bank removes "items of note", net of income taxes, from reported results. The items of note relate to items which management does not believe are indicative of underlying business performance. The Bank believes that adjusted results provide the reader with a better understanding of how management views the Bank's performance. The items of note are listed in the table on the following page. As explained, adjusted results are different from reported results determined in accordance with GAAP. Adjusted results, items of note, and related terms used in this document are not defined terms under GAAP and, therefore, may not be comparable to similar terms used by other issuers.

The Bank is transitioning from Canadian GAAP to International Financial Reporting Standards (IFRS), effective for interim and annual periods beginning in the first quarter of fiscal 2012. Refer to Note 34 of the Consolidated Financial Statements for the Bank's IFRS opening Consolidated Balance Sheet as at November 1, 2010 (IFRS opening Consolidated Balance Sheet) and related disclosures including a summary of the Bank's first-time adoption transition elections under IFRS 1 and other significant differences between Canadian GAAP and IFRS. These disclosures form the starting point for TD's financial reporting under IFRS and have been provided to allow users of the financial statements to obtain a better understanding of the expected effect on the Consolidated Financial Statements as a result of the adoption of IFRS. The interim and annual fiscal 2012 Consolidated Financial Statements will also include fiscal 2011 comparatives, related transitional reconciliations, and accompanying note disclosures.

The following table provides the operating results - reported for the Bank.

ECONOMIC PROFIT AND RETURN ON INVESTED CAPITAL

The Bank utilizes economic profit as a tool to measure shareholder value creation. Economic profit is adjusted net income available to common shareholders less a charge for average invested capital. Average invested capital is equal to average common equity for the period plus the average cumulative after-tax goodwill and intangible assets amortized as of the reporting date. The rate used in the charge for capital is the equity cost of capital calculated using the capital asset pricing model. The charge represents an assumed minimum return required by common shareholders on the Bank's invested capital. The Bank's goal is to achieve positive and growing economic profit.

Return on invested capital (ROIC) is adjusted net income available to common shareholders divided by average invested capital. ROIC is a variation of the economic profit measure that is useful in comparison to the equity cost of capital. Both ROIC and the equity cost of capital are percentage rates, while economic profit is a dollar measure. When ROIC exceeds the equity cost of capital, economic profit is positive. The Bank's goal is to maximize economic profit by achieving ROIC that exceeds the equity cost of capital.

Economic profit and ROIC are non-GAAP financial measures as these are not defined terms under GAAP. Readers are cautioned that earnings and other measures adjusted to a basis other than GAAP do not have standardized meanings under GAAP and, therefore, may not be comparable to similar terms used by other issuers.

The following table reconciles between the Bank's economic profit, ROIC, and adjusted net income available to common shareholders. Adjusted results, items of note, and related terms are discussed in the "How the Bank Reports" section.

Significant Events in 2011

Acquisition of MBNA Canada's credit card business
On or about December 1, 2011, the Bank is expected to complete the acquisition of substantially all of the credit card portfolio of MBNA Canada, a wholly-owned subsidiary of Bank of America Corporation, as well as certain other assets and liabilities. At closing, the Bank will pay a premium of approximately $75 million on the portfolio, which is expected to total approximately $7.8 billion at December 1, 2011. The acquisition will be accounted for by the purchase method.

On a pro forma basis, the Bank's Tier 1 Capital ratio would have been 44 basis points lower as at October 31, 2011 had the acquisition closed before year-end.¹ The pro forma impact does not include the common shares issued in September 2011. The net impact of the acquisition on the Bank's Tier 1 Capital ratio including the common shares issued would have been negative 12 basis points as at October 31, 2011.

