TD Bank 2007 Annual Report Download - page 108

TD BANK FINANCIAL GROUP ANNUAL REPORT 2007 Financial Results104
Estimated Contributions
In 2008, the Bank or its subsidiaries expect to contribute $70
million to the principal pension plan, nil to the CT Defined Benefit
Pension Plan, $40 million to the TD Banknorth Defined Benefit
Pension Plan, $12 million to the Bank’s supplemental employee
retirement plans and $12 million for the principal non-pension
post-retirement benefit plans. Future contribution amounts may
change upon the Bank’s review of its contribution levels during
the year.
NOTE 17 TRADING-RELATED INCOME
Trading assets and liabilities, including derivatives, are measured
at fair value, with gains and losses recognized in the Consolidated
Statement of Income. Beginning on November 1, 2006, certain
loans held within a trading portfolio were designated under the
fair value option and are also measured at fair value.
Trading-related income comprises net interest income, trading
income and income from loans designated as trading under the
fair value option that are managed within a trading portfolio. Net
interest income arises from interest and dividends related to trad-
ing assets and liabilities, and is reported net of interest expense
and income associated with funding these assets and liabilities.
Trading income includes realized and unrealized gains and losses
on trading securities, trading derivatives and loans designated as
trading under the fair value option.
Trading-related income excludes underwriting fees and com-
missions on securities transactions, which are shown separately in
the Consolidated Statement of Income.
Trading-related income by product line depicts trading income
for each major trading category.
Trading-related Income
(millions of Canadian dollars) 2007 2006 2005
Net interest income $ (55)$ (65 )$ 457
Trading income
Trading securities and derivatives 591 797 147
Loans designated as trading under
the fair value option (38)– –
Total trading income $ 553 $ 797 $ 147
Total trading-related income $ 498 $ 732 $ 604
By product
Interest rate and credit portfolios $ 239 $ 362 $ 370
Foreign exchange portfolios 312 306 248
Equity and other portfolios (15)64 (14)
Loans designated as trading under
the fair value option (38)– –
Total trading-related income $ 498 $ 732 $ 604
NOTE 18 INSURANCE
The majority of insurance premiums, claims, and liabilities are
derived from the Bank’s property and casualty insurance business.
These premiums, net of reinsurance, are recognized as income
on a pro-rata basis over the terms of the policies. Claims are
expensed as incurred. Insurance-related liabilities, reported in
other liabilities, represent unpaid claims and estimates for losses
incurred but not yet reported, as determined by the appointed
actuary in accordance with accepted actuarial practice.
(millions of Canadian dollars) 2007 2006 2005
Net earned premiums and fees $ 2,325 $ 2,226 $ 2,118
Claims and related expenses 1,320 1,330 1,292
$ 1,005 $ 896 $ 826
NOTE 19 RESTRUCTURING COSTS
TD BANKNORTH RESTRUCTURING, PRIVATIZATION
AND MERGER-RELATED CHARGES
As a result of the privatization of TD Banknorth and related
restructuring initiatives undertaken within both TD Banknorth
and TD Bank USA during 2007, the Bank incurred a total of $67
million before-tax restructuring charges of which $59 million
related to TD Banknorth and $8 million related to TD Bank USA.
The restructuring charges consisted primarily of employee sever-
ance costs, the costs of amending certain executive employment
and award agreements and the write-down of long-lived assets
due to impairment. In the Consolidated Statement of Income, the
restructuring charges are included in restructuring costs.
During the year, TD Banknorth also incurred privatization costs
of $11 million before tax, which primarily consisted of legal and
investment banking fees, and merger-related costs of $8 million
in connection with the integration of Hudson United Bancorp
(Hudson) and Interchange Financial Services Corporation
(Interchange) with TD Banknorth. In the Consolidated Statement
of Income, the privatization and merger-related charges are
included in other non-interest expenses.
WHOLESALE BANKING
In 2005, the Bank restructured its global structured products busi-
nesses within Wholesale Banking to reduce focus on the less prof-
itable and more complex activities and concentrate resources on
growing the more profitable areas of the business. As a result, the
Bank recorded $43 million of restructuring costs in 2005. During
2006, the Bank recorded an additional $50 million of restructur-
ing costs, consisting primarily of severance costs in relation to the
restructuring of the global structured products businesses.
As at October 31, 2007, the total unutilized balance of
restructuring costs of $29 million (2006 – $27 million) shown
below is included in other liabilities in the Consolidated
Balance Sheet.
Estimated Future Benefit Payments
Estimated future benefit payments under the Bank’s principal
pension plan are $105 million for 2008; $105 million for 2009;
$106 million for 2010; $108 million for 2011; $119 million for
2012 and $582 million for 2013 to 2017.
Estimated future benefit payments under the principal non-
pension post-retirement benefit plans are $12 million for 2008;
$13 million for 2009; $14 million for 2010; $15 million for 2011;
$17 million for 2012 and $106 million for 2013 to 2017.