Good Business: How To Avoid The Worst Credit Cards Of 2013

Picking one of the worst credit cards on the market is an easy mistake to make.

CardHub has released its selections for the Worst Credit Cards of 2013, and one look at their terms and potential costs will have you quaking in your boots. After all, who can spare a few hundred dollars in this tough economic climate?

CardHub’s list of scary credit card offers is based on analysis of more than 1,000 different cards, which were compared based on their ability to meet the needs of major population segments. So check them out below, in addition to our selections for attractive alternatives and some tips for steering clear of the bottom feeders of the credit card market in the future.

Consumer Credit Cards

o Worst Card for Credit Building: #160;First Premier Bank Gold Credit Card – This card charges $170 in initial fees, $120 in membership fees per year starting on your first anniversary of account opening, a 36 percent APR, and a 25 percent credit-limit-increase fee.

o Attractive Alternative: #160;Harley-Davidson Secured Credit Card – Given that its “secured,” Harley Card users are required to place a refundable security deposit that acts as their credit line and prevents overspending. #160;They don’t have to worry about an annual fee, though, which means cardholders who do not carry a balance can rebuild their credit standing at no cost. #160;#160;

o Worst Rewards Card: #160;Visa Black Card – An imposter trying to capitalize on the American Express Centurion Card’s “black card” mystique, the Visa Black Card from Barclaycard US has a $495 annual fee as well as relatively modest rewards for the cost.

o Attractive Alternative: #160;The Barclaycard Arrival Card offers an initial bonus worth $400 in travel-related expenses and its $89 annual fee doesn’t kick in until the second year. The Blue Cash Preferred Card from American Express gives you 6 percent cash back on groceries, 3 percent on gas and department store purchases, 1 percent on everything else, and a $150 initial bonus in return for a very reasonable $75 annual fee.

o Worst Card for Financing: #160;Arvest Bank Classic Credit Card – This particular card charges 4.9 percent interest on new purchases for the first six months until a 17.9 percent regular rate takes effect. Arvest Bank’s other credit card offers were also among the most expensive cards to use for financing big-ticket purchases.

o Attractive Alternative: #160;The Citi Diamond Preferred Card offers 0 percent on new purchases for 18 months.

o Worst Card for Balance Transfers: #160;UBS Preferred Visa Signature Credit Card – As if a $495 annual fee weren’t enough, this card’s introductory interest rate is an unexciting 9.99 percent and only remains in effect for six months (until a 13.24 percent regular rate kicks in). The card also charges a 3 percent balance transfer fee.

o Attractive Alternative: The Slate Card from Chase doesn’t charge an annual fee or a balance transfer fee and offers 0 percent on transferred debt for 15 months.

o Worst Student Card: #160;US Bank College Visa Credit Card – Not only are rewards and introductory interest rates absent from this offer, but it also charges one of the highest interest rates on the student credit card market, at 20.99 percent.

o Attractive Alternative: #160;The Capital One Journey Student Rewards Card gives you 1.25 percent cash back on every dollar that you spend, as long as you pay your bill on time.

Small Business Credit Cards

o Worst Business Rewards Card: #160;First Hawaiian Bank Business MasterCard – Business credit cards are known for offering lucrative rewards in purchase categories such as office supplies or telecommunications services. The First Hawaiian Bank Business MasterCard is an outlier, however, as it does not have a rewards program (it doesn’t offer a low intro interest rate either).

o Attractive Alternative: Chase’s Ink Plus Business Card offers a $500 initial bonus, 5 points per $1 in key small business expense categories, and its $95 annual fee does not kick take effect until year two.

o Worst Card for Business Funding: #160;All of Them – According to CardHub’s 2013 Small Business Credit Card Study, the vast majority of credit card offers designated for company use aren’t covered by the Credit CARD Act of 2009.#160;Issuers can therefore increase the interest rates on existing debt whenever they want to, as opposed to only being able to do so when a consumer account becomes at least 60 days delinquent.

o Attractive Alternative: Both of the 0 percent consumer credit cards mentioned above are well-suited to small business funding purposes, as they provide debt stability without adding any additional personal liability (you’re held liable for business card debt anyway).

Tips for Avoiding Scary Credit Cards

Finding a credit card that meets your individual needs as well as your budget is a product of financial self-awareness and direct comparison of applicable offers. That means you should begin your search by evaluating your credit standing as well as your spending and payment habits. Then consider the following rules of thumb:

1. If you have damaged, limited or fair credit: Focus on finding a secured credit card or an unsecured credit card that does not charge an annual fee.

2. If you have above-average credit and always pay your bills in full: Focus on getting a card with market-best rewards in your biggest everyday expense categories. Paying an annual fee in return for higher earning rates can often be worthwhile.

3. If you have above-average credit and are planning a big-ticket purchase: Find a no annual fee credit card that is offering 0 percent interest on new purchases for as long as possible.

4. If you have above-average credit and carry a balance from month to month: #160;Identify the card whose introductory interest rate, balance transfer fee, and will enable you to comfortably pay off what you owe at the lowest possible cost.

Other than that, just make sure to support your card choice with responsible habits. Establishing automatic monthly payments from a checking account and using a credit card calculator to strategically repay debt will help in that regard.

Odysseas Papadimitriou is CEO of the personal finance websites CardHub #38; WalletHub.

Spindle, Edo Interactive Partner To Expand MeNetwork

MeNetwork is mobile marketing service that allows local merchants to deliver targeted content, offers, loyalty programs and promotions directly to consumers’ mobile devices based on location-based services. Spindle is one of the first providers to deliver an SMB (small to medium business) solution that aggregates both merchant payment and mobile marketing services.

Headquartered in Nashville, Tenn., with offices in Chicago, Ill. and Atlanta, Ga., edo delivers customized marketing offers and makes them automatically available through consumer credit cards, debit cards and mobile devices.

St. Louis Fed report shows small business loans aren’t growing



US government “profits” from student loans in 2013 surpassed $41 billion

The US government made enough profit from student loans in the last year to provide full Pell Grants of over $5,600 to 7.3 million students. But, like many government financial issues, accounting methods complicate the story.

The $41.3 billion student-loan profit for the 2013 fiscal year –
which ended on Sept. 30 – is actually down by $3.6 billion from
2012, but still enough to out-profit all but two global
companies, Exxon Mobil and Apple.

The numbers give pause since estimates show more than $1.2
trillion in student loan debt exists in the US, more than
Americans owe on credit cards.

Yet officials and experts point out that there are various ways
of accounting for how the US Department of Education runs the
student loan program, and that calling this pure profit is
misleading.

The profit number is ultimately tallied by the Congressional
Budget Office (CBO) and in what way the CBO chooses to account
for the cost of the loan programs can differ. The CBO has
traditionally used a procedure mandated in the Federal Credit
Reform Act (FCRA) of 1990 to assess the costs of the government’s
six loan programs. The method can produce large numbers cited in
news reports of late about the wild “profits” off student
loans.

But the CBO has acknowledged FCRA doesn’t account for cost of
“market risk,” or economic activities that affect if and
how borrowers pay back loans. For example, when the economy is in
a downturn, borrowers are more likely to be behind on payments,
affecting the government’s recovery rates and the overall costs
of the program for the Education Department.

“It’s actually neither accurate nor fair to characterize the
student loan program as making a profit,” Education Secretary
Arne Duncan said in July after new reports on profits from
student loans.

Another method – “fair value accounting” – has gained
traction with the CBO of late and is touted by experts as giving
a more truthful snapshot of the debt programs. The method
acknowledges the market risk inherent in lending, and its
outcomes show a big difference in government profit. Using it,
the 2013 profit goes down to more than $5 billion rather than the
over $40 billion being reported by many news outlets. Add
previous-year estimates using the method and routine
administrative costs, the claims of profit lose a lot of bite.
Proponents of this accounting method say there is little to no
profit involved in the programs.

This summer, Congress directed the government’s watchdog research
agency – the Government Accountability Office – to evaluate the
true cost of the federal student loan programs.

In addition, Congress and President Obama agreed this summer to
temporarily lower interest rates on student loans, tying rates on
loans to the market. Had they not done so, the Education
Department’s 2013 profits would have been about $8 billion
higher, according to the CBO. Yet the temporary relief will come
to an end in coming years, as rates are expected to rise.

Gains off loans in 2013 comprised nearly half of the Education
Department’s total outlays, the biggest share since at least
1997.

Effectively subsidizing half of the agencys total operations,
the profits have enabled Sec. Duncan to reduce the Education
Department’s total cost to the smallest amount since 2001.

The Education Department spent $40.9 billion in 2013, nearly a
third less than 2012 and the lowest reported amount since the
first year of George W. Bush’s presidency, according to the
Treasury Department.

Student loan profits last year exceeded the amount of money for
federal Pell Grants given to low-income college students,
according to budget documents. The administration has increased
Pell Grant funding in part due to reduced costs of student loans,
giving the appearance of one group of students subsidizing
another.

Senate Majority Leader Harry Reid (D-NV) expressed concern over
this in June, saying Democrats “don’t think there should be
deficit reduction based on the backs of these young men and women
who are trying to go to college.”

Congress plans to explore student debt issues in coming months.

In September, the Senate Health, Education, Labor and Pension
Committee began a series of hearings on critical higher education
issues, including loan programs.

The average federal student loan holder is more than $26,000 in
debt, a nearly 43 percent increase from 2007. Since that year,
outstanding federal student loans have almost doubled, worrying
Treasury and Federal Reserve officials.

“(It) is a burden which is affecting, for example, the ability
of many young people to buy a first home, affecting other
purchasing decisions they might make, affecting obviously their
overall financial condition,” Federal Reserve Chairman Ben
Bernanke said earlier this month. “To the extent that there’s
a lot of student debt held by people who are not working, its
obviously yet another drag on recovery.”

The Education Department told the Detroit Free Press Monday that
the Obama administration has strived to alleviate debt for
students and families.

“The administration has taken steps to improve college
affordability, and thanks to collective efforts, students and
families are paying lower rates on their loans today than they
would have otherwise,” Stephen Spector, US Department of
Education spokesman said. “More must be done to bring down the
cost of college, and we look forward to continuing to work with
Congress, institutions, borrowers, and other stakeholders to make
college more affordable.”

