TD Bank 2007 Annual Report Download - page 96

TD BANK FINANCIAL GROUP ANNUAL REPORT 2007 Financial Results92
NOTE 5GOODWILL AND OTHER INTANGIBLES
Goodwill represents the excess purchase price paid on acquisi-
tions over the fair value assigned to identifiable net assets,
including identifiable intangible assets. Goodwill is not amortized
but is assessed for impairment annually and when an event or
change in circumstances indicates that there may be an impair-
ment. Goodwill is allocated to reporting units that are either the
operating business segment or the reporting unit below the seg-
ment. Goodwill impairment is identified by comparing the
carrying value of the reporting unit with its fair value. Impairment
in goodwill is charged to the Consolidated Statement of Income
in the period in which the impairment is identified. Annual
impairment testing on goodwill determined that no impairment
write-downs were required in 2007, 2006 and 2005.
Goodwill by Segment
(millions of Canadian dollars)
2007
Canadian Personal and
Commercial Banking Wealth Management
U.S. Personal and
Commercial Banking Wholesale Banking Total
Carrying value of goodwill at beginning
of year $ 1,086 $ 359 $ 5,805 $ 146 $ 7,396
Goodwill acquired during the year 2 – 1,346 –1,348
Foreign currency translation adjustments
and other –(15)(811) – (826)
Carrying value of goodwill at end of year $ 1,088 $ 344 $ 6,340 $ 146 $ 7,918
2006
Carrying value of goodwill at beginning
of year $ 884 $ 1,160 $ 4,328 $146 $ 6,518
Goodwill acquired during the year 202 56 1,778 –2,036
Sale of TD Waterhouse U.S.A. – (827) – – (827)
Foreign currency translation adjustments
and other –(30)(301) – (331)
Carrying value of goodwill at end of year $ 1,086 $ 359 $ 5,805 $ 146 $ 7,396
OTHER INTANGIBLES
The Bank’s intangible assets consist primarily of core deposit
intangibles that represent the intangible value of depositor
relationships acquired when deposit liabilities are assumed in an
acquisition and term deposit, loan and mutual fund intangibles
resulting from acquisitions. Intangible assets are amortized over
3 to 20 years, proportionate to the expected economic benefit.
All intangible assets are assessed for impairment at least annu-
ally and when an event or change in circumstances indicates that
the assets might be impaired. There were no such circumstances
in 2007, 2006 and 2005.
The table below presents details of the Bank’s other intangible
assets as at October 31:
Other Intangibles
(millions of Canadian dollars) 2007 2006
Carrying
value
Accumulated
amortization
Net carrying
value
Net carrying
value
Core deposit intangible assets $ 3,056 $ (1,930)$ 1,126 $ 902
Other intangible assets 4,286 (3,308)978 1,044
Total intangible assets1$ 7,342 $ (5,238)$ 2,104 $ 1,946
1 Future amortization expense for the carrying amount of intangible assets
is estimated to be as follows for the next five years: 2008 – $457 million,
2009 – $336 million, 2010 – $263 million, 2011 – $209 million and
2012 – $167 million.
The following table presents information about gross impaired
loans and net write-offs for components of reported and
securitized financial assets as at October 31.
Loans Managed
(millions of Canadian dollars) 2007 2006
Loans1
Gross
impaired
loans
Net
write
offs Loans1
Gross
impaired
loans
Net
write
offs
Type of loan
Mortgage loans $ 76,816 $ 48 $ 3 $ 69,730 $ 31 $ 2
Personal loans 82,462 230 573 76,343 179 420
Other loans 44,953 301 70 42,452 243 57
Total loans reported and securitized 204,231 579 646 188,525 453 479
Less: loans securitized 28,316 10 18 27,917 725
Total loans reported on the Consolidated Balance Sheet $ 175,915 $ 569 $ 628 $ 160,608 $ 446 $ 454
1 Net of allowance for credit losses.