Acquisition of Chrysler Financial
On April 1, 2011, the Bank acquired 100% of the outstanding equity of Chrysler Financial in Canada and the U.S. for cash consideration of approximately $6,390 million including contingent consideration. As part of the purchase agreement, the Bank is required to pay additional cash consideration in the event that amounts realized on certain assets exceed a pre-established threshold. Under Canadian GAAP, contingent consideration is recorded as part of the purchase price, when the amount can be reasonably estimated and the outcome is determinable beyond a reasonable doubt. During September 2011, the amounts realized on these assets exceeded the threshold and the Bank was required to pay cash consideration of $70 million. The acquisition was accounted for by the purchase method. The results of Chrysler Financial from the acquisition date to October 31, 2011 have been consolidated with the Bank's results. The results of Chrysler Financial in the U.S. are reported in the U.S. Personal and Commercial Banking segment. The results of Chrysler Financial in Canada are reported in the Canadian Personal and Commercial Banking segment. As at April 1, 2011, the acquisition contributed $3,081 million of net cash and cash equivalents, $7,322 million of loans, $2,235 million of other assets, and $6,490 million of liabilities. The estimated fair value for loans reflects the expected credit losses at the acquisition date. The excess of the fair value of the identifiable assets acquired over that of the liabilities assumed of approximately $242 million has been allocated to goodwill, which increased by $73 million, during the period from acquisition date to October 31, 2011, primarily due to the recognition of contingent consideration. The purchase price allocation is subject to refinement as the Bank completes the valuation of the assets acquired and liabilities assumed. As at October 31, 2011, Chrysler Financial contributed $69 million of net cash and cash equivalents, $7,885 million of loans, $1,615 million of other assets, and $3,058 million of liabilities. Included in loans is $518 million of acquired credit-impaired loans.

Acquisition of TMX Group
On October 30, 2011, TMX Group Inc. (TMX) and Maple Group Acquisition Corporation (Maple) announced that they have entered into a support agreement in respect of Maple's proposed acquisition of all of the outstanding TMX shares pursuant to an integrated two-step transaction valued at approximately $3,800 million. The first step of the integrated acquisition transaction will involve acquisition of 70% to 80% of the TMX Group shares for $50 in cash per share, on a pro rated basis, to be followed by a second step court approved plan of arrangement that will provide shareholders (other than Maple) with Maple shares in exchange for their remaining TMX Group shares. Maple is a corporation whose investors comprise 13 of Canada's leading financial institutions and pension funds, including TD Securities Inc., a wholly owned subsidiary of the Bank. As part of the proposed transaction, TD Securities has made an equity commitment of up to $192 million. TMX and Maple are working diligently to obtain all approvals required for the completion of Maple's offer, including approvals by securities regulators and the Competition Bureau. In connection with entering into the support agreement, Maple has agreed to extend its offer associated with the first step of the above noted transaction until January 31, 2012.

¹ Estimates are subject to risks and uncertainties that may cause actual results to differ materially; and TD's expectations are based on certain factors and assumptions. See the "Caution regarding forward-looking statements" included in the Bank's press release dated August 15, 2011, which is available on the Bank's website at www.td.com, as well as on SEDAR at www.sedar.com and on the SEC's website at www.sec.gov (EDGAR filers section).

U.S. Legislative Developments
On July 21, 2010 the President of the United States signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act" or "the Act") that provides for widespread changes to the U.S. financial industry. At over 2,300 pages in length, the Dodd-Frank Act will ultimately affect virtually every financial institution operating in the United States, including the Bank, and, due to certain extraterritorial aspects of the Act, may impact the Bank's operations outside the United States. The Dodd-Frank Act makes significant changes in areas such as banking and bank supervision, the resolution of, and enhanced prudential standards applicable to, systemically important financial companies, proprietary trading and certain fund investments, consumer protection, securities, over-the-counter derivatives, and executive compensation, among others. The Dodd-Frank Act also calls for the issuance of over 240 pieces of regulatory rulemaking as well as numerous studies and on-going reports as part of its implementation. Accordingly, while the Act will have an effect on the business of the Bank, especially its business operations in the United States, the full impact on the Bank will not be known until such time as the implementing regulations are fully released and finalized.