TD Bank Group Reports Fourth Quarter and Fiscal 2013 Results

This quarterly earnings news release should be read in conjunction with our unaudited Fourth Quarter 2013 consolidated financial results for the year ended October 31, 2013 , included in this Earnings News Release and with our audited 2013 Consolidated Financial Statements, which is available on our website at http://www.td.com/investor/ . This analysis is dated December 4, 2013 . Unless otherwise indicated, all amounts are expressed in Canadian dollars, and have been primarily derived from the Banks Annual or Interim Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The accounting policies used in the preparation of these consolidated financial results are consistent with those used in the Banks October 31, 2013 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 Banks website at http://www.td.com , as well as on SEDAR at http://www.sedar.com and on the US Securities and Exchange Commissions ( SECs ) website at http://www.sec.gov (EDGAR filers section). Reported results conform to Generally Accepted Accounting Principles (GAAP), in accordance with IFRS. Adjusted measures are non-GAAP measures. Refer to the How the Bank Reports section of the Managements Discussion and Analysis (MDA) for an explanation of reported and adjusted results. FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth quarter last year: Reported diluted earnings per share were $1.68 , compared with $1.66 . Adjusted diluted earnings per share were $1.90 , compared with $1.83 . Reported net income was $1,622 million , compared with $1,597 million . Adjusted net income was $1,821 million , compared with $1,757 million . FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year: Reported diluted earnings per share were $6.91 , compared with $6.76 . Adjusted diluted earnings per share were $7.45 , compared with $7.42 . Reported net income was $6,662 million , compared with $6,471 million . Adjusted net income was $7,158 million , compared with $7,075 million . FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE) The fourth quarter reported earnings figures included the following items of note: Amortization of intangibles of $59 million after tax ( 6 cents per share), compared with $60 million after tax ( 6 cents per share) in the fourth quarter last year. A loss of $15 million after tax ( 2 cents per share), due to the change in fair value of derivatives hedging the reclassified available-for-sale securities portfolio, compared with a loss of $35 million after tax ( 4 cents per share) in the fourth quarter last year. Integration charges of $14 million after tax ( 2 cents per share), relating to the acquisition of the credit card portfolio of MBNA Canada, compared with $25 million after tax ( 3 cents per share) in the fourth quarter last year. A release of $29 million after tax ( 3 cents per share), due to the impact of the Alberta flood on the loan portfolio. A litigation-related charge of $30 million after tax ( 3 cents per share). Restructuring charges of $90 million after tax ( 10 cents per share). Set-up costs of $20 million after tax ( 2 cents per share), in preparation for the previously announced affinity relationship with Aimia with respect to Aeroplan Visa credit cards and the related acquisition of accounts. TORONTO , Dec. 5, 2013 /CNW/ – TD Bank Group (TD or the Bank) today announced its financial results for the fourth quarter ended October 31, 2013 . Overall results for the quarter reflected strong performances from TDs Canadian and US personal and commercial banking businesses, and the Wealth business. We are pleased with our fourth quarter performance, said Ed Clark , Group President and Chief Executive Officer. We finished the year with adjusted earnings of over $7.1 billion , which included record results in several of our businesses. These results demonstrate the strength of our business fundamentals, even in a challenging operating environment. Canadian Personal and Commercial Banking Canadian Personal and Commercial Banking posted reported net income of $914 million in the fourth quarter. On an adjusted basis, net income was $948 million , an increase of 14% compared with the fourth quarter last year. These earnings reflect continued good loan and deposit volume growth, favourable credit performance and effective expense management. Canadian Personal and Commercial Banking had a good fourth quarter and a strong 2013, said Tim Hockey , Group Head, Canadian Banking, Auto Finance, and Wealth Management. In 2014, we will continue to deliver legendary service and convenience to customers across all of our channels, including our expanding digital and mobile platforms. We look forward to welcoming Aeroplan Visa credit card customers and providing services to help them meet their financial needs. Wealth and Insurance Wealth and Insurance delivered net income of $405 million in the quarter, up 38% from the same period last year. Wealth business results were driven by higher fee-based revenue, the addition of Epoch Holding Corporation and higher trading volume compared with same quarter last year. TD Ameritrade contributed $77 million in earnings to the segment, an increase of 51% over the same period last year. Our Wealth business delivered a strong finish to a great year, said Hockey. In 2014, we plan to build on our market leadership positions, expand our asset management capabilities and continue to invest in our operations and technology infrastructure, which will enhance our ability to provide our clients with legendary experiences. In Insurance, net income in the fourth quarter increased compared with the same period last year, mainly due to premium volume growth, partially offset by higher claims. The business will continue to monitor industry developments related to Ontario auto insurance, focus on improving the client experience, and will invest in our core capabilities and processes. US Personal and Commercial Banking US Personal and Commercial Banking generated US$355 million in reported net income for the quarter. On an adjusted basis, the segment earned US$384 million , an increase of 7% compared with the fourth quarter last year. The increase in earnings was primarily due to strong loan and deposit volume growth, the acquisition of Targets US credit card portfolio, and an improvement in credit quality, partially offset by lower margins and investments in new stores and technology. TD Bank , Americas Most Convenient Bank, delivered a good fourth quarter and strong year, said Mike Pedersen , Group Head, US Banking. While we are encouraged by the strong fundamentals of the business, we expect the operating environment to remain challenging in 2014. We will remain focused on loan and deposit growth and expense management, while continuing to provide superior customer service. Wholesale Banking Wholesale Banking generated net income of $122 million for the quarter, a decrease of 61% compared with the same period last year. The decrease in earnings was primarily due to lower security gains and higher non-interest expenses. Overall it was a challenging year for our Wholesale business, said Bob Dorrance , Group Head, Wholesale Banking. Instability in the economic environment continues to impact corporate and investor activities. Looking ahead, we remain focused on serving our clients, growing our franchise, managing our risks and reducing expenses. Capital TDs Common Equity Tier 1 ratio on a Basel III fully phased-in basis was 9%, up from 8.9% last quarter. Stock Dividend Today, TD announced a stock dividend of one common share per each issued and outstanding common share, which has the same effect as a two-for-one split of the common shares. Shareholders of record as at the close of business on January 23, 2014 , are entitled to receive the stock dividend on the payment date of January 31, 2014 . TD also announced an increase of $0.01 to the quarterly cash dividend payable on January 31, 2014 . The cash dividend is payable on the common shares that are issued and outstanding on January 6, 2014 , and as such will not be payable on any common shares issued pursuant to the stock dividend. This announcement reflects the substantial appreciation of our share price over the last decade, said Clark. We expect that this will help ensure the accessibility of our stock to retail investors. The Banks share price has increased 170% since the last stock dividend declared by the Bank in 1999. Conclusion In a challenging operating environment, we are very pleased with the great results in a number of our businesses. Were especially proud that TD Bank , Americas Most Convenient Bank, delivered $1.6 billion in adjusted net income in 2013, achieving a target we set for our US business three years ago. This represents a terrific milestone in our North American success story, said Clark. We are confident in our ability to succeed in 2014 and beyond as we strategically invest in our businesses and prudently manage expense growth. A critical component of our success is our employees passion for delivering winning service to our customers and clients. I truly appreciate the outstanding contributions from the entire TD team. The foregoing contains forward-looking statements. Caution Regarding Forward-Looking Statements From time to time, the Bank makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the US Securities and Exchange Commission , and in other communications. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the safe harbour provisions of, and are intended to be forward-looking statements under, applicable Canadian and US securities legislation, including the US Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements made in this document, the Banks 2013 MDA under the headings Economic Summary and Outlook, for each business segment Business Outlook and Focus for 2014 and in other statements regarding the Banks objectives and priorities for 2014 and beyond and strategies to achieve them, and the Banks anticipated financial performance. Forward-looking statements are typically identified by words such as will, should, believe, expect, anticipate, intend, estimate, plan, may, and could. By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, general and specific. Especially in light of the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and uncertainties – many of which are beyond the Banks control and the effects of which can be difficult to predict – may cause actual results to differ materially from the expectations expressed in the forward-looking statements. Risk factors that could cause such differences include: credit, market (including equity, commodity, foreign exchange, and interest rate), liquidity, operational (including technology), reputational, insurance, strategic, regulatory, legal, environmental, capital adequacy, and other risks. Examples of such risk factors include the general business and economic conditions in the regions in which the Bank operates; disruptions in or attacks (including cyber attacks) on the Banks information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud to which the Bank is exposed; the failure of third parties to comply with their obligations to the Bank or its affiliates relating to the care and control of information; the impact of recent legislative and regulatory developments; the overall difficult litigation environment, including in the United States ; changes to the Banks credit ratings; changes in currency and interest rates; increased funding costs for credit due to market illiquidity and competition for funding; and the occurrence of natural and unnatural catastrophic events and claims resulting from such events. We caution that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Banks results. For more detailed information, please see the Risk Factors and Management section of the 2013 MDA, as may be updated in subsequently filed quarterly reports to shareholders and news releases (as applicable) related to any transactions discussed under the heading Significant Events in the relevant MDA, which applicable releases may be found on www.td.com . All such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, when making decisions with respect to the Bank and we caution readers not to place undue reliance on the Banks forward-looking statements. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2013 MDA under the headings Economic Summary and Outlook, and for each business segment, Business Outlook and Focus for 2014, each as updated in subsequently filed quarterly reports to shareholders. Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Banks shareholders and analysts in understanding the Banks financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation. This document was reviewed by the Banks Audit Committee and was approved by the Banks Board of Directors, on the Audit Committees recommendation, prior to its release. TABLE 1: FINANCIAL HIGHLIGHTS (millions of Canadian dollars, except as noted) For the three months ended For the twelve months ended October 31 July 31 October 31 October 31 October 31 2013 2013 2012 2013 2012 Results of operations Total revenue 1 $ 7,001 $ 7,085 $ 6,577 $ 27,262 $ 25,546 Provision for credit losses 352 477 565 1,631 1,795 Insurance claims and related expenses 1 711 1,140 688 3,056 2,424 Non-interest expenses 4,157 3,764 3,606 15,042 13,998 Net income – reported 1,622 1,527 1,597 6,662 6,471 Net income – adjusted 2 1,821 1,588 1,757 7,158 7,075 Economic profit 3 695 473 703 2,757 3,037 Return on common equity – reported 13.3 % 12.5 % 14.0 % 14.0 % 14.9 % Return on common equity – adjusted 3 15.0 % 13.0 % 15.5 % 15.0 % 16.3 % Financial position Total assets $ 862,532 $ 835,101 $ 811,106 $ 862,532 $ 811,106 Total equity 51,973 50,918 49,000 51,973 49,000 Total risk-weighted assets 4 286,355 283,521 245,875 286,355 245,875 Financial ratios Efficiency ratio – reported 1 59.4 % 53.1 % 54.8 % 55.2 % 54.8 % Efficiency ratio – adjusted 1,2 55.3 % 52.3 % 52.8 % 52.8 % 51.3 % Common Equity Tier 1 capital to risk weighted assets 5 9.0 % 8.9 % N/A 9.0 % N/A Tier 1 capital to risk-weighted assets 4 11.0 % 11.0 % 12.6 % 11.0 % 12.6 % Provision for credit losses as a % of net average loans and acceptances 6 0.34 % 0.43 % 0.54 % 0.38 % 0.43 % Common share information – reported (dollars) Per share earnings Basic $ 1.69 $ 1.59 $ 1.67 $ 6.93 $ 6.81 Diluted 1.68 1.58 1.66 6.91 6.76 Dividends per share 0.85 0.81 0.77 3.24 2.89 Book value per share 51.31 50.04 48.17 51.31 48.17 Closing share price 95.64 86.56 81.23 95.64 81.23 Shares outstanding (millions) Average basic 916.7 921.4 912.4 918.9 906.6 Average diluted 919.5 924.1 920.0 922.5 914.9 End of period 917.5 919.8 916.1 917.5 916.1 Market capitalization (billions of Canadian dollars) $ 87.7 $ 79.6 $ 74.4 $ 87.7 $ 74.4 Dividend yield 3.5 % 3.7 % 3.6 % 3.7 % 3.8 % Dividend payout ratio 50.4 % 51.0 % 46.1 % 46.7 % 42.5 % Price-earnings ratio 13.9 12.6 12.0 13.9 12.0 Common share information – adjusted (dollars) 2 Per share earnings Basic $ 1.90 $ 1.65 $ 1.84 $ 7.47 $ 7.47 Diluted 1.90 1.65 1.83 7.45 7.42 Dividend payout ratio 44.6 % 49.0 % 41.7 % 43.3 % 38.7 % Price-earnings ratio 12.8 11.7 10.9 12.8 10.9 1 Effective the fourth quarter of 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts, including certain ratios, have been recast to conform with the current period presentation. 2 Adjusted measures are non-GAAP measures. Refer to the How the Bank Reports section for an explanation of reported and adjusted results. 3 Economic profit and adjusted return on common equity are non-GAAP financial measures. Refer to the Economic Profit and Return on Common Equity section for an explanation. 4 Effective the first quarter of 2013, amounts are calculated in accordance with the Basel III regulatory framework, and are presented based on the all-in methodology. Prior to the first quarter of 2013, amounts were calculated in accordance with the Basel II regulatory framework. 5 Effective the first quarter of 2013, the Bank implemented the Basel III regulatory framework. As a result, the Bank began reporting the Common Equity Tier 1 capital measure in accordance with the all-in methodology. 6 Excludes acquired credit-impaired loans and debt securities classified as loans. For additional information on acquired credit-impaired loans, see the Credit Portfolio Quality section of the MDA and Note 7 to the Consolidated Financial Statements. For additional information on debt securities classified as loans, see the Exposure to Non-Agency Collateralized Mortgage Obligations discussion and tables in the Credit Portfolio Quality section of the MDA and Note 7 to the Consolidated Financial Statements. HOW WE PERFORMED How the Bank Reports The Bank prepares its Interim 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 Banks 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 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. TABLE 2: OPERATING RESULTS – REPORTED (millions of Canadian dollars) For the three months ended For the twelve months ended October 31 July 31 October 31 October 31 October 31 2013 2013 2012 2013 2012 Net interest income $ 4,184 $ 4,146 $ 3,842 $ 16,078 $ 15,026 Non-interest income 1 2,817 2,939 2,735 11,184 10,520 Total revenue 1 7,001 7,085 6,577 27,262 25,546 Provision for credit losses 352 477 565 1,631 1,795 Insurance claims and related expenses 1 711 1,140 688 3,056 2,424 Non-interest expenses 4,157 3,764 3,606 15,042 13,998 Income before income taxes and equity in net income of an investment in associate 1,781 1,704 1,718 7,533 7,329 Provision for income taxes 240 252 178 1,143 1,092 Equity in net income of an investment in associate, net of income taxes 81 75 57 272 234 Net income – reported 1,622 1,527 1,597 6,662 6,471 Preferred dividends 49 38 49 185 196 Net income available to common shareholders and non-controlling interests in subsidiaries $ 1,573 $ 1,489 $ 1,548 $ 6,477 $ 6,275 Attributable to: Non-controlling interests $ 27 $ 26 $ 26 $ 105 $ 104 Common shareholders 1,546 1,463 1,522 6,372 6,171 1 Effective the fourth quarter of 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts have been reclassified to conform with the current period presentation. TABLE 3: NON-GAAP FINANCIAL MEASURES – RECONCILIATION OF ADJUSTED TO REPORTED NET INCOME (millions of Canadian dollars) For the three months ended For the twelve months ended October 31 July 31 October 31 October 31 October 31 2013 2013 2012 2013 2012 Operating results – adjusted Net interest income 1 $ 4,184 $ 4,146 $ 3,842 $ 16,078 $ 15,062 Non-interest income 2,3 2,834 2,857 2,772 11,113 10,615 Total revenue 7,018 7,003 6,614 27,191 25,677 Provision for credit losses 4 392 412 511 1,606 1,903 Insurance claims and related expenses 3 711 1,140 688 3,056 2,424 Non-interest expenses 5 3,883 3,662 3,493 14,363 13,162 Income before income taxes and equity in net income of an investment in associate 2,032 1,789 1,922 8,166 8,188 Provision for income taxes 6 305 290 236 1,334 1,404 Equity in net income of an investment in associate, net of income taxes 7 94 89 71 326 291 Net income – adjusted 1,821 1,588 1,757 7,158 7,075 Preferred dividends 49 38 49 185 196 Net income available to common shareholders and non-controlling interests in subsidiaries – adjusted 1,772 1,550 1,708 6,973 6,879 Attributable to: Non-controlling interests in subsidiaries, net of income taxes 27 26 26 105 104 Net income available to common shareholders – adjusted 1,745 1,524 1,682 6,868 6,775 Adjustments for items of note, net of income taxes Amortization of intangibles 8 (59) (59) (60) (232) (238) Fair value of derivatives hedging the reclassified available-for-sale securities portfolio 9 (15) 70 (35) 57 (89) Integration charges and direct transaction costs relating to US Personal and Commercial Banking acquisitions 10 – – – – (9) Fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses 11 – – – – – Integration charges, direct transaction costs, and changes in fair value of contingent consideration relating to the Chrysler Financial acquisition 12 – – (3) – (17) Integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada 13 (14) (24) (25) (92) (104) Litigation and litigation-related charge/reserve 14 (30) – – (100) (248) Reduction of allowance for incurred but not identified credit losses 15 – – – – 120 Positive impact due to changes in statutory income tax rates 16 – – – – 18 Impact of Alberta flood on the loan portfolio 17 29 (48) – (19) – Impact of Superstorm Sandy 18 – – (37) – (37) Restructuring charges 19 (90) – – (90) – Set-up costs in preparation for the previously announced affinity relationship with Aimia with respect to Aeroplan Visa credit cards and the related acquisition of accounts 20 (20) – – (20) – Total adjustments for items of note (199) (61) (160) (496) (604) Net income available to common shareholders – reported $ 1,546 $ 1,463 $ 1,522 $ 6,372 $ 6,171 1 Adjusted net interest income excludes the following items of note: second quarter 2012 – $22 million ( $17 million after tax) of certain charges against revenue related to promotional-rate card origination activities, as explained in footnote 13; first quarter 2012 – $14 million ( $10 million after tax) of certain charges against revenue related to promotional-rate card origination activities. 