TD Bank Group Reports Third Quarter 2024 Results

Earnings News Release • Three and nine months ended July 31, 2024

THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third quarter last year:

• Reported diluted earnings (loss) per share were $(0.14), compared with $1.53.
• Adjusted diluted earnings per share were $2.05, compared with $1.95.
• Reported net income (loss) was $(181) million, compared with $2,881 million.
• Adjusted net income was $3,646 million, compared with $3,649 million.

YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended July 31, 2024, compared with the corresponding period last year:

• Reported diluted earnings per share were $2.76, compared with $4.04.
• Adjusted diluted earnings per share were $6.09, compared with $6.09.
• Reported net income was $5,207 million, compared with $7,768 million.
• Adjusted net income was $11,072 million, compared with $11,510 million.

THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The third quarter reported earnings figures included the following items of note:

• Amortization of acquired intangibles of $64 million ($56 million after-tax or 3 cents per share), compared with $88 million ($75 million after-tax or 4 cents per share) in the third quarter last year.
• Acquisition and integration charges related to the Schwab transaction of $21 million ($18 million after-tax or 1 cent per share), compared with $54 million ($44 million after-tax or 2 cents per share) in the third quarter last year.
• Restructuring charges of $110 million ($81 million after-tax or 5 cents per share).
• Acquisition and integration charges related to the Cowen acquisition of $78 million ($60 million after-tax or 3 cents per share), compared with $143 million ($105 million after-tax or 6 cents per share) in the third quarter last year.
• Impact from the terminated First Horizon Corporation (FHN) acquisition-related capital hedging strategy of $62 million ($46 million after-tax or 3 cents per share), compared with $177 million ($134 million after-tax or 8 cents per share) in the third quarter last year.
• Provision for investigations related to the Bank's AML program of $3,566 million ($3,566 million after-tax or $2.04 per share).

TORONTO, Aug. 22, 2024 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the third quarter ended July 31, 2024. Reported earnings were a loss of $181 million, compared with reported earnings of $2,881 million in the third quarter last year, and adjusted earnings were $3.6 billion, relatively flat.

The Bank's reported results include the impact of the US$2,600 million provision for investigations related to the Bank's anti-money laundering (AML) program, which, together with the provision taken last quarter in connection with this matter, reflects the Bank's current estimate of the total fines related to this matter.

"TD delivered record revenue and net income in Canadian Personal and Commercial Banking, continued operating momentum in the U.S., and strong results across our markets-driven businesses," said Bharat Masrani, Group President and CEO, TD Bank Group. "We continued to invest in new and innovative capabilities and expanded our product offerings to better serve our customers and clients."

Canadian Personal and Commercial Banking delivered record net income and revenue supported by continued volume growth and strong operating leverage
Canadian Personal and Commercial Banking net income was $1,872 million, an increase of 13% compared to the third quarter last year, reflecting higher revenue, partially offset by higher non-interest expenses and provisions for credit losses. The segment delivered record revenue of $5,003 million, an increase of 9%, primarily reflecting volume growth and margin expansion.

Canadian Personal and Commercial Banking grew its leading deposit franchise with another strong quarter for account openings. TD further expanded its market-leading credit card business to reach a milestone of more than 8 million active accounts and delivered market share gains in Real Estate Secured Lending while supporting its growing customer base. This quarter, TD added more value for New to Canada customers, including offers for both TD Direct Investing and the TD Cash Back Visa Card. The Bank also enhanced its TD Student Line of Credit offering, supporting Canada's next generation of doctors, dentists, and veterinarians. In addition, Business Banking launched TD Innovation Partners, a full-service banking and financing solutions platform for technology and innovation companies.

The U.S. Retail Bank delivered operating momentum in a challenging environment
U.S. Retail reported net loss for the quarter was $2,275 million (US$1,658 million), compared with reported net income of $1,305 million (US$977 million) in the third quarter last year. On an adjusted basis, net income was $1,291 million (US$942 million), a decrease of $77 million (US$83 million). Reported net income for the quarter from the Bank's investment in The Charles Schwab Corporation ("Schwab") was $178 million (US$129 million), a decrease of $13 million (US$13 million).