On November 10, 2011, the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission jointly released a proposed rule implementing Section 619 of the Dodd-Frank Act (the "Volcker Rule"). The Bank is in the process of analyzing and planning for the implementation of the proposed Volcker Rule. The Volcker Rule broadly prohibits proprietary trading and places limitations on so-called permitted trading activities, limits investments in and the sponsorship of hedge and private equity funds and requires robust compliance and reporting regimes surrounding permitted activities. Under the current proposal, the provisions of the Volcker Rule are applicable to banking entities, including non-U.S. banks such as the Bank which control insured depository institutions in the United States or are treated as bank holding companies by virtue of maintaining a state branch or agency. The proposed Volcker rule applies to affiliates or subsidiaries of the Bank: the terms "affiliate" and "subsidiary" are defined by the rule to include those entities controlled by or under common control with the Bank. The Volcker Rule will also have an effect on certain of the funds the Bank sponsors and advises in its asset management business as well as private equity investments it currently has made.

Although the regulatory guidance is not yet finalized, as part of its implementation plan, the Bank will be required to distinguish between prohibited proprietary trading businesses and businesses that primarily engage in 'permitted activities' under the Volcker Rule. The Bank regards proprietary trading businesses as those where the primary activity is to build an inventory position in securities, derivatives or other instruments using the Bank's own funds or capital, as opposed to client funds, with the overall objective of profiting from short-term movements in prices for the Bank's own account. In addition, proprietary trading businesses do not have formal market-making responsibilities, or other risk management accountabilities and deal primarily or exclusively with inter-bank counterparties. They are also typically organizationally or operationally separate from market-making activities.

While the Volcker Rule will have an effect on the business of the Bank, the extent of the impact on the Bank will not be known until such time as the current proposal is finalized.

The Durbin Amendment contained in the Dodd-Frank Act authorizes the Federal Reserve Board (FRB) to issue regulations that set interchange fees which are "reasonable and proportional" to the costs of processing such transactions. In June 2011, the FRB issued final rules limiting debit card interchange fees with a required implementation date of October 1, 2011 and capped the fee at 21 cents per transaction plus small amounts to cover fraud related expenses. The Durbin amendment is expected to impact gross revenue by approximately US$50-60 million pre-tax per quarter.

Other regulatory changes include amendments to Regulation E, or the Electronic Funds Transfer Act, which prohibits financial institutions from charging fees to consumers for paying automated teller machine and point of sale transactions that result in an overdraft and the Credit Card Act, which has, among other things, significantly restricted the Bank's United States banking subsidiary ability to charge interest rates and assess fees to reflect individual customer risk.

For more detail on the impact of the Durbin Amendment and Regulation E, see the U.S. Personal and Commercial Banking segment disclosure in the "Business Segment Analysis" section of the 2011 MD&A. The Bank continues to monitor closely these and other legislative developments and will analyze the impact such regulatory and legislative changes may have on its businesses.

HOW OUR BUSINESSES PERFORMED

For management reporting purposes, the Bank's operations and activities are organized around four key business segments operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust, TD Insurance, and TD Auto Finance Canada; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking including TD Bank, America's Most Convenient Bank and TD Auto Finance U.S.; and Wholesale Banking, including TD Securities. The Bank's other activities are grouped into the Corporate segment.

Effective the first quarter of 2011, operating results and associated loans for the U.S. credit cards business were transferred from Canadian Personal and Commercial Banking to U.S. Personal and Commercial Banking for segment reporting purposes. In addition, the Bank implemented a change in its allocation methodologies whereby certain items previously reported in the Corporate segment are now being allocated to other segments. These changes have no impact on the Bank's Interim Consolidated Financial Statements. Prior period results were not reclassified. These changes are referred to as "segment transfers" throughout this document. Refer to the "Segment Transfers" section of this document for further details.