2 Adjusted non-interest income excludes the following items of note: fourth quarter 2013 – $17 million loss due to change in fair value of derivatives hedging the reclassified available-for-sale (AFS) securities portfolio, as explained in footnote 9; third quarter 2013 – $82 million gain due to change in fair value of derivatives hedging the reclassified AFS securities portfolio; second quarter 2013 – $25 million loss due to change in fair value of derivatives hedging the AFS securities portfolio; first quarter 2013 – $31 million gain due to change in fair value of derivatives hedging the reclassified AFS securities portfolio; fourth quarter 2012 – $1 million loss due to change in fair value of credit default swaps (CDS) hedging the corporate loan book, as explained in footnote 11; $33 million loss due to change in fair value of derivatives hedging the reclassified available-for-sale AFS; $2 million loss due to change in fair value of contingent consideration relating to Chrysler Financial, as explained in footnote 12, $1 million loss due to the impact of Superstorm Sandy, as explained in footnote 18; third quarter 2012 – $3 million gain due to change in CDS hedging the corporate loan book; $2 million gain due to change in fair value of derivatives hedging the reclassified AFS securities portfolio; $2 million loss due to change in fair value of contingent consideration relating to Chrysler Financial; second quarter 2012 – $2 million loss due to change in fair value of CDS hedging the corporate loan book; $5 million loss due to change in fair value of derivatives hedging the reclassified AFS securities portfolio; first quarter 2012 – $2 million loss due to change in fair value of CDS hedging the corporate loan book; $53 million loss due to change in fair value of derivatives hedging the reclassified AFS securities portfolio; $1 million gain due to change in fair value of contingent consideration relating to Chrysler Financial. 3 Effective the fourth quarter of 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts have been reclassified to conform with the current period presentation. 4 Adjusted provision for credit losses (PCL) excludes the following items of note: fourth quarter 2013 – $40 million release on the provision set up for the impact of the Alberta flood on the loan portfolio, as explained in footnote 17; third quarter 2013 – $65 million due to the impact of the Alberta flood on the loan portfolio; fourth quarter 2012 – $54 million due to the impact of Superstorm Sandy, as explained in footnote 18; third quarter 2012 – $41 million in reduction of allowance for incurred but not identified credit losses in Canadian Personal and Commercial Banking, as explained in footnote 15; second quarter 2012 – $80 million in reduction of allowance for incurred but not identified credit losses in Canadian Personal and Commercial Banking; first quarter 2012 – $41 million in reduction of allowance for incurred but not identified credit losses in Canadian Personal and Commercial Banking. 5 Adjusted non-interest expenses excludes the following items of note: fourth quarter 2013 – $70 million amortization of intangibles, as explained in footnote 8; $19 million of integration charges and direct transaction costs relating to the acquisition of the MBNA Canada credit card portfolio, as explained in footnote 13; $30 million of litigation and litigation-related charges, as explained in footnote 14; $129 million due to the initiatives to reduce costs, as explained in footnote 19; $27 million of set-up costs in preparation for the affinity relationship with Aimia Inc. with respect to Aeroplan credit cards, as explained in footnote 20; third quarter 2013 – $69 million amortization of intangibles; $33 million of integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada; second quarter 2013 – $67 million amortization of intangibles; $41 million of integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada; first quarter 2013 – $66 million amortization of intangibles; $32 million of integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada; $97 million of litigation and litigation-related charges; fourth quarter 2012 – $69 million amortization of intangibles; $4 million of integration charges and direct transaction costs relating to the Chrysler Financial acquisition, as explained in footnote 12; $33 million of integration charges and direct transaction costs relating to the acquisition of the MBNA Canada credit card portfolio; $7 million due to the impact of Superstorm Sandy, as explained in footnote 18; third quarter 2012 – $69 million amortization of intangibles; $7 million of integration charges and direct transaction costs relating to the Chrysler Financial acquisition; $35 million of integration charges and direct transaction costs relating to the acquisition of the MBNA Canada credit card portfolio; $128 million of litigation and litigation-related charges; second quarter 2012 – $69 million amortization of intangibles; $6 million of integration charges and direct transaction costs relating to the Chrysler Financial acquisition; $18 million of integration charges and direct transaction costs relating to the acquisition of the MBNA Canada credit card portfolio; first quarter 2012 – $70 million amortization of intangibles; $11 million of integration charges related to US Personal and Commercial Banking acquisitions, as explained in footnote 10; $7 million of integration charges and direct transaction costs relating to the Chrysler Financial acquisition; $18 million of integration charges and direct transaction costs relating to the acquisition of the MBNA Canada credit card portfolio; $285 million of litigation and litigation-related charges. 6 For reconciliation between reported and adjusted provision for income taxes, see the Non-GAAP Financial Measures – Reconciliation of Reported to Adjusted Provision for Income Taxes table in the Income Taxes section of the Banks Consolidated Financial Statements. 7 Adjusted equity in net income of an investment in associate excludes the following items of note: fourth quarter 2013 – $13 million amortization of intangibles, as explained in footnote 8; third quarter 2013 – $14 million amortization of intangibles; second quarter 2013 – $14 million amortization of intangibles; first quarter 2013 – $13 million amortization of intangibles; fourth quarter 2012 – $14 million amortization of intangibles; third quarter 2012 – $13 million amortization of intangibles; second quarter 2012 – $15 million amortization of intangibles; first quarter 2012 – $15 million amortization of intangibles. 8 Amortization of intangibles primarily relates to the TD Banknorth acquisition in 2005 and its privatization in 2007, the acquisitions by TD Banknorth of Hudson United Bancorp in 2006 and Interchange Financial Services in 2007, the Commerce acquisition in 2008, the amortization of intangibles included in equity in net income of TD Ameritrade, the acquisition of the credit card portfolio of MBNA Canada in 2012, the acquisition of Target Corporations US credit card portfolio in 2013, and the Epoch Investment Partners, Inc. acquisition in 2013. Amortization of software is recorded in amortization of other intangibles; however, amortization of software is not included for purposes of items of note, which only includes amortization of other intangibles acquired as a result of asset acquisitions and business combinations. 9 During 2008, as a result of deterioration in markets and severe dislocation in the credit market, the Bank changed its trading strategy with respect to certain trading debt securities. Since the Bank no longer intended to actively trade in these debt securities, the Bank reclassified these debt securities from trading to the AFS category effective August 1, 2008. As part of the Banks trading strategy, these debt securities are economically hedged, primarily with CDS and interest rate swap contracts. This includes foreign exchange translation exposure related to the debt securities portfolio and the derivatives hedging it. These derivatives are not eligible for reclassification and are recorded on a fair value basis with changes in fair value recorded in the periods earnings. Management believes that this asymmetry in the accounting treatment between derivatives and the reclassified debt securities results in volatility in earnings from period to period that is not indicative of the economics of the underlying business performance in Wholesale Banking. The Bank may from time to time replace securities within the portfolio to best utilize the initial, matched fixed term funding. As a result, the derivatives are accounted for on an accrual basis in Wholesale Banking and the gains and losses related to the derivatives in excess of the accrued amounts are reported in the Corporate segment. Adjusted results of the Bank exclude the gains and losses of the derivatives in excess of the accrued amount. 10 As a result of US Personal and Commercial Banking acquisitions, the Bank incurred integration charges and direct transaction costs. Integration charges consist of costs related to information technology, employee retention, external professional consulting charges, marketing (including customer communication and rebranding), integration-related travel costs, employee severance costs, the costs of amending certain executive employment and award agreements, contract termination fees and the write-down of long-lived assets due to impairment. Direct transaction costs are expenses directly incurred in effecting a business combination and consist primarily of finders fees, advisory fees, and legal fees. Integration charges in the recent quarters were driven by the South Financial and FDIC -assisted acquisitions and there were no direct transaction costs recorded. The first quarter 2012 was the last quarter US Personal and Commercial Banking included any further FDIC -assisted and South Financial related integration charges or direct transaction costs as an item of note. 11 The Bank purchases CDS to hedge the credit risk in Wholesale Bankings corporate lending portfolio. These CDS do not qualify for hedge accounting treatment and are measured at fair value with changes in fair value recognized in current periods earnings. The related loans are accounted for at amortized cost. Management believes that this asymmetry in the accounting treatment between CDS and loans would result in periodic profit and loss volatility which is not indicative of the economics of the corporate loan portfolio or the underlying business performance in Wholesale Banking. As a result, the CDS are accounted for on an accrual basis in Wholesale Banking and the gains and losses on the CDS, in excess of the accrued cost, are reported in the Corporate segment. When a credit event occurs in the corporate loan book that has an associated CDS hedge, the PCL related to the portion that was hedged through the CDS is netted against this item of note. 12 As a result of the Chrysler Financial acquisition in Canada and US, the Bank incurred integration charges and direct transaction costs. As well, the Bank experienced volatility in earnings as a result of changes in fair value of contingent consideration. Integration charges consist of costs related to information technology, employee retention, external professional consulting charges, marketing (including customer communication and rebranding), integration-related travel costs, employee severance costs, the cost of amending certain executive employment and award agreements, contract termination fees, and the write-down of long-lived assets due to impairment. Direct transaction costs are expenses directly incurred in effecting a business combination and consist primarily of finders fees, advisory fees, and legal fees. Contingent consideration is defined as part of the purchase agreement, whereby the Bank is required to pay additional cash consideration in the event that amounts realized on certain assets exceed a pre-established threshold. Contingent consideration is recorded at fair value on the date of acquisition. Changes in fair value subsequent to acquisition are recorded in the Consolidated Statement of Income. Adjusted earnings exclude the gains and losses on contingent consideration in excess of the acquisition date fair value. While integration charges and direct transaction costs related to this acquisition were incurred for both Canada and the US, the majority of these charges relate to integration initiatives undertaken for US Personal and Commercial Banking. 13 As a result of the acquisition of the MBNA Canada credit card portfolio, as well as certain other assets and liabilities, the Bank incurred integration charges and direct transaction costs. Integration charges consist of costs related to information technology, employee retention, external professional consulting charges, marketing (including customer communication, rebranding and certain charges against revenues related to promotional-rate card origination activities), integration-related travel costs, employee severance costs, the cost of amending certain executive employment and award agreements, contract termination fees, and the write-down of long lived assets due to impairment. The Banks integration charges related to the MBNA acquisition were higher than what were anticipated when the transaction was first announced. The elevated spending was primarily due to additional costs incurred (other than the amounts capitalized) to build out technology platforms for the business. Direct transaction costs are expenses directly incurred in effecting the business combination and consist primarily of finders fees, advisory fees and legal fees. Integration charges and direct transaction costs related to this acquisition were incurred by Canadian Personal and Commercial Banking. 14 As a result of certain adverse judgments and settlements in the US in 2012 and after continued evaluation of this portfolio of cases throughout that year, the Bank took prudent steps to determine, in accordance with applicable accounting standards, that the litigation provision of $413 million ( $248 million after tax) was required. In 2013, the Bank further reassessed its litigation provisions and determined that additional litigation and litigation-related charges of $97 million ( $70 million after tax) and $30 million ( $30 million after tax) were required as a result of recent developments and settlements reached in the US 15 Excluding the impact related to the MBNA credit card and other consumer loan portfolios (which is recorded to the Canadian Personal and Commercial Banking results), Reduction of allowance for incurred but not identified credit losses, formerly known as General allowance increase (release) in Canadian Personal and Commercial Banking and Wholesale Banking includes $41 million ( $30 million after tax) in the third quarter of 2012, $80 million ( $59 million after tax) in the second quarter of 2012 and $41 million ( $31 million after tax) in the first quarter of 2012, all of which are attributable to the Wholesale Banking and non- MBNA related Canadian Personal and Commercial Banking loan portfolios. Beginning in 2013, the change in the allowance for incurred but not identified credit losses in the normal course of business is included in the Corporate segment net income and is no longer be recorded as an item of note. 16 This represents the impact of changes in the income tax statutory rate on net deferred income tax balances. 17 In the third quarter of 2013, the Bank recorded a provision for credit losses of $65 million ( $48 million after tax) for residential loan losses from Alberta flooding. In the fourth quarter of 2013, a provision of $40 million ( $29 million after tax) was released. The reduction in the provision reflects an updated estimate incorporating more current information regarding the extent of damage, actual delinquencies in impacted areas, and greater certainty regarding payments to be received under the Alberta Disaster Recovery Program and from property and default insurance. 18 In the fourth quarter of 2012, the Bank provided $62 million ( $37 million after tax) for certain estimated losses resulting from Superstorm Sandy which primarily relate to an increase in provision for credit losses, fixed asset impairments and charges against revenue relating to fee reversals. 19 The Bank undertook certain measures commencing in the fourth quarter of 2013, which are expected to continue through fiscal year 2014, to reduce costs in a sustainable manner and achieve greater operational efficiencies. To implement these measures, the Bank recorded a provision of $129 million ( $90 million after tax) for restructuring initiatives related primarily to retail branch and real estate optimization initiatives. 20 On September 16, 2013 , the Bank (i) confirmed that it had entered into an agreement pursuant to which TD will become the primary issuer of Aeroplan Visa credit cards commencing on January 1, 2014 (the affinity relationship); and (ii) announced that the Bank will acquire approximately 50% of the existing Aeroplan credit card portfolio from CIBC . During the fourth quarter of 2013, in preparation for the affinity relationship with Aimia Inc. and the expected acquisition of part of the CIBC credit card portfolio, the Bank incurred program set-up costs related to information technology, external professional consulting, marketing, training, and program management. These costs are included as an item of note in the Canadian Personal and Commercial Banking segment. TABLE 4: RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE (EPS) 1 (Canadian dollars) For the three months ended For the twelve months ended October 31 July 31 October 31 October 31 October 31 2013 2013 2012 2013 2012 Basic earnings per share – reported $ 1.69 $ 1.59 $ 1.67 $ 6.93 $ 6.81 Adjustments for items of note 2 0.21 0.06 0.17 0.54 0.66 Basic earnings per share – adjusted $ 1.90 $ 1.65 $ 1.84 $ 7.47 $ 7.47 Diluted earnings per share – reported $ 1.68 $ 1.58 $ 1.66 $ 6.91 $ 6.76 Adjustments for items of note 2 0.22 0.07 0.17 0.54 0.66 Diluted earnings per share – adjusted $ 1.90 $ 1.65 $ 1.83 $ 7.45 $ 7.42 1 EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding during the period. 2 For explanation of items of note, see the Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income table in the How We Performed section of this document. TABLE 5: NON-GAAP FINANCIAL MEASURES – RECONCILIATION OF REPORTED TO ADJUSTED PROVISION FOR INCOME TAXES (millions of Canadian dollars, except as noted) For the three months ended For the twelve months ended October 31 July 31 October 31 October 31 October 31 2013 2013 2012 2013 2012 Provision for income taxes – reported $ 240 $ 252 $ 178 $ 1,143 $ 1,092 Adjustments for items of note: 1,2 Amortization of intangibles 24 24 23 94 96 Fair value of derivatives hedging the reclassified available-for-sale securities portfolio 2 (12) (2) (14) – Integration charges and direct transaction costs relating to US Personal and Commercial Banking acquisitions – – – – 2 Fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses – – 1 – 2 Integration charges, direct transaction costs, and changes in fair value of contingent consideration relating to the Chrysler Financial acquisition – – 3 – 10 Integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada 5 9 8 33 36 Litigation and litigation-related charge/reserve (1) – – 26 165 Reduction of allowance for incurred but not identified credit losses – – – – (42) Positive impact due to changes in statutory income tax rates – – – – 18 Impact of Alberta flood on the loan portfolio (11) 17 – 6 – Impact of Superstorm Sandy – – 25 – 25 Restructuring charges 39 – – 39 – Set-up costs in preparation for the previously announced affinity relationship with Aimia with respect to Aeroplan Visa credit cards and the related acquisition of accounts 7 – – 7 – Total adjustments for items of note 65 38 58 191 312 Provision for income taxes – adjusted $ 305 $ 290 $ 236 $ 1,334 $ 1,404 Effective income tax rate – adjusted 3 15.0 % 16.2 % 12.3 % 16.3 % 17.1 % 1 For explanations of items of note, see the Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income table in the How We Performed section of this document. 2 The tax effect for each item of note is calculated using the effective statutory income tax rate of the applicable legal entity. 3 Adjusted effective income tax rate is the adjusted provision for income taxes before other taxes as a percentage of adjusted net income before taxes. ECONOMIC PROFIT AND RETURN ON COMMON EQUITY The Banks methodology for allocating capital to its business segments is aligned with the common equity capital requirements under Basel III at a 7% Common Equity Tier 1 (CET1) ratio. The return measures for business segments reflect a return on common equity methodology. 