TD Bank Group Reports Fourth Quarter and Fiscal 2014 Results

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

• Reported diluted earnings per share were $0.91, compared with $0.84.
• Adjusted diluted earnings per share were $0.98, compared with $0.95.
• Reported net income was $1,746 million, compared with $1,616 million.
• Adjusted net income was $1,862 million, compared with $1,815 million.

FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year:

• Reported diluted earnings per share were $4.14, compared with $3.44.
• Adjusted diluted earnings per share were $4.27, compared with $3.71.
• Reported net income was $7,883 million, compared with $6,640 million.
• Adjusted net income was $8,127 million, compared with $7,136 million.

FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE)

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

• Amortization of intangibles of $62 million after tax (4 cents per share), compared with $59 million after tax (3 cents per share) in the fourth quarter last year.
  
• Integration charges of $54 million after tax (3 cents per share) relating to the acquisition of the credit card portfolio of MBNA Canada, compared with $14 million after tax (1 cent per share) in the fourth quarter last year.
  
  

TORONTO, Dec. 4, 2014 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the fourth quarter ended October 31, 2014. Fourth quarter adjusted earnings of $1.9 billion were up 3% over the same quarter last year, with solid performances from all business segments, partially offset by higher enterprise expenses.

"We are pleased to finish out the year with strong total adjusted earnings of $8.1 billion," said Bharat Masrani, Group President and Chief Executive Officer. "Results for the year reflect good earnings from each of our businesses, driven by organic growth, strong fundamentals, and good results from recent acquisitions."

Canadian Retail
Canadian Retail delivered reported net income of $1.3 billion in the fourth quarter. On an adjusted basis net income was $1.4 billion, representing a 7% increase over the same quarter last year. Higher earnings were driven by good growth in loans, deposits, wealth assets under management and the addition of Aeroplan.

"A good fourth quarter helped us deliver another great year for Canadian Retail," said Tim Hockey, Group Head, Canadian Banking, Auto Finance and Wealth Management. "In 2015 our focus will continue to be on providing customers with great products and services that enable financial goals and supporting our colleagues in providing legendary customer experiences across all channels."

U.S. Retail
U.S. Retail generated net income of US$462 million, representing relatively flat earnings on an adjusted basis compared with the fourth quarter last year. Excluding the Bank's investment in TD Ameritrade, the segment generated net income of US$385 million, as strong organic growth, good productivity and excellent asset quality were offset by lower securities gains and margin compression.

TD Ameritrade contributed US$77 million in earnings to the segment, an increase of 5% compared with the fourth quarter last year.

"U.S. Retail continued to outgrow the industry in 2014," said Mike Pedersen, Group Head, U.S. Banking. "Despite a challenging operating and evolving regulatory environment, we had a good overall performance. Our fundamentals are solid going in to 2015, as we focus on deepening customer relationships, evolving our distribution strategy and increasing productivity."

Wholesale Banking
Wholesale Banking net income for the quarter was $160 million, an increase of 31% compared with the fourth quarter last year, reflecting strong business fundamentals and a rebound from the fourth quarter of 2013 that included higher non-interest expenses.

"The Wholesale business delivered a solid finish to a great year," said Bob Dorrance, Group Head, Wholesale Banking. "Improved capital markets, good trading results, and a robust performance in investment banking were key drivers of our performance. We remain focused on attracting new clients and expanding existing relationships, and managing risks and productivity in 2015."

Capital
TD's Common Equity Tier 1 Capital ratio on a Basel III fully phased-in basis was 9.4%, compared with 9.3% last quarter.

Conclusion
"Our 2014 results demonstrate the earnings power and underlying growth potential across all of our businesses. As we close 2014, I'd like to thank our 85,000 colleagues here at TD for their relentless dedication to making the Bank stronger and delivering exceptional customer service," said Masrani. "As we look ahead to 2015, we expect the operating environment to be more challenging. We will focus on organic growth, delivering legendary experiences across every channel, and increasing productivity while investing for the future."