The U.S. Retail Bank, which excludes the Bank's investment in Schwab, reported net loss was $2,453 million (US$1,787 million), compared with reported net income of $1,114 million (US$835 million) in the third quarter last year, primarily reflecting the impact of the provision for investigations related to the Bank's AML program. On an adjusted basis net income was $1,113 million, a decrease of $64 million from the third quarter last year, primarily reflecting higher PCL and higher non-interest expenses, partially offset by higher revenue. In U.S. dollars, adjusted net income was US$813 million, a decrease of US$70 million, reflecting higher PCL and lower revenue.

This quarter, the U.S. Retail Bank continued to deliver strong operating momentum with stable deposits excluding Schwab sweep deposits, and year-over-year peer-leading loan growth. The Commercial Banking Middle Market loan balances and lending fees grew 18% and 9% respectively year-over-year. In addition, TD Bank, America's Most Convenient Bank^® ranked highest among national banks in the J.D. Power 2024 U.S. Online Banking Satisfaction Study[1], reflecting investments in digital banking and continued enhancements to customer experience. For the fifth year in a row, TD Auto Finance ranked #1 in Dealer Satisfaction among Non-Captive National Prime Automotive Finance Lenders in the J.D. Power 2024 U.S. Dealer Financing Satisfaction Study[2].

Wealth Management and Insurance delivered record revenue while net income reflects impact from severe weather events
Wealth Management and Insurance net income was $430 million, relatively flat compared with the third quarter last year. Driven by strong business fundamentals, Wealth Management and Insurance delivered record revenues of $3,349 million reflecting higher insurance premiums, asset growth, higher deposit margins, and increased trades per day in the Direct Investing business. TD Insurance reported higher claims costs due to severe weather events in the Greater Toronto Area and wildfires in Alberta, in addition to increased claims severity.

Wealth Management and Insurance continued to invest in client-centric innovation this quarter. TD Direct Investing was the first bank-owned brokerage in Canada to launch partial shares trading, enabling investors to buy and sell a fraction of stocks and exchange-traded funds. TD Insurance supported customers and communities in their moments of need by providing advice and assistance to those impacted by severe weather-related events this quarter.

Wholesale Banking continued its growth, with revenues up on broader and stronger capabilities
Wholesale Banking reported net income for the quarter was $317 million, an increase of $45 million compared with the third quarter last year, primarily reflecting higher revenues, partially offset by higher PCL and non-interest expenses. On an adjusted basis, net income was $377 million, flat compared to the third quarter last year. Revenue for the quarter was $1,795 million, an increase of $227 million, or 14%, compared with the third quarter last year, reflecting higher trading-related revenue, lending revenue, advisory and underwriting fees.

This quarter, Wholesale Banking continued to gain momentum across its banking and markets businesses. In June, TD Securities colleagues across North America participated in the annual TD Securities Underwriting Hope Campaign, which raised more than $2.1 million in support of children and youth-related charities.

Update on TD's AML remediation program
TD is undertaking a remediation of its U.S. AML Program. As part of this work, the Bank has been making investments in its risk and control infrastructure, including onboarding leadership with deep subject matter expertise supported by increased staffing resources, implementing new cross-functional procedures for preventing, detecting and reporting suspicious activity; and investing in data and technology, training and process design to enable improved transaction monitoring and data analytics capabilities.

Capital
TD's Common Equity Tier 1 Capital ratio was 12.8%.

Conclusion
"Looking ahead, TD is strong and well-positioned to navigate the macroeconomic environment, invest in both our AML remediation program and our business, and continue to deepen our relationships with our nearly 28 million customers and clients," added Masrani. "I want to thank TD bankers around the globe for their hard work and commitment to the Bank and those we serve."

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

SIGNIFICANT AND SUBSEQUENT EVENTS

a) Investigations Related to the Bank's AML Program
The Bank continues to actively pursue a global resolution of the civil and criminal investigations into its U.S. Bank Secrecy Act (BSA)/AML program (the "AML Program") by its U.S. prudential regulators, the Financial Crimes Enforcement Network (FinCEN), and the U.S. Department of Justice (DOJ). For additional information about these matters, including provisions recorded in connection with such investigations, refer to Note 19 of the Bank's third quarter 2024 Interim Consolidated Financial Statements.