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 common equity. The rate used in the charge for average common equity 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 Banks common equity. The Banks goal is to achieve positive and growing economic profit. Adjusted return on common equity (ROE) is adjusted net income available to common shareholders as a percentage of average common equity. ROE is a percentage rate and is a variation of economic profit which is a dollar measure. When ROE exceeds the equity cost of capital, economic profit is positive. Economic profit and adjusted ROE are non-GAAP financial measures as these are not defined terms 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. TABLE 6: ECONOMIC PROFIT AND RETURN ON COMMON EQUITY (millions of Canadian dollars) For the three months ended For the twelve months ended October 31 July 31 October 31 October 31 October 31 2013 2013 2012 2013 2012 Average common equity $ 46,267 $ 46,342 $ 43,256 $ 45,676 $ 41,535 Rate charged for average common equity 9.0 % 9.0 % 9.0 % 9.0 % 9.0 % Charge for average common equity $ 1,050 $ 1,051 $ 979 $ 4,111 $ 3,738 Net income available to common shareholders – reported $ 1,546 $ 1,463 $ 1,522 $ 6,372 $ 6,171 Items of note impacting income, net of income taxes 1 199 61 160 496 604 Net income available to common shareholders – adjusted $ 1,745 $ 1,524 $ 1,682 $ 6,868 $ 6,775 Economic profit 2 $ 695 $ 473 $ 703 $ 2,757 $ 3,037 Return on common equity – adjusted 15.0 % 13.0 % 15.5 % 15.0 % 16.3 % 1 For explanations of items of note, see the Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported net income table in the How We Performed section of this document. 2 Economic profit is calculated based on average common equity. SIGNIFICANT EVENTS IN 2013 Acquisition of Target Corporations US Credit Card Portfolio On March 13, 2013 , the Bank, through its subsidiary, TD Bank USA, NA , acquired substantially all of Target Corporations existing US Visa and private label credit card portfolios (Target), with a gross outstanding balance of $5.8 billion . TD Bank USA, NA also entered into a seven-year program agreement under which it will become the exclusive issuer of Target-branded Visa and private label consumer credit cards to Target Corporations US customers. Under the terms of the program agreement, the Bank and Target Corporation share in the profits generated by the portfolios. Target Corporation is responsible for all elements of operations and customer service, and bears most of the operating costs to service the assets. The Bank controls risk management policies and regulatory compliance, and bears all costs relating to funding the receivables for existing Target Visa accounts and all existing and newly issued Target private label accounts in the US The Bank accounted for the purchase as an asset acquisition. The results of the acquisition from the acquisition date to October 31, 2013 have been recorded in the US Personal and Commercial Banking segment. At the date of acquisition the Bank recorded the credit card receivables acquired at their fair value of $5.7 billion and intangible assets totalling $98 million . The gross amount of revenue and credit losses have been recorded on the Consolidated Statement of Income since that date. Target Corporation shares in a fixed percentage of the revenue and credit losses incurred. Target Corporations net share of revenue and credit losses is recorded in Non-interest expenses on the Consolidated Statement of Income and related receivables from, or payables to, Target Corporation are recorded in Other assets or Other liabilities, respectively, on the Consolidated Balance Sheet. Acquisition of Epoch Investment Partners, Inc. On March 27, 2013 , the Bank acquired 100% of the outstanding equity of Epoch Holding Corporation including its wholly-owned subsidiary Epoch Investment Partners, Inc. (Epoch), a New York -based asset management firm. Epoch was acquired for cash consideration of $674 million . Epoch Holding Corporation shareholders received US$28 in cash per share. The acquisition was accounted for as a business combination under the purchase method. The results of the acquisition from the acquisition date have been consolidated with the Banks results and are reported in the Wealth and Insurance segment. As at March 27, 2013 , the acquisition contributed $34 million of tangible assets, and $9 million of liabilities. The excess of consideration over the fair value of the acquired net assets of $649 million has been allocated to customer relationship intangibles of $149 million and goodwill of $500 million . Goodwill is not expected to be deductible for tax purposes. For the year ended October 31, 2013 , the acquisition contributed $96 million to revenue and $2 million to net income. Sale of TD Waterhouse Institutional Services On November 12, 2013 , TD Waterhouse Canada Inc. , a subsidiary of the Bank, completed the sale of the Banks institutional services business, known as TD Waterhouse Institutional Services, to a subsidiary of National Bank of Canada. The transaction price was $250 million , subject to certain price adjustment mechanisms. The effects of the sale will be recorded in the first quarter of fiscal 2014. Agreement with Aimia Inc. and Acquisition of certain CIBC Aeroplan Credit Card Accounts On August 12, 2013 , the Bank and Aimia Inc. (Aimia) announced that the Bank will become the primary credit card issuer for Aeroplan , a loyalty program owned by Aimia, starting on January 1, 2014 . On September 16, 2013 , the Bank, Aimia, and the Canadian Imperial Bank of Commerce (CIBC) jointly announced agreements under which the Bank will also acquire approximately 50% of CIBCs existing Aeroplan credit card portfolio, which will primarily include accounts held by customers who do not have an existing retail banking relationship with CIBC . The Bank expects to acquire approximately 550,000 cardholder accounts, representing approximately $3 billion in card balances and $20 billion in annual retail spend. The Bank will pay a purchase price of par plus $50 million for the CIBC Aeroplan accounts. In addition, the Bank will pay CIBC a further $112.5 million plus HST over three years under a commercial subsidy agreement. Depending on the migration of Aeroplan -branded credit card accounts between CIBC and TD over the next five years, TD, Aimia, and CIBC have agreed to make additional potential payments of up to $400 million . TD will be responsible for, or entitled to receive, up to $300 million of these potential payments. Additionally, TD will make a $100 million upfront payment to Aimia to assist in the development and maintenance of the new Distinction program. The minimum miles purchase commitment is a five-year volume commitment based on miles purchases by TD and CIBC . These payments by TD, in aggregate, would not exceed $95 million . Also, TD and Aimia will undertake a joint marketing spend of approximately $140 million in the first four years of the program to support the new Aeroplan Visa co-branded credit cards and program features. The CIBC portfolio acquisition is subject to customary closing conditions and is expected to close in the first quarter of fiscal 2014. HOW OUR BUSINESSES PERFORMED For management reporting purposes, the Banks 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, Wealth and Insurance, US Personal and Commercial Banking, and Wholesale Banking. The Banks other activities are grouped into the Corporate segment. Effective December 1, 2011 , results of the acquisition of the credit card portfolio of MBNA Canada (MBNA) are reported primarily in the Canadian Personal and Commercial Banking and Wealth and Insurance segments. Integration charges and direct transaction costs relating to the acquisition of MBNA are reported in Canadian Personal and Commercial Banking. The results of TD Auto Finance Canada are reported in Canadian Personal and Commercial Banking. The results of TD Auto Finance US are reported in US Personal and Commercial Banking. Integration charges, direct transaction costs, and changes in fair value of contingent consideration related to the Chrysler Financial acquisition were reported in the Corporate segment. Effective March 13, 2013 , results of Target are reported in US Personal and Commercial Banking. Effective March 27, 2013 , the results of Epoch are reported in Wealth and Insurance. 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. 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, the Business Focus section in the MDA of the Banks 2013 Annual Report, and Note 1 to the Banks Consolidated Financial Statements for the year ended October 31, 2013 . For information concerning the Banks measures of economic profit and adjusted return on common equity, which are non-GAAP financial measures, 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 is reversed in the Corporate segment. The TEB adjustment for the quarter was $100 million , compared with $112 million in the fourth quarter last year, and $80 million in the prior quarter. TABLE 7: CANADIAN PERSONAL AND COMMERCIAL BANKING (millions of Canadian dollars, except as noted) For the three months ended October 31 July 31 October 31 2013 2013 2012 Net interest income $ 2,151 $ 2,126 $ 2,071 Non-interest income 680 695 678 Total revenue 2,831 2,821 2,749 Provision for credit losses 224 216 306 Non-interest expenses – reported 1,362 1,281 1,343 Non-interest expenses – adjusted 1,316 1,248 1,310 Net income – reported 914 973 806 Adjustments for items of note, net of income taxes 1 Integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada 14 24 25 Set-up costs in preparation for the previously announced affinity relationship with Aimia with respect to Aeroplan Visa credit cards and the related acquisition of accounts 20 – – Net income – adjusted $ 948 $ 997 $ 831 Selected volumes and ratios Return on common equity – reported 45.8 % 49.4 % 41.9 % Return on common equity – adjusted 47.5 % 50.6 % 43.1 % Margin on average earning assets (including securitized assets) 2.81 % 2.83 % 2.83 % Efficiency ratio – reported 48.1 % 45.4 % 48.9 % Efficiency ratio – adjusted 46.5 % 44.2 % 47.7 % Number of Canadian retail stores 1,179 1,169 1,168 Average number of full-time equivalent staff 28,418 28,345 28,449 1 For explanations of items of note, see the Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income table in the How We Performed section of this document. Quarterly comparison – Q4 2013 vs. Q4 2012 Canadian Personal and Commercial Banking net income for the quarter on a reported basis was $914 million , an increase of $108 million , or 13%, compared with the fourth quarter last year. Adjusted net income for the quarter was $948 million , an increase of $117 million , or 14%, compared with the fourth quarter last year. The increase in adjusted earnings was primarily driven by loan and deposit volume growth, favourable credit performance, and effective cost management. The reported annualized return on common equity for the quarter was 45.8%, while the adjusted annualized return on common equity was 47.5%, compared with 41.9% and 43.1%, respectively, in the fourth quarter last year. Canadian Personal and Commercial Banking revenue is derived from personal and business banking, auto lending and credit cards. Revenue for the quarter was $2,831 million , an increase of $82 million , or 3%, compared with the fourth quarter last year. Net interest income growth was driven primarily by portfolio volume growth, and higher revenue from mortgage refinancing, partially offset by the inclusion of the MBNA credit mark release in the fourth quarter last year. The personal banking business generated solid but slowing lending volume growth of $8.6 billion , or 3%, reflecting slower growth in the housing market and moderation in household borrowing. Compared with the fourth quarter last year, average real estate secured lending volume increased $7.8 billion , or 4%. Auto lending average volume increased $0.4 billion , or 3%, while all other personal lending average volumes increased $0.4 billion or 1% largely driven by credit card balances. Business loans and acceptances average volume increased $5.1 billion , or 12%. Average personal deposit volumes increased $3.6 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 $5.3 billion , or 8%. Margin on average earning assets was 2.81%, a 2 basis point (bps) decrease primarily due to lower deposit margins. Non-interest income increased $2 million compared to the fourth quarter last year largely due to volume growth. PCL for the quarter was $224 million , a decrease of $82 million , or 27%, compared with the fourth quarter last year. Personal banking PCL was $223 million , a decrease of $66 million , or 23%, due primarily to better credit performance, low bankruptcies and elevated PCL in the fourth quarter last year due to an adjustment related to past due accounts. Business banking PCL was $1 million , a decrease of $16 million , compared with the fourth quarter last year primarily due to higher recoveries. Annualized PCL as a percentage of credit volume was 0.28%, a decrease of 13 bps, compared with the fourth quarter last year. Net impaired loans were $882 million , a decrease of $118 million , or 12%, compared with the fourth quarter last year. Net impaired loans as a percentage of total loans were 0.28%, compared with 0.33% as at October 31, 2012 . Reported non-interest expenses for the quarter were $1,362 million , an increase of $19 million , or 1%, compared with the fourth quarter last year. Adjusted non-interest expenses for the quarter were $1,316 million , relatively flat compared with the fourth quarter last year as volume growth and investments in the business were largely offset by initiatives to increase productivity. The average full-time equivalent (FTE) staffing levels decreased by 31 compared with the fourth quarter last year, as investments in front line sales staff was more than offset by volume-related reductions and productivity gains. The reported efficiency ratio for the quarter improved to 48.1%, while the adjusted efficiency ratio improved to 46.5%, compared with 48.9% and 47.7%, respectively, in the fourth quarter last year. Quarterly comparison – Q4 2013 vs. Q3 2013 Canadian Personal and Commercial Banking net income for the quarter on a reported basis decreased $59 million , or 6%, compared with the prior quarter. Adjusted net income for the quarter decreased $49 million , or 5%, compared with the prior quarter. The decrease in earnings was primarily due to an increase in non-interest expenses. The reported annualized return on common equity for the quarter was 45.8%, while the adjusted annualized return on common equity was 47.5%, compared with 49.4% and 50.6% respectively, in the prior quarter. Revenue for the quarter increased $10 million compared with the prior quarter. Net interest income growth was driven by portfolio volume growth in loans and deposits. Compared with the prior quarter, average real estate secured lending volume increased $3.4 billion , or 2%. All other personal lending average volumes increased $0.9 billion or 2%. Business loans and acceptances average volumes increased $1.1 billion , or 2%. Average personal deposit volumes increased $2.4 billion , or 2%, while average business deposit volumes increased $1.7 billion , or 2%. Margin on average earning assets was 2.81%, a 2 bps decrease primarily due to lower deposit margins. Non-interest income decreased $15 million or 2%, largely due to higher seasonal fee income in the third quarter. PCL for the quarter increased $8 million , or 4%, compared with the prior quarter. Personal banking PCL for the quarter increased $12 million , or 6%, due primarily to higher provisions in auto lending and credit cards. Business banking PCL decreased $4 million due to higher recoveries. Net impaired loans increased $2 million , relatively flat compared with the prior quarter. Net impaired loans as a percentage of total loans were 0.28%, in line with the prior quarter. Reported non-interest expenses for the quarter increased $81 million , or 6%, compared with the prior quarter. Adjusted non-interest expenses for the quarter increased $68 million , or 5%, compared with the prior quarter largely due to timing of business investments, marketing initiatives, and higher employee related costs. The average FTE staffing levels increased by 73, compared with the prior quarter, largely due to new branch openings and higher staffing for business initiatives. The reported efficiency ratio for the quarter worsened to 48.1%, compared with 45.4% in the prior quarter, while the adjusted efficiency ratio worsened to 46.5%, compared with 44.2% in the prior quarter. TABLE 8: WEALTH AND INSURANCE 1 (millions of Canadian dollars, except as noted) For the three months ended October 31 July 31 October 31 2013 2013 2012 Net interest income $ 147 $ 144 $ 147 Insurance revenue 1 968 942 920 Income (loss) from financial instruments designated at fair value through profit or loss 17 (40) (6) Non-interest income – other 702 684 590 Total revenue 1 1,834 1,730 1,651 Insurance claims and related expenses 1 711 1,140 688 Non-interest expenses 730 711 676 Wealth and Insurance net income (loss), before TD Ameritrade 328 (62) 242 Wealth 187 181 148 Insurance 141 (243) 94 TD Ameritrade 77 69 51 Total Wealth and Insurance $ 405 $ 7 $ 293 Selected volumes and ratios Assets under administration – Wealth (billions of Canadian dollars) $ 293 $ 279 $ 258 Assets under management – Wealth (billions of Canadian dollars) 2 257 246 207 Gross originated insurance premiums 993 1,049 943 Return on common equity 25.3 % 0.4 % 17.9 % Efficiency ratio 1 39.8 % 41.1 % 40.9 % Average number of full-time equivalent staff 11,451 11,661 11,839 1 Effective the fourth quarter of 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts, including certain ratios, have been recast to conform with the current period presentation. 2 As at October 31, 2013 , the Wealth assets under management include $38 billion ( July 31, 2013 – $29 billion ) related to Epoch. Quarterly comparison – Q4 2013 vs. Q4 2012 Wealth and Insurance net income for the quarter was $405 million , an increase of $112 million , or 38%, compared with the fourth quarter last year, reflecting higher earnings in Wealth, Insurance and TD Ameritrade. Wealth and Insurance net income excluding TD Ameritrade was $328 million , an increase of $86 million , or 36%, compared with the fourth quarter last year. The Banks reported investment in TD Ameritrade generated net income for the quarter of $77 million , an increase of $26 million , or 51%, compared with the fourth quarter last year, driven by higher TD Ameritrade earnings. For its fourth quarter ended September 30, 2013 , TD Ameritrade reported net income of US$200 million , an increase of US$57 million , or 40%, compared with the fourth quarter last year, driven by increased transaction-based and fee-based revenue, and increased investment gains, partially offset by higher operating expenses. The annualized return on common equity for the quarter was 25.3%, compared with 17.9% in the fourth quarter last year. Wealth and Insurance revenue is derived from direct investing, advice-based businesses, asset management services, life and health insurance, and property and casualty insurance. Revenue for the quarter was $1,834 million , an increase of $183 million , or 11%, compared to the fourth quarter last year. In the Wealth business, revenue increased mainly due to higher fee-based revenue from asset growth and equity market appreciation, the addition of Epoch, and higher trading volume. In the Insurance business, revenue increased mainly due to premium volume growth and higher fair value of assets due to the impact of lower interest rates, partially offset by the sale of the US Insurance business in fiscal 2012. Insurance claims and related expenses for the quarter were $711 million , an increase of $23 million , or 3%, compared with the fourth quarter last year, primarily due to higher current year claims and volume growth, partially offset by lower unfavourable prior years claims development and lower cost of weather-related events. Non-interest expenses for the quarter were $730 million , an increase of $54 million , or 8%, compared with the fourth quarter last year, primarily due to the addition of Epoch, higher revenue-based variable expenses in the Wealth business, and increased costs to support business growth in Wealth and Insurance, partially offset by expense reductions due to the sale of the US Insurance business in fiscal 2012. Assets under administration of $293 billion as at October 31, 2013 increased $35 billion , or 14%, compared with October 31, 2012 . Assets under management of $257 billion as at October 31, 2013 increased $50 billion , or 24%, compared with October 31, 2012 . These increases were mainly driven by market appreciation of assets, the addition of Epoch assets under management, and growth in new client assets for the period. Gross originated insurance premiums were $993 million , an increase of $50 million , or 5%, compared with the fourth quarter last year. The increase was primarily due to organic business growth. The average FTE staffing levels decreased by 388, or 3%, compared to the fourth quarter last