Effective July 4, 2011, executive responsibilities for the TD Insurance business were moved from Group Head, Canadian Banking, Auto Finance, and Credit Cards, TD to the Group Head, Wealth Management, Insurance and Corporate Shared Services, TD. The Bank is currently finalizing its future reporting format and will update these results for segment reporting purposes effective the first quarter of fiscal 2012. These changes will be applied retroactively to 2011.

Results of each business segment reflect revenue, expenses, assets, and liabilities generated by the businesses in that segment. The Bank measures and evaluates the performance of each segment based on adjusted results where applicable, and for those segments the Bank notes that the measure is adjusted. Amortization of intangible expenses is included in the Corporate segment. Accordingly, net income for the operating business segments is presented before amortization of intangibles, as well as any other items of note not attributed to the operating segments. For further details, see the "How the Bank Reports" section, the "Business Focus" section in the 2011 Management Discussion and Analysis, Appendix A of this Earnings News Release, and Note 27 to the 2011 Consolidated Financial Statements. For information concerning the Bank's measures of economic profit and return on invested capital, which are non-GAAP financial measures, see the "How We Performed" section of this document and in the 2011 Management Discussion and Analysis.

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 dividends, is adjusted to its equivalent before-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 $94 million, compared with $117 million in the fourth quarter last year, and $67 million in the prior quarter. On a full year basis, the TEB adjustment was $311 million, compared with $415 million in the same period last year.

The Bank securitizes retail loans and receivables, and records a gain or loss on sale, including the recognition of an asset related to retained interests. Credit losses incurred on retained interests after securitization are recorded as a charge to non-interest income in the Bank's Interim Consolidated Financial Statements. For segment reporting, PCL related to securitized volumes is included in Canadian Personal and Commercial Banking but is reversed in the Corporate segment and reclassified as a charge to non-interest income to comply with GAAP.

Quarterly comparison - Q4 2011 vs. Q4 2010
Canadian Personal and Commercial Banking net income for the quarter was $905 million, an increase of $132 million, or 17%, compared with the fourth quarter last year. The annualized return on invested capital for the quarter was 38.7%, compared with 32.9% in the fourth quarter last year.

Canadian Personal and Commercial Banking revenue is derived from personal banking, auto lending, business banking, and insurance. Revenue for the quarter was $2,802 million, an increase of $134 million, or 5% (7% excluding segment transfers), compared with the fourth quarter last year. The increase was driven by strong volume growth in real estate secured lending, auto lending, business deposits, as well as better claims management in insurance, partially offset by a decline in margin on average earning assets. Real estate secured lending volume, including securitized assets, increased $14.6 billion, or 8% from last year. Auto lending volume increased $2.2 billion, or 19% with the acquisition of Chrysler Financial contributing $0.5 billion. Business loans and acceptances volume increased $4.4 billion, or 14%. Personal deposit volume increased $2.2 billion, or 2%, while business deposit volume increased $6.3 billion, or 11%. Gross originated insurance premiums increased $43 million, or 5%. Margin on average earning assets decreased by 20 bps to 2.71%, mainly due to the low rate environment, competitive pricing, and portfolio mix, while the impact of segment transfers was 7 bps.

PCL for the quarter was $212 million, a decrease of $27 million, or 11% (8% excluding segment transfers), compared with the fourth quarter last year. Personal banking PCL was $196 million, a decrease of $25 million, or 11%, mainly due to improved credit portfolio performance and enhanced collection strategies. Business banking PCL was $16 million, a decrease of $2 million, or 12%. Annualized PCL as a percentage of credit volume was 0.30%, a decrease of 7 bps, compared with the fourth quarter last year. Net impaired loans were $596 million, an increase of $44 million or 8%, compared with the fourth quarter last year. Net impaired loans as a percentage of total loans were 0.22%, which was flat compared to October 31, 2010.