As previously disclosed, the Bank is undertaking a remediation of its AML Program. This is a cross-functional undertaking, spanning business lines and control functions, and is a priority for the Bank. As part of this work, the Bank has been making investments in its risk and controls infrastructure, including: (i) onboarding leadership with deep subject matter expertise supported by increased staffing resources; (ii) implementing new cross-functional procedures for preventing, detecting, and reporting suspicious activity; (iii) investing in training and process design; and (iv) investing in data and technology to enable improved transaction monitoring and data analytics capabilities. The Bank has established a dedicated program management infrastructure to monitor execution against the remediation program. This work is being overseen by an Interim AML/BSA Committee of the U.S. subsidiary boards and is expected to be a multi-year endeavour, involving additional investments.

b) Restructuring Charges
The Bank continued to undertake certain measures in the third quarter of 2024 to reduce its cost base and achieve greater efficiency. In connection with these measures, the Bank incurred $110 million and $566 million, respectively, of restructuring charges for the three and nine months ended July 31, 2024, which primarily relate to employee severance and other personnel-related costs and real estate optimization. The restructuring program has concluded.

c) 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 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 increased compared to the amount communicated with the final rule in November 2023. Accordingly, the Bank recognized an additional expense for the special assessment of $103 million (US$75 million) in the second quarter of the Bank's fiscal 2024. The final amount of the Bank's special assessment may be further updated as the FDIC determines the actual losses to the Deposit Insurance Fund.

d) Sale of Schwab Common Shares
On August 21, 2024, the Bank announced that it had sold 40.5 million shares of common stock of Schwab. The shares are sold for proceeds of approximately $3.4 billion (US$2.5 billion). The share sale will reduce the Bank's ownership interest in Schwab from 12.3% to 10.1%. The Bank is expected to recognize approximately $1.0 billion (US$0.7 billion) as other income (net of $0.5 billion (US$0.4 billion) loss from accumulated other comprehensive income (AOCI) reclassified to earnings), in the fourth quarter of fiscal 2024.

HOW WE PERFORMED

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, 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 third 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 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. By the end of the first quarter of 2024, Schwab had completed its buy down of the full US$5 billion FROA buydown allowance and had paid a total of $337 million (US$250 million) in termination fees to the Bank. The fees were intended to compensate the Bank for losses incurred from discontinuing certain hedging relationships and for lost revenues. The net impact was 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 and Subsequent Events" or "How We Performed" sections.

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.

HOW OUR BUSINESSES PERFORMED

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 $27 million, compared with $4 million in the prior quarter and $40 million in the third 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 – Q3 2024 vs. Q3 2023
Canadian Personal and Commercial Banking net income for the quarter was $1,872 million, an increase of $217 million, or 13%, compared with the third quarter last year, reflecting higher revenue, partially offset by higher non-interest expenses and PCL. The annualized ROE for the quarter was 34.1%, compared with 35.4% in the third quarter last year.

Revenue for the quarter was $5,003 million, an increase of $433 million, or 9%, compared with the third quarter last year. Net interest income was $3,994 million, an increase of $423 million, or 12%, primarily reflecting volume growth and higher deposit margins. Average loan volumes increased $33 billion, or 6%, reflecting 6% growth in personal loans and 7% growth in business loans. Average deposit volumes increased $22 billion, or 5%, reflecting 7% growth in personal deposits and 2% growth in business deposits. Net interest margin was 2.81%, an increase of 7 basis points (bps), primarily due to higher margins on deposits, partially offset by lower margins on loans and changes to balance sheet mix reflecting the transition of Bankers' Acceptances to Canadian Overnight Repo Rate Average (CORRA)-based loans. Non-interest income was $1,009 million, an increase of $10 million, or 1%, compared with the third quarter last year.

PCL for the quarter was $435 million, an increase of $56 million compared with the third quarter last year. PCL – impaired was $338 million, an increase of $53 million, or 19%, largely related to credit migration in the consumer lending portfolios. PCL – performing was $97 million, an increase of $3 million. The performing provisions this quarter largely reflect credit conditions, including credit migration in the commercial and consumer 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 third quarter last year.

Non-interest expenses for the quarter were $1,967 million, an increase of $72 million, or 4%, compared with the third quarter last year, reflecting higher spend supporting business growth, including higher employee-related expenses and technology costs.

The efficiency ratio for the quarter was 39.3%, compared with 41.5% in the third quarter last year.

Quarterly comparison – Q3 2024 vs. Q2 2024
Canadian Personal and Commercial Banking net income for the quarter was $1,872 million, an increase of $133 million, or 8%, compared with the prior quarter, primarily reflecting higher revenue. The annualized ROE for the quarter was 34.1%, compared with 32.9% in the prior quarter.

Revenue increased $164 million, or 3%, compared with the prior quarter. Net interest income increased $182 million, or 5%, reflecting volume growth and two more days in the third quarter. Average loan volumes increased $8 billion, or 1%, reflecting 1% growth in personal loans and 1% growth in business loans. Average deposit volumes increased $8 billion, or 2%, reflecting 1% growth in personal deposits and 3% growth in business deposits. Net interest margin was 2.81%, a decrease of 3 bps, primarily due to balance sheet mix, reflecting the transition of Bankers' Acceptances to CORRA-based loans. Non-interest income decreased $18 million, or 2%, compared with the prior quarter, reflecting lower fee revenue.

PCL for the quarter was $435 million, a decrease of $32 million compared with the prior quarter. PCL – impaired was $338 million, a decrease of $59 million, or 15%, reflecting lower provisions in both the commercial and consumer lending portfolios. PCL – performing was $97 million, an increase of $27 million. The performing provisions this quarter largely reflect credit conditions, including credit migration in the commercial and consumer lending portfolios, and volume growth. Total PCL as an annualized percentage of credit volume was 0.30%, a decrease of 4 bps compared with the prior quarter.

Non-interest expenses increased $10 million, or 1% compared with the prior quarter, primarily reflecting higher technology costs, partially offset by lower employee-related expenses.

The efficiency ratio was 39.3%, compared with 40.4% in the prior quarter.

Year-to-date comparison – Q3 2024 vs. Q3 2023
Canadian Personal and Commercial Banking net income for the nine months ended July 31, 2024, was $5,396 million, an increase of $387 million, or 8%, compared with the same period last year, reflecting higher revenue, partially offset by higher PCL and non-interest expenses. The annualized ROE for the period was 33.9%, compared with 37.5%, in the same period last year.

Revenue for the period was $14,726 million, an increase of $1,163 million, or 9%, compared with the same period last year. Net interest income was $11,639 million, an increase of $1,152 million, or 11%, reflecting volume growth and higher deposit margins. Average loan volumes increased $35 billion, or 7%, reflecting 6% growth in personal loans and 7% growth in business loans. Average deposit volumes increased $17 billion, or 4%, reflecting 6% growth in personal deposits and business deposits were relatively flat compared with the same period last year. Net interest margin was 2.83%, an increase of 7 bps, primarily due to higher margins on deposits, partially offset by changes to balance sheet mix reflecting the transition of Bankers' Acceptances to CORRA-based loans and lower margins on loans. Non-interest income was $3,087 million, relatively flat compared with the same period last year.

PCL was $1,325 million, an increase of $372 million compared with the same period last year. PCL – impaired was $1,099 million, an increase of $360 million, or 49%, reflecting credit migration in the consumer and commercial lending portfolios. PCL – performing was $226 million, an increase of $12 million. The current year performing provisions largely reflect current credit conditions, including credit migration in the consumer and commercial lending portfolios, and volume growth. Total PCL as an annualized percentage of credit volume was 0.31%, an increase of 7 bps compared with the same period last year.

Non-interest expenses were $5,908 million, an increase of $247 million, or 4%, compared with the same period last year, reflecting higher spend supporting business growth, including higher employee-related expenses and technology costs, partially offset by higher non-credit provisions in the second quarter last year.

The efficiency ratio was 40.1%, compared with 41.7%, for the same period last year.