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

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 IFRS, the current GAAP, and refers to results prepared in accordance with IFRS 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 the 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 disclosed on Table 3. As explained, adjusted results are different from reported results determined in accordance with IFRS. Adjusted results, items of note, and related terms used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers. The Bank implemented New IFRS Standards and Amendments which required retrospective application, effective the first quarter of fiscal 2014. As a result, certain comparative amounts have been restated. For more information refer to Note 4 of the 2014 Consolidated Financial Statements.

The following table provides a reconciliation between the Bank's adjusted and reported results.

RETURN ON COMMON EQUITY

The Bank's methodology for allocating capital to its business segments is aligned with the common equity capital requirements under Basel III. Beginning November 1, 2013, capital allocated to the business segments is based on 8% Common Equity Tier 1 (CET1) Capital which includes an additional charge of 1% of risk-weighted assets (RWA) to account for the Office of the Superintendent of Financial Institutions Canada (OSFI) common equity capital surcharge for Domestic Systemically Important Banks (D-SIBs), resulting in a CET1 Capital ratio minimum requirement of 8% effective January 1, 2016. The return measures for business segments reflect a return on common equity methodology.

Adjusted return on common equity (ROE) is adjusted net income available to common shareholders as a percentage of average common equity.

Adjusted ROE is a non-GAAP financial measure as it is not a defined term under IFRS. Readers are cautioned that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other issuers.

SIGNIFICANT EVENTS IN 2014

Acquisition of certain CIBC Aeroplan Credit Card Accounts

On December 27, 2013, the Bank, Aimia Inc. (Aimia), and the Canadian Imperial Bank of Commerce (CIBC) closed a transaction under which the Bank acquired approximately 50% of CIBC's existing Aeroplan credit card portfolio, which primarily included accounts held by customers who did not have an existing retail banking relationship with CIBC. The Bank accounted for the purchase as an asset acquisition. The results of the acquisition have been recorded in the Canadian Retail segment.

The Bank acquired approximately 540,000 cardholder accounts with an outstanding balance of $3.3 billion at a price of par plus $50 million less certain adjustments for total cash consideration of $3.3 billion. At the date of acquisition, the fair value of credit card receivables acquired was $3.2 billion and the fair value of an intangible asset for the purchased credit card relationships was $146 million.

In connection with the purchase agreement, the Bank agreed to pay CIBC a further $127 million under a commercial subsidy agreement. This payment was recognized as a non-interest expense in 2014.

Disposal of TD Waterhouse Institutional Services

On November 12, 2013, TD Waterhouse Canada Inc., a subsidiary of the Bank, completed the sale of the Bank's institutional services business, known as TD Waterhouse Institutional Services, to a subsidiary of National Bank of Canada. The transaction price was $250 million in cash, subject to certain price adjustment mechanisms. A pre-tax gain of $231 million was recorded in the Corporate segment in other income in the first quarter of 2014. An additional pre-tax gain of $13 million was recorded in the Corporate segment subsequently, upon the settlement of price adjustment mechanisms.

HOW OUR BUSINESSES PERFORMED

Effective November 1, 2013, the Bank revised its reportable segments, and for management reporting purposes, reports its results under three key business segments: Canadian Retail, which includes the results of the Canadian personal and commercial banking businesses, Canadian credit cards, TD Auto Finance Canada, and Canadian wealth and insurance businesses; U.S. Retail, which includes the results of the U.S. personal and commercial banking businesses, U.S. credit cards, TD Auto Finance U.S., U.S. wealth business, and the Bank's investment in TD Ameritrade; and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment. The prior period segmented results have been restated accordingly.

Effective December 27, 2013, and January 1, 2014, the results of the acquired Aeroplan credit card portfolio and the results of the related affinity relationship with Aimia Inc. (collectively, "Aeroplan") are reported in the Canadian Retail segment. Effective March 27, 2013, the results of the acquisition of Epoch Investment Partners, Inc. (Epoch) are reported in the U.S. Retail segment. Effective March 13, 2013, results of the acquisition of the credit card portfolio of Target Corporation and related program agreement (collectively, "Target") are reported in the U.S. Retail segment.

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 indicates that the measure is adjusted. Net income for the operating business segments is presented before any items of note not attributed to the operating segments. For further details, see the "How the Bank Reports" section of this document, the "Business Focus" section in the 2014 MD&A, and Note 31 to the Bank's Consolidated Financial Statements for the year ended October 31, 2014. For information concerning the Bank's measure of adjusted return on average common equity, which is a non-GAAP financial measure, see the "How We Performed" section of this document.

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 are reversed in the Corporate segment. The TEB adjustment for the quarter was $76 million, compared with $100 million in the fourth quarter last year, and $131 million in the prior quarter.

Quarterly comparison - Q4 2014 vs. Q4 2013

Canadian Retail net income for the quarter on a reported basis was $1,304 million, an increase of $67 million, or 5%, compared with the fourth quarter last year. Adjusted net income for the quarter was $1,358 million, an increase of $87 million, or 7%, compared with the fourth quarter last year. The increase in adjusted earnings was primarily due to good loan and deposit volume growth, the addition of Aeroplan, and higher wealth assets under management, partially offset by higher expenses. The reported annualized return on common equity for the quarter was 40.8%, while the adjusted annualized return on common equity was 42.5%, compared with 43.8% and 45.0%, respectively, in the fourth quarter last year.

Canadian Retail revenue is derived from the Canadian personal and commercial banking businesses, including credit cards, auto finance, wealth and insurance businesses. Revenue for the quarter was $4,920 million, an increase of $323 million, or 7%, compared with the fourth quarter last year. Net interest income increased $137 million, or 6%, driven primarily by good loan and deposit volume growth and the addition of Aeroplan. Non-interest income increased $186 million, or 8%, largely driven by wealth asset growth, insurance business growth, good account volume growth, and the addition of Aeroplan. Margin on average earning assets was 2.92%, flat compared with the fourth quarter last year, as the increase due to the addition of Aeroplan was offset by lower deposit margins.

The personal banking business generated good lending volume growth of $13.9 billion, or 5%, compared with the fourth quarter last year. Average real estate secured lending volume increased $8.2 billion, or 4%. Auto lending average volume increased $1.6 billion, or 11%, while all other personal lending average volumes increased $4.1 billion, or 13%, largely due to the addition of Aeroplan. Business loans and acceptances average volume increased $4.9 billion, or 10%. Average personal deposit volumes increased $3.8 billion, or 2%, due to strong growth in core chequing and savings accounts, partially offset by lower term deposit volume. Average business deposit volumes increased $5 billion, or 7%.

Assets under administration increased $8 billion, or 3%, compared with the fourth quarter last year, as growth from new client assets for the period, market appreciation, and the addition of the remaining interest in NatWest Stockbrokers Limited¹, was partially offset by the sale of the TD Waterhouse Institutional Services business. Assets under management increased $25 billion, or 12%, mainly driven by growth from market appreciation and new client assets, compared with the fourth quarter last year.

Provision for credit losses (PCL) for the quarter was $250 million, an increase of $26 million, or 12%, compared with the fourth quarter last year. Personal banking PCL was $231 million, an increase of $8 million, or 4%, due to the addition of Aeroplan, partially offset by better credit performance and lower bankruptcies in other personal banking businesses. Business banking PCL was $19 million, an increase of $18 million, primarily due to higher provisions in the current quarter. Annualized PCL as a percentage of credit volume was 0.30%, an increase of 3 basis points (bps), compared with the fourth quarter last year. Net impaired loans were $834 million, a decrease of $48 million, or 5%, compared with the fourth quarter last year. Net impaired loans as a percentage of total loans were 0.25%, compared with 0.28% as at October 31, 2013.

Insurance claims and related expenses for the quarter were $720 million, an increase of $9 million, or 1%, compared with the fourth quarter last year, primarily due to an increase in severe weather-related events, and business growth partially offset by more favourable prior year claims development.

Reported non-interest expenses for the quarter were $2,224 million, an increase of $192 million, or 9%, compared with the fourth quarter last year. Adjusted non-interest expenses for the quarter were $2,151 million, an increase of $165 million, or 8%, compared with the fourth quarter last year. The increase was primarily driven by higher employee-related costs including higher revenue-based variable compensation in the wealth business, initiatives to grow the business, and the addition of Aeroplan, partially offset by initiatives to increase productivity.

The reported efficiency ratio for the quarter worsened to 45.2%, while the adjusted efficiency ratio worsened to 43.7%, compared with 44.2% and 43.2%, respectively, in the fourth quarter last year.

Quarterly comparison - Q4 2014 vs. Q3 2014

Canadian Retail net income for the quarter on a reported basis decreased $96 million, or 7%, compared with the prior quarter. Adjusted net income for the quarter decreased $85 million, or 6%, compared with the prior quarter. The decrease in earnings was primarily due to an increase in non-interest expenses, partially offset by lower insurance claims compared with the prior quarter. The reported annualized return on common equity for the quarter was 40.8%, while the adjusted annualized return on common equity was 42.5%, compared with 43.4% and 44.7%, respectively, in the prior quarter.

Revenue for the quarter decreased $14 million, flat with the prior quarter. Net interest income was flat, as the increase from volume growth was more than offset by margin compression, compared with the prior quarter. Non-interest income decreased $13 million, or 1%, primarily due to lower insurance premiums, partially offset by higher wealth asset-based revenue. Margin on average earning assets was 2.92%, a 6 bps decrease compared with the prior quarter, primarily due to a decline in deposit margins due to low rate environment, competitive pricing, and seasonally lower mortgage renewal revenue.

The personal banking business generated average lending volume growth of $5.4 billion, or 2%, compared with the prior quarter. Average real estate secured lending volume increased $4.2 billion, or 2%. Auto lending average volume increased $0.8 billion, or 5%, while all other personal lending average volumes increased $0.4 billion, or 1%. Business loans and acceptances average volume increased $1 billion, or 2%. Average personal deposit volumes increased $1.9 billion, or 1%, due to growth in core chequing and savings accounts, partially offset by lower term deposit volume. Average business deposit volumes increased $2.4 billion, or 3%, compared with the prior quarter.

Assets under administration increased $8 billion, or 3%, compared with the prior quarter, primarily due to the addition of the remaining interest in NatWest Stockbrokers Limited¹. Assets under management were flat compared with the prior quarter.

PCL for the quarter increased $22 million, or 10%, compared with the prior quarter. Personal banking PCL increased $15 million or 7%, primarily due to higher provisions in credit cards. Business banking PCL increased $7 million, due to higher provisions in the commercial business. Annualized PCL as a percentage of credit volume was 0.30%, an increase of 3 bps, compared with the prior quarter. Net impaired loans decreased $4 million, flat compared with the prior quarter. Net impaired loans as a percentage of total loans were 0.25%, in line with the prior quarter.

Insurance claims and related expenses for the quarter decreased $51 million, or 7%, compared with the prior quarter, primarily due to lower current year claims partially offset by an increase in severe weather-related events.

Reported non-interest expenses for the quarter increased $148 million, or 7%, compared with the prior quarter. Adjusted non-interest expenses for the quarter increased $133 million, or 7%, compared with the prior quarter due to higher employee-related costs, investments to grow the business, and higher seasonal marketing expenses.

The reported efficiency ratio for the quarter worsened to 45.2%, while the adjusted efficiency ratio worsened to 43.7%, compared with 42.1% and 40.9%, respectively, in the prior quarter.

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Quarterly comparison - Q4 2014 vs. Q4 2013

U.S. Retail reported and adjusted net income for the quarter was $509 million (US$462 million), which included net income of $426 million (US$385 million) from the U.S. Retail Bank and $83 million (US$77 million) from TD's investment in TD Ameritrade. Canadian dollar earnings growth benefited from a strengthening of the U.S. dollar. The annualized reported and adjusted return on common equity for the quarter was 7.6%, down slightly from 7.9% on a reported basis and 8.4% on an adjusted basis for the fourth quarter last year.

U.S. Retail reported earnings of US$385 million were up 8% compared with the fourth quarter last year. U.S. Retail adjusted earnings were relatively flat as compared with the fourth quarter last year primarily due to lower provisions for credit losses offset by a higher tax rate. The contribution from TD Ameritrade of US$77 million was up 5% compared with the fourth quarter last year, primarily due to increased asset-based and transaction-based revenue, partially offset by higher operating expenses and lower investment gains.

U.S. Retail revenue is derived from personal banking, business banking, investments, auto lending, credit cards, and wealth management. Revenue for the quarter was US$1,851 million, a decrease of US$45 million, or 2%, compared with the fourth quarter last year. The decrease in net interest income was primarily due to lower accretion. Margin on average earning assets was 3.65%, a 24 bps decrease compared with the fourth quarter last year. Other non-interest income decreased due to lower gains on sales of securities and debt securities classified as loans. Average loan volumes increased US$9 billion, or 8%, compared with the fourth quarter last year, due to growth in business loans of 14% and growth in personal loans of 3%. Average deposit volumes increased US$10 billion, or 5%, compared with the fourth quarter last year, driven by 7% growth in business deposit volume, 6% growth in personal deposit volume, and 3% growth in TD Ameritrade deposit volume.

PCL for the quarter was US$125 million, a decrease of US$52 million, or 29%, compared with the fourth quarter last year, primarily due to improved credit quality and lower net charge-offs. Personal banking PCL was US$117 million, a decrease of US$58 million, or 33%, compared with the fourth quarter last year, primarily due to improved credit quality for auto loans. Business banking PCL was US$28 million, an increase of US$3 million. Annualized PCL as a percentage of credit volume for loans excluding debt securities classified as loans was 0.50%, a decrease of 27 bps, compared with the fourth quarter last year. Net impaired loans, excluding acquired credit-impaired loans and debt securities classified as loans, were US$1.2 billion, a decrease of US$64 million, or 5%, compared with the fourth quarter last year. Net impaired loans as a percentage of total loans were 1.1% as at October 31, 2014, compared with 1.3% at October 31, 2013. Net impaired debt securities classified as loans were US$919 million, a decrease of US$66 million, or 7%, compared with the fourth quarter last year.

Reported non-interest expenses for the quarter were US$1,249 million, a decrease of US$48 million, or 4%, compared with the fourth quarter last year. On an adjusted basis, non-interest expenses were US$1,249 million, a decrease of US$20 million, or 2%, compared with the fourth quarter last year, primarily due to strong expense control, permanent expense reductions, and lower expenses related to Target, partially offset by higher personnel related costs to support growth.

The reported efficiency ratio for the quarter improved to 67.5%, compared with 68.4% last year, while the adjusted efficiency ratio for the year was 67.5%, compared with 67.0% last year.

Quarterly comparison - Q4 2014 vs. Q3 2014

U.S. Retail reported and adjusted net income for the quarter decreased $52 million (US$56 million) compared with the prior quarter, which included a decrease in net income of $59 million (US$64 million) from the U.S. Retail Bank and an increase of $7 million (US$8 million) from TD's investment in TD Ameritrade. The annualized return on common equity for the quarter was 7.6%, compared with 9.0% in the prior quarter.

U.S. Retail earnings decreased primarily due to continued margin compression and lower accretion, coupled with increases in provisions for credit losses and non-interest expenses. The contribution from TD Ameritrade of US$77 million was up 12% compared with the prior quarter, primarily due to increased asset-based and transaction-based revenue.

Revenue for the quarter decreased US$40 million compared with the prior quarter primarily due to lower accretion and lower other gains and losses. Margin on average earning assets was 3.65%, an 11 bps decrease compared with the prior quarter. Average loan volumes increased US$3 billion, or 3%, compared with the prior quarter, due to growth in business loans of 4% and growth in personal loans of 2%. Average deposit volumes increased US$5 billion, or 2%, compared with the prior quarter, driven by 4% growth in business deposit volume and 3% growth in TD Ameritrade deposit volume, while personal deposits remained relatively flat.

PCL for the quarter increased US$7 million, or 6%, compared with the prior quarter, primarily due to higher provision on loans, partially offset by lower provisions for debt securities. Personal banking PCL was US$117 million, a decrease of US$9 million, or 7%, from the prior quarter, primarily due to lower provisions on credit cards, partially offset by increased provisions on home equity loans, auto loans, and other retail products. Business banking PCL was US$28 million compared to a recovery of US$10 million from the prior quarter, primarily due to net commercial recoveries in the prior quarter not recurring in the current quarter. The recovery of provision for debt securities classified as loans reflects lower expected losses on non-agency collateralized mortgage obligations. Annualized adjusted PCL as a percentage of credit volume for loans excluding debt securities classified as loans was 0.50%, an increase of 9 bps, compared with the prior quarter. Net impaired loans, excluding acquired credit-impaired loans and debt securities classified as loans, were US$1.2 billion, an increase of US$57 million, or 5%, compared with the prior quarter. Net impaired loans as a percentage of total loans were 1.1% as at October 31, 2014, flat compared with prior quarter. Net impaired debt securities classified as loans decreased US$2 million, compared with the prior quarter.

Non-interest expenses for the quarter increased US$29 million, or 2%, compared with the prior quarter, primarily due to the timing of project and personnel related costs.

The efficiency ratio for the quarter was 67.5%, compared with 64.5% in the prior quarter.

In the fourth quarter of 2014, the Bank implemented a funding valuation adjustment (FVA) in response to growing evidence that market implied funding costs and benefits are now considered in the pricing and fair valuation of uncollateralized derivatives. The implementation of FVA resulted in a pre-tax additional charge of $65 million recorded in the Wholesale segment. The Bank will continue to monitor industry practice, and may refine the methodology and the products to which FVA applies to as market practices evolve. See Note 5 to the Bank's 2014 Consolidated Financial Statements for further information on FVA.

Quarterly comparison - Q4 2014 vs. Q4 2013

Wholesale Banking net income for the quarter was $160 million, an increase of $38 million, or 31%, compared with the fourth quarter last year. The increase in earnings was primarily due to lower non-interest expenses. The annualized return on common equity for the quarter was 13.0%, compared with 12.1% in the fourth quarter last year.

Wholesale Banking revenue is derived primarily from capital markets services and corporate lending. The capital markets businesses generate revenue from advisory, underwriting, trading, facilitation, and trade execution services. Revenue for the quarter was $604 million, relatively flat compared with the fourth quarter last year. Higher equity underwriting volumes, advisory fees and lending growth, which benefited from solid client activity in the quarter, was partially offset by lower trading-related revenue due to a charge related to FVA.

PCL for the quarter was a net recovery of $1 million, as the accrual cost of credit protection was largely offset by a recovery of a previously recorded provision in the investment portfolio. PCL for the fourth quarter last year was $5 million and consisted primarily of the accrual cost of credit protection.

Non-interest expenses for the quarter were $381 million, a decrease of $42 million, or 10%, compared to the fourth quarter last year. The decrease is primarily due to expenses related to the settlement of a commercial dispute included in the fourth quarter last year, partially offset by higher variable compensation commensurate with revenue.

CET1 risk-weighted assets were $61 billion as at October 31, 2014, an increase of $14 billion, or 30%, compared with October 31, 2013. The increase was primarily due to the inclusion of the Credit Valuation Adjustment (CVA) capital charge.

Quarterly comparison - Q4 2014 vs. Q3 2014

Wholesale Banking net income for the quarter decreased $56 million, or 26%, compared with the prior quarter. The decrease was largely due to lower revenue, partially offset by lower non-interest expenses. The annualized return on common equity for the quarter was 13.0%, compared with 18.4% in the prior quarter.

Revenue for the quarter decreased $76 million, or 11%, compared with the prior quarter. The decrease in revenue was primarily due to a charge related to FVA and lower underwriting and advisory fees.

PCL for the quarter was a net recovery of $1 million, compared with a charge of $5 million in the prior quarter, which was primarily related to the accrual cost of credit protection.

Non-interest expenses for the quarter decreased $11 million, or 3%, primarily due to lower variable compensation commensurate with revenue.

CET1 risk-weighted assets were $61 billion as at October 31, 2014, an increase of $4 billion, or 7%, compared with July 31, 2014.

Quarterly comparison - Q4 2014 vs. Q4 2013

Corporate segment's reported net loss for the quarter was $227 million, compared with a reported net loss of $191 million in the fourth quarter last year. Adjusted net loss was $165 million, compared with an adjusted net loss of $56 million in the fourth quarter last year. Adjusted net loss increased primarily due to higher net corporate expenses as a result of ongoing investment in enterprise and regulatory projects and productivity initiatives. Other items were slightly unfavourable due to positive tax items recognized in the fourth quarter last year.

Quarterly comparison - Q4 2014 vs. Q3 2014

Corporate segment's reported net loss for the quarter was $227 million, compared with a reported net loss of $70 million in the prior quarter. Adjusted net loss was $165 million, compared with an adjusted net loss of $53 million in the prior quarter. The increase in adjusted net loss was due to higher net corporate expenses and lower contribution from Other items. Expenses increased as a result of ongoing investment in enterprise and regulatory projects and productivity initiatives. The unfavourable impact of Other items was due to positive tax items recognized in the prior quarter.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Certain comparative amounts have been restated to conform with the presentation adopted in the current period.

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

Certain comparative amounts have been restated to conform with the presentation adopted in the current period.

Certain comparative amounts have been restated to conform with the presentation adopted in the current period.

Certain comparative amounts have been restated to conform with the presentation adopted in the current period.

Appendix A - Segmented Information

Effective November 1, 2013, the Bank revised its reportable segments, and for management reporting purposes, reports its results under three key business segments: Canadian Retail, which includes the results of the Canadian personal and commercial banking businesses, Canadian credit cards, TD Auto Finance Canada, and Canadian wealth and insurance businesses; U.S. Retail, which includes the results of the U.S. personal and commercial banking businesses, U.S. credit cards, TD Auto Finance U.S., U.S. wealth business, and the Bank's investment in TD Ameritrade; and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment. The segmented results for periods prior to the segment realignment have been restated accordingly.

Results for these segments for the three and twelve months ended October 31 are presented in the following tables.

SHAREHOLDER AND INVESTOR INFORMATION

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.

Annual Report on Form 40-F (U.S.)

A copy of the Bank's annual report on Form 40-F for fiscal 2014 will be filed with the Securities and Exchange Commission later today and will be available at http://www.td.com. You may obtain a printed copy of the Bank's annual report on Form 40-F for fiscal 2014 free of charge upon request to TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or e-mail tdshinfo@td.com.

General Information
Contact Corporate & Public Affairs: 416-982-8578

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Internet website: http://www.td.com
Internet e-mail: customer.service@td.com

Access to Quarterly Results Materials

Interested investors, the media and others may view this fourth quarter earnings news release, results slides, supplementary financial information, and the 2014 Consolidated Financial Statements and Notes and the 2014 Management's Discussion and Analysis documents on the TD website at www.td.com/investor/.

Quarterly Earnings Conference Call

TD Bank Group will host an earnings conference call in Toronto, Ontario on December 4, 2014. The call will be webcast live through TD's website at 3 p.m. ET. The call and webcast will feature presentations by TD executives on the Bank's financial results for the fourth quarter, discussions of related disclosures, and will be 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/qr_2014.jsp on December 4, 2014, by approximately 12 p.m. ET. A listen-only telephone line is available at 416-204-9269 or 1-800-499-4035 (toll free).

The webcast and presentations will be archived at www.td.com/investor/qr_2014.jsp. Replay of the teleconference will be available from 6 p.m. ET on December 4, 2014, until January 5, 2015, by calling 647-436-0148 or 1-888-203-1112 (toll free). The passcode is 1696813.

Annual Meeting
Thursday, March 26, 2015
Metro Toronto Convention Centre
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 branches and serves more than 23 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in TD Ameritrade; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with approximately 9.4 million active online and mobile customers. TD had CDN$945 billion in assets on October 31, 2014. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

SOURCE TD Bank Group