Non-interest expenses for the quarter were $1,353 million, an increase of $22 million, or 2%, compared with the fourth quarter last year, primarily due to higher employee related costs, partially offset by the non-recurrence of costs associated with a project cancellation last year.

The average full-time equivalent (FTE) staffing levels decreased by 89, compared with the fourth quarter last year reflecting process improvements. The efficiency ratio for the quarter improved to 48.3%, compared with 49.9% in the fourth quarter last year.

Quarterly comparison - Q4 2011 vs. Q3 2011
Canadian Personal and Commercial Banking net income for the quarter decreased $49 million, or 5%, compared with the prior quarter. The annualized return on invested capital for the quarter was 38.7%, compared with 40.7% in the prior quarter.

Revenue for the quarter increased $34 million compared with the prior quarter. The increase was driven by strong volume growth in real estate secured lending, auto lending, and personal and business deposits, partially offset by lower margins. Compared with the prior quarter, real estate secured lending volume, including securitized assets, increased $4.4 billion, or 2%. Auto lending volume increased $0.4 billion, or 3%. Business loans and acceptances increased $1 billion, or 3%. Personal deposit volume increased $0.4 billion, or 1%, while business deposit volume increased $1.5 billion, or 2%. Gross originated insurance premiums decreased $54 million or 6% due to seasonality of policy renewals. Margin on average earning assets decreased 6 bps to 2.71% primarily due to the low rate environment, competitive pricing, and portfolio mix.

PCL for the quarter increased $8 million compared with the prior quarter. Personal banking PCL increased $1 million while business banking PCL increased $7 million. Net impaired loans increased $29 million, or 5%, compared to the prior quarter. Net impaired loans as a percentage of total loans were 0.22%, compared with 0.21% as at July 31, 2011.

Non-interest expenses for the quarter increased $95 million, or 8%, compared with the prior quarter, largely due to the timing of business investment, marketing initiatives, and employee related costs.

The average FTE staffing levels decreased by 126 compared with the prior quarter reflecting process improvements. The efficiency ratio for the current quarter was 48.3%, compared with 45.4% in the prior quarter mainly due to higher expenses in the fourth quarter.

Quarterly comparison - Q4 2011 vs. Q4 2010
Wealth Management net income for the quarter was $193 million, an increase of $42 million, or 28%, compared with the fourth quarter last year. Global Wealth net income, which excludes TD Ameritrade, was $139 million, an increase of $21 million, or 18% resulting from growth across all business lines. The Bank's reported investment in TD Ameritrade generated net income for the quarter of $54 million, an increase of $21 million, or 64%, compared with the fourth quarter last year. The increase was due to higher operating earnings at TD Ameritrade mainly due to higher trading volumes. For its fourth quarter ended September 30, 2011, TD Ameritrade reported net income of US$164 million, an increase of US$50 million, or 44%, compared with the fourth quarter last year. Wealth Management's annualized return on invested capital for the quarter was 18.4%, compared with 13.5% in the fourth quarter last year.

Wealth Management revenue is derived from direct investing, advice-based businesses, and asset management services. Global Wealth revenue for the quarter was $697 million, an increase of $58 million, or 9%, compared to the fourth quarter last year. The increase was largely driven by increased fee-based revenue from higher average client assets in the advice-based and asset management businesses and increased transaction volumes in our direct investing business.

Non-interest expenses for the quarter were $507 million, an increase of $39 million, or 8%, compared with the fourth quarter last year. This was primarily due to employee related costs, project costs, and increased revenue-based commissions.

The average FTE staffing levels increased by 141, or 2%, compared with the fourth quarter last year, due to growth in both infrastructure and client-facing FTE staff. The efficiency ratio for the current quarter was 72.7%, compared with 73.2% in the fourth quarter last year.

Assets under administration of $241 billion as at October 31, 2011, increased by $16 billion, or 7%, from October 31, 2010. Assets under management of $189 billion as at October 31, 2011, increased by $6 billion, or 3%, from October 31, 2010. These increases were primarily the result of growth in net new client assets.