year, primarily due to the sale of the US Insurance business in fiscal 2012. The efficiency ratio for the current quarter improved to 39.8%, compared with 40.9% in the fourth quarter last year. Quarterly comparison – Q4 2013 vs. Q3 2013 Wealth and Insurance net income for the quarter increased $398 million compared with the prior quarter, reflecting higher earnings in Wealth, Insurance and TD Ameritrade. For the quarter ended July 31, 2013 , the Bank took charges of $565 million ( $418 million after tax) to increase reserves for Ontario automobile insurance claims and for claims resulting from severe weather-related events in southern Alberta and the Greater Toronto Area . Wealth and Insurance net income excluding TD Ameritrade increased $390 million compared with the prior quarter. The Banks reported investment in TD Ameritrade increased $8 million , or 12%, compared with the prior quarter, mainly driven by higher TD Ameritrade earnings. For its fourth quarter ended September 30, 2013 , TD Ameritrade reported net income increased US$16 million , or 9%, compared with the prior quarter, primarily driven by increased investment gains, partially offset by lower transaction-based revenue. The annualized return on common equity for the quarter was 25.3%, compared with 0.4% in the prior quarter. Revenue for the quarter increased $104 million , or 6%, compared with the prior quarter. In the Wealth business, revenue increased mainly due to higher fee-based revenue from asset growth and equity market appreciation. In the Insurance business, revenue increased mainly due to higher fair value of assets due to the impact of lower interest rates and premium volume growth. Insurance claims and related expenses for the quarter decreased $429 million , or 38%, compared with the prior quarter, due to unfavourable prior years claims development recorded in the prior quarter relating to Ontario auto insurance and lower claims from weather-related events. Non-interest expenses for the quarter increased $19 million , or 3%, compared to the prior quarter, primarily due to higher expenses in the Wealth business, mainly from higher costs in support of strategic business initiatives and higher variable expenses driven by revenue growth. Assets under administration as at October 31, 2013 increased by $14 billion , or 5%, compared with July 31, 2013 . Assets under management as at October 31, 2013 increased by $11 billion , or 4%, compared with July 31, 2013 . The increases were mainly due to market appreciation of assets and growth in new client assets for the period. Gross originated insurance premiums decreased $56 million , or 5%, compared with the prior quarter due largely to seasonality. The average FTE staffing levels for the current quarter decreased by 210, or 2%, compared with the prior quarter due to the impact of efficiency initiatives and seasonality in the Insurance business. The efficiency ratio for the current quarter improved to 39.8%, compared with 41.1% in the prior quarter. TABLE 9: US PERSONAL AND COMMERCIAL BANKING (millions of dollars, except as noted) For the three months ended Canadian dollars US dollars October 31 July 31 October 31 October 31 July 31 October 31 2013 2013 2012 2013 2013 2012 Net interest income $ 1,428 $ 1,374 $ 1,148 $ 1,380 $ 1,334 $ 1,164 Non-interest income 468 593 375 449 575 380 Total revenue – reported 1,896 1,967 1,523 1,829 1,909 1,544 Total revenue – adjusted 1,896 1,967 1,524 1,829 1,909 1,545 Provision for credit losses – loans 211 218 231 204 213 234 Provision for credit losses – debt securities classified as loans (27) (11) 3 (26) (11) 3 Provision for credit losses – acquired credit-impaired loans 1 (1) 16 20 (1) 15 20 Provision for credit losses – reported 183 223 254 177 217 257 Provision for credit losses – adjusted 183 223 200 177 217 202 Non-interest expenses – reported 1,279 1,206 929 1,234 1,170 941 Non-interest expenses – adjusted 1,250 1,206 922 1,206 1,170 934 Net income – reported $ 369 $ 445 $ 316 $ 355 $ 432 $ 321 Adjustments for items of note 2 Litigation and litigation-related charge/reserve 30 – – 29 – – Impact of Superstorm Sandy – – 37 – – 37 Net income – adjusted $ 399 $ 445 $ 353 $ 384 $ 432 $ 358 Selected volumes and ratios Return on common equity – reported 7.5 % 9.1 % 7.2 % 7.5 % 9.1 % 7.2 % Return on common equity – adjusted 8.1 % 9.1 % 8.1 % 8.1 % 9.1 % 8.1 % Margin on average earning assets (TEB) 3 3.89 % 3.80 % 3.48 % 3.89 % 3.80 % 3.48 % Efficiency ratio – reported 67.5 % 61.3 % 61.0 % 67.5 % 61.3 % 61.0 % Efficiency ratio – adjusted 65.9 % 61.3 % 60.5 % 65.9 % 61.3 % 60.5 % Number of US retail stores 1,317 1,312 1,315 1,317 1,312 1,315 Average number of full-time equivalent staff 24,797 24,811 25,304 24,797 24,811 25,304 1 Includes all Federal Deposit Insurance Corporation (FDIC) covered loans and other acquired credit-impaired loans. 2 For explanations of items of note, see the Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income table in the How We Performed section of this document. 3 Margin on average earning assets exclude the impact related to the TD Ameritrade insured deposit accounts (IDA). Quarterly comparison – Q4 2013 vs. Q4 2012 US Personal and Commercial Banking reported net income, in Canadian dollar terms, for the quarter was $369 million , an increase of $53 million , or 17%, compared with the fourth quarter last year. Adjusted net income for the quarter was $399 million , an increase of $46 million , or 13%, compared with the fourth quarter last year. In US dollar terms, reported net income for the quarter was US$355 million , an increase of US$34 million , or 11%, compared with the fourth quarter last year and adjusted net income for the quarter was US$384 million , an increase of US$26 million , or 7%, compared with the fourth quarter last year. Results include activity related to the credit card program agreement with Target Corporation subsequent to the acquisition of approximately US$5.6 billion of credit card receivables on March 13, 2013 . Revenue and expenses related to Target are reported on a gross basis on the income statement and non-interest expenses include our expenses related to the business, and amounts due to Target Corporation under the credit card program agreement. The increase in earnings was primarily due to Target, strong loan and deposit volume growth, and an improvement in credit quality, partially offset by lower margins and investments in new stores. The reported and adjusted annualized return on common equity for the quarter were 7.5% and 8.1%, respectively, compared with 7.2% and 8.1%, respectively, in the fourth quarter last year. US Personal and Commercial Banking revenue is derived from personal banking, business banking, investments, auto lending, and credit cards. In US dollar terms, reported revenue for the quarter was US$1,829 million , an increase of US$285 million , or 18%, compared with the fourth quarter last year. Adjusted revenue for the quarter was US$1,829 million , an increase of US$284 million , or 18%, compared with the fourth quarter last year primarily due to the inclusion of revenue from Target, strong organic loan and deposit growth and fee growth, partially offset by a lower margin and lower gains on sales of securities. Excluding Target, average loans increased US$9 billion , or 10%, compared with the fourth quarter last year, with a 14% increase in personal loans and an 8% increase in business loans. Average deposits increased US$19 billion , or 11%, compared with the fourth quarter last year driven by 8% growth in personal deposit volume, 7% growth in business deposit volume, and 17% growth in TD Ameritrade deposit volume. Margin on average earning assets was 3.89%, a 41 bps increase compared with the fourth quarter last year due to the impact of Target, partially offset by core margin compression. PCL for the quarter was US$177 million , a decrease of US$80 million , or 31%, compared with the fourth quarter last year on a reported basis, and a decrease of US$25 million , or 12%, compared with the fourth quarter last year on an adjusted basis. Reported PCL in the fourth quarter of 2012 included provisions for Superstorm Sandy and the impact of new regulatory guidance related to loans discharged in bankruptcy which were the primary drivers of the $80 million decrease. Personal banking PCL was US$175 million , an increase of US$47 million , or 37%, compared with the fourth quarter last year primarily due to provisions for Target and increased provisions in auto loans, offset by the impact of the new regulatory guidance recorded in the fourth quarter of 2012. Business banking PCL was US$25 million , a decrease of US$46 million , or 65%, compared with the fourth quarter last year reflecting improved credit quality of commercial loans. Annualized PCL as a percentage of credit volume for loans excluding debt securities classified as loans was 0.77%, a decrease of 11 bps, compared with the fourth quarter last year reflecting improving credit quality trends and growth in the portfolio. Net impaired loans, excluding acquired credit-impaired loans and debt securities classified as loans, as a percentage of total loans were 1.3% as at October 31, 2013 , compared with 1.2% as at October 30, 2012 . Net impaired debt securities classified as loans were US$985 million , a decrease of US$358 million , or 27%, compared with the fourth quarter last year. Reported non-interest expenses for the quarter was US$1,234 million , an increase of US$293 million , or 31%, compared with the fourth quarter last year. Adjusted non-interest expenses for the quarter were US$1,206 million , an increase of US$272 million , or 29%, compared with the fourth quarter last year primarily due to increased expenses related to the credit card agreement with Target Corporation, investments in new stores and other growth initiatives, partially offset by productivity gains. The average FTE staffing levels decreased by 507, primarily due to efficiencies in store network operations including optimization of store locations and planned declines in TD Auto Finance US, partially offset by investments in growth initiatives. The efficiency ratio for the quarter worsened to 67.5% on a reported basis, and 65.9% on an adjusted basis, compared with 61.0% and 60.5% respectively, in the fourth quarter last year primarily driven by lower margins. Quarterly comparison – Q4 2013 vs. Q3 2013 US Personal and Commercial Banking reported net income, in Canadian dollar terms, for the quarter decreased $76 million , or 17%, compared with the prior quarter. Adjusted net income for the quarter decreased $46 million , or 10%, compared with the prior quarter. In US dollar terms, reported net income for the quarter decreased US$77 million , or 18%, and adjusted net income for the quarter decreased US$48 million , or 11%, compared with the prior quarter. The reported and adjusted annualized return on common equity for the quarter were 7.5% and 8.1%, compared with 9.1% on both a reported and an adjusted basis in the prior quarter. In US dollar terms, revenue for the quarter decreased US$80 million , or 4%, compared with the prior quarter primarily due to lower gains on security sales. Excluding Target, average loans were up 2%, compared with the prior quarter, with a 2% increase in personal loans and a 3% increase in business loans. Average deposits increased US$4 billion , or 2%, compared with the prior quarter. Margin on average earning assets increased by 9 bps to 3.89%, compared with the prior quarter as additional margin compression from personal and commercial loans was more than offset by higher deposit margins reflecting higher long term interest rates and increased net interest income on acquired credit-impaired loans and debt securities classified as loans. PCL for the quarter decreased US$40 million , or 18%, compared with the prior quarter driven primarily by lower provisions on debt securities classified as loans and acquired credit-impaired loans reflecting lower expected losses. Personal banking PCL decreased US$29 million , or 14%, from the prior quarter primarily due to lower provisions on auto loans. Business banking PCL was flat compared with prior quarter as provisions for portfolio growth were offset by improvements in asset quality. Annualized adjusted PCL as a percentage of credit volume for loans excluding debt securities classified as loans was 0.77%, a decrease of 11 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 1.3% as at October 31, 2013 , flat compared with July 31, 2013 . Net impaired debt securities classified as loans were US$985 million , a decrease of US$48 million , or 5%, compared with the prior quarter. Reported non-interest expenses for the quarter increased US$64 million , or 5%, compared with the prior quarter. Adjusted non-interest expenses increased US$36 million , or 3%, compared with the prior quarter primarily due to increased expenses related to the credit card agreement with Target Corporation, higher regulatory compliance costs and timing of planned initiatives. The average FTE staffing levels decreased by 14 compared with the prior quarter due primarily to efficiencies in store network operations including optimization of store locations and planned declines in TD Auto Finance US The efficiency ratio for the quarter worsened to 67.5% on a reported basis, and 65.9% on an adjusted basis, compared with 61.3% in the prior quarter mainly driven by higher expenses and lower security gains. TABLE 10: WHOLESALE BANKING (millions of Canadian dollars, except as noted) For the three months ended October 31 July 31 October 31 2013 2013 2012 Net interest income (TEB) $ 509 $ 505 $ 481 Non-interest income 93 58 244 Total revenue 602 563 725 Provision for credit losses 5 23 8 Non-interest expenses 422 351 374 Net income $ 122 $ 147 $ 309 Selected volumes and ratios Trading-related revenue $ 342 $ 284 $ 316 Risk-weighted assets (billions of dollars) 1 47 46 43 Return on common equity 12.0 % 14.3 % 30.3 % Efficiency ratio 70.1 % 62.3 % 51.6 % Average number of full-time equivalent staff 3,535 3,592 3,545 1 Effective the first quarter of 2013, amounts are calculated in accordance with the Basel III regulatory framework, excluding Credit Valuation Adjustment (CVA) capital in accordance with the Office of the Superintendent of Financial Institutions Canada (OSFI) guidance, and are presented based on the all-in methodology. In 2012, amounts were calculated in accordance with the Basel II regulatory framework inclusive of Market Risk Amendments. Quarterly comparison – Q4 2013 vs. Q4 2012 Wholesale Banking net income for the quarter was $122 million , a decrease of $187 million , or 61%, compared with the fourth quarter last year. The decrease in earnings was primarily due to lower revenue, higher non-interest expenses and a higher effective tax rate. The annualized return on common equity for the quarter was 12.0%, compared with 30.3% 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 $602 million , a decrease of $123 million , or 17%, compared with the fourth quarter last year. The decrease in revenue was primarily due to lower security gains in the investment portfolio, partially offset by higher trading-related revenue. The increase in trading-related revenue was due to improved fixed income markets that resulted in increased client activity, partially offset by lower equity trading. Debt underwriting was solid this quarter partially offset by lower mergers and acquisitions (MA) and advisory fees due to lower industry wide volumes. PCL for the quarter was $5 million , compared with $8 million in the fourth quarter last year. PCL in the current quarter primarily consisted of the accrual cost of credit protection. Non-interest expenses for the quarter were $422 million , an increase of $48 million , or 13%, compared with the fourth quarter last year due to litigation matters. Risk-weighted assets were $47 billion as at October 31, 2013 , an increase of $4 billion , or 9%, compared with October 31, 2012 . The increase was primarily due to the implementation of the Basel III regulatory framework. Quarterly comparison – Q4 2013 vs. Q3 2013 Wholesale Banking net income for the quarter decreased by $25 million , or 17%, compared with the prior quarter. The decrease was largely due to higher non-interest expenses, partially offset by higher trading-related revenue. The annualized return on common equity for the quarter was 12.0%, compared with 14.3% in the prior quarter. Revenue for the quarter increased $39 million , or 7%, compared with the prior quarter, primarily due to higher fixed income trading-related revenue and debt underwriting fees. The increase was partially offset by reduced credit origination revenue and lower equity underwriting fees both impacted by reduced volumes. PCL for the quarter was $5 million , compared with $23 million in the prior quarter which included a specific credit provision in the corporate lending portfolio. Non-interest expenses for the quarter increased by $71 million , or 20%, compared with the prior quarter, primarily due to litigation matters. Risk-weighted assets as at October 31, 2013 increased $1 billion , or 2%, compared with July 31, 2013 . TABLE 11: CORPORATE (millions of Canadian dollars) For the three months ended October 31 July 31 October 31 2013 2013 2012 Net income (loss) – reported $ (188) $ (45) $ (127) Adjustments for items of note: Decrease (increase) in net income 1 Amortization of intangibles 59 59 60 Fair value of derivatives hedging the reclassified available-for-sale securities portfolio 15 (70) 35 Integration charges, direct transaction costs, and changes in fair value of contingent consideration relating to the Chrysler Financial acquisition – – 3 Impact of Alberta flood on the loan portfolio (29) 48 – Restructuring costs 90 – – Total adjustments for items of note 135 37 98 Net income (loss) – adjusted $ (53) $ (8) $ (29) Decomposition of items included in net gain (loss) – adjusted Net corporate expenses $ (140) $ (118) $ (191) Other 60 84 136 Non-controlling interests 27 26 26 Net income (loss) – adjusted $ (53) $ (8) $ (29) 1 For explanations of items of note, see the Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income table in the How We Performed section of this document. Quarterly comparison – Q4 2013 vs. Q4 2012 Corporate segments reported net loss for the quarter was $188 million , compared with a reported net loss of $127 million in the fourth quarter last year. Adjusted net loss was $53 million , compared with an adjusted net loss of $29 million in the fourth quarter last year. The increased loss reflected a lower contribution from Other items which included lower gains from treasury and hedging activities partially offset by positive tax items. Corporate expenses declined as a result of lower project and initiative costs. Quarterly comparison – Q4 2013 vs. Q3 2013 Corporate segments reported net loss for the quarter was $188 million , compared with a reported net loss of $45 million in the prior quarter. Adjusted net loss was $53 million , compared with an adjusted net loss of $8 million in the prior quarter. The increased loss was due to the unfavourable impact of Other items and higher net corporate expenses. Other items were unfavourable largely due to lower gains from treasury and other hedging activities and the reduction of allowance for incurred but not identified credit losses related to the Canadian loan portfolio in the prior quarter partially offset by positive tax items. Net corporate expenses were elevated from the prior quarter. INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) INTERIM CONSOLIDATED BALANCE SHEET (unaudited) (millions of Canadian dollars, except as noted) As at October 31 October 31 2013 2012 ASSETS Cash and due from banks $ 3,581 $ 3,436 Interest-bearing deposits with banks 28,855 21,692 32,436 25,128 Trading loans, securities, and other 101,928 94,531 Derivatives 49,461 60,919 Financial assets designated at fair value through profit or loss 6,532 6,173 Available-for-sale securities 79,541 98,576 237,462 260,199 Held-to-maturity securities 29,961 – Securities purchased under reverse repurchase agreements 64,283 69,198 Loans Residential mortgages 185,820 172,172 Consumer instalment and other personal 119,192 117,927 Credit card 22,222 15,358 Business and government 116,799 101,041 Debt securities classified as loans 3,744 4,994 447,777 411,492 Allowance for loan losses (2,855) (2,644) Loans, net of allowance for loan losses 444,922 408,848 Other Customers liability under acceptances 6,399 7,223 Investment in TD Ameritrade 5,300 5,344 Goodwill 13,297 12,311 Other intangibles 2,493 2,217 Land, buildings, equipment, and other depreciable assets 4,635 4,402 Current income tax receivable 583 439 Deferred tax assets 1,588 883 Other assets 19,173 14,914 53,468 47,733 Total assets $ 862,532 $ 811,106 LIABILITIES Trading deposits $ 47,593 $ 38,774 Derivatives 49,471 64,997 Securitization liabilities at fair value 21,960 25,324 Other financial liabilities designated at fair value through profit or loss 12 17 119,036 129,112 Deposits Personal 319,749 291,759 Banks 20,523 14,957 Business and government 203,204 181,038 543,476 487,754 Other Acceptances 6,399 7,223 Obligations related to securities sold short 41,829 33,435 Obligations related to securities sold under repurchase agreements 34,414 38,816 Securitization liabilities at amortized cost 25,592 26,190 Provisions 696 656 Current income tax payable 134 167 Deferred tax liabilities 321 327 Other liabilities 28,913 24,858 138,298 131,672 Subordinated notes and debentures 7,982 11,318 Liability for preferred shares 27 26 Liability for capital trust securities 1,740 2,224 Total liabilities 810,559 762,106 EQUITY Common shares (millions of shares issued and outstanding: Oct. 31, 2013 – 919.4 , Oct. 31, 2012 – 918.2) 19,316 18,691 Preferred shares (millions of shares issued and outstanding: Oct. 31, 2013 – 135.8 , Oct. 31, 2012 – 135.8) 3,395 3,395 Treasury shares – common (millions of shares held: Oct. 31, 2013 – (1.9) , Oct. 31, 2012 – (2.1)) (145) (166) Treasury shares – preferred (millions of shares held: Oct. 31, 2013 – (0.1) , Oct. 31, 2012 – nil) (2) (1) Contributed surplus 170 196 Retained earnings 24,565 21,763 Accumulated other comprehensive income (loss) 3,166 3,645 50,465 47,523 Non-controlling interests in subsidiaries 1,508 1,477 Total equity 51,973 49,000 Total liabilities and equity $ 862,532 $ 811,106 INTERIM CONSOLIDATED STATEMENT OF INCOME (unaudited) (millions of Canadian dollars, except as noted) For the three months ended For the twelve months ended October 31 October 31 October 31 October 31 2013 2012 2013 2012 Interest income Loans $ 4,793 $ 4,558 $ 18,514 $ 17,951 Securities Interest 751 786 2,965 3,259 Dividends 265 256 1,048 940 Deposits with banks 22 22 89 88 5,831 5,622 22,616 22,238 Interest expense Deposits 1,088 1,163 4,310 4,670 Securitization liabilities 230 243 927 1,026 Subordinated notes and debentures 105 152 447 612 Preferred shares and capital trust securities 38 44 154 174 Other 186 178 700 730 1,647 1,780 6,538 7,212 Net interest income 4,184 3,842 16,078 15,026 Non-interest income Investment and securities services 731 660 2,831 2,621 Credit fees 191 185 785 745 Net securities gains (losses) 35 178 304 373 Trading income (losses) (58) (66) (281) (41) Service charges 484 453 1,863 1,775 Card services 386 274 1,345 1,039 Insurance revenue 968 920 3,734 3,537 Trust fees 36 34 148 149 Other income (loss) 44 97 455 322 2,817 2,735 11,184 10,520 Total revenue 7,001 6,577 27,262 25,546 Provision for credit losses 352 565 1,631 1,795 Insurance claims and related expenses 711 688 3,056 2,424 Non-interest expenses Salaries and employee benefits 1,928 1,837 7,622 7,241 Occupancy, including depreciation 384 355 1,456 1,374 Equipment, including depreciation 225 228 847 825 Amortization of other intangibles 153 133 521 477 Marketing and business development 194 221 685 668 Brokerage-related fees 79 71 317 296 Professional and advisory services 301 311 1,010 925 Communications 70 71 281 282 Restructuring 129 – 129 – Other 694 379 2,174 1,910 4,157 3,606 15,042 13,998 Income before income taxes and equity in net income of an investment in associate 1,781 1,718 7,533 7,329 Provision for (recovery of) income taxes 240 178 1,143 1,092 Equity in net income of an investment in associate, net of income taxes 81 57 272 234 Net income 1,622 1,597 6,662 6,471 Preferred dividends 49 49 185 196 Net income available to common shareholders and non-controlling interests in subsidiaries $ 1,573 $ 1,548 $ 6,477 $ 6,275 Attributable to: Non-controlling interests in subsidiaries $ 27 $ 26 $ 105 $ 104 Common shareholders 1,546 1,522 6,372 6,171 Weighted-average number of common shares outstanding (millions) Basic 916.7 912.4 918.9 906.6 Diluted 919.5 920.0 922.5 914.9 Earnings per share (dollars) Basic $ 1.69 $ 1.67 $ 6.93 $ 6.81 Diluted 1.68 1.66 6.91 6.76 Dividends per share (dollars) 0.85 0.77 3.24 2.89 Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year. INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited) (millions of Canadian dollars) For the three months ended For the twelve months ended October 31 October 31 October 31 October 31 2013 2012 2013 2012 Net income $ 1,622 $ 1,597 $ 6,662 $ 6,471 Other comprehensive income (loss), net of income taxes Change in unrealized gains (losses) on available-for-sale securities 1 8 106 (493) 689 Reclassification to earnings of net losses (gains) in respect of available-for-sale securities 2 (54) (48) (250) (163) Net change in unrealized foreign currency translation gains (losses) on investments in foreign operations 760 (132) 1,892 92 Reclassification to earnings of net losses (gains) on investments in foreign operations 3 – – 4 – Reclassification to earnings of net losses (gains) on hedges of investments in foreign operations 4 – – (4) – Net foreign currency translation gains (losses) from hedging activities 5 (325) 52 (737) (54) Change in net gains (losses) on derivatives designated as cash flow hedges 6 619 38 668 834 Reclassification to earnings of net losses (gains) on cash flow hedges 7 (492) (243) (1,559) (1,079) 516 (227) (479) 319 Comprehensive income (loss) for the period $ 2,138 $ 1,370 $ 6,183 $ 6,790 Attributable to: Preferred shareholders $ 49 $ 49 $ 185 $ 196 Common shareholders 2,062 1,295 5,893 6,490 Non-controlling interests in subsidiaries 27 26 105 104 1 Net of income tax provision of $9 million for the three months ended October 31, 2013 (three months ended October 31, 2012 – net of income tax provision of $24 million ). Net of income tax recovery of $264 million for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 – net of income tax provision of $302 million ). 2 Net of income tax provision of $36 million for the three months ended October 31, 2013 (three months ended October 31, 2012 – net of income tax provision of $16 million ). Net of income tax provision of $157 million for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 – net of income tax provision of $74 million ). 3 Net of income tax provision of nil for the three months ended October 31, 2013 (three months ended October 31, 2012 – income tax provision of nil). Net of income tax provision of nil for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 – income tax provision of nil). 4 Net of income tax provision of nil for the three months ended October 31, 2013 (three months ended October 31, 2012 -income tax provision of nil). Net of income tax provision of $1 million for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 – income tax provision of nil). 5 Net of income tax recovery of $114 million for the three months ended October 31, 2013 (three months ended October 31, 2012 – income tax provision of $13 million ). Net of income tax recovery of $264 million for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 -income tax recovery of $22 million ). 6 Net of income tax provision of $332 million for the three months ended October 31, 2013 (three months ended October 31, 2012 – income tax recovery of $10 million ). Net of income tax provision of $383 million for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 – net of income tax provision of $381 million ). 7 Net of income tax provision of $254 million for the three months ended October 31, 2013 (three months ended October 31, 2012 – net of income tax provision of $104 million ). Net of income tax provision of $830 million for the twelve months ended October 31, 2013 (twelve months ended October 31, 2012 – net of income tax provision of $485 million ). All items presented in other comprehensive income will be reclassified to the Consolidated Statement of Income in subsequent periods. INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) (millions of Canadian dollars) For the three months ended For the twelve months ended October 31 October 31 October 31 October 31 2013 2012 2013 2012 Common shares Balance at beginning of period $ 19,218 $ 18,351 $ 18,691 $ 17,491 Proceeds from shares issued on exercise of stock options 112 58 297 253 Shares issued as a result of dividend reinvestment plan 86 282 515 947 Purchase of shares for cancellation (100) – (187) – Proceeds from issuance of new shares – – – – Balance at end of period 19,316 18,691 19,316 18,691 Preferred shares Balance at beginning of period 3,395 3,395 3,395 3,395 Balance at end of period 3,395 3,395 3,395 3,395 Treasury shares – common Balance at beginning of period (144) (178) (166) (116) Purchase of shares (987) (1,045) (3,552) (3,175) Sale of shares 986 1,057 3,573 3,125 Balance at end of period (145) (166) (145) (166) Treasury shares – preferred Balance at beginning of period (3) (1) (1) – Purchase of shares (29) (16) (86) (77) Sale of shares 30 16 85 76 Balance at end of period (2) (1) (2) (1) Contributed surplus Balance at beginning of period 181 203 196 212 Net premium (discount) on sale of treasury shares – (1) (3) 10 Stock options (11) (6) (25) (25) Other – – 2 (1) Balance at end of period 170 196 170 196 Retained earnings Balance at beginning of period 24,122 20,943 21,763 18,213 Net income attributable to shareholders 1,595 1,571 6,557 6,367 Common dividends (779) (702) (2,977) (2,621) Preferred dividends (49) (49) (185) (196) Premium paid on repurchase of common shares (324) – (593) – Share issue expenses – – – – Balance at end of period 24,565 21,763 24,565 21,763 Accumulated other comprehensive income (loss) Net unrealized gain (loss) on available-for-sale securities: Balance at beginning of period 778 1,417 1,475 949 Other comprehensive income (loss) (46) 58 (743) 526 Balance at end of period 732 1,475 732 1,475 Net unrealized foreign currency translation gain (loss) on investments in foreign operations, net of hedging activities: Balance at beginning of period 294 (346) (426) (464) Other comprehensive income (loss) 435 (80) 1,155 38 Balance at end of period 729 (426) 729 (426) Net gain (loss) on derivatives designated as cash flow hedges: Balance at beginning of period 1,578 2,801 2,596 2,841 Other comprehensive income (loss) 127 (205) (891) (245) Balance at end of period 1,705 2,596 1,705 2,596 Total 3,166 3,645 3,166 3,645 Non-controlling interests in subsidiaries Balance at beginning of period 1,499 1,482 1,477 1,483 Net income attributable to non-controlling interests in subsidiaries 27 26 105 104 Other (18) (31) (74) (110) Balance at end of period 1,508 1,477 1,508 1,477 Total equity $ 51,973 $ 49,000 $ 51,973 $ 49,000 INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (millions of Canadian dollars) For the three months ended For the twelve months ended October 31 October 31 October 31 October 31 2013 2012 2013 2012 Cash flows from (used in) operating activities Net income before income taxes $ 1,862 $ 1,775 $ 7,805 $ 7,563 Adjustments to determine net cash flows from (used in) operating activities Provision for credit losses 352 565 1,631 1,795 Depreciation 130 130 518 508 Amortization of other intangibles 153 133 521 477 Net securities losses (gains) (35) (178) (304) (373) Equity in net income of an investment in associate (81) (57) (272) (234) Deferred taxes (281) (43) (362) 112 Changes in operating assets and liabilities Interest receivable and payable 74 203 (425) (236) Securities sold short 1,964 1,365 8,394 9,818 Trading loans and securities (5,134) (4,680) (7,397) (21,178) Loans net of securitization and sales (11,807) (4,541) (33,820) (27,836) Deposits 28,913 8,728 64,541 47,487 Derivatives (1,895) 1,080 (4,068) 2,208 Financial assets and liabilities designated at fair value through profit or loss (424) (318) (364) (1,952) Securitization liabilities (2,742) 874 (3,962) (2,265) Other (2,006) (2,988) 128 (2,069) Income taxes paid (76) (272) (869) (1,296) Net cash from (used in) operating activities 8,967 1,776 31,695 12,529 Cash flows from (used in) financing activities Change in securities sold under repurchase agreements 2,628 4,323 (4,402) 12,825 Issue of subordinated notes and debentures – – – – Repayment of subordinated notes and debentures – – (3,400) (201) Repayment or redemption of liability for preferred shares and capital trust securities (6) 6 (483) (11) Translation adjustment on subordinated notes and debentures issued in a foreign currency and other (2) (23) 64 (24) Common shares issued 96 47 247 206 Repurchase of common shares (424) – (780) – Sale of treasury shares 1,016 1,072 3,655 3,211 Purchase of treasury shares (1,016) (1,061) (3,638) (3,252) Dividends paid (742) (469) (2,647) (1,870) Distributions to non-controlling interests in subsidiaries (27) (26) (105) (104) Net cash from (used in) financing activities 1,523 3,869 (11,489) 10,780 Cash flows from (used in) investing activities Interest-bearing deposits with banks (7,101) (4,432) (7,163) (676) Activities in available-for-sale Purchases (15,861) (15,529) (60,958) (64,861) Proceeds from maturities 12,454 9,342 39,468 40,223 Proceeds from sales 4,174 4,175 18,189 20,707 Activities in held-to-maturity Purchases (4,351) – (11,836) – Proceeds from maturities 799 – 2,873 – Activities in debt securities classified as loans Purchases (92) (47) (721) (213) Proceeds from maturities 254 278 1,399 1,568 Proceeds from sales 208 109 1,030 162 Net purchases of premises, equipment, and other depreciable assets (242) (265) (751) (827) Securities purchased (sold) under reverse repurchase agreements (253) 1,178 4,915 (12,217) Net cash acquired from (paid for) acquisitions – – (6,543) (6,839) Net cash from (used in) investing activities (10,011) (5,191) (20,098) (22,973) Effect of exchange rate changes on cash and due from banks 35 (7) 37 4 Net increase (decrease) in cash and due from banks 514 447 145 340 Cash and due from banks at beginning of period 3,067 2,989 3,436 3,096 Cash and due from banks at end of period $ 3,581 $ 3,436 $ 3,581 $ 3,436 Supplementary disclosure of cash flow information Amount of interest paid during the period $ 1,486 $ 1,471 $ 6,928 $ 7,368 Amount of interest received during the period 5,479 5,260 21,533 21,218 Amount of dividends received during the period 238 242 1,018 925 Certain comparative amounts have been reclassified to conform with the presentation adopted in the current year. Appendix A – Segmented Information The Banks operations and activities are organized around four key business segments: Canadian Personal and Commercial Banking, Wealth and Insurance, US Personal and Commercial Banking, and Wholesale Banking. The Banks 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: Results by Business Segment (millions of Canadian dollars) For the three months ended Canadian Personal US Personal and Commercial Wealth and and Commercial Wholesale Banking Insurance Banking Banking Corporate Total Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 Net interest income (loss) $ 2,151 $ 2,071 $ 147 $ 147 $ 1,428 $ 1,148 $ 509 $ 481 $ (51) $ (5) $ 4,184 $ 3,842 Non-interest income (loss) 1 680 678 1,687 1,504 468 375 93 244 (111) (66) 2,817 2,735 Total revenue 1 2,831 2,749 1,834 1,651 1,896 1,523 602 725 (162) (71) 7,001 6,577 Provision for (reversal of) credit losses 224 306 – – 183 254 5 8 (60) (3) 352 565 Insurance claims and related expenses 1 – – 711 688 – – – – – – 711 688 Non-interest expenses 1,362 1,343 730 676 1,279 929 422 374 364 284 4,157 3,606 Income (loss) before income taxes 1,245 1,100 393 287 434 340 175 343 (466) (352) 1,781 1,718 Provision for (recovery of) income taxes 331 294 65 45 65 24 53 34 (274) (219) 240 178 Equity in net income of an investment in associate, net of income taxes – – 77 51 – – – – 4 6 81 57 Net income (loss) $ 914 $ 806 $ 405 $ 293 $ 369 $ 316 $ 122 $ 309 $ (188) $ (127) $ 1,622 $ 1,597 As at Total assets (billions of Canadian dollars) $ 290.3 $ 282.6 $ 27.5 $ 26.4 $ 239.1 $ 209.1 $ 269.3 $ 260.7 $ 36.3 $ 32.3 $ 862.5 $ 811.1 Results by Business Segment (millions of Canadian dollars) For the twelve months ended Canadian Personal US Personal and Commercial Wealth and and Commercial Wholesale Banking Insurance Banking Banking Corporate Total Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 Oct. 31 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 Net interest income (loss) $ 8,345 $ 8,023 $ 579 $ 583 $ 5,172 $ 4,663 $ 1,982 $ 1,805 $ – $ (48) $ 16,078 $ 15,026 Non-interest income (loss) 1 2,695 2,629 6,358 5,860 1,957 1,468 425 849 (251) (286) 11,184 10,520 Total revenue 1 11,040 10,652 6,937 6,443 7,129 6,131 2,407 2,654 (251) (334) 27,262 25,546 Provision for (reversal of) credit losses 929 1,151 – – 779 779 26 47 (103) (182) 1,631 1,795 Insurance claims and related expenses 1 – – 3,056 2,424 – – – – – – 3,056 2,424 Non-interest expenses 5,136 4,988 2,821 2,600 4,550 4,125 1,541 1,570 994 715 15,042 13,998 Income (loss) before income taxes 4,975 4,513 1,060 1,419 1,800 1,227 840 1,037 (1,142) (867) 7,533 7,329 Provision for (recovery of) income taxes 1,321 1,209 153 261 273 99 192 157 (796) (634) 1,143 1,092 Equity in net income of an investment in associate, net of income taxes – – 246 209 – – – – 26 25 272 234 Net income (loss) $ 3,654 $ 3,304 $ 1,153 $ 1,367 $ 1,527 $ 1,128 $ 648 $ 880 $ (320) $ (208) $ 6,662 $ 6,471 1 Effective 2013, Insurance revenue and Insurance claims and related expenses are presented on a gross basis on the Consolidated Statement of Income. Comparative amounts have been reclassified to conform with the current period presentation. SHAREHOLDER AND INVESTOR INFORMATION Shareholder Services If you: And your inquiry relates to: Please contact: Are a registered shareholder (your name appears on your TD share certificate) Missing dividends, lost share certificates, estate questions, address changes to the share register, dividend bank account changes, the dividend reinvestment plan, eliminating duplicate mailings of shareholder materials or stopping (and resuming) receiving annual and quarterly reports Transfer Agent: CST Trust Company PO Box 700, Station B MontrEacute;al, QuEacute;bec H3B 3K3 1-800-387-0825 (Canada and US only) or 416-682-3860 Facsimile: 1-888-249-6189 inquiries@canstockta.com or www.canstockta.com Hold your TD shares through the Direct Registration System in the United States Missing dividends, lost share certificates, estate questions, address changes to the share register, eliminating duplicate mailings of shareholder materials or stopping (and resuming) receiving annual and quarterly reports Co-Transfer Agent and Registrar Computershare PO Box 43006 Providence, Rhode Island 02940-3006 or 250 Royall Street Canton, Massachusetts 02021 1-866-233-4836 TDD for hearing impaired: 1-800-231-5469 Shareholders outside of US: 201-680-6578 TDD shareholders outside of U.S: 201-680-6610 www.computershare.com Beneficially own TD shares that are held in the name of an intermediary, such as a bank, a trust company, a securities broker or other nominee Your TD shares, including questions regarding the dividend reinvestment plan and mailings of shareholder materials Your intermediary 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 (US) A copy of the Banks annual report on Form 40-F for fiscal 2013 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 Banks annual report on Form 40-F for fiscal 2013 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 Products and services: Contact TD Canada Trust , 24 hours a day, seven days a week: 1-866-567-8888 French: 1-866-233-2323 Cantonese/Mandarin: 1-800-328-3698 Telephone device for the hearing impaired (TTY): 1-800-361-1180 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 2013 Consolidated Financial Statements and Notes and the 2013 Managements Discussion and Analysis documents on the TD website at www.td.com/investor/qr_2013.jsp . Quarterly Earnings Conference Call TD Bank Group will host an earnings conference call in Toronto, Ontario on December 5, 2013 . The call will be webcast live through TDs website at 3 pm ET . The call and webcast will feature presentations by TD executives on the Banks financial results for the fourth quarter and fiscal 2013, 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_2013.jsp on December 5, 2013 , before 12 pm ET . A listen-only telephone line is available at 416-644-3415 or 1-877-974-0445 (toll free). The webcast and presentations will be archived at www.td.com/investor/qr_2013.jsp . Replay of the teleconference will be available from 6 pm ET on December 5, 2013 , until January 6, 2014 , by calling 416-640-1917 or 1-877-289-8525 (toll free). The passcode is 4649137, followed by the pound key. Annual Meeting Thursday, April 3, 2014 Hyatt Regency Calgary Calgary, Alberta 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 over 22 million customers in four key businesses operating in a number of locations in financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Auto Finance Canada; Wealth and Insurance, including TD Wealth, TD Direct Investing, an investment in TD Ameritrade, and TD Insurance ; US Personal and Commercial Banking, including TD Bank , Americas Most Convenient Bank , and TD Auto Finance US; and Wholesale Banking, including TD Securities . TD also ranks among the worlds leading online financial services firms, with approximately 8 million active online and mobile customers. TD had CDN$862.5 billion in assets on October 31 , 2013. The Toronto-Dominion Bank trades under the symbol TD on the Toronto and New York Stock Exchanges. SOURCE TD Bank Group

Flagler Young Professionals to offer business loans

The group, an affiliate of the Flagler County Chamber of Commerce, announced that it is offering interest-free loans of between $500 and $2,000 to owners of small businesses in Flagler County.

The objective of its Small Company Assistance Loan Enterprise, or SCALE, program is to help both start-up and established businesses grow, said Meredith Rodriguez, chair of the groups board of directors.

The funding comes from money raised by the Young Professionals Groups fundraising events for the past two years, she said.

Business owners, in order to be considered for a loan, must complete an application form and include a copy of their business plan, as well as an explanation for why they need the funding. They must also pay a nonrefundable $50 application fee to the Flagler County Chamber Foundation.

If approved, the applicant will be assigned a small business adviser who will track the companys progress and serve as a mentor to the business for a specified period of time. This additional service is free and designed to ensure the businesss long-term success, according to Rodriguez.

Recipients will be given one year to repay the loan in installments, she said.

Applicants must be members of the Flagler County Chamber of Commerce.

For more information, call 386-437-0106.

Prediction: Obama Will Buy Back Millennials by Forgiving Student Loans

BEGIN TRANSCRIPT

RUSH:  Back to the phones we go, and Mansfield, Ohio.  Jerry, Im glad you waited.  Youre next.  Its great to have you here.  Hi.

CALLER:  That I thanks, Rush.  North central Ohio listener.  I appreciate what you do.

RUSH:  Thank you, sir.

CALLER:  This all occurred to me when you talk about the minimum wage strategy thats now happening.  Most of the young people are on minimum wage, and its like theyve allocated monies to strategically to buy support, buy votes, support those people that support them, and seems like since theyre dipping in popularity with the youth, that it would be a good strategy play to increase their income so they could actually support and afford the Obamacare program.  I just wondered what your take was on that.

RUSH:  Well, its an interesting thought. Look, Obama is not going to do it that way. If everybody was in favor of raising the minimum wage, you cant raise it enough for everybody to such a level that they would be able to afford Obamacare.  Thats not what hes gonna do.  The real question now… Look, I got two stories.  This Harvard poll thats come out that we talked about yesterday.

Fewer than one-third of young, uninsured Americans say they are leaning toward enrolling in a health-care plan under the new Obamacare exchanges…  just 29 percent of uninsured 18-to-29-year olds say they will definitely (13 percent) or likely (16 percent) enroll in the Obamacare exchanges. Twenty-nine percent.  Thats a combination of 16 and 13.  Some of that 29% is ambivalent about it.  Sorry, that isnt gonna get it done.  That wont get it done.

I understand, you think Obamas raising minimum wage to give these people more money to afford it. He wont do it that way.  Hell find a way to buy them off.  I have no doubt that Obama and his strategerists are, right now, trying to come up with ideas. Just like they have miniature bailout of the insurance companies to keep them on board during all this, theyll conjure a way to buy these people, something to give them.  Hes not interested in people having disposable income, particularly now.

Thats too much economic and freedom and power.  Theres another take on this story.  Young Invincibles Spurn Obamacare — Mounting opposition to ObamaCare among young adults is creating a new crisis for the White House. While the federal enrollment website HealthCare.gov appears to be improving by the day… What a crock! What, you got 29,000? Its improving?  [P]olls show the young invincibles key to making the law work are becoming less likely to enroll.

Theres polling data all over the place that the youths are not interested.  Theyre not interested because they dont like the invasion of privacy that theyre encountering with security snafus.  They dont like what the NSA is doing, tracking their movements on their cell phones, and monitoring their communication. Dont doubt me on this, folks.  Of all the things going on in this country, they are more ticked off at Obama for the NSA than they are for anything else, and a close second is the economy. 

They dont have jobs — and they a lot of them are now discovering, by the way, that they were the marks.  A lot of them are discovering that they were the targets.  They were the ones that were going to be paying a lot in order to cover other people, and theyre resisting it all.  The Millennials, thats been the news of the week is how the Millennials are objecting. (interruption) Dont call it selfishness, Mr. Snerdley, but you might look at it that way. 

No, theyre discovering self-interest. 

Theyre discovering here that they were being used. 

Theyre discovering here that, all of a sudden, rather than being the recipients of federal largesse, they are going to be the source, and they said, Whoa! A, they dont have jobs.  So I guarantee you, as the Regime looks at these polling numbers, the minimum wage — trust me, Jer — is not about actually increasing anybodys income, because it doesnt do that.  Thats not what its for. Even the Regime knows this.  This is just a political wedge. 

Nobody gets rich on the minimum wage.  Nobodys gonna be able to afford more. No matter raise it a buck or two or 10, it isnt gonna matter.  The Millennials are not nearly as dumb, nor are they as slavishly devoted as Obama thought.  So I get what Obama and his people are doing. They see these polling numbers. Were losing the Millennials.  Okay, time to buy them back.  Thats what theyre talking about right now.  What can we give them? What can we buy them back with?

Thats how Obama looks at the federal Treasury.  Its his to spend to buy love, to buy support, to buy loyalty, or to buy a change in poll direction.  But actually coming up with a policy that would help people improve their standard of living?  Thats not what this Regime is about.  The past five years are all the evidence that you need.  I will bet you that one of the things… Ive been waiting for this, in fact. 

Lets make a note.  What is this, December 5th?  Mark it down, somebody — iCal it, do something up.  December 5th, 2013: El Rushbo predicting that one of the ways Obama will try to buy the Millennials back to get his poll numbers up, is to forgive student loans.  Its just sitting out there on a silver platter, just waiting for Obama to do it.  Its the Chicago way! If they dont succeed in getting rid of you with a gun or a knife, theyll forgive your student loan and theyll buy you back. 

Thats whats on tap, my friends.

BREAK TRANSCRIPT

RUSH:  A quick question for you Millennials who are now balking at paying Obamacare premiums to cover other people.  Wheres your compassion?  I keep hearing that the youth are compassionate and they only care about people.  Heres your chance to prove it. Go pay your higher premiums so that the sick and the elderly and the less fortunate get their health care.  I mean, thats the deal.  You see, the truth is, compassion is for words only.  When you get to the deeds part of it, thats when the blooms off the rose.

END TRANSCRIPT

OCBC Bank repositions credit cards with rebates on all items

KUCHING: OCBC Bank (Malaysia) Bhd (OCBC) has signalled its intention to become the favourite number two card in every Malaysian’s wallet.

The bank is repositioning its credit cards as everyone’s “must-have second card” by offering an unprecedented 0.5 per cent to 1.2 per cent rebate on any retail purchase and totally removing the standard industry practice of a maximum rebate limit.

Currently, all credit cards in the market limit the types of purchases to which rebates apply and have a cap of, typically, RM30 to RM50.

According to OCBC Bank’s head of Cards and Unsecured Lending, Chow Theng Kai, what this means is that while the Bank accepts that others might have better rebate offerings at certain establishments, paying with OCBC Cards everywhere else makes sense for consumers.

“Some of the time, other banks would have something better to offer, mainly for petrol and groceries. But when you notice there is no special deal or discount, all you need to do is pay with your OCBC Card and, depending on which card you hold, you get up to a 1.2 per cent rebate on everything, with no cap.

“MasterCard’s processed data for consumer credit cards over the last twelve months reveals that about 75 per cent of all purchases are in categories that usually do not attract special rebates.

“So, while a person might get an attractive five per cent or even 20 per cent rebate on certain purchases, there will always be another three or four purchases where banks do not offer a special rebate.

“And because these purchases, although collectively of higher value, are less frequently made, they do not command top-of-mind awareness for the consumer. Now, they have a clear opportunity to gain more savings by using OCBC Cards for such purchases,” he said.

Among the items that commonly do not attract special rebates are insurance, gadgets, dental visits, medicines, furniture, education, flights, renovations, down payments, car servicing, assessments, hotel stays, fitness centre charges, grooming, clothes and footwear, and entertainment.

Other common card restrictions include those where rebates are applicable only at specific merchants, only on specific days or only on regular priced items. At times, rebates are only awarded upon a minimum spend or number of swipes.

Chow added that there are several card-specific privileges.

The new OCBC Platinum Card provides a three-month zero per cent auto-instalment payment plan (IPP) for any transaction that is above RM500 and a similar six-month plan when the amount exceeds RM1,000.

“This added service allows OCBC Platinum Cardmembers to better manage their monthly cashflow for all purchases instead of relying on merchants to offer the service. And people can even earn rebates for such IPP purchases,” Chow said.

For the affluent, the Bank has introduced the OCBC World MasterCard that offers an unparalleled 1.2 per cent rebate on all spending. Other benefits include KLIA Premium Lounge access, RM2 million travel insurance, a 24-hour concierge service and a 24-hour priority hotline.

I Can’t Pay My Private Student Loans My Parents Cosigned For

Huffington Post Reader Question

Dear Steve,

Graduated in 2012 with a Bachelors degree in Fine Arts (sculpture). Have about $70k in private loan debt. Went into forbearance, still did not find an alternative in that time. Have looked into and applied for consolidation WITHOUT cosigners, denied.

I am curious as to whether or not there are other options available. My payments are over $700/month, which I (and my cosigners) cannot pay. I have looked into consolidation, but most new loans are no better than the ones I currently have. I would like to file for bankruptcy, but feel I would not qualify. I have immense guilt for ruining my cosigners (my parents) credit along with mine, and NEED them off my loans. Thank you!!

Sarah

Dont miss my free my weekday email newsletter with the latest tips and advice on how to beat debt and do better financially. Subscribe now. – Click Here

Dear Sarah,

I understand the guilt created by the situation. It is an unfortunate byproduct of what was thought to be a helpful action by your parents at the time.

What we have here is the perfect storm. You have an investment in education that was hoped to payoff in future income to service the loans easily. There is the willingness for your parents to cosign for the loans and guarantee the payments if you could not pay. And then of course there is the educational industry to pushes loans to sell butts into seats.

You will notice that nowhere along the way do you have anyone looking at the overall situation and making hard decisions about affordability and financial suitability.

The current educational situation is like a car dealer giving you unlimited financing for a car you can never afford and getting your parents to guarantee to make the payments if you cant. In the regular world that would be ridiculous but when you stick the phrase higher education in the situation instead of car, it all of a sudden becomes reasonable to the majority of people.

When your parents cosigned the private student loans they agreed to 100% of the liability for the loans with none of the benefit. They said they would be responsible for the debt if you could not pay.

If you decided to pursue bankruptcy there is a chance some of the loans could be reduced or eliminated. The case that comes to mind is one in particular, 2:12-ap-00039 – Opp. This case was interesting because the consumer said the cost of their education in their field of study did not allow them to earn enough money to repay the loans.

Opp went to The Art Institutes and University of the Arts. The debtor had $183,639 in student loans. Of that amount, $52,539 was completely discharged, Sallie Mae settled a $94,100 balance for $60,000 at 3% interest, and RBS Citizens settled $37,000 at 0% interest payments at $75 per month. I call that a substantial reduction in debt and terms. You can read more about this here.

The danger in your case is your parents would still be on the hook for the debt even if your obligation was reduced or eliminated unless the lender agreed to limit their liability.

A logical path to follow here would be to sit down and have an open discussion with your parents and together you all can make a monthly full payment on the student loans. You need to start making payments and not defer payments. Deferring payments only grows the student loan balances.

No matter how much your parents might not want to start paying their percentage of the student loan full payment which you cant afford, thats exactly what they signed up to do when they cosigned. And for that, there is no reason to feel guilt. They agreed and understood, or should have, and the situation just is what it is.

You should do your best to afford to pay what you can and they should fill in the gap. Thats the most reasonable and likely solution to allow all of you to move forward on a path that will really eliminate these loans in the future.

Of course if their financial situation changes for the worse, then there might be an argument to meet with an experienced bankruptcy attorney who is skilled at handling these types of situations and get all of you into a coordinated effort to file bankruptcy and deal with the private student loans at the same time.

Steve

Get Out of Debt Guy – Twitter, G+, Facebook

If you have a credit or debt question youd like to ask, just click here and ask away.

If youd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

Source

SBA loans to black entrepreneurs drop dramatically

Dec. 01 –Like many entrepreneurs, K. Kalimba Kindell and Delfaye Jason went to bank after bank before finding a lender that would work with them. They both had good credit and had run small consulting businesses in the past, but they spent a year being rejected by lenders unconvinced by their plans to open a therapeutic spa that offers massages, facials and wellness programs. They had the backing of a franchise, but banks viewed the business as a risky startup. The process was disheartening. They often had to resubmit the same paperwork to lenders that they felt made little effort to understand their business. We had (loan) processors in California that knew nothing about our character or our business background or the St. Louis area, Jason said. With persistence, they eventually got traction with US Bank and Midwest BankCentre , and received two loans — both backed by the Small Business Administration — totaling $300,000 . Their store, MassageLuXe, has now been open on South Grand for two years and has 16 employees. But getting those SBA loans, which provided crucial startup funds for Kindell and Jason, represented an achievement that has become increasingly rare for African-American entrepreneurs in the region. In 2007, black-owned businesses in Missouri received 236 SBA-backed loans totaling $20.1 million , according to Post-Dispatch analysis of SBA data. Five years later, that number dropped to 15 loans totaling $2.8 million . During the first 10 months of the 2013 fiscal year, black borrowers received 17 loans totaling $5.7 million . In contrast, the $359 million in loans white-owned firms received in Missouri in 2012 was well above the 2007 total of $281 million , though the overall number of loans declined from 1,455 to 960. When the economy crashed, banks tightened credit requirements, loan demand dropped and small business lending slumped. In response, the SBA, which works to get loans to borrowers whom banks might not otherwise lend to, took several steps to encourage more lending. The agency raised borrowing caps on the loans it guarantees, added more lenders to its programs, streamlined paperwork, reduced borrower fees and made more businesses eligible by raising the maximum revenue levels for its programs. As a result, the dollar amount of loans, both locally and nationally, has surged. Across the US, the SBA approved around $30 billion in loans during each of the last three years, the three best years on record. The SBAs St. Louis district, which includes the eastern half of Missouri , approved a record $211 million in loans in 2013. But the growth hasnt been evenly distributed. In Illinois , the decline was just as stark; 669 loans totaling $56.6 million were made to black borrowers in 2007. In 2012, that number had dropped to 62 loans totaling $29.4 million . During the first 10 months of 2013, blacks received 32 SBA loans in the state. Those figures exclude loans in which the borrowers race was not provided — about 6 percent of overall loans in Missouri in 2012, and 7 percent in Illinois . Dennis Melton , the director of the SBAs St. Louis office, said the agency works hard to reach out to all underserved communities — minorities, women, veterans and rural business owners. Is that a focus in this office? he said. You better believe it. But ultimately, Melton said, the decision to lend comes down to whether a potential borrower meets lending criteria. Were sometimes successful, and sometimes not, he said, because it always comes down to a credit decision. The decision is also left to a bank. To encourage lending, the SBA guarantees up to 85 percent of a loan through its largest program; it doesnt issue loans itself. The agency offers a variety of services for small businesses, and its primary vehicle to boost lending is by offering guarantees to lenders. If you were to divide loan applications into yes, no and maybe stacks based on degree of risk, Melton said, the SBAs focus is the maybe stack. The SBA doesnt track approval rates, so its unknown whether blacks are being denied loans at disproportionate rates. A 2012 study conducted for the agency using small business survey data (not SBA loan data) found that even when controlling for creditworthiness and other factors, blacks and Hispanics were less likely to have loan applications approved than whites. The author of the study, Kauffman Foundation researcher Alicia Robb , said in an interview that minority borrowers are turning to mainstream lenders less because they have a fear of denial, which is warranted. There are myriad other factors likely at play: During the recession, incomes in the St. Louis area dropped more for blacks than for other groups. Banks have tightened lending standards and are looking to lend to established businesses and entrepreneurs with greater wealth and stronger credit histories, ruling out many minority-owned firms. In particular, SBA officials point to the decline of smaller loans, which are disproportionately used by minority- and female-owned businesses, as a crucial factor. (SBA lending to female-owned businesses in Missouri and Illinois is down since recession, but not as much as lending to blacks.) In 2010, Congress raised loan caps on SBA programs from $2 million to $5 million . The average size loan issued in Missouri has more than doubled since before the recession, to about $385,000 in 2012. It takes the same amount of effort to underwrite a $5,000 loan as a $500,000 loan, said Eddie Davis , director of the Center for African-American Business Acceleration in St. Louis . Making bigger loans to established companies is more profitable than small loans to startups, and from an economic perspective, Davis said, the very cautious approach many lenders take makes perfect sense. Some banks also sell SBA loans for a premium on the secondary market, further incentivizing larger loans. Most businesses Davis works at are in the startup or embryonic stage of development, he said, and mainstream lenders and SBA loans simply arent an option for them. The growth of microlending helps meet some of the demand, he said, but still falls short. Theres a gaping hole, for businesses that want around $50,000 to $100,000 , he said, above where microlenders help but below where banks take interest. While SBA loans account for only a small portion of small business lending, Robb said, the decline in SBA lending to black borrowers is troubling. Those who cant get capital will struggle to create quality products and services or generate new jobs, she said, It has a negative impact on the entire community. Credit markets should function and viable businesses should get funding, she added, and we see thats not happening in a lot of cases. FEWER SMALL LOANS Much of the decline can be traced to the 2011 cancellation of the SBAs Community Express program, which guaranteed loans of up to $250,000 to underserved groups and businesses in low-income areas. The program led to more small loans but had high default rates, and regulators criticized lender underwriting practices. An SBA Inspector General report found that some of the most active lenders issued greatly reduced loan amounts with little regard for borrower business plans or cash flows, meaning some borrowers received far less than what was needed to fund a business. In Missouri and Illinois , one of the most active lenders in the program was Innovative Bank , which was seized by federal regulators, who lambasted the banks underwriting practices and sued its former directors. Innovative was acquired by a company that was merged into California -based BBCN Bank . Because Innovative was acquired by what is now BBCN, SBA records list BBCN as the lender for about 1,600 loans made in Missouri and Illinois . For more than half of the loans — 919 in total — an unpaid balance was charged off as a loss by the SBA. Black-owned businesses received 830 of the loans, 593 of which were charged off. A BBCN spokeswoman said in an email that it was Innovative that did lending in the market, and didnt respond to reporter requests to clarify if that meant Innovative was responsible for every loan in both states. US Bank , one the leading SBA lenders in Missouri , was also one of the most active in lending to black-owned businesses in St. Louis before the recession, but has made far fewer loans in recent years, which the bank attributed to the reduced funding for and eventual elimination of Community Express. A bank spokeswoman said it hadnt changed its approach in St. Louis , and works to expand lending in minority communities through partnerships, marketing and directly contacting businesses. The bank also invested in a fund managed by local nonprofit Justine Petersen , which makes microloans primarily to minority borrowers. While the SBA has no initiative that specifically targets lending to minorities, Melton said the agency constantly makes outreach efforts to advertise programs, and said its recent decision to eliminate borrower fees and lender guarantee fees for loans of less than $150,000 could help make more loans available for minority borrowers. The SBA also lends money to Justine Petersen , which in 2012 made nearly $1 million in loans to black-owned businesses in the St. Louis region using SBA dollars. Melton highlighted two other programs that he said could help, one of which focuses on making loans of up to $350,000 , and another that guarantees loans made by community-based financial institutions, typically nonprofits. Adolphus Pruitt , head of the St. Louis City NAACP, was disappointed with the SBAs efforts and questioned whether it was being aggressive enough in reaching out to black entrepreneurs. The drop in loans to blacks was just astonishing, he said. Its not a pretty picture. If (someones) job depended on their ability to mine the marketplace to find viable minority businesses, Pruitt said, the situation would improve. Others argue the SBA is limited in what it can do. Galen Gandolfi , a spokesman for Justine Petersen , said that because loans are branded SBA, the SBA gets shamed, but it really comes back to the banks. He said its unfair to lump all banks together, and that some were making genuine efforts to expand lending to minority-owned businesses. However, he noted that Justine Petersen was applying to be an SBA 7(a) lender — which would allow it to make larger, SBA-guaranteed loans — because the demand for business loans among underserved groups isnt being met. Without enough funding, many minority business owners will exhaust personal resources, burn through credit cards and struggle to expand, said Kevin Wilson , head of the Missouri Small Business Development Center . The SBA represents only one piece of the puzzle, he said, and theres a more systemic issue in society that we have to address. ___ (c)2013 the St. Louis Post-Dispatch Visit the St. Louis Post-Dispatch at www.stltoday.com Distributed by MCT Information Services