Quarterly comparison - Q4 2011 vs. Q3 2011
Wealth Management net income for the quarter decreased by $2 million compared with the prior quarter while Global Wealth net income, which excludes TD Ameritrade, decreased by $8 million. The Bank's reported investment in TD Ameritrade reflected an increase in net income of $6 million, or 13%, compared with the prior quarter mainly due to higher operating earnings at TD Ameritrade driven by higher trading volumes. For its fourth quarter ended September 30, 2011, TD Ameritrade reported a net income of US$164 million, an increase of US$7 million, or 4%, compared with the prior quarter. Wealth Management's annualized return on invested capital for the quarter was 18.4%, compared with 18.8% in the prior quarter.

Global Wealth revenue for the quarter increased $8 million compared with the prior quarter, primarily due to increased transaction volumes in our direct investing, partially offset by lower fee-based revenue resulting from lower average client assets in the advice-based and asset management businesses.

Non-interest expenses increased $22 million, or 5%, compared to the prior quarter primarily due to employee related and project costs.

The average FTE staffing levels decreased by 102 compared with the prior quarter, primarily due to seasonality in business volumes. The efficiency ratio for the current quarter worsened to 72.7%, compared with 70.4% in the prior quarter.

Assets under administration as at October 31, 2011 decreased $1 billion from July 31, 2011 and assets under management as at October 31, 2011 decreased $2 billion in the current quarter. The decrease in assets was market driven, which more than offset positive client inflows.

Quarterly comparison - Q4 2011 vs. Q4 2010
U.S. Personal and Commercial Banking net income, in Canadian dollar terms, for the quarter was $316 million, an increase of $51 million, or 19%, on a reported basis, and $328 million, an increase of $45 million, or 16%, on an adjusted basis, compared with the fourth quarter last year. Adjusted net income for the current and prior year exclude integration and restructuring charges relating to acquisitions. The annualized return on invested capital for the quarter was 7.3%, compared with 6.3% in the fourth quarter last year.

In U.S. dollar terms, revenue for the quarter was US$1,450 million, an increase of US$267 million, or 23%, compared with the fourth quarter last year. The increase was primarily due to strong organic growth in loans and deposits and the impact of acquisitions. Margin on average earning assets increased 1 bp compared with the fourth quarter last year. Higher margins on acquired loans were offset by the continued compression of deposit margins as a result of the current low rate environment. Compared with the fourth quarter last year, average loans increased US$17.7 billion, or 30%. Excluding acquisitions (the South Financial Group and Chrysler Financial) and segment transfers, average loans increased US$6.5 billion, or 12%, with average personal loans increasing US$3.8 billion, or 22%, primarily due to an increase of US$3.5 billion, or 42% in residential mortgages, and average business loans increasing US$3.0 billion, or 8%. Average deposits increased US$25.9 billion, or 19%. Excluding acquisitions, average deposits increased $21.3 billion, or 16%, which included a US$12.9 billion increase in TD Ameritrade insured deposit accounts (IDA). Average deposit volume, excluding the impact of the TD Ameritrade IDAs, Government deposits and acquisitions, increased US$9.3 billion, or 13%, due to maturing stores and solid organic growth. Business deposit volumes (excluding government) increased US$5.0 billion, or 18%, and personal deposit volumes increased US$4.7 billion, or 11%.

Total PCL for the quarter was US$125 million, a decrease of US$17 million, or 12%, compared with the fourth quarter last year as asset quality continued to improve modestly. The credit performance of acquired credit-impaired loans was in line with expectations. Annualized PCL for loans excluding acquired credit-impaired loans and debt securities classified as loans as a percentage of credit volume was 0.75%, a decrease of 14 bps compared with the fourth quarter last year. Net impaired loans, excluding acquired credit-impaired loans and debt securities classified as loans, as a percentage of total loans were 1.57%, a decrease of 33 bps compared with the fourth quarter last year.

Reported non-interest expenses for the quarter were US$929 million, an increase of $188 million, compared with the fourth quarter last year. On an adjusted basis, non-interest expenses for the quarter were US$909 million, an increase of US$195 million, or 27%, primarily due to operating expenses associated with acquisitions, investments in infrastructure, new stores, and expenditures to improve productivity.

The average FTE staffing levels increased by 4,283, or 20%, compared with the fourth quarter last year. This increase resulted from the acquisitions and 37 new store openings since the fourth quarter last year. The reported efficiency ratio for the quarter worsened to 63.9%, compared with 62.6% in the fourth quarter last year. The adjusted efficiency ratio for the quarter worsened 2.1% to 62.5%.

Quarterly comparison - Q4 2011 vs. Q3 2011
U.S. Personal and Commercial Banking net income, in Canadian dollar terms, for the quarter decreased $1 million, or 1%, on a reported basis, and decreased $17 million, or 5%, on an adjusted basis, compared with the prior quarter. The annualized return on invested capital for the quarter was 7.3%, compared with 8.0% in the prior quarter.

In U.S. dollar terms, revenue for the quarter decreased US$73 million compared with the prior quarter, as strong volume growth was more than offset by decreased net interest margins and lower other income. Margin on average earning assets decreased by 7 bps to 3.51% compared with the prior quarter, primarily due to timing on expected cash flows in the acquired loan portfolio. Compared with the prior quarter, average loans increased US$1.5 billion, or 2% with average business loans increasing US$0.5 billion, or 1%, and average personal loans increasing US$1.0 billion, or 3%. Average deposits increased US$9.1 billion, or 6% including a US$6.8 billion increase in average deposits of TD Ameritrade IDAs. Average deposit volume excluding the impact of the TD Ameritrade IDAs, increased US$2.3 billion, or 2%. Business deposit volumes grew 5% while personal deposit volume was flat.

Total PCL for the quarter decreased US$49 million, or 28%, compared with the prior quarter. Annualized PCL for loans as a percentage of credit volume, excluding acquired credit-impaired loans, was 0.75%, an increase of 13 bps, compared with the prior quarter. Net impaired loans, excluding acquired credit-impaired loans and debt securities classified as loans, as a percentage of total loans were 1.57%, a decrease of 7 bps, compared with the prior quarter. Overall credit quality continues to improve compared to the prior quarter.

Non-interest expenses for the quarter increased US$11 million on a reported basis, and increased US$39 million, or 4%, on an adjusted basis, compared with the prior quarter, primarily due to timing of marketing campaigns, new stores and expenditures to improve productivity.

The average FTE staffing levels increased by 354, compared with the prior quarter, primarily driven by retail store staffing. The reported efficiency ratio for the quarter worsened to 63.9%, compared with 60.3% in the prior quarter. The adjusted efficiency ratio for the quarter worsened to 62.5%, compared with 57.1% in the prior quarter.

Quarterly comparison - Q4 2011 vs. Q4 2010

Wholesale Banking net income for the quarter was $288 million, an increase of $193 million, or 203%, on a reported basis, and $72 million, or 33%, on an adjusted basis, compared with the fourth quarter last year. There were no items of note in the current quarter. The increase in adjusted net income was due to improved equity and foreign exchange trading, higher security gains, and lower PCL, partially offset by increased expenses. The annualized return on invested capital for the quarter was 32.5%, compared with 25.6% in the fourth quarter last year.

Wholesale Banking revenue is derived primarily from capital markets activity and corporate banking. In the current quarter, core revenues were augmented by significant realized gains from the investment portfolio. Revenue for the quarter was $732 million, an increase of $55 million, or 8%, compared with the fourth quarter last year. The increase was due to security gains in the investment portfolio and improved trading revenue from equity derivative and foreign exchange businesses, partially offset by lower fixed income and credit trading. The operating environment for our fixed income and credit trading businesses was challenging due to the volatile trading conditions and lower client volumes as compared to last year. In the fourth quarter last year, results were very strong as favourable markets and high levels of liquidity led to increased customer activity and significantly improved asset values.

PCL in the quarter was $3 million, a decrease of $20 million compared to the fourth quarter last year. Provisions in the current quarter primarily reflect the accrual costs for credit protection. In the fourth quarter last year, PCL reflected the cost of credit protection and a specific provision. Net impaired loans were $30 million, a decrease of $12 million, or 29%, compared with the fourth quarter last year.

Non-interest expenses for the quarter were $387 million, an increase of $63 million, or 19%, compared with the fourth quarter last year. The increase was driven by higher variable compensation, strategic additions to front office staff, and investment in risk and control infrastructure.

Quarterly comparison - Q4 2011 vs. Q3 2011

Wholesale Banking net income increased by $180 million, or 167%, compared with the prior quarter. The increase was primarily due to realized security gains, improved trading revenue from equity derivatives and foreign exchange businesses, and gains from credit valuation adjustments for trading derivatives as compared to charges in the prior quarter. Partially offsetting these increases were lower underwriting and advisory revenues. The annualized return on invested capital for the quarter was 32.5%, compared with 12.8% in the prior quarter.

Revenue for the quarter increased $274 million, or 60%, compared with the prior quarter, primarily due to realized security gains and improved trading revenue from foreign exchange and equity derivatives businesses. Also contributing to the favourable variance were gains from credit valuation adjustments for trading derivatives as compared with charges in the prior quarter. U.S. and international fixed income and credit trading revenue were adversely affected due to the continued volatile trading environment and lower client activity.

PCL for the quarter was in line with the prior quarter and was limited to credit protection costs. Net impaired loans decreased marginally from the prior quarter. Net impaired loans increased $2 million, or 6%, compared with the prior quarter.

Non-interest expenses for the quarter were $387 million, an increase of $54 million, or 16% higher than the prior quarter primarily due to increased variable compensation.

Quarterly comparison - Q4 2011 vs. Q4 2010

Corporate segment's reported net loss for the quarter was $136 million, compared with a reported net loss of $290 million in the fourth quarter last year. Adjusted net loss for the quarter was $80 million, compared with an adjusted net loss of $163 million. Compared with the fourth quarter last year, the lower adjusted net loss was primarily attributable to lower net corporate expenses, segment transfers, and higher earnings on unallocated capital.

Quarterly comparison - Q4 2011 vs. Q3 2011

Corporate segment's reported net loss for the quarter was $136 million, compared with a reported net loss of $124 million in the prior quarter. Adjusted net loss for the quarter was $80 million, compared with an adjusted net loss of $24 million. The higher adjusted net loss was primarily attributable to higher net corporate expenses and preferred capital redemption costs. The current quarter also included a loss relating to Symcor's divestiture of its U.S. business.

Segment Transfers

Effective the first quarter of fiscal 2011, operating results and associated loans for the U.S. credit cards business were transferred from Canadian Personal and Commercial Banking to U.S. Personal and Commercial Banking for segment reporting purposes. In addition, the Bank implemented a change in its allocation methodologies whereby certain items previously reported in the Corporate segment are now being allocated to other segments. These changes have no net impact on the Bank's Consolidated Financial Statements. Prior period results were not reclassified. The following table summarizes the segment transfers for the three months ended October 31, 2011.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year.

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year.

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year.

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year.

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year.

Appendix A - Segmented Information

The Bank's operations and activities are organized around four key business segments: Canadian Personal and Commercial Banking, Wealth Management, U.S. Personal and Commercial Banking, and Wholesale Banking. The Bank's other activities are reported in the Corporate segment. Results for these segments for the three and twelve months ended October 31 are presented in